##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 29, 2007
 OR
 o
    
    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)
 (Registrants telephone number, including area code)
  o þ
  o þ o
 o þ




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##### 



JOHN B. SANFILIPPO & SON, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 29, 2007
INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Operations for the quarters and thirty-nine weeks ended March 29, 2007 and March 30, 2006
    
    
    3Consolidated Balance Sheets as of March 29, 2007, June 29, 2006 and March 30, 2006
    
    
    5Consolidated Statements of Cash Flows for the thirty-nine weeks ended March 29, 2007 and March 30, 2006
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    27PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 6. Exhibits
    
    
    29SIGNATURE
    
    
    30Section 302 CertificationSection 302 CertificationSection 1350 CertificationSection 1350 Certification
  2




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PART IFINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 For theFor the Quarter Ended
    
    
    Thirty-nine Weeks EndedMarch 29,
    
    
    March 30,
    
    
    March 29,
    
    
    March 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    107,009
    
    
    $
    119,004
    
    
    $
    418,456
    
    
    $
    448,739Cost of sales
    
    
    101,043
    
    
    
    114,506
    
    
    
    387,629
    
    
    
    414,822Gross profit
    
    
    5,966
    
    
    
    4,498
    
    
    
    30,827
    
    
    
    33,917Operating expenses:Selling expenses
    
    
    8,131
    
    
    
    9,005
    
    
    
    30,202
    
    
    
    30,026Administrative expenses
    
    
    3,956
    
    
    
    3,858
    
    
    
    11,917
    
    
    
    11,076Gain related to real estate sales
    
    
    
    
    
    
    (940
    )
    
    
    (3,047
    )
    
    
    (940
    )Total operating expenses
    
    
    12,087
    
    
    
    11,923
    
    
    
    39,072
    
    
    
    40,162Loss from operations
    
    
    (6,121
    )
    
    
    (7,425
    )
    
    
    (8,245
    )
    
    
    (6,245
    )Other expense:Interest expense ($281, $150, $614
and $468 to related parties)
    
    
    (2,861
    )
    
    
    (1,849
    )
    
    
    (6,315
    )
    
    
    (4,513
    )Rental and miscellaneous expense, net
    
    
    (530
    )
    
    
    (190
    )
    
    
    (626
    )
    
    
    (458
    )Total other expense, net
    
    
    (3,391
    )
    
    
    (2,039
    )
    
    
    (6,941
    )
    
    
    (4,971
    )Loss before income taxes
    
    
    (9,512
    )
    
    
    (9,464
    )
    
    
    (15,186
    )
    
    
    (11,216
    )Income tax benefit
    
    
    (3,330
    )
    
    
    (3,551
    )
    
    
    (5,419
    )
    
    
    (4,111
    )Net loss
    
    $
    (6,182
    )
    
    $
    (5,913
    )
    
    $
    (9,767
    )
    
    $
    (7,105
    )Basic and diluted loss per common share
    
    $
    (0.58
    )
    
    $
    (0.56
    )
    
    $
    (0.92
    )
    
    $
    (0.67
    )
 The accompanying notes are an integral part of these consolidated financial statements.
 3




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JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
 March 29,
    
    
    June 29,
    
    
    March 30,2007
    
    
    2006
    
    
    2006ASSETSCURRENT ASSETS:Cash
    
    $
    2,187
    
    
    $
    2,232
    
    
    $
    2,309Accounts receivable, less allowances of $5,025,
$3,766 and $4,093
    
    
    33,393
    
    
    
    35,481
    
    
    
    36,955Inventories
    
    
    168,237
    
    
    
    164,390
    
    
    
    206,173Income taxes receivable
    
    
    4,891
    
    
    
    6,427
    
    
    
    5,142Deferred income taxes
    
    
    2,499
    
    
    
    2,984
    
    
    
    2,305Prepaid expenses and other current assets
    
    
    1,123
    
    
    
    2,248
    
    
    
    859Asset held for sale
    
    
    5,569
    
    
    
    
    
    
    
    TOTAL CURRENT ASSETS
    
    
    217,899
    
    
    
    213,762
    
    
    
    253,743PROPERTY, PLANT AND EQUIPMENT:Land
    
    
    9,463
    
    
    
    10,299
    
    
    
    10,301Buildings
    
    
    77,733
    
    
    
    64,146
    
    
    
    63,400Machinery and equipment
    
    
    133,179
    
    
    
    109,391
    
    
    
    107,923Furniture and leasehold improvements
    
    
    6,113
    
    
    
    5,440
    
    
    
    5,558Vehicles
    
    
    2,880
    
    
    
    2,897
    
    
    
    2,991Construction in progress
    
    
    29,253
    
    
    
    53,811
    
    
    
    38,979258,621
    
    
    
    245,984
    
    
    
    229,152Less: Accumulated depreciation
    
    
    114,678
    
    
    
    117,094
    
    
    
    115,592143,943
    
    
    
    128,890
    
    
    
    113,560Rental investment property, less accumulated
depreciation of $1,536, $924 and $726
    
    
    28,594
    
    
    
    27,969
    
    
    
    28,167TOTAL PROPERTY, PLANT AND EQUIPMENT
    
    
    172,537
    
    
    
    156,859
    
    
    
    141,727Intangible asset  minimum retirement plan liability
    
    
    6,197
    
    
    
    6,197
    
    
    
    10,467Cash surrender value of officers life insurance and
other assets
    
    
    6,254
    
    
    
    5,440
    
    
    
    4,980Development agreement
    
    
    
    
    
    
    6,806
    
    
    
    6,806Goodwill
    
    
    
    
    
    
    
    
    
    
    1,242Brand name, less accumulated amortization of $6,392,
$6,072 and $5,965
    
    
    1,528
    
    
    
    1,848
    
    
    
    1,955TOTAL ASSETS
    
    $
    404,415
    
    
    $
    390,912
    
    
    $
    420,920
 The accompanying notes are an integral part of these consolidated financial statements.
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JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
 March 29,
    
    
    June 29,
    
    
    March 30,2007
    
    
    2006
    
    
    2006LIABILITIES & STOCKHOLDERS EQUITYCURRENT LIABILITIES:Revolving credit facility borrowings
    
    $
    80,987
    
    
    $
    64,341
    
    
    $
    78,620Current maturities of long-term debt,
including related party debt of $196,
$4,279 and $3,173
    
    
    58,544
    
    
    
    67,717
    
    
    
    76,091Accounts payable, including related party
payables of $1,279, $140 and $559
    
    
    31,174
    
    
    
    27,944
    
    
    
    32,993Book overdraft
    
    
    10,076
    
    
    
    14,301
    
    
    
    10,584Accrued payroll and related benefits
    
    
    5,318
    
    
    
    5,930
    
    
    
    4,986Accrued workers compensation
    
    
    6,052
    
    
    
    5,619
    
    
    
    4,363Other accrued expenses
    
    
    6,826
    
    
    
    5,293
    
    
    
    4,843TOTAL CURRENT LIABILITIES
    
    
    198,977
    
    
    
    191,145
    
    
    
    212,480LONG-TERM LIABILITIES:Long-term debt, less current maturities,
including related party debt of $13,911,
$0 and $0
    
    
    20,267
    
    
    
    5,618
    
    
    
    104Retirement plan
    
    
    8,644
    
    
    
    7,654
    
    
    
    11,745Deferred income taxes
    
    
    5,475
    
    
    
    6,385
    
    
    
    7,011Other
    
    
    310
    
    
    
    
    
    
    
    TOTAL LONG-TERM LIABILITIES
    
    
    34,696
    
    
    
    19,657
    
    
    
    18,860COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS 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
    
    
    
    26Common Stock, non-cumulative voting rights
of one vote per share, $.01 par value;
17,000,000 shares authorized, 8,121,349,
8,112,099 and 8,110,849 shares issued and
outstanding
    
    
    81
    
    
    
    81
    
    
    
    81Capital in excess of par value
    
    
    100,219
    
    
    
    99,820
    
    
    
    99,674Retained earnings
    
    
    71,620
    
    
    
    81,387
    
    
    
    91,003Treasury stock, at cost; 117,900 shares of
Common Stock
    
    
    (1,204
    )
    
    
    (1,204
    )
    
    
    (1,204
    )TOTAL STOCKHOLDERS EQUITY
    
    
    170,742
    
    
    
    180,110
    
    
    
    189,580TOTAL LIABILITIES & STOCKHOLDERS EQUITY
    
    $
    404,415
    
    
    $
    390,912
    
    
    $
    420,920
 The accompanying notes are an integral part of these consolidated financial statements.
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JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Thirty-nine Weeks EndedMarch 29,
    
    
    March 30,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (9,767
    )
    
