John B. Sanfilippo & Son Inc. (JBSS, Financial) filed Quarterly Report for the period ended 2009-03-26.
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. John B. Sanfilippo & Son Inc. has a market cap of $55.4 million; its shares were traded at around $5.21 with and P/S ratio of 0.1.
Selling and administrative expenses for the third quarter of fiscal 2009 increased to 12.2% of net sales from 11.6% of net sales for the third quarter of fiscal 2008. Selling expenses for the third quarter of fiscal 2009 were $7.7 million, a decrease of $0.1 million, or 1.8%, from the third quarter of fiscal 2008. The slight decrease is primarily due to a $0.6 million increase in advertising expenses offset by a $0.6 million decrease in freight expense. Administrative expenses for the third quarter of fiscal 2009 were $6.2 million, an increase of $1.7 million, or 36.9%, from the third quarter of fiscal 2008. The increase is primarily due to $1.3 million of expenses related to the pistachio product recall. Selling and administrative expenses for the first thirty-nine weeks of fiscal 2009 increased to 9.8% of net sales from 9.7% of net sales for the first thirty-nine weeks of fiscal 2008. Selling expenses for the first thirty-nine weeks of fiscal 2009 were $26.1 million, a decrease of $0.3 million, or 1.0%, from the first thirty-nine weeks of fiscal 2008. The decrease is primarily due to cost savings from the restructuring initiatives implemented at the end of the second quarter of fiscal 2008 and a $0.7 million decrease in freight expense partially offset by a $1.4 million increase in advertising expenses during the first thirty-nine weeks of fiscal 2008. Administrative expenses for the first thirty-nine weeks of fiscal 2009 were $15.9 million, an increase of $1.7 million, or 12.1%, from the first thirty-nine weeks of fiscal 2008. The increase is primarily due to $1.3 million of expenses related to the pistachio product recall. Operating expenses for the third quarter of fiscal 2008 included $0.4 million of restructuring expenses primarily related to severance expenses. Operating expenses for the first thirty-nine weeks of fiscal 2008 included $1.8 million of restructuring expenses, primarily related to the estimated cost of withdrawal from a multiemployer pension plan. Operating expenses were reduced by $0.3 million during the first quarter of fiscal 2009 for the difference between our previously estimated cost of withdrawal from the multiemployer pension plan and the actual cost determined by the multiemployer pension plan.
Due to the factors discussed above, income from operations decreased to a loss of $0.7 million, or (0.6)% of net sales, for the third quarter of fiscal 2009 from income of $0.1 million, or 0.1% of net sales, for the third quarter of fiscal 2008. Also due to the factors discussed above, income from operations increased to $10.3 million, or 2.4% of net sales, for the first thirty-nine weeks of fiscal 2009 from $5.7 million, or 1.4% of net sales, for the first thirty-nine weeks of fiscal 2008.
Income tax benefit was $0.3 million, or 10.3% of loss before income taxes, for the third quarter of fiscal 2009 compared to $0.6 million, or 6.5% of loss before income taxes, for the third quarter of fiscal 2008. Income tax expense was $0.4 million, or 11.7% of income before income taxes, for the first thirty-nine weeks of fiscal 2009 compared to income tax benefit of $0.5 million, or 5.4% of the loss before income taxes, for the first thirty-nine weeks of fiscal 2008. At the beginning of fiscal year 2009, we had $2.4 million of state and $3.3 million of federal net operating loss (NOL) carryforwards for income tax purposes. The state NOL carryforward relates to losses generated during the years ended June 26, 2008, June 28, 2007 and June 29, 2006, which generally have a carryforward period of approximately 12 years before expiration. The federal NOL carryforward relates to losses generated during the year ended June 26, 2008, which generally have a carryforward period of 20 years before expiration. In our effective rate for the quarter and year-to-date period, based on our currently anticipated annual operating results we have estimated utilizing a portion of the NOL and the respective valuation allowanceduring fiscal 2009, which was the primary factor in our effective tax rate varying from the federal statutory rate. Due to our cumulative losses for the last three fiscal years, we believe it is currently more likely than not that we will be unable to utilize primarily state NOL carryforwards in periods subsequent to fiscal year 2009. Consequently, we have continued to provide a valuation allowance of $2.6 million primarily related to state jurisdiction NOL carryforwards as of March 26, 2009. We will consider the need for, and the amount of the valuation allowance in the future as actual operating results are achieved.
