What changed in this filing

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Item 1. Business

2022-08-24 compared with 2021-08-18 · 48 added, 43 removed, 171 unchanged (35% of the section changed)

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weeks (four thirteen week quarters).

However, the fiscal year ended June 30, 2022 consisted of fifty-three weeks with our fourth quarter containing fourteen weeks.

Additional information on the comparability of the periods presented is as follows:

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, Squirrel Brand

, Southern Style Nuts

and Sunshine Country

and Southern Style Nuts

brand names and under a variety of private brands.

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We are one of the leading processors and distributors of tree nuts and peanuts in the United States.

We manufacture and market the Fisher, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts,

and Sunshine Country

We manufacture and market the Fisher, Orchard Valley Harvest, Squirrel Brand

and Southern Style Nuts

brand names and manufacture and distribute numerous private brands as well.

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In recent years we have developed Fisher

recipe nuts as the leading brand in the category, increased distribution of Orchard Valley Harvest

in the produce section of many retailers, increased innovative snacking solutions with our Fisher

snack nuts and expanded into new channels with our acquisition of Squirrel Brand

and Southern Style Nuts

Our branded and private brand products are sold through the major distribution channels to

significant buyers of nuts, including food and other retailers (both brick and mortar and e-commerce),

recipe nuts as the leading brand in the category through strong marketing campaigns, merchandising, and promotional support.

We have increased distribution and launched innovation with our Orchard Valley Harvest

snack nut brands in many retailers.

We have also expanded into new channels and business models with Southern Style Nuts

and Squirrel Brand

Our branded and private brand products are sold through the major distribution channels to significant buyers of nuts, including food and other retailers (both brick and mortar and e-commerce),

commercial ingredient users and contract packaging customers.

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Our principal products are raw and processed nuts.

These products accounted for approximately 70%, 74% and 78% of our gross sales for fiscal 2021, fiscal 2020 and fiscal 2019, respectively.

Including trail and snack mixes, these products accounted for approximately 94%, 95% and 95% of our gross sales for fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

The nut product line includes almonds, pecans, peanuts, black walnuts, English walnuts, cashews, macadamia nuts, pistachios, pine nuts, Brazil nuts and filberts.

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We purchase the balance of our raw nuts from importers, trading companies and domestic processors.

We manufacture and market peanut butter in several sizes and varieties.

Furthermore, we manufacture and market peanut butter in several sizes and varieties.

We also market and distribute, and in many cases process and manufacture, a wide assortment of other food and snack products.

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We sell products through the consumer channel under our brand names, including the Fisher

, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts

and Sunshine Country

, Orchard Valley Harvest, Squirrel Brand

and Southern Style Nuts

brands, as well as under our customers’ private brands.

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brand and our customers’ private brands.

Our contract packaging channel produces and packages nut-based

snacks for other food manufacturers under their brand name.

Our contract packaging channel produces and packages nut and fruit-based snacks for other food manufacturers under their brand name.

We are dependent on a few significant customers for a majority of our total net sales, particularly in the consumer channel.

Net sales to Wal-Mart

accounted for approximately 34% of our net sales for fiscal 2021 and 33% of our net sales for fiscal 2020 and fiscal 2019.

Net sales to Target Corporation accounted for approximately 14% of our net sales for fiscal 2021, 12% of our net sales for fiscal 2020 and 10% of our net sales for fiscal 2019.

accounted for approximately 35% of our net sales for fiscal 2022, 34% of our net sales for fiscal 2021 and 33% of our net sales for fiscal 2020.

Net sales to Target Corporation accounted for approximately 14% of our net sales for fiscal 2022 and fiscal 2021 and 12% of our net sales for fiscal 2020.

No other customer accounted for more than 10% of net sales for any period presented.

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and Southern Style Nut

products, bulk foods and other products produced by us and other vendors.

products, bulk foods and other products produced by us and other vendors directly to consumers.

(v) Marketing

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Private brand and commercial ingredient channel efforts are focused on category management, new product identification and introduction, brand awareness and merchandising support.