    $
    (7,105
    )Depreciation and amortization
    
    
    9,970
    
    
    
    7,563Gain on disposition of properties
    
    
    (3,108
    )
    
    
    (963
    )Deferred income tax benefit
    
    
    (425
    )
    
    
    (695
    )Stock-based compensation expense
    
    
    309
    
    
    
    410Change in current assets and current liabilities:Accounts receivable, net
    
    
    2,088
    
    
    
    2,047Inventories
    
    
    (3,847
    )
    
    
    11,451Prepaid expenses and other current assets
    
    
    1,125
    
    
    
    804Accounts payable
    
    
    6,189
    
    
    
    3,085Accrued expenses
    
    
    (70
    )
    
    
    962Income taxes receivable
    
    
    1,536
    
    
    
    (5,937
    )Other operating assets
    
    
    (1,718
    )
    
    
    732Net cash provided by operating activities
    
    
    2,282
    
    
    
    12,354CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property, plant and equipment
    
    
    (3,114
    )
    
    
    (8,019
    )Facility expansion costs
    
    
    (29,986
    )
    
    
    (22,740
    )Proceeds from disposition of properties
    
    
    17,812
    
    
    
    24Cash surrender value of officers life insurance
    
    
    (285
    )
    
    
    (280
    )Net cash used in investing activities
    
    
    (15,573
    )
    
    
    (31,015
    )CASH FLOWS FROM FINANCING ACTIVITIESBorrowings under revolving credit facility
    
    
    119,915
    
    
    
    120,288Repayments of revolving credit borrowings
    
    
    (103,269
    )
    
    
    (108,229
    )Principal payments on long-term debt
    
    
    (10,020
    )
    
    
    (611
    )Financing obligation with related parties
    
    
    14,300
    
    
    
    (Decrease) increase in book overdraft
    
    
    (4,225
    )
    
    
    7,537Issuance of Common Stock under option plans
    
    
    68
    
    
    
    63Minority interest distribution
    
    
    (3,545
    )
    
    
    Tax benefit of stock options exercised
    
    
    22
    
    
    
    37Net cash provided by financing activities
    
    
    13,246
    
    
    
    19,085NET (DECREASE) INCREASE IN CASH
    
    
    (45
    )
    
    
    424Cash, beginning of period
    
    
    2,232
    
    
    
    1,885Cash, end of period
    
    $
    2,187
    
    
    $
    2,309SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:Capital lease obligations incurred
    
    
    1,117
    
    
    
    133
 The accompanying notes are an integral part of these consolidated financial statements.
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JOHN B. SANFILIPPO & SON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Basis of Presentation
   Note 2  Inventories
  March 29,
    
    
    June 29,
    
    
    March 30,2007
    
    
    2006
    
    
    2006Raw material and supplies
    
    $
    87,282
    
    
    $
    77,209
    
    
    $
    113,357Work-in-process and finished goods
    
    
    80,955
    
    
    
    87,181
    
    
    
    92,816Inventories
    
    $
    168,237
    
    
    $
    164,390
    
    
    $
    206,173
 Note 3  Earnings Per Common Share
  For theFor the Quarter Ended
    
    
    Thirty-nine Weeks EndedMarch 29,
    
    
    March 30,
    
    
    March 29,
    
    
    March 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Weighted average shares
outstanding  basic
    
    
    10,594,944
    
    
    
    10,585,749
    
    
    
    10,593,981
    
    
    
    10,582,815Effect of dilutive securities:Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average shares
outstanding  diluted
    
    
    10,594,944
    
    
    
    10,585,749
    
    
    
    10,593,981
    
    
    
    10,582,815
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Note 4  Stock-Based Compensation
   Weighted Average
    
    
    Aggregate IntrinsicWeighted Average
    
    
    Remaining
    
    
    ValueOptions
    
    Shares
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    (in thousands)Outstanding, at June 29, 2006
    
    
    324,815
    
    
    $
    13.70Activity:Granted
    
    
    75,000
    
    
    
    10.23Exercised
    
    
    (9,250
    )
    
    
    6.95Forfeited
    
    
    (30,875
    )
    
    
    15.69Outstanding, at March 29, 2007
    
    
    359,690
    
    
    $
    12.98
    
    
    
    6.34
    
    
    $
    1,015Exercisable, at March 29, 2007
    
    
    202,315
    
    
    $
    11.57
    
    
    
