Good day, ladies and gentlemen, and welcome to your John B Sanfilippo & Son, Inc. First Quarter Fiscal 2013 Operating Results Conference Call. My name is Lulu, and I will be your operator today. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded. I would now like to turn the call over to Mr. Michael Valentine, Chief Financial Officer. Please proceed, sir.

For the first quarter of our fiscal 2013, before we turn to operating results, we want to remind everyone that we may make some forward-looking statements this morning. These statements are based on our current expectations and involve certain risks and uncertainties. The factors that could negatively impact results are explained in the various SEC filings that we have made, including Forms 10-K and 10-Q. We encourage everyone to refer to these filings to learn more about these risks and uncertainties that are inherent in our business. Turning to operating results. Net sales for the first quarter of fiscal 2013 increased by 13.2% to $177.5 million in comparison to net sales for the first quarter of fiscal 2012. The increase in net sales was mainly attributable to higher sales prices from pricing actions implemented over the last 12 months. Sales prices increased for most of our major product types in the quarterly comparison due to higher commodity acquisition costs. A shift in sales volume to higher-priced consumer products in the consumer channel from lower-priced bulk products in the Commercial Ingredients channel also contributed significantly to the increase in net sales. Sales volume, which is measured as pounds sold was virtually unchanged in the quarterly comparison. Sales volume increased in the consumer channel from increased sales of Fisher baking and snack nuts, at existing customers and from new sales of Fisher products at new customers. Sales volume also increased in the contract packaging channel due to expanding sales to a major existing customer. Sales volume declined in the Commercial Ingredients and export channels, primarily because of the impact of high prices for peanuts, pecans and walnuts on customer demand. The first quarter of fiscal 2013 saw our gross profit increased by $8.8 million and gross profit margin increased to 17.2% of…

Thank you, Mike. Good morning, everyone. The results of our first quarter fiscal 2013 are solid and we earned record net income of $7.5 million, the highest of any first quarter in the company's history. I am proud of our management team for staying focused and disciplined as we continue to execute our corporate strategies in spite of a volatile economic marketplace and high commodity prices. At the same time, I'm proud that the company continue to invest in product innovation, marketing programs and consumer insights to support our Fisher and Orchard Valley Harvest brands and the private brands of our key retail partners. We developed a 5-year strategic plan to help us achieve long-term profitable growth. And the management team continues to complete tactical projects to streamline our business and reallocate financial resources to support our strategic goals. Mike mentioned a net gain on the sale of assets of $600,000 in our first quarter fiscal 2013. We've finalized the sale of a property in Barrington, Illinois, which was the home of one of our outlet stores and this contributed to the net gain. Our long-term goals include expanding globally and attaining recognition by global retailers, food service providers and consumers as a world-class nut partner. I just returned from Asia 2 weeks ago. We are in the process of establishing a representative office in Shanghai to better support our Fisher brand sales in China, and I'm very excited about the opportunities there; goals to profitably increase our market share in private brands and Commercial Ingredients by using innovation and consumer insights valued by our customers. Three, providing the best total solution to retailers by increasing our presence beyond the traditional nut aisles of stores, especially in the produce aisle with our Orchard Valley Harvest brand. Four, utilizing our Fisher…

Okay, thanks, Jeff. At this time, we will open the call to questions. Lulu, can you please queue up the first question?

[Operator Instructions] And the first question comes from the line of Gregg Hillman.

Who's the #1 company in the baking nuts?

The #1 brand share is Diamond Foods in baking nuts.

Okay. And then, the way you grew share was by picking up more distribution, like, you got into more grocery stores or outlets. Is that the main way you grew that segment?

Correct. We picked up 2 national retailers with new distribution where we did not have Fisher distribution before. So that was one part of it. Also, executing more promotional displays and getting more pounds on the floor, as we call it, with our current distribution. Then the third thing is, really, increasing the velocity or the sales volume of our Fisher products that are in distribution.

Okay. Then just long-term, in terms of just the availability, the capacity for nuts is being added worldwide and domestically, how does that look like in terms of new trees being planted?

