What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-08-18 compared with 2020-08-19 · 155 added, 281 removed, 811 unchanged (35% of the section changed)

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and its subsidiaries (the “Company”) as of June 24, 2021 and June 25, 2020, and the related consolidated statements of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended June 24, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of June 25, 2020, based on criteria established in Internal Control - Integrated Framework

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited the Company’s internal control over financial reporting as of June 24, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 24, 2021 and June 25, 2020, and the results of its operations and its cash flows for each of the three years in the period ended June 24, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 25, 2020, based on criteria established in Internal Control - Integrated Framework

(2013) issued by the COSO.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 24, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

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Prepaid expenses and other current assets

Assets held for sale

TOTAL CURRENT ASSETS

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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

Class A Common Stock, convertible to Common Stock on a per share basis, cumulative voting rights of ten votes per share, $ .01

shares authorized, 2,597,426

shares issued and outstanding

Common Stock, non-cumulative

voting rights of one vote per share, $ .01 par value;

17,000,000 shares authorized, 8,939,890 and 8,909,406 shares issued, respectively

17,000,000 shares authorized, 8,988,812

and 8,939,890

shares issued, respectively

Capital in excess of par value

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Income tax expense

Other comprehensive (loss) income, net of tax:

Other comprehensive loss, net of tax:

Amortization of prior service cost and actuarial loss included in net periodic pension cost

Net actuarial (loss) gain arising during the period

Other comprehensive (loss) income, net of tax

Net actuarial loss arising during the period

Other comprehensive loss, net of tax

Comprehensive income

Net income per common share

Net income per common share — basic

Net income per common share — diluted

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Pension liability amortization, net of income tax expense of $ 274

Pension liability adjustment, net of income tax expense of $ 127

Pension liability adjustment, net of income tax benefit of $ 675

Equity award exercises, net of shares withheld for employee taxes

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Equity award exercises, net of shares withheld for employee taxes

Impact of adopting ASU 2018-02

Stock-based compensation expense

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Equity award exercises, net of shares withheld for employee taxes

Impact of adopting ASU 2018-02

Stock-based compensation expense

Balance, June 24, 2021

Refer to Recent Accounting Pronouncements in Note 1 — “Significant Accounting Policies” for additional information.

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

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Depreciation and amortization

(Gain) loss on disposition of properties, net

Gain on disposition of properties, net

Deferred income tax expense (benefit)

Stock-based compensation expense

Change in assets and liabilities, net of Acquisition:

Change in assets and liabilities:

Accounts receivable, net

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Purchases of property, plant and equipment

Acquisition of Squirrel Brand L.P.

Proceeds from insurance recoveries

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CASH FLOWS FROM FINANCING ACTIVITIES:

Net short-term borrowings (repayments)

Net short-term (repayments) borrowings

Debt issue costs

Principal payments on long-term debt

Increase (decrease) in bank overdraft

(Decrease) increase in bank overdraft

Dividends paid

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Supplemental disclosure of non-cash

Acquisition of Squirrel Brand L.P.

through note payable, see Note 7

assets recognized at ASU No.

transition, see Note 3

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

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The accompanying consolidated financial statements and related footnotes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

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,

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 our Fisher, Orchard Valley Harvest,

Squirrel Brand, Southern Style Nuts

and Sunshine Country

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 primary distribution channels to significant buyers of nuts, including food retailers in the consumer channel, commercial ingredient users and contract packaging customers.

brand names and under a variety of private brands.

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, snack and trail mixes, snack bites, sunflower kernels, dried fruit, corn snacks, chickpea snacks, sesame sticks and other sesame snack products under our brand names and under private brands.

Our products are sold through three primary distribution channels, including food retailers in the consumer channel, commercial ingredient users and contract packaging customers.

Management Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates include reserves for customer deductions, the quantity of bulk inventories, the evaluation of recoverability of long-lived assets,

the assumption

used in estimating the annual discount rate utilized in determining the

retirement plan liability .

Actual results could differ from those estimates , particularly due to the uncertain impact of COVID-19 on the Company and its customers

Significant estimates include reserves for customer deductions, the quantity of bulk inventories, the evaluation of recoverability of long-lived assets, and the assumption used in estimating the annual discount rate utilized in determining the retirement plan liability.

Actual results could differ from those estimates, particularly due to any further impact of COVID-19

and its variants on the Company and its customers.

