Stockholder's Report First Quarter 2001

March 6, 2003

Dear Stockholder:

Net income for the second quarter of fiscal 2003 was approximately $8.2 million or 90 cents per share basic (89 cents per share diluted) compared to net income of approximately $4.8 million or 52 cents a share (basic and diluted) for the second quarter of fiscal 2002. For the six-month period ended December 26, 2002, net income was approximately $9.9 million or $1.08 per share basic ($1.07 per share diluted) compared to approximately $5.9 million or 64 cents per share (basic and diluted) for the first six months of fiscal 2002.

Net sales for the second quarter of fiscal 2003 were approximately $134.2 million compared to approximately $112.8 million last year. Net sales for the first six months of this fiscal year were approximately $227.3 million versus approximately $197.5 million for same period in fiscal 2002. The increase in net sales, for both the quarterly and the six month period was due primarily to higher unit volume sales to the Company’s retail, export and contract packaging customers. The gross profit margin for the second quarter of fiscal 2003 was 16.8 percent of net sales as compared to 15.4 percent for the second quarter of fiscal 2002. Year-to-date gross profit margin of 14.8 percent of net sales for fiscal 2003 increased from the gross profit margin of 14.4 percent for the same period in fiscal 2002. The increase in gross profit margin, for both the quarterly and year-to-date periods, was due primarily to: (i) the increase in unit volume as certain costs of sales are of a fixed nature, (ii) changes in the sales mix, and (iii) generally lower commodity costs.

Selling and administrative expenses for the second quarter of fiscal 2003 were 6.0 percent of net sales compared to 7.2 percent of net sales for the second quarter of fiscal 2002. For the current six-month period, selling and administrative expenses were 6.7 percent of net sales versus 8.1 percent of net sales for the same period in fiscal 2002. This decrease, for both the quarterly and year-to-date was due primarily to: (i) continuous efforts to control expenses and (ii) the fixed nature of certain of these expenses relative to a larger revenue base. Lower borrowing levels and interest rates in the current fiscal year resulted in a quarterly interest expense of approximately $1.1 million compared to approximately $1.4 million in the second quarter of fiscal 2002. Interest expense for the current six-month period was approximately $2.3 million versus approximately $3.0 million for the first six months of fiscal 2002.

I am very pleased with our fiscal 2003 results. We have, in the first six months of fiscal 2003, exceeded our earnings for any entire fiscal year ever reported thoughout the Company’s eighty-year history. These results are truly remarkable and a source of pride for your Company’s management. We will continue to focus on growth and cost control in an effort to deliver another record year.

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