Well, on the supply standpoint, it's really different for each commodity. We anticipate or we do see additional almond plantings. We anticipate higher volumes of almonds coming on board from a supply standpoint. Pecans, we see additional plantings, although, we haven't seen enormous growth in pecans plantings over the last couple of years. I believe with the higher prices, we're seeing more plantings in places like Mexico. I've just returned from Australia, and I know they're planting more pecan trees in Australia to support the demand there, as well as in Asia. Walnuts, we had a nice-sized walnut crop this year. We believe that there is additional plantings for walnuts as well. So overall, I think with these higher prices, growers have seen, from a return standpoint, there have been more additional plantings and we anticipate supply to continue to increase in most commodities.

Okay. And then, when you're saying in demand for nuts is inelastic, I mean, is that just on a given price range? But at certain times when the price of nuts have gone really high, the demand has decreased, is that correct?

Correct, yes. Then, there's a ceiling, I think, on just about anything unless it's vital to your life. But we believe that we -- as I mentioned, we saw a 2% decrease in volume but a 10% to 13% increase in prices. So consumers, even though prices have gone up, they haven't -- they still have been willing to purchase nuts as a snack or ingredient. And so I think it's a positive thing for our industry that they are still willing to pay a little bit more for nuts because they see the health benefits or the value as a snack item.

Okay. But then, just -- but the more expensive nuts would go down, like cashews, something that?

Correct. So we just think it's the decline in cashews and other tree nuts, pecans, for example, we believe there will be a lot of nice opportunities for promotions on both cashews and mixed nuts.

And the next question comes from the line of Bruce Winter[ph].

You explained why you expect the volumes of nuts to increase because of declining prices in the new crop. What do you expect to happen to your profit margins given that you have a higher inventory of the old crop?

Bruce, this is Mike Valentine. We do have a higher carryover than we had last year. But I wouldn't characterize it as an abnormal carryover. In fact, last year our carryovers were too low. We'll be out of those carryovers, probably, in about 4 weeks on those particular nuts that we've pointed out. So it shouldn't be a problem for us.

Good. I also have a question about your 2 office buildings. I'm having trouble figuring it out, and I'm working off your 10-K. The Elgin site, 2005, you have an office building that is breakeven on profits but you don't have a book value in your financial statements. What's the book value of that property?

I'm not sure which property you're referring to.

The Elgin site acquired in April 2005 that's 75% vacant.

Okay -- then, you're talking about -- okay, because there's actually 2 Elgin sites.

Yes. The -- not the old Elgin site, the new Elgin site.

Okay. That -- if you -- on our balance sheet, you'll see our rental investment property is about $29.4 million.

Yes, I see it.

Right. And most of that is attributable to that office building.

And then, the other office building is $6 million in change. Are -- the sum -- are both office buildings sum to this $29 million, 4.43?

Yes. They're both in there. And that second one that's at a little over $6 million really isn't an office building, it's primarily a vacant piece of property that was intended to be our site that we're going to build our plant on.

And you breakeven on the office building -- the new Elgin office building, you're running that at breakeven, roughly. What does the other one cost you, the -- what you called the old Elgin site? Does that have a profit or loss with it?

The old Elgin site is almost completely land. So there's really no operating costs or income associated with it of any significance.

Okay. And what's the purpose of keeping this $29 million of property on your balance sheet? Why don't you do something...

Yes. This is Jeffrey. The original site that we purchased, the $6 million value that's on the balance sheet has been for sale since we moved into this new corporate headquarters. The market has not been very favorable to sell vacant land in this area. But we are optimistic that we've got interest in the property, but it has been for sale. So it's not something we want to keep on the books.

How about the other one?

And then, as far as the office building on our site goes, it's actually part of the site that we're on. And it isn't easily separated, and that's why we're keeping that.

You want to increase the rent on it. You want to find more occupants for it?

Right, right. It just -- and well, first of all, the market really isn't set up to sell it anyway. But because it's part of an entire campus, it would be difficult to break that out and sell it separately without having a negative impact on the manufacturing part of our business.

Okay. So you could opt for a $20 million investment, if you got it fully occupied, you could get a reasonable return on your income if you -- on your investment if you rented it all out?

Well, that's true. But I should point out that the fourth floor of that 4-storey building is not developed. So to rent it out completely would require a pretty sizable capital investment that we really don't think would be a good financial decision.

I would now like to turn the call over to Mr. Michael Valentine for closing remarks.

Okay. Again, we certainly appreciate everyone's interest in JBSS, especially those participants living on the East Coast who have called in. And this concludes our call for the first quarter of fiscal 2013. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference call. You may now disconnect. Enjoy your day. Thank you.