Accounts Receivable

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and net realizable value.

The results of our shelling process can also result in changes to inventory costs, such as adjustments made pursuant

to actual versus expected crop yields.

The results of our shelling process can also result in changes to inventory costs, such as adjustments made pursuant to actual versus expected crop yields.

We maintain significant inventories of bulk-stored inshell pecans, peanuts and walnuts.

Quantities of inshell bulk-stored nuts are determined based on our inventory systems and are subject to quarterly physical verification techniques including observation, weighing and other methods.

The quantities of each crop year bulk-stored nut inventories are generally shelled out over a ten to fifteen-month period, at which time revisions to any estimates ,

which historically averaged less than 1.0 % of inventory purchases,

are also recorded.

The quantities of each crop year bulk-stored nut inventories are generally shelled out over a ten to fifteen-month period, at which time revisions to any estimates, which historically averaged less than 1.0 % of inventory purchases, are also recorded.

We enter into walnut purchase agreements with growers typically in our first fiscal quarter, under which they deliver their walnut crop to us during the fall harvest season (which typically occurs in our first and second fiscal quarters).

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Since the ultimate purchase price to be paid is determined subsequent to receiving the walnut crop, we typically estimate the final purchase price for our first and second quarter interim financial statements based on crop size, quality, current market prices and other factors.

such changes in estimates, which could be significant, are accounted

for in the period of change by adjusting

inventory on hand or cost of goods sold if the inventory has been sold.

Any such changes in estimates, which could be significant, are accounted for in the period of change by adjusting inventory on hand or cost of goods sold if the inventory has been sold.

Changes in estimates may affect the ending inventory balances, as well as gross profit.

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Estimated Useful Lives

10 to 40 years

Machinery and equipment

5 to 10 years

Furniture and leasehold improvements

5 to 10 years

Computers and software

3 to 10 years

No interest costs were capitalized for the last three fiscal years due to the lack of any significant

project requiring such capitalization.

No interest costs were capitalized for the last three fiscal years due to the lack of any significant project requiring such capitalization.

Business Combinations

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Segment Reporting

We operate in a single reporting unit and operating segment that consists of selling various nut and nut related products through three

distribution channels.

We operate in a single

reporting unit and operating segment that consists of selling various nut and nut related products through three distribution channels.

Impairment of Long-Lived Assets

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We did no t record any impairment of long-lived assets for the last three fiscal years.

Goodwill currently represents the excess of the purchase price over the fair value of the net assets from our acquisition

of Squirrel Brand, L.P.

Goodwill currently represents the excess of the purchase price over the fair value of the net assets from our acquisition of Squirrel Brand, L.P.

which closed in November 2017.

Goodwill is not amortized, but is tested annually as of the last day of each fiscal year for impairment, or whenever events or changes in circumstances indicate it is more likely than not that the carrying amount of the reporting unit is greater than its fair value.

Goodwill is no t amortized, but is tested annually as of the last day of each fiscal year for impairment, or whenever events or changes in circumstances indicate it is more likely than not that the carrying amount of the reporting unit is greater than its fair value.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred.

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Under the goodwill qualitative assessment, various events and circumstances that would affect the estimated fair value of our single reporting unit are identified (similar to impairment indicators above).

During fiscal 2020 we elected to perform a qualitative impairment test which showed no indicators of goodwill impairment, despite the market uncertainty surrounding the impact of COVID-19

on the economy.

During fiscal 2021 we elected to perform a qualitative impairment test which showed no indicators of goodwill impairment.

Under the goodwill quantitative impairment test, the evaluation of impairment involves comparing the current fair value of our single reporting unit to its carrying value, including goodwill.

We estimate the fair value using level 3 inputs as defined by the fair value hierarchy.

The inputs used to estimate

fair value include several subjective factors, such as estimates of future cash flows, estimates of our future cost structure, discount rates for our estimated cash flows, required level of working capital, assumed terminal value, and time horizon of cash flow forecasts.

The inputs used to estimate fair value include several subjective factors, such as estimates of future cash flows, estimates of our future cost structure, discount rates for our estimated cash flows, required level of working capital, assumed terminal value, and time horizon of cash flow forecasts.

Our market capitalization is also an estimate of fair value that is considered in our qualitative impairment analysis which is a level 1 input in the fair value hierarchy.

If the carrying value of our single reporting unit exceeds its fair value, we recognize an impairment loss equal to the difference between the carrying value and estimated fair value.

