John B. Sanfilippo & Son, Inc.: Including Restructuring Costs, Net Income for the Current Second Quarter Increased by 159% over Net Income for the Second Quarter of Fiscal 2007

Business Wire, Feb 11, 2008

ELGIN, Ill. -- Overview:

* Including restructuring costs, net income improved by 159.0%

* Gross profit improved by 20.7%

* Volume declined by 6.7%

* Inventories declined by 11.5%

* Refinancing has been completed

John B. Sanfilippo & Son, Inc. (NASDAQ: JBSS) today announced operating results for its fiscal 2008 second quarter. Including restructuring costs of $1.4 million, net income for the current quarter was $3.5 million, or $0.33 per share diluted, compared to net income of approximately $1.4 million, or $0.13 per share diluted, for the second quarter of fiscal 2007. The income tax rate in the second quarter was 14%, which reflects the tax benefit of the portion of the first quarter loss that previously could not be recorded as a tax benefit. Including restructuring costs of $1.4 million, the current year to date net income was $0.1 million, or $0.01 per share diluted, compared to a net loss of $3.3 million, or $0.31 per share diluted, for the first two quarters of fiscal 2007.

The Company has recently implemented several initiatives aimed at increasing the Company's long-term profitability. One such initiative resulted in the Company discontinuing its store door delivery program as a result of the Company's determination that it is no longer profitable to ship products to customers. The Company has contacted its larger grocery customers who were receiving products through this mode of distribution and requested that products be shipped directly to their distribution centers. Based upon positive customer response, the Company believes that many of these customers will accept this change in distribution, and consequently, the Company anticipates that approximately 50% of the $2.5 million in sales made in calendar 2007 through its store door distribution system will migrate to other distribution channels. However, there can be no assurances in this regard. Additionally, the Company closed two of the three temporarily leased Chicago area facilities in the second quarter with the remaining facility to close by the end of the current fiscal year. In connection with another initiative, the Company identified approximately 1,200 items that will be eliminated in the third quarter pursuant to its item rationalization initiative. The eliminated items represent approximately 30% of the items that the Company currently sells and approximately $20 million in annual sales. As a result of these changes, the Company recorded a restructuring charge before income taxes in the amount of $1.4 million in the current quarter, which is comprised primarily of the following items:

* $1.2 million for the withdrawal liability related to the multiemployer pension plan for its unionized store door drivers; and

* $0.2 million for lease termination costs related to the closed Chicago area facility.

The Company anticipates that the balance of the restructuring charges that will be reported in the third quarter of this fiscal year should amount to approximately $0.6 million before income taxes. The balance of the restructuring charges is comprised mainly of severance and lease termination costs. All significant restructuring costs are expected to be paid in the third quarter with the exception of the multiemployer pension obligation, which is subject to a final determination by the union and may not be settled until fiscal 2009.

Net sales decreased slightly from approximately $177.7 million for the second quarter of fiscal 2007 to $177.0 million for the second quarter of fiscal 2008. Net sales increased in the consumer, food service and export distribution channels and decreased in the industrial and contract packaging distribution channels. Total unit volume sold, which is measured in pounds shipped, decreased by 6.7%. The unit volume decrease was driven by declines in the consumer, industrial and contract packaging distribution channels. Unit volume declined in sales of peanuts, almonds, walnuts and pecans in the quarterly comparison. For the first two quarters of fiscal 2008, net sales decreased to $309.8 million from $311.4 million for the first two quarters of fiscal 2007. The decline in net sales for the year to date comparison was attributable primarily to a sizeable decline in the sales of almonds in the industrial and export channels. The decline in almond sales in these channels resulted from the discontinuance of the Company's almond handling operation in the third quarter of fiscal 2007. Total unit volume sold fell by 6.5% in the year to date comparison due to unit volume declines in the sales of peanuts and pecans in addition to the volume decline in almonds.

The gross profit margin, as a percentage of net sales, increased from 10.9% for the second quarter of fiscal 2007 to 13.2% for the current quarter. The considerable improvement in gross profit margin occurred despite the negative impact of the following items in the second quarter of fiscal 2008 that were related to the move of the Chicago area facilities and the item rationalization initiative: