Stockholder's Report First Quarter 2001

February 15, 2002

Dear Stockholder:

Net income for the second quarter of fiscal 2002 was approximately $4.8 million or 52 cents per share, which ties the record for quarterly EPS, previously set by the Company in the second quarter of fiscal 2001. For the six-month period ended December 27, 2001, net income was approximately $5.9 million or 64 cents per share compared to approximately $6.0 million or 66 cents per share for the first six months of fiscal 2001.

Net sales for the second quarter of fiscal 2002 were approximately $112.8 million compared to approximately $112.4 million last year. The slight increase in quarterly net sales was primarily attributable to gains in the Consumer distribution channel offset by declines in Industrial sales. The gross profit margin for the second quarter of fiscal 2002 was 15.4 percent of net sales as compared to 16.6 percent for the second quarter of fiscal 2001. Lower margins on lower Industrial sales and an increase in Private Label sales as a percentage of the total sales mix led to the decrease in the current quarter’s gross profit margin. Net sales for the first six months of this fiscal year were approximately $197.5 million, relatively unchanged from approximately $197.0 million for same period in fiscal 2001. Year-to-date gross profit margin of 14.4 percent of net sales for fiscal 2002 decreased from the gross profit margin of 15.5 percent for the same period in fiscal 2001. Again, a decrease in gross profit margin on lower Industrial sales and the increase in Private Label sales as a percentage of the Company’s total sales mix led to the decrease in gross profit margin for the current six-month period.

Selling and administrative expenses for the second quarter of fiscal 2002 were 7.2 percent of net sales compared to 7.8 percent of net sales for the second quarter of fiscal 2001. For the current six-month period, selling and administrative expenses were 8.1 percent of net sales versus 8.4 percent of net sales for the same period in fiscal 2001. Cost reductions in selling expense led to the decrease in selling and administrative expenses for both the current quarter and the current six-month period. Current second quarter income from operations decreased to approximately 8.2 percent of net sales from 8.8 percent of net sales in the second quarter of fiscal 2001. Lower borrowing levels and interest rates in the current fiscal year resulted in a quarterly interest expense of approximately $1.4 million compared to approximately $2.1 million in the second quarter of fiscal 2001. Interest expense for the current six-month period was approximately $3.0 million versus approximately $4.2 million for the first six months of fiscal 2001.

We are very pleased with our record earnings performance for the quarter notwithstanding the current economic environment. Management’s effort to control selling expenses and decrease borrowing levels to counter the decrease in gross margins reaffirms its commitment to enhance stockholder value. For both the second quarter and for the first half of fiscal 2002 we have seen substantial growth in the Consumer sector of our business. Recently, we have added experienced personnel to our Industrial sales department and put inventories in place in order to increase our Industrial sales in the second half of this fiscal year. Increased Industrial sales for the next six months coupled with the current growth in the Consumer channel should help to put us on the right track towards achieving modest growth and regaining some of the previous decreases in gross profit dollars.

Jasper B. Sanfilippo
Chairman and Chief Executive Officer

The statements of Jasper B. Sanfilippo in this letter are forward looking. These forward-looking statements are based on the company’s current expectations and involve risks and uncertainties. Consequently, the company’s actual results could differ materially. Among the factors that could cause results to differ materially from current expectations are: (i) sales activity for the company’s products for the remainder of the fiscal year; (ii) changes in the availability and costs of raw materials for the production of the company’s products; (iii) fluctuations in the value of the company’s inventories of pecans, walnuts or other nuts due to fluctuations in the market prices of these nuts; (iv) the company’s ability to lessen the negative impact of competitive pressures by reducing its selling prices and increasing sales volume while at the same time maintaining profit margins by reducing costs; (v) the time and occurrence (or non-occurrence) of other transactions and events which may be subject to circumstances beyond the company’s control.

Consolidated Statements of Operations & Balance Sheets