Facility Consolidation Project/Real Estate Transactions

Elgin Rental Property

In April 2005, we acquired property to be used for the Elgin Site.

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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.

For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

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 June 24, 2021 and June 25, 2020 because of the short-term maturities and nature of these balances.

The carrying value of our Credit Facility (as defined in Note 6 — “Revolving Credit Facility” in the Notes to Consolidated Financial Statements below) borrowings approximates fair value at June 25, 2020 because interest rates on this instrument approximate current market rates (Level 2 criteria), the short-term maturity and nature of this balance.

The carrying value of our Credit Facility (as defined in Note 6 — “Revolving Credit Facility” below) borrowings approximates fair value at June 24, 2021 because interest rates on this instrument approximate current market rates (Level 2 criteria), the short-term maturity and nature of this balance.

In addition, there has been no significant change in our inherent credit risk.

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The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for the goods or services.

We sell our products under

some arrangements which include customer contracts that fix the sales price for periods, which typically can be up to one year for some commercial ingredient customers.

We sell our products under some arrangements which include customer contracts that fix the sales price for periods, which typically can be up to one year for some commercial ingredient customers.

We also sell our products through specific programs consisting of promotion allowances, volume and customer rebates and marketing allowances, among others, to consumer and some commercial ingredient users.

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We are subject to concentrations of credit risk, primarily in trade accounts receivable, and we attempt to mitigate this risk through our credit evaluation process, collection terms and through geographical dispersion of sales.

Sales to two customers exceeded 10% of net sales during both

fiscal 2020 and fiscal 2019.

Sales to three customers exceeded 10% of net sales during fiscal 2018.

Sales to two customers exceeded 10 % of net sales during fiscal 2021, fiscal 2020 and fiscal 2019.

In total, sales to these customers represented approximately 48 %, 45 % and 43 % of our net sales in fiscal 2021, fiscal 2020 and fiscal 2019, respectively.

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Marketing and Advertising Costs

Marketing and advertising costs are incurred to promote and support branded products in the consumer

distribution channel.

Marketing and advertising costs, including consumer insight research and related consulting expenses, are incurred to promote and support branded products in the consumer distribution channel.

These costs are generally expensed as incurred, recorded in selling expenses and were as follows for the last three fiscal years:

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

In February 2016, the FASB issued ASU No.

“ 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.

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.

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 2018, the FASB issued ASU No.

“ Leases (Topic 842):

Targeted Improvements

” which provides for another transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize 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 a practical expedient, by class of underlying asset, to not separate non-lease

components from the associated lease component, similar to the expedient provided for lessees.

In July 2018, the FASB also issued ASU No.

“ Codification Improvements to Topic 842, Leases

” which affects narrow aspects of the guidance issued in ASU No.

In December 2018, the FASB issued ASU No.

“ 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

In March 2019, the FASB issued ASU No.

“ Leases (Topic 842) – Codification Improvements

” which clarifies transition disclosure requirements for annual and interim periods after the date of adoption of ASU No.

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.

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 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.

In February 2018, the FASB issued ASU No.

“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.

in the first quarter of fiscal 2020 and reclassified $976 from AOCL to retained earnings.

Refer to Note 1 5

— “Accumulated Other Comprehensive Loss” for additional detail.

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 March 2020, the FASB issued ASU No.

“ Reference Rate Reform (Topic 848)

The amendments in this Update are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationship s

, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

The amendments in this Update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments in this Update are effective upon issuance and can be taken at any point in time (at the beginning of an interim period) through December 31, 2022.

We do not expect this accounting Update to have a material impact on our Consolidated Financial Statements.

In December 2019, the FASB issued ASU No.

“ Income Taxes (Topic 740)

The amendments in this Update simplify the accounting for income taxes by removing certain exceptions, providing updated requirements and specifications in certain areas and by making minor codification improvements.

The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year.

Early adoption is permitted.

This Update is effective for the Company beginning in fiscal 2022.

We do not expect this accounting Update to have a material impact on our Consolidated Financial Statements.

In August 2018, the FASB issued ASU No.

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

This Update will be effective for the Company in fiscal 2021 and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

We do not expect this accounting Update to have a material impact on our Consolidated Financial Statements.

was adopted using the prospective method in the first quarter of fiscal 2021 and did not have a material impact on our Consolidated Financial Statements.

In August 2018, the FASB issued ASU No.

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The amendments in this Update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant.

This Update will be effective for the Company in fiscal 2021 and should be applied on a retrospective basis to all periods presented.

We do not expect this accounting Update to have a material impact on our Consolidated Financial Statements.

was adopted on a retrospective basis to all periods presented in the first quarter of fiscal 2021 and did not have a material impact on our Consolidated Financial Statements.

In January 2017, the FASB issued ASU No.

“Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for 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 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.

was adopted in the first quarter of fiscal 2021 and did not have a material impact on our Consolidated Financial Statements.

In June 2016, the FASB issued ASU No.

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The main objective of this Update is to provide financial statement users with more decision-useful information about the 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.

will be effective for the Company in fiscal

should be applied using a modified-retrospective approach through a cumulative-effect adjustment to retained earnings.

We do not expect this accounting Update to have a significant impact on the Consolidated Financial Statements.

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

In August 2020, the SEC issued Release No.

Modernization of Regulation S-K

Items 101, 103 and 105,

which modernizes the description of business, legal proceedings and risk factor disclosures.

These rules amend certain SEC disclosure requirements to improve disclosure for investors and to simplify compliance for registrants, including new requirements for human capital disclosures and a summary of risk factors, if the page-length requirement for a summary is met.

The Company has adopted the provisions of this new rule beginning with the 2021 Annual Report on Form 10-K.

The adoption only impacted the Company’s disclosures and did not impact the consolidated financial statements.

The following recent accounting pronouncements have not yet been adopted:

In March 2020, the FASB issued ASU No.

“ Reference Rate Reform (Topic 848)

The amendments in this Update are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

The amendments in this Update are effective upon issuance and can be taken at any point in time (at the beginning of an interim period) through December 31, 2022.

We do not expect this accounting Update to have a material impact on our Consolidated Financial Statements.

In December 2019, the FASB issued ASU No.

“ Income Taxes (Topic 740)

The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year.

Early adoption is permitted.

This Update is effective for the Company beginning in fiscal 2022.

We do not expect this accounting Update to have a material impact on our Consolidated Financial Statements.

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.

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.

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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 ultimate cost of these programs is dependent on certain factors such as actual purchase volumes or customer activities and is dependent on significant management judgment when determining estimates.

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.

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Conversely, if the measure of the remaining performance obligations exceeds the measure of the remaining rights, the Company records a contract liability.

The contract asset balance at June 24, 2021 is $ 74 and is recorded in the caption “Prepaid expenses and other current assets” on the Consolidated Balance Sheets.

There was no contract asset balance at June 25, 2020.

The contract asset balances at June 27, 2019 was $ 117 and is recorded in the caption “Prepaid expenses and other current assets” on the Consolidated Balance Sheets.

The Company generally does not have material deferred revenue or contract liability balances arising from transactions with customers.

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Contract Packaging

NOTE 3 — LEASES

On June 28, 2019 we adopted ASU No.

Leases (“Topic 842”)

using the alternative transition method under ASU No.

2016-02, Leases (“Topic 842”) using

the alternative transition method under ASU No.

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.

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.

Refer to Recent Accounting Pronouncements in Note 1 — “Significant Accounting Policies” for additional information.

Upon adoption of the new standard, we recognized operating lease right-of-use

assets and liabilities on our Consolidated Balance Sheet of $ 5,361 and $ 5,320 respectively.

Upon adoption of the new standard, we recognized operating lease right-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

5.8 % were used when determining the present value of future lease payments.

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.

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Our leases have remaining terms of up to 5.2 years.

Topic 842 allows for the election as an accounting policy not to

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 such, leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheet.

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.

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

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assets and liabilities:

June 25, 2020

Affected Line Item in Consolidated Balance Sheet

Affected Line Item in Consolidated

Balance Sheet

Operating lease right-of-use

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The following tables summarize the Company’s total lease costs and other information arising from operating lease transactions:

For the Year Ended

June 24, 2021

June 25, 2020

Operating lease costs (a)

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Variable lease costs consist of sales tax.

Rental expense under operating leases agreements was $ 1,981 and $ 1,988 in fiscal years 2019 and 2018, respectively.

Rental expense under operating leases agreements was $ 1,981 in fiscal year 2019.

Supplemental cash flow and other information related to leases was as follows:

Ended June 25,

For the Year Ended

June 24, 2021

For the Year Ended

June 25, 2020

Operating cash flows information:

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June 24, 2021

June 25, 2020

Weighted Average Remaining Lease Term (in years)

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Present value of operating lease liabilities

June 25, 2020, the Company has additional operating leases totaling approximately $ 89 that have not yet commenced and therefore are not reflected in the Consolidated Balance Sheet and tables above.

These leases will commence in the first quarter of fiscal 2021 with initial lease terms ranging from 3 to 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

June 24, 2021

June 30, 2022

June 29, 2023

June 27, 2024

Lessor Accounting

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basis over the terms of the leases.

There is generally an immaterial amount of variable lease consideration and an immaterial amount of non-lease

There is generally no variable lease consideration and an immaterial amount of non-lease

components such as recurring utility and storage fees.

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June 24, 2021

For the Year Ended

June 25, 2020

Lease income related to lease payments

Gross rental income was $ 1,978 and $ 1,988 in fiscal years 2019 and 2018, respectively.

The future minimum, undiscounted 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.

Gross rental income was $ 1,978 in fiscal year 2019.

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.

Fiscal year ending

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The remainder of the brand name relates to the OVH acquisition, which was fully amortized in fiscal 2015.

Total amortization expense related to intangible assets, which is classified in administrative expense in the Consolidated Statement of Comprehensive

Income, was as follows for the last three fiscal years:

Total amortization expense related to intangible assets, which is classified in administrative expense in the Consolidated Statement of Comprehensive Income, was as follows for the last three fiscal years:

Amortization of intangible assets

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The Credit Facility is secured by substantially all our assets other than machinery and equipment, real property and fixtures.

Enhanced features for the Amended and Restated Credit Agreement include, but are not limited to, the additions and amendments listed below:

The maximum incremental revolver was increased to $ 50,000 .

The purchase-money and capital lease basket was increased to $ 10,000 .

A new basket for unsecured subordinated indebtedness of $ 10,000 and a new basket for additional unsecured indebtedness of $ 20,000 were added.

For permitted acquisitions, a new two-tier alternative test was added.

For any acquisition by the Company, either (a) revolver availability plus unrestricted cash must be equal to or greater than $ 20,000 after giving effect to the acquisition, or (b) revolver availability plus unrestricted cash must be equal to or greater than $ 15,000 and the pro forma fixed charge coverage ratio must be equal to or greater than 1.00:1.00, in each case after giving effect to the acquisition.

The aggregate amount of dividends and distribution permitted in any fiscal year was increased to $ 75,000 , subject to the same existing conditions of no defaults and a minimum excess availability of $ 30,000

, after giving effect to the dividends or distribution

The Company is allowed unlimited investments as long as (a) there are no existing defaults and (b) revolver availability plus unrestricted cash is not less than $ 20,000 after giving effect to the proposed investment.

The definition of fixed charges was amended to increase the threshold exclusion of dividends and distributions to $ 40,000 .

At June 24, 2021, the interest rate for the Credit Facility was at the Base Rate of 3.5 %.

There were no borrowings under LIBOR contracts due to the low borrowing levels against the Credit Facility and projected positive cash flow for July.

At June 25, 2020, the weighted average interest rate for the Credit Facility was 2.40 %.

At June 27, 2019 there were no borrowings on the line of credit.

The terms of the Credit Facility contain covenants that require us to restrict investments, indebtedness, acquisitions and certain sales of assets, cash dividends, 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 $ 25,000 , we will be

required to maintain a specified fixed charge coverage ratio, tested on a monthly basis.

All cash received from customers

is required to

be applied against the Credit Facility.

The Bank Lenders are entitled to require 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

If loan availability under the Borrowing Base Calculation falls below $ 25,000 , we will be required to maintain a specified fixed charge coverage ratio, tested on a monthly basis.

All cash received from customers is required to be applied against the Credit Facility.

with the financial covenant or upon the occurrence of certain other defaults by us under the Credit Facility (including a default under the Mortgage Facility).

As of June 24, 2021, we were in compliance with the financial covenant under the Credit Facility and we currently expect to be in compliance with the financial covenant in the Credit Facility for the next twelve months.

At June 25, 2020, we had $

87,131 of available credit under the Credit Facility which reflects borrowings of $

27,008 and reduced availability as a result of $

3,361 in outstanding letters of credit.

We would still be in compliance

with all restrictive covenants under the Credit Facility if this entire amount were borrowed.

At June 24, 2021, we had $ 104,561 of available credit under the Credit Facility which reflects borrowings of $ 8,653 and reduced availability as a result of $ 4,286 in outstanding letters of credit.

We would still be in compliance with all restrictive covenants under the Credit Facility if this entire amount were borrowed.

NOTE 7 — LONG-TERM DEBT

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Mortgage Facility (“Tranche B”), collateralized by real property, due in monthly installments of $ 57 including interest at 4.25 % per annum with a final payment due March 1, 2023

Squirrel Brand Seller-Financed Note

(“Promissory Note”), unsecured, due in monthly principal installments of $ 319 plus interest at 5.5 % per annum beginning in January 20 18 through November 30, 2020

Squirrel Brand Seller-Financed Note (“Promissory Note”), unsecured, due in monthly principal installments of $ 319 plus interest at 5.5 % per annum beginning in J anuary 20 18 through November 30, 2020

Selma, Texas facility financing obligation to related parties, due in monthly installments of $ 103 through September 1, 2021

through September 1, 2026

Unamortized debt issuance costs

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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 $ 36,000 (“Tranche A”) and the other in the amount of $ 9,000 (“Tranche B”), for an aggregate amount of $ 45,000 (the “Mortgage Facility”).

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”).

The Mortgage Facility is secured by mortgages on essentially all of our owned real property located in Elgin, Illinois and Gustine, California (the “Encumbered Properties”).

On March 1, 2018 the interest rate on the Mortgage Facility was fixed at 4.25% per annum.

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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, Texas properties had an initial ten -year term at a fair market value rent with three five-year renewal options.

The lease for the Selma, Texas properties had an initial ten -year

term at a fair market value rent with three five-year renewal options.

In September 2015, we signed a lease renewal which exercised two five-year renewal options and extended the term of our Selma lease to September 18, 2026.

The lease extension also reduced the base monthly lease amount to $ 103 , beginning in September 2016.

At the end of each five-year renewal option, the base monthly lease amounts are reassessed, and the monthly payments will increase to $ 114 beginning in September 2021.

One five-year renewal option remains.

Also, we currently have the option to purchase the properties from the lessor

at 95 % ( 100 % in certain circumstances) of the then fair market value, but not to be less than the $ 14,300 purchase price.

Also, we currently have the option to purchase the properties from the lessor at 95 % ( 100 % in certain circumstances) of the then fair market value, but not to be less than the $ 14,300 purchase price.

The financing obligation is being accounted for similar to the accounting for a capital lease, whereby the purchase price was recorded as a debt obligation, as the provisions of the arrangement are not eligible for sale-leaseback accounting.

The balance of the debt obligation outstanding at June 24, 2021 was $ 8,947 .

In November 2017 , we completed the Squirrel Brand acquisition which was financed by a combination of cash (drawn under the Credit Facility) and a three -year seller-financed note for $ 11,500 .

In November 2017

, we completed the Squirrel Brand acquisition which was financed by a combination of cash (drawn under the Credit Facility) and a three-year seller-financed note for $ 11,500 .

The principal owner and seller 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 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 $ 319 , 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 June 25, 2020, the principal amount of $ 1,597 of the Promissory Note was outstanding.

Since he is no longer considered a related party, the outstanding balance on the Promissory Note is not reflected as related party debt on our Consolidated Balance Sheet as of June 25, 2020.

Interest paid on the Promissory Note while the former executive officer was a related party was $ 127 for the fiscal year ended June 25, 2020, $ 413 for the fiscal year ended June 27, 2019, and $ 338 for the fiscal year ended June 28, 2018.

During fiscal 2021, the Promissory Note was paid in full.

Interest paid on the Promissory Note while the former executive officer was a related party was $ 127 for the fiscal year ended June 25, 2020 and $ 413 for the fiscal year ended June 27, 2019.

Aggregate maturities of long-term debt are as follows for the fiscal years ending:

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State income taxes, net of federal benefit

Impact of Tax Reform

Section 162(m) limitation

Research and development tax credit

Domestic manufacturing deduction

Windfall tax benefits

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Share based compensation

Net deferred tax asset — long term

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that

some portion or all of the deferred tax assets will not be realized.

Net deferred tax asset

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the character necessary during the periods in which those temporary differences become deductible.