    5.48
    
    
    $
    788
    Thirty-nine Weeks EndedMarch 29,
    
    March 30,2007
    
    2006Weighted average expected stock-price volatility
    
    
    54.00
    %
    
    
    54.66
    %Average risk-free interest rate
    
    
    4.57
    %
    
    
    4.14
    %Average dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Weighted average expected option life (in years)
    
    
    5.78
    
    
    
    5.72Forfeiture percentage
    
    
    5.00
    %
    
    
    0.00
    %
 8




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Note 5  Retirement Plan
  For theFor the Quarter Ended
    
    
    Thirty-nine Weeks EndedMarch 29,
    
    
    March 30,
    
    
    March 29,
    
    
    March 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Service cost
    
    $
    66
    
    
    $
    116
    
    
    $
    196
    
    
    $
    270Interest cost
    
    
    163
    
    
    
    193
    
    
    
    490
    
    
    
    450Amortization of prior service cost
    
    
    239
    
    
    
    239
    
    
    
    718
    
    
    
    558Amortization of gain
    
    
    (76
    )
    
    
    
    
    
    
    (229
    )
    
    
    Net periodic benefit cost
    
    $
    392
    
    
    $
    548
    
    
    $
    1,175
    
    
    $
    1,278
 Note 6  Distribution Channel and Product Type Sales Mix
   For theFor the Quarter Ended
    
    
    Thirty-nine Weeks EndedMarch 29,
    
    
    March 30,
    
    
    March 29,
    
    
    March 30,Distribution Channel
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Consumer
    
    $
    51,387
    
    
    $
    56,548
    
    
    $
    218,371
    
    
    $
    229,219Industrial
    
    
    22,772
    
    
    
    27,836
    
    
    
    85,418
    
    
    
    104,344Food Service
    
    
    13,788
    
    
    
    13,852
    
    
    
    44,666
    
    
    
    47,125Contract Packaging
    
    
    10,047
    
    
    
    10,492
    
    
    
    32,924
    
    
    
    32,464Export
    
    
    9,015
    
    
    
    10,276
    
    
    
    37,077
    
    
    
    35,587Total
    
    $
    107,009
    
    
    $
    119,004
    
    
    $
    418,456
    
    
    $
    448,739
  For theFor the Quarter Ended
    
    Thirty-nine Weeks EndedMarch 29,
    
    March 30,
    
    March 29,
    
    March 30,Product Type
    
    2007
    
    2006
    
    2007
    
    2006Peanuts
    
    
    21.1
    %
    
    
    21.4
    %
    
    
    18.9
    %
    
    
    19.6
    %Pecans
    
    
    17.5
    
    
    
    17.0
    
    
    
    23.8
    
    
    
    23.6Cashews & Mixed Nuts
    
    
    21.3
    
    
    
    22.4
    
    
    
    21.1
    
    
    
    21.8Walnuts
    
    
    13.7
    
    
    
    11.5
    
    
    
    13.8
    
    
    
    11.6Almonds
    
    
    16.8
    
    
    
    18.7
    
    
    
    13.0
    
    
    
    15.2Other
    
    
    9.6
    
    
    
    9.0
    
    
    
    9.4
    
    
    
    8.2Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Note 7  Comprehensive Income
  9




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Note 8  Credit Facilities
   Note 9Managements Plans to Continue as a Going Concern
  10




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Note 10  Interest Cost
  For theFor the Quarter Ended
    
    
    Thirty-nine Weeks EndedMarch 29,
    
    
    March 30,
    
    
    March 29,
    
    
    March 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Gross interest cost
    
    $
    2,861
    
    
    $
    2,383
    
    
    $
    7,216
    
    
    $
    5,614Capitalized interest
    
    
    
    
    
    
    (534
    )
    
    
    (901
    )
    
    
    (1,101
    )Interest expense
    
    $
    2,861
    
    
    $
    1,849
    
    
    $
    6,315
    
    
    $
    4,513
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Note 11 Property Sale and Leaseback Transactions






Note 12 Financing Obligation




Note 13Commitments and Contingencies




Note 14  Asset Held for Sale/Development Agreement




12



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Note 15 Recent Accounting Pronouncements
     13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  INTRODUCTION
    14




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RESULTS OF OPERATIONS
 Net Sales
    18




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For theFor the Quarter Ended
    
    
    Thirty-nine Weeks EndedMarch 29,
    
    
    March 30,
    
    
    March 29,
    
    
    March 30,Distribution Channel
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Consumer
    