A significant portion of our branded marketing efforts are focused on compelling consumer campaigns that include advertisements (e.g., television, online video, social and influencer activations and partnerships, search engine marketing and online display), product sampling and coupon offers.

A significant portion of our branded marketing efforts are focused on compelling consumer campaigns that include advertisements (e.g., online video, social and influencer activations and partnerships, search engine marketing and media partnerships), product sampling and coupon offers.

Our integrated marketing efforts for the Fisher

brand include partnerships with chefs and influencers, as well as professional baseball sponsorships.

Additionally, shipper display units are utilized in retail stores in an effort to gain additional temporary product placement and to drive sales volume.

Additionally, shipper display units and other point of sale promotions are utilized in retail stores in an effort to gain additional temporary product placement and to drive sales volume.

We work with third-party information agencies, such as Information Resources, Inc.

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Through participation in several trade associations, funding of industry research and sponsorship of educational programs, we support efforts to increase awareness of the health benefits, convenience and versatility of nuts as both a snack and a recipe ingredient among existing and future consumers of nuts.

In the future, we expect to participate and fund sustainability efforts in the industry through trade associations.

In the future, we expect to increase our participation and funding with trade associations and groups to focus on sustainability efforts while continuing to partner with farmers to further mitigate climate risk.

(vi) Competition

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Due, in part, to the seasonal nature of the industry, we maintain significant inventories of peanuts, pecans and walnuts at certain times of the year, especially in the second and third quarters of our fiscal year.

In fiscal 2022, we increased our inventories to reflect supply chain constraints to help ensure we have product available for our customers.

Fluctuations in the market price of pecans, peanuts and walnuts and other nuts may affect the value of our inventory and thus may also affect our gross profit and gross profit margin.

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(viii) Trademarks and Patents

We market our products primarily under name brands, including the Fisher, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts

and Sunshine Country

Fisher, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts

and Sunshine Country

We market our products primarily under name brands, including the Fisher, Orchard Valley Harvest, Squirrel Brand

and Southern Style Nuts

Fisher, Orchard Valley Harvest, Squirrel Brand

and Southern Style Nuts

are registered as trademarks with the U.S.

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(ix) Human Capital

As of June 24, 2021, we had approximately 1,300 full-time employees across our five locations.

As of June 30, 2022, we had approximately 1,300 full-time employees across our four locations.

We recognize that, in order for our company to be successful, our employees must be healthy, well-trained and motivated to do their best every day.

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We place a high priority on employee health and safety as part of our continuous improvement culture.

Our total occupational injury rate continues to remain below the food manufacturing industry average.

Our total occupational injury rate continues to remain in line with the food manufacturing industry average.

We continue to enhance our safety programs by investing in systems and controls focused on injury and accident prevention.

During the 2021 fiscal year, we were able to increase significantly employee participation in our voluntary Safety Observation Program, and we implemented a cloud-based environmental health and safety platform that we believe will help us to better measure and monitor data in this area, as well as predict and prevent future safety risks.

In response to the COVID-19

pandemic, we implemented a number of health and safety protocols to protect our employees, and we regularly monitor such protocols for best practices and improvements.

During fiscal 2022, we utilized our cloud-based environmental health and safety platform to analyze safety observations which helped us to predict and prevent future safety risks.

We believe properly prioritizing risks helps us to be proactive in building a sustainable safety culture.

pandemic is still a factor.

In 2020, we instituted a COVID-19

task force to help oversee and promote the health and safety of our employees.

task force helped guide our establishment of policies and practices in accordance with guidance from the U.S.

Centers for Disease Control, federal, state and local governments, and other health authorities.

The actions we took to help ensure the safety and wellness of our employees include, among other things, requiring employees to practice social distancing at our facilities, checking employees’ temperatures, increasing the frequency of the sanitation of our facilities and equipment, supplying personal protective equipment to our employees, not reducing compensation for employees that are required to quarantine due to exposure to COVID-19,

working to educate our employees about vaccines and allowing our corporate staff to work from home.

We also hosted several free on-site

vaccination clinics for our employees and their family members.

We continue to monitor guidance and best practices to help ensure the health and safety of our employees.

task force continued to function during fiscal 2022.

The health and safety protocols are still active and working to protect our employees.