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We do not anticipate that total unrecognized tax benefits will significantly change in the next twelve months.

There were certain changes in state tax laws during the period, for which the impact was insignificant.

We file income tax returns with federal and state tax authorities within the United States of America.

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Options generally will expire no later than ten years after the date on which they were granted.

We issue new shares of Common Stock upon exercise of stock options.

We determine the fair value of stock option awards using the Black-Scholes option-pricing model;

however, there were no options granted in fiscal 2020, fiscal 2019 or fiscal 2018.

The following is a summary of stock option activity for the year ended June 25, 2020:

Term in Years

Outstanding at June 27, 2019

Outstanding and exercisable at June 25, 2020

The following table summarizes the total intrinsic value of all options exercised and the total cash received from the exercise of options for the last three fiscal years:

Total intrinsic value of options exercised

Total cash received from exercise of options

We issue new shares of Common Stock upon the vesting of RSUs and upon exercise of stock options.

The fair value of RSUs is generally determined based on the market price of our Common Stock on the date of grant.

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NOTE 12 — CASH DIVIDENDS

Our Board of Directors declared the following cash dividends payable in fiscal

2020 and fiscal 2019:

Our Board of Directors declared the following cash dividends payable in fiscal 2021 and fiscal 2020:

Declaration Date

January 27, 2021

February 26, 2021

March 16, 2021

August 7, 2020

August 21, 2020

April 29, 2020

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August 20, 2019

July 10, 2018

August 3, 2018

August 17, 2018

The dividends declared on July 10, 2019 and July 9, 2020 include both the annual and special dividend declared on such date.

On July 8, 2021 , our Board of Directors declared a special cash dividend of $ 2.30 per share and a regular annual cash dividend of $ 0.70 per share on all issued and outstanding shares of Common Stock and Class A Stock of the Company.

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401(k) plan expense

During the first quarter of fiscal 2009, we recorded a long-term liability of $ 868 for the withdrawal from the multiemployer plan (“Route pension”) for the step-van

drivers that were employed for our store-door delivery system that was discontinued during fiscal 2008.

Pursuant to terms of settlement with a labor union, we are making monthly payments of $ 8 (including interest) through April 2022.

The total Route pension liability was as follows for the last two fiscal years:

Route pension liability

Virtually all of our salaried employees participate in our Sanfilippo Value Added Plan (as amended, the “SVA Plan”), which is a cash incentive plan (an economic value added-based program) administered by our Compensation Committee.

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The accumulated benefit obligation, which represents benefits earned up to the measurement date, was $ 28,927 and $ 25,839 at June 24, 2021 and June 25, 2020, respectively.

Components of the actuarial loss (gain) portion of the change in projected benefit obligation are presented below for the fiscal years ended:

Actuarial Loss (Gain)

Components of the actuarial loss portion of the change in projected benefit obligation are presented below for the fiscal years ended:

Actuarial Loss

Change in assumed pay increases

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Change in mortality assumptions

Actuarial loss (gain)

Actuarial loss

The components of the net periodic pension cost are as follows for the fiscal years ended:

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Net periodic pension cost

The most significant assumption

related to our SERP

the discount rate used to calculate the actuarial present value of benefit obligations to be paid in the future .

We used the following assumptions to calculate

the benefit obligation of our SERP as of the following dates :

The most significant assumption related to our SERP is the discount rate used to calculate the actuarial present value of benefit obligations to be paid in the future.

We used the following assumptions to calculate the benefit obligation of our SERP as of the following dates:

Discount rate

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Rate of compensation increases

RP-2014 white

Pri-2012 white

collar with MP-

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base, paid 4 of 5

The assumed discount rate is based, in part, upon a discount rate modeling

process that considers both high quality long-term indices and the duration of the SERP relative to the durations implicit in the broader indices.

The assumed discount rate is based, in part, upon a discount rate modeling process that considers both high quality long-term indices and the duration of the SERP relative to the durations implicit in the broader indices.

The discount rate is utilized principally in calculating the actuarial present value of our obligation and periodic expense pursuant to the SERP.

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Net amount unrecognized

We expect to recognize

the remaining

$ 478 of the prior service cost and $ 1,183 of net loss into net periodic pension expense during the fiscal year ending June 24, 2021.

NOTE 15 — ACCUMULATED OTHER COMPREHENSIVE LOSS

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Amounts in parenthesis indicate debits/expense.