    $
    51,387
    
    
    $
    56,548
    
    
    $
    218,371
    
    
    $
    229,219Industrial
    
    
    22,772
    
    
    
    27,836
    
    
    
    85,418
    
    
    
    104,344Food Service
    
    
    13,788
    
    
    
    13,852
    
    
    
    44,666
    
    
    
    47,125Contract Packaging
    
    
    10,047
    
    
    
    10,492
    
    
    
    32,924
    
    
    
    32,464Export
    
    
    9,015
    
    
    
    10,276
    
    
    
    37,077
    
    
    
    35,587Total
    
    $
    107,009
    
    
    $
    119,004
    
    
    $
    418,456
    
    
    $
    448,739
  For theFor the Quarter Ended
    
    Thirty-nine Weeks EndedMarch 29,
    
    March 30,
    
    March 29,
    
    March 30,Product Type
    
    2007
    
    2006
    
    2007
    
    2006Peanuts
    
    
    21.1
    %
    
    
    21.4
    %
    
    
    18.9
    %
    
    
    19.6
    %Pecans
    
    
    17.5
    
    
    
    17.0
    
    
    
    23.8
    
    
    
    23.6Cashews & Mixed Nuts
    
    
    21.3
    
    
    
    22.4
    
    
    
    21.1
    
    
    
    21.8Walnuts
    
    
    13.7
    
    
    
    11.5
    
    
    
    13.8
    
    
    
    11.6Almonds
    
    
    16.8
    
    
    
    18.7
    
    
    
    13.0
    
    
    
    15.2Other
    
    
    9.6
    
    
    
    9.0
    
    
    
    9.4
    
    
    
    8.2Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 19




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Gross Profit
    Operating Expenses
   Loss from Operations
  Interest Expense
  20




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Rental and Miscellaneous Expense, Net
  Income Taxes
  Net Loss
  LIQUIDITY AND CAPITAL RESOURCES
 General
      Plans To Continue as a Going Concern
  21




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Financing Arrangements
  22




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23




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24




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Capital Expenditures
  Recent Accounting Pronouncements
     FORWARD LOOKING STATEMENTS
  25




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
    26




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Item 4. Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  (1)
    
    The Company did not maintain effective controls to ensure the completeness and
accuracy of information communicated within the organization on a timely basis.
Specifically, there was inadequate sharing of information impacting the financial
statements between the accounting, sales, and operating departments for consideration
by the appropriate accounting personnel in the Companys financial forecast. This
control deficiency resulted in the restatement of the 2006 consolidated financial
statements, affecting the classification of long-term debt, valuation allowance
associated with state tax net operating loss carryforwards and disclosures relating to
the Companys ability to continue as a going concern.(2)
    
    The Company did not maintain effective controls over the completeness and
accuracy of the periodic goodwill impairment assessment. Specifically, effective
controls were not maintained to ensure that a complete and accurate periodic impairment
analysis was prepared, reviewed, and approved in order to identify and record
impairments, as required under generally accepted accounting principles. This control
deficiency resulted in the restatement of the Companys 2006 consolidated financial
statements, affecting goodwill, goodwill impairment loss and disclosures.(3)
    
    The Company did not maintain effective controls to ensure the accuracy of
accounting for lease transactions. Specifically, effective controls were not maintained
to ensure that an accurate analysis was prepared, reviewed and approved in order to
properly evaluate the accounting for certain sale-leaseback transactions, as required
under generally accepted accounting principles, affecting plant, property and
equipment, current and long-term liabilities, gains relating to real estate sales,
lease expense, interest expense and sale-leaseback transaction disclosures.(4)
    
    The Company did not 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. This control deficiency
contributed to the material weaknesses discussed in items 1, 2 and 3 above and the
restatement of the Companys 2006 consolidated financial statements.These control deficiencies could result in a misstatement of the aforementioned account
balances and disclosures that would result in a material misstatement of the annual or
interim consolidated financial statements that would not be prevented or detected.
Accordingly, management has determined that each of these control deficiencies
constitutes a material weakness at March 29, 2007.
  Remediation Plan for Material Weaknesses
 
    
    The Company did not maintain effective controls to ensure the completeness and accuracy of
information communicated within the organization on a timely basis. To remediate this matter,
the Company has:
 27




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##### Table of Contents



(1)
    
    Conducted month end surveys and meetings of significant functional areas such
as operations, purchasing, accounts payable, sales, marketing and payroll in order to
ensure that all relevant information is communicated to the accounting department in a
complete and timely manner and considered in the financial statement closing process.(2)
    
    Implemented a process to ensure that information gathered in the financial
statement closing process that requires further action or consideration is tracked and
resolved on a timely basis.(3)
    
    Implemented a revised lease assessment process to ensure proper lease
accounting determinations are made on an interim and annual basis.(4)
    
    Performed monthly cutoffs of all transactional activity on a company-wide basis
to the same extent that it performs cutoffs at the end of quarters to improve the
accuracy of monthly interim periodic financial information. This effort focused
primarily on inventory and related reserves and accounts.
 