Net loss was $2.5 million, or $0.23 per common share (basic and diluted), for the third quarter of fiscal 2009, compared to $8.8 million, or $0.82 per common share (basic and diluted), for the third quarter of fiscal 2008. Net income was $3.0 million, or $0.28 per common share (basic and diluted), for the first thirty-nine weeks of fiscal 2009, compared to a net loss of $8.6 million, or $0.81 per common share (basic and diluted), for the first thirty-nine weeks of fiscal 2008.
Net accounts receivable were $36.6 million at March 26, 2009, an increase of $2.1 million, or 6.2%, from the balance at June 26, 2008, and an increase of $1.9 million, or 5.4%, from the balance at March 27, 2008. The increase from June 26, 2008 to March 26, 2009 is due to higher monthly sales in March 2009 than in June 2008. The increase from March 27, 2008 to March 26, 2009 is primarily due to higher sales in March 2009 than March 2008. Accounts receivable allowances were $2.5 million at March 26, 2009, an increase of $0.3 million from the amount at June 26, 2008 and a decrease of $0.6 million from the amount at March 27, 2008. The primary reason for the increase in accounts receivable allowances from June 26, 2008 to March 26, 2009 is due to the seasonality of the business. The primary reason for the decrease from March 27, 2008 to March 26, 2009 is due to our efforts to accelerate our process to resolve customer deductions.
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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. John B. Sanfilippo & Son Inc. has a market cap of $55.4 million; its shares were traded at around $5.21 with and P/S ratio of 0.1.
Highlight of Business Operations:
We anticipate that we will reimburse our customers at their retail price for any recalled products in their possession at the recall date and for any recalled products returned by end consumers. Additionally, we are responsible for any costs associated with the retrieval or destruction of the recalled products and for our customers lost profits associated with the affected products. We currently estimate these total costs to be between $3.2 million and $4.4 million. In accordance with generally accepted accounting principles, the minimum amount was recorded because no amount in this range is a better estimate than any other amount in this range. Additionally, our estimated range could change as further information from our customers regarding their claims is determined in the future. This range does not include other aspects and consequences of the recall, including but not limited to (i) any future claims that may arise as a result of consumers ingesting the products that were recalled, or (ii) our Companys disposal costs of inventory not yet shipped to customers. We recorded a recall liability of $3.2 million as of March 26, 2009, $1.9 million of which was recorded as a reduction in net sales and $1.3 million of which was recorded as administrative expenses. We also were required to reduce our inventories and increase cost of sales by $0.3 million for the recalled inventory that was in our possession at the recall date. Therefore, the total amount recorded as a result of the pistachio recall was $3.5 million. Including the effect of the recall on our incentive compensation plan, the recall had a negative $2.4 million effect on our income from operations for the third quarter of fiscal 2009.Selling and administrative expenses for the third quarter of fiscal 2009 increased to 12.2% of net sales from 11.6% of net sales for the third quarter of fiscal 2008. Selling expenses for the third quarter of fiscal 2009 were $7.7 million, a decrease of $0.1 million, or 1.8%, from the third quarter of fiscal 2008. The slight decrease is primarily due to a $0.6 million increase in advertising expenses offset by a $0.6 million decrease in freight expense. Administrative expenses for the third quarter of fiscal 2009 were $6.2 million, an increase of $1.7 million, or 36.9%, from the third quarter of fiscal 2008. The increase is primarily due to $1.3 million of expenses related to the pistachio product recall. Selling and administrative expenses for the first thirty-nine weeks of fiscal 2009 increased to 9.8% of net sales from 9.7% of net sales for the first thirty-nine weeks of fiscal 2008. Selling expenses for the first thirty-nine weeks of fiscal 2009 were $26.1 million, a decrease of $0.3 million, or 1.0%, from the first thirty-nine weeks of fiscal 2008. The decrease is primarily due to cost savings from the restructuring initiatives implemented at the end of the second quarter of fiscal 2008 and a $0.7 million decrease in freight expense partially offset by a $1.4 million increase in advertising expenses during the first thirty-nine weeks of fiscal 2008. Administrative expenses for the first thirty-nine weeks of fiscal 2009 were $15.9 million, an increase of $1.7 million, or 12.1%, from the first thirty-nine weeks of fiscal 2008. The increase is primarily due to $1.3 million of expenses related to the pistachio product recall. Operating expenses for the third quarter of fiscal 2008 included $0.4 million of restructuring expenses primarily related to severance expenses. Operating expenses for the first thirty-nine weeks of fiscal 2008 included $1.8 million of restructuring expenses, primarily related to the estimated cost of withdrawal from a multiemployer pension plan. Operating expenses were reduced by $0.3 million during the first quarter of fiscal 2009 for the difference between our previously estimated cost of withdrawal from the multiemployer pension plan and the actual cost determined by the multiemployer pension plan.