Refer to Recent Accounting Pronouncements in Note 1 — “Significant Accounting Policies” for additional information.

The reclassifications out of accumulated other comprehensive loss for the last two fiscal years were as follows:

Reclassifications from AOCL to earnings (c)

Affected line item in

Statements of

Comprehensive

Reclassifications from AOCL to earnings (b)

Affected line item in the

Consolidated Statements of

Comprehensive Income

Amortization of defined benefit pension items:

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See Note 14 — “Retirement Plan” above for additional details.

NOTE 16 — TRANSACTIONS WITH RELATED PARTIES

In addition to the related party transactions described in Note 7, we also purchased materials from a company that until July 2017 was owned by three members of our Board of Directors, two of whom are also executive officers, and individuals directly related to them.

Purchases from this related party aggregated to the following for the years ending:

Purchases from related party

NOTE 16 — PRODUCT TYPE SALES MIX

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Reserve for customer deductions

Deferred tax asset valuation allowance

June 27, 2019

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Cash dividends declared per common share

The decrease in net sales was primarily attributable to a 3.3 % decrease in weighted average selling price per pound, combined with a decrease in sales volume for foodservice customers in our commercial ingredients distribution channel as a result of the COVID-19

Year Ended June 25, 2020:

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Cash dividends declared per common share

— 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 contracted with a third party to roast and salt our inshell peanuts to meet our current production requirements.

We did not experience any negative impact on our customer service levels or a material adverse impact on our operating or financial results for the 2020 fiscal year.

After evaluating our options with regard to our peanut production operations, the Company is considering strategic alternatives for this facility and currently plans to cease all operations at the Garysburg facility permanently in fiscal 2021.

We will finish shelling the current crop of peanuts at this facility, which is estimated to take approximately four to seven more months, after which the facility will continue to be used to store and ship inshell peanuts through the remainder of fiscal 2021.

We ceased roasting operations in the second quarter of this fiscal year, which resulted in a partial reduction in the workforce at this facility and we recognized an immaterial amount of separation costs in the second quarter of fiscal 2020.

We have adequate property damage and business interruption insurance, subject to applicable deductibles.

To date, approximately $ 2,000 in clean-up

costs and damage to capital assets has been incurred.

Insurance claims have been filed under our property damage and business interruption policies.

Insurance proceeds totaling $ 2,934 were received from the insurance carrier in the second and fourth quarters of this fiscal year.

Insurance proceeds received for damage to capital equipment are recorded as investing activities on the Consolidated Statements of Cash Flows.

During fiscal 2020, the building and roof were repaired and brought back to their original condition.

Insurance proceeds totaling $ 2,934 were received from the insurance carrier in fiscal 2020, and the final payment of $ 2,730 was received during the third quarter of this fiscal year.

Insurance proceeds received for damage to capital equipment are recorded as investing activities on the Consolidated Statements of Cash Flows when received.

We completed shelling of the 2019 peanut crop during the second quarter of this fiscal year and the facility was used to store and ship inshell peanuts through the remainder of fiscal 2021.

During fiscal 2020 we manufactured and sold approximately 6 million pounds of inshell peanuts from this facility and discontinued that product line at the end of the current fiscal year.

We spent the fourth quarter of fiscal 2021 cleaning and preparing the facility for sale.

After evaluating our options with regard to our peanut production operations, the Company decided to cease all operations permanently at the Garysburg facility at the end of fiscal 2021 and sell the facility and its related assets.

The planned sale of this property meets the criteria of an asset “Held for Sale” in accordance with ASC 360, Property, Plant and Equipment

Assets held for sale are required to be measured at the lower of their carrying value or fair value less costs to sell.

No adjustment of the carrying value was required.

Assets classified as held for sale are no longer depreciated, and a current asset of $ 1,595 consisting of the building, land and remaining machinery and equipment is presented in the consolidated balance sheets as of June 24, 2021.

Employee separation and related closure costs were immaterial for all periods presented.

NOTE 20 — SUBSEQUENT EVENT

On July 9, 2020 , our Board of Directors declared a special cash dividend of $

1.85 per share and a regular annual cash dividend of $ 0.65 per share on all issued and outstanding shares of Common Stock and Class A Stock of the Company (the “August 2020 Dividends”).

The August 2021 Dividends will be paid on August 25, 2021 to stockholders of record as of the close of business on August 10, 2021 .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data