    
    To further remediate this matter, the Company plans to:
 (1)
    
    Implement new forecasting methods, considering the survey and monthly close
information on a more frequent basis, with the objective of improving the accuracy and
usefulness of such information.(2)
    
    Direct the internal audit department to focus on the process changes and on
effective operation of the newly implemented information and communication processes
discussed above.
 
    
    The Company did not 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. To remediate this matter, the Company has:
 (1)
    
    Hired an additional senior level accounting professional in the third quarter
of fiscal 2007, with public accounting and public company experience, to enhance the
technical accounting resources of the department.(2)
    
    Hired three experienced degreed accountants in the third quarter of fiscal 2007
to improve the timeliness of periodic closings to allow more senior accounting
executives to perform higher level review duties and to improve internal reporting.(3)
    
    Engaged a consultant to review its monthly closing process and control
procedures during the third quarter of fiscal 2007 to further improve the timeliness
and accuracy of both the interim and quarterly closing processes. This effort will
also focus on improving the timing related to preparation of SEC filings.
   28




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  Limitations on the Effectiveness of Controls
  
 PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 6. Exhibits
  29




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SIGNATURE
  JOHN B. SANFILIPPO & SON, INCBy:
    /s/     Michael J. ValentineMichael J. ValentineChief Financial Officer and Group President 30




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    
    Restated Certificate of Incorporation of Registrant(13)3.2
    
    
    Bylaws of Registrant(1)4.1
    
    
    Specimen Common Stock Certificate(3)4.2
    
    
    Specimen Class A Common Stock Certificate(3)4.3
    
    
    Limited Waiver and Second Amendment to Note Purchase Agreement (the Note Agreement) in the amount of $65
million by the Company with The Prudential Insurance Company of America, Pruco Life Insurance Company,
American Skandia Life Assurance Corporation, Prudential Retirement Ceded Business Trust, ING Life Insurance
and Annuity Company, Farmers New World Life Insurance Company, Physicians Mutual Insurance Company,
Great-West Life & Annuity Insurance Company, The Great-West Life Assurance Company, United of Omaha Life
Insurance Company and Jefferson Pilot Financial Insurance Company (collectively the Noteholders) dated as
of July 25, 2006(19)4.4
    
    
    Note in the principal amount of $7,749,166.67 executed by the Company in favor of Prudential Insurance
Company of America, dated June 1, 2006(19)4.5
    
    
    Note in the principal amount of $1,945,555.56 executed by the Company in favor of Pruco Life Insurance
Company, dated June 1, 2006(19)4.6
    
    
    Note in the principal amount of $7,980,555.55 executed by the Company in favor of ING Life Insurance and
Annuity Company, dated June 1, 2006(19)4.7
    
    
    Note in the principal amount of $1,261,777.78 executed by the Company in favor of American Skandia Life
Insurance Corporation, dated June 1, 2006(19)4.8
    
    
    Note in the principal amount of $3,210,166.67 executed by the Company in favor of Prudential Retirement
Insurance and Annuity Company, dated June 1, 2006(19)4.9
    
    
    Note in the principal amount of $3,919,444.44 executed by the Company in favor of Farmers New World Life
Insurance Company, dated June 1, 2006(19)4.10
    
    
    Note in the principal amount of $2,266,666.79 executed by the Company in favor of How & Co., dated June 1,
2006(19)4.11
    
    
    Note in the principal amount of $9,444,444.44 executed by the Company in favor of Great-West Life & Annuity
Insurance Company, dated June 1, 2006(19)4.12
    
    
    Note in the principal amount of $9,444,444.44 executed by the Company in favor of Mac & Co., dated June 1,
2006(19)4.13
    
    
    Note in the principal amount of $4,722,222.22 executed by the Company in favor of Jefferson Pilot Financial
Insurance Company, dated June 1, 2006(19)4.14
    