Due to the factors discussed above, income from operations decreased to a loss of $0.7 million, or (0.6)% of net sales, for the third quarter of fiscal 2009 from income of $0.1 million, or 0.1% of net sales, for the third quarter of fiscal 2008. Also due to the factors discussed above, income from operations increased to $10.3 million, or 2.4% of net sales, for the first thirty-nine weeks of fiscal 2009 from $5.7 million, or 1.4% of net sales, for the first thirty-nine weeks of fiscal 2008.
Income tax benefit was $0.3 million, or 10.3% of loss before income taxes, for the third quarter of fiscal 2009 compared to $0.6 million, or 6.5% of loss before income taxes, for the third quarter of fiscal 2008. Income tax expense was $0.4 million, or 11.7% of income before income taxes, for the first thirty-nine weeks of fiscal 2009 compared to income tax benefit of $0.5 million, or 5.4% of the loss before income taxes, for the first thirty-nine weeks of fiscal 2008. At the beginning of fiscal year 2009, we had $2.4 million of state and $3.3 million of federal net operating loss (NOL) carryforwards for income tax purposes. The state NOL carryforward relates to losses generated during the years ended June 26, 2008, June 28, 2007 and June 29, 2006, which generally have a carryforward period of approximately 12 years before expiration. The federal NOL carryforward relates to losses generated during the year ended June 26, 2008, which generally have a carryforward period of 20 years before expiration. In our effective rate for the quarter and year-to-date period, based on our currently anticipated annual operating results we have estimated utilizing a portion of the NOL and the respective valuation allowanceduring fiscal 2009, which was the primary factor in our effective tax rate varying from the federal statutory rate. Due to our cumulative losses for the last three fiscal years, we believe it is currently more likely than not that we will be unable to utilize primarily state NOL carryforwards in periods subsequent to fiscal year 2009. Consequently, we have continued to provide a valuation allowance of $2.6 million primarily related to state jurisdiction NOL carryforwards as of March 26, 2009. We will consider the need for, and the amount of the valuation allowance in the future as actual operating results are achieved.
Net loss was $2.5 million, or $0.23 per common share (basic and diluted), for the third quarter of fiscal 2009, compared to $8.8 million, or $0.82 per common share (basic and diluted), for the third quarter of fiscal 2008. Net income was $3.0 million, or $0.28 per common share (basic and diluted), for the first thirty-nine weeks of fiscal 2009, compared to a net loss of $8.6 million, or $0.81 per common share (basic and diluted), for the first thirty-nine weeks of fiscal 2008.
Net accounts receivable were $36.6 million at March 26, 2009, an increase of $2.1 million, or 6.2%, from the balance at June 26, 2008, and an increase of $1.9 million, or 5.4%, from the balance at March 27, 2008. The increase from June 26, 2008 to March 26, 2009 is due to higher monthly sales in March 2009 than in June 2008. The increase from March 27, 2008 to March 26, 2009 is primarily due to higher sales in March 2009 than March 2008. Accounts receivable allowances were $2.5 million at March 26, 2009, an increase of $0.3 million from the amount at June 26, 2008 and a decrease of $0.6 million from the amount at March 27, 2008. The primary reason for the increase in accounts receivable allowances from June 26, 2008 to March 26, 2009 is due to the seasonality of the business. The primary reason for the decrease from March 27, 2008 to March 26, 2009 is due to our efforts to accelerate our process to resolve customer deductions.
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