We will continue to regularly monitor such protocols for best practices and improvements.

task force will continue to meet until we have received guidance from the U.S.

Centers for Disease Control, federal, state and local governments or any other health authorities that COVID-19

is no longer a concern.

The health and safety of our employees will always remain a priority.

Diversity and Inclusion:

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Our goal is to maintain and promote diversity among our employees and foster an inclusive environment where differences are celebrated.

In the 2021 fiscal year, we launched our Diversit y, Equity a

nd Inclusion Council, consisting of a team of employees from different functional areas, to provide oversight and enhance our diversity and inclusion initiatives.

In fiscal 2021, we launched our Diversity, Equity and Inclusion Council, consisting of a team of employees from different functional areas, to provide oversight and enhance our diversity and inclusion initiatives.

In fiscal 2022 year our Diversity, Equity and Inclusion council organized various events facilitated through our Employee Resource Groups and built a three-year strategic plan.

Training, Development and Promotion:

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We offer training to our employees on a variety of subjects related to professional development, workplace fundamentals, business, computer applications and industry specific subjects such as our Nutology-101

In fiscal 2022 we piloted a formal Leadership Development program with 41 participants.

Through the course of the program approximately 36% of program participants were able to expand their responsibilities and move into higher level jobs with the company.

We also conduct annual mandatory training for all employees covering food safety, workplace safety and various regulatory and compliance related subjects.

In the 2021 fiscal year, approximately 15% of our employees received promotions and a promotion-related salary increase.

In fiscal 2022, approximately 16% of our employees received promotions and a promotion-related salary increase.

Employee Rewards and Satisfaction:

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We are also proud to offer a comprehensive and competitive benefits package designed to meet the diverse needs of our employees at every stage of life, including a company-sponsored healthcare program and 401(k) program with a generous company matching contribution.

In fiscal 2022 we introduced adoption assistance, student loan repayment, paid parental leaves, volunteer time off and enhanced time off programs.

We continue to closely monitor the competitiveness of our compensation programs.

In fiscal 2022 more than 38% of our employees received market-based wage adjustments.

Among other things, we periodically conduct employee surveys to monitor employee satisfaction, engagement and concerns.

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(xi) Government Regulations, Operating Hazards and Uninsured Risks

The sale of food products for human consumption involves the risk of injury to consumers as a result of product contamination or spoilage, including the presence of shell fragments, foreign objects, insects, foreign substances, pathogens, chemicals, aflatoxin and other hazards, agents or residues introduced during the growing, storage, handling or transportation phases.

The sale of food products for human consumption involves the risk of injury to consumers as a result of product contamination or spoilage, including the presence of shell fragments, foreign objects, insects, foreign substances, pathogens, chemicals, mycotoxins and other hazards, agents or residues introduced during the growing, storage, handling or transportation phases.

We (i) maintain what we believe to be rigid quality control standards and food safety systems that is evident in our annual Safe Quality Food (“SQF”) certification at each manufacturing facility, (ii) generally inspect our nut and other food products by visual examination, screening, metal detectors or electronic monitors at various stages of our shelling and processing operations, (iii) work with the United States Department of Agriculture (“USDA”) in its inspection of peanuts shipped to and from our peanut shelling facilities, (iv) maintain robust environmental pathogen programs, (v) seek to comply with the Nutrition Labeling and Education Act by labeling each product that we sell with labels that disclose the nutritional value and content of each of our products and (vi) assure compliance with the United States Food and Drug Administration (“FDA”) Food Safety Modernization Act (“FSMA”) through our comprehensive Food Safety Plans which include following Current Good Manufacturing Practices and control biological, chemical and physical hazards through our Process, Sanitation, Allergen and Supply Chain Preventative Controls;

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A portion of our annual capital expenditure budget is allocated for compliance with government-mandated food safety standards.

Compliance with food safety standards and other government regulations may have an impact on our operations and earnings, particularly if we fail to satisfy such standards or regulations and our products are recalled, harm our consumers or harm our Company’s reputation and standing as a leader of branded and private brand nut products.

See Part I, Item 1A — “Risk Factors”.

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 1. Business