    
    Note in the principal amount of $9,444,444.44 executed by the Company in favor of United of Omaha Life
Insurance Company, dated June 1, 2006(19)5-9
    
    
    Not applicable10.1
    
    
    Certain documents relating to $8.0 million Decatur County-Bainbridge Industrial Development Authority
Industrial Development Revenue Bonds (John B. Sanfilippo & Son, Inc. Project) Series 1987 dated as of June 1,
1987(1)10.2
    
    
    Tax Indemnification Agreement between Registrant and certain Stockholders of Registrant prior to its initial
public offering(2)10.3
    
    
    Indemnification Agreement between Registrant and certain Stockholders of Registrant prior to its initial
public offering(2)10.4
    
    
    The Registrants 1995 Equity Incentive Plan(4)
 31




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##### Table of Contents



ExhibitNumber
    
    Description10.5
    
    
    The Registrants 1998 Equity Incentive Plan(5)10.6
    
    
    First Amendment to the Registrants 1998 Equity Incentive Plan(6)10.7
    
    
    Amended and Restated John B. Sanfilippo & Son, Inc. Split-Dollar Insurance Agreement Number One among John E.
Sanfilippo, as trustee of the Jasper and Marian Sanfilippo Irrevocable Trust, dated September 23, 1990,
Jasper B. Sanfilippo, Marian R. Sanfilippo and Registrant, dated December 31, 2003(7)10.8
    
    
    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
Registrant, dated December 31, 2003(7)10.9
    
    
    Amendment, dated February 12, 2004, to Amended and Restated John B. Sanfilippo & Son, Inc. Split-Dollar
Insurance Agreement Number One among John E. Sanfilippo, as trustee of the Jasper and Marian Sanfilippo
Irrevocable Trust, dated September 23, 1990, Jasper B. Sanfilippo, Marian R. Sanfilippo and Registrant, dated
December 31, 2003(8)10.10
    
    
    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 Registrant, dated December 31, 2003(8)10.11
    
    
    Development Agreement dated as of May 26, 2004, by and between the City of Elgin, an Illinois municipal
corporation, the Registrant, Arthur/Busse Limited Partnership, an Illinois limited partnership, and 300 East
Touhy Avenue Limited Partnership, an Illinois limited partnership(9)10.12
    
    
    Agreement For Sale of Real Property, dated as of June 18, 2004, by and between the State of Illinois, acting
by and through its Department of Central Management Services, and the City of Elgin(9)10.13
    
    
    Agreement for Purchase and Sale between Matsushita Electric Corporation of America and the Company, dated
December 2, 2004(10)10.14
    
    
    First Amendment to Purchase and Sale Agreement dated March 2, 2005 by and between Panasonic Corporation of
North America (Panasonic), f/k/a Matsushita Electric Corporation, and the Company(11)10.15
    
    
    Office Lease dated April 15, 2005 between the Company, as landlord, and Panasonic, as tenant(12)10.16
    
    
    Warehouse Lease dated April 15, 2005 between the Company, as landlord, and Panasonic, as tenant(12)10.17
    
    
    Construction contract dated August 18, 2005 between the Company and McShane Construction Corporation, as
general contractor(14)10.18
    
    
    The Registrants Supplemental Retirement Plan(14)10.19
    
    
    Form of Option Grant Agreement under 1998 Equity Incentive Plan(14)10.20
    
    
    Termination Agreement dated as of January 11, 2006, by and between the City of Elgin, an Illinois municipal
corporation, the Registrant, Arthur/Busse Limited Partnership, an Illinois limited partnership, and 300 East
Touhy Avenue Limited Partnership, an Illinois limited partnership(15)10.21
    
    
    Assignment and Assumption Agreement dated March 28, 2006 by and between JBSS Properties LLC and the City of
Elgin, Illinois(16)10.22
    
    
    Agreement of Purchase and Sale between the Company and Prologis(17)10.23
    
    
    Agreement for Purchase of Real Estate and Related Property between the Company and Arthur/Busse Limited
Partnership(18)10.24
    
    
    Lease Agreement between the Company, as Tenant, and Palmtree Acquisition Corporation, as Landlord for
property at 3001 Malmo Drive, Arlington Heights, Illinois(18)10.25
    
    
    Lease Agreement between the Company, as Tenant, and Palmtree Acquisition Corporation, as Landlord for
property at 2299 Busse Road, Elk Grove Village, Illinois(18)10.26
    
    
    Lease Agreement between the Company, as Tenant, and Palmtree Acquisition Corporation, as Landlord for
property at 1851 Arthur Avenue, Elk Grove Village, Illinois(18)
 32




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##### Table of Contents



ExhibitNumber
    
    Description10.27
    
    
    Amended and Restated Agreement by and among the Company, U.S. Bank National Association (USB), LaSalle Bank
National Association (LSB) and ING Capital LLC (ING) (collectively, the Lenders), dated July 25,
2006(19)10.28
    
    
    Line of Credit Note in the principal amount of $45.0 million executed by the Company in favor of USB, dated
July 25, 2006(19)10.29
    
    
    Line of Credit Note in the principal amount of $35.0 million executed by the Company in favor of LSB, dated
July 25, 2006(19)10.30
    
    
    Line of Credit Note in the principal amount of $20.0 million executed by the Company in favor of ING, dated
July 25, 2006(19)10.31
    
    
    Security Agreement by and between the Company and USB, in its capacity as Agent for the Lenders and
Noteholders, dated July 25, 2006(19)10.32
    
    
    Mortgage made by the Company related to its Elgin, Illinois property to USB, in its capacity as Agent for the
Lenders and Noteholders, dated July 25, 2006(19)10.33
    
    
    Deed of Trust made by the Company related to its Gustine, California property for the benefit of USB, in its
capacity as Agent for the Lenders and Noteholders, dated July 25, 2006(19)10.34
    
    
    Trademark License Agreement by and between the Company and USB, in its capacity as Agent for the Lenders and
Noteholders, dated July 25, 2006(19)10.35
    
    
    Agreement for Purchase of Real Estate and Related Property by and among the Company, as Seller, and
Arthur/Busse Limited Partnership and 300 East Touhy Limited Partnership, as Purchasers(20)10.36
    
    
    Industrial Building Lease by and between the Company, as Tenant, and Arthur/Busse Limited Partnership and 300
East Touhy Limited Partnership, as Landlord, dated September 20, 2006(20)11-30
    
    
    Not applicable31.1
    
    
    Certification of Jeffrey T. Sanfilippo pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended,
filed herewith31.2
    
    
    Certification of Michael J. Valentine pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended,
filed herewith32.1
    
    
    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, filed herewith32.2
    
    
    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, filed herewith33-100
    
    
    Not applicable
 
 (1)
    
    Incorporated by reference to the Registrants Registration Statement on Form S-1,
Registration No. 33-43353, as filed with the Commission on October 15, 1991 (Commission File
No. 0-19681).(2)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K for the fiscal year
ended December 31, 1991 (Commission File No. 0-19681), as amended by the certificate of
amendment filed as an appendix to the Registrants 2004 Proxy Statement filed on September 8,
2004.(3)
    
    Incorporated by reference to the Registrants Registration Statement on Form S-1 (Amendment
No. 3), Registration No. 33-43353, as filed with the Commission on November 25, 1991
(Commission File No. 0-19681).(4)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q for the third
quarter ended March 26, 1998 (Commission File No. 0-19681). 33




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##### Table of Contents



(5)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q for the second
quarter ended December 28, 2000 (Commission File No. 0-19681).(6)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K for the fiscal year
ended June 26, 2003 (Commission File No. 0-19681).(7)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q for the second
quarter ended December 25, 2003 (Commission File No. 0-19681).(8)
    
    Incorporated by reference to the Registrants Registration Statement on Form S-3 (Amendment
No. 2), Registration No. 333-112221, as filed with the Commission on March 10, 2004.(9)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K for the fiscal year
ended June 24, 2004 (Commission File No. 0-19681).(10)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K dated December 2,
2004 (Commission File No. 0-19681).(11)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K dated March 2, 2005
(Commission File No. 0-19681).(12)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K dated April 15, 2005
(Commission File No. 0-19681).(13)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q for the third
quarter ended March 24, 2005 (Commission File No. 0-19681).(14)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K for the fiscal year
ended June 30, 2005 (Commission File No. 0-19681).(15)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q for the second
quarter ended December 29, 2005 (Commission File No. 0-19681).(16)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K dated March 28, 2006
(Commission File No. 0-19681).(17)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K dated May 11, 2006
(Commission File No. 0-19681).(18)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K dated July 14, 2006
(Commission File No. 0-19681).(19)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K dated July 27, 2006
(Commission File No. 0-19681).(20)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K dated September 20,
2006 (Commission File No. 0-19681). 34