Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OF 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended January 29,April 30, 1994 Commission File Number 0-1989
Seneca Foods Corporation
(Exact name of registrant as specified in its charter)
New York 16-0733425
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
1162 Pittsford-Victor Road, Pittsford, New York 14534
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 716/385-9500
Not Applicable
Former name, former address and former fiscal year,
if changed since last report
Check mark indicates whether registrant (1) has filed all reports required to
be filed by Section 13 of 15(d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the issuer's classes of common
stock at the latest practical date are:
Class Shares Outstanding at February 28,May 31, 1994
Common Stock, $.25 Par 2,893,1702,798,055
PART I FINANCIAL INFORMATION
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands of Dollars)
1/29/4/30/94 7/31/93
_______ _______------- -------
ASSETS
Current Assets:
Cash and Short-term Investments $ 6,28027,616 $ 15,522
Accounts Receivable, Net 31,77926,857 24,398
Inventories:
Finished Goods 53,95031,845 38,350
Work in Process 26,25516,561 16,366
Raw Materials 15,93822,472 27,870
96,14370,878 82,586
Off-Season Reserve (Note 3) (11,270)(4,628) -
Deferred Tax (Net) (Note 6) 2,422 -
Other Current Assets 476510 250
------- -------
Total Current Assets 125,830123,655 122,756
Property, Plant and Equipment, Net 78,63379,465 74,089
Common Stock of Moog Inc. (Note 4) 6,078 6,079
Other Assets 200197 214
-------- --------
$210,741$209,395 $203,138
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable $ - $ -
Accounts Payable 19,83219,315 19,742
Accrued Expenses 18,15518,732 12,980
Income Taxes 2,658704 567
Current Portion of Long-Term Debt and Capital
Lease Obligations 6,7836,784 5,057
------ ------
Total Current Liabilities 47,42845,535 38,346
Long-Term Debt 68,64067,520 71,534
Capital Lease Obligations 940899 1,022
Deferred Income Taxes 9,68411,745 10,940
10% Preferred Stock, Series A, Voting, Cumulative,
Convertible, $.025 Par Value Per Share 10 10
10% Preferred Stock, Series B, Voting, Cumulative,
Convertible, $.025 Par Value Per Share 10 10
6% Preferred Stock, Voting, Cumulative,
$.25 Par Value Per Share 50 50
Common Stock 1,9111,881 1,948
Additional Paid-in Capital 344- 3,157
Retained Earnings 81,72481,745 76,121
-------- --------
Stockholders' Equity 84,04983,696 81,296
-------- --------
$210,741$209,395 $203,138
======== ========
The accompanying notes are an integral part of these financial statements.
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except Share Data)
Three Months Ended
------------------
1/29/4/30/94 5/1/30/93
------- -------------
Net Sales $ 83,78082,586 $ 71,51067,635
Costs and Expenses:
Cost of Product Sold 71,354 62,49470,693 61,280
Selling and Administrative 8,811 7,2817,607 6,833
Interest Expense 1,643 2,0411,447 52
------ ------
Total Costs and Expenses 81,808 71,816
------ ------79,747 68,165
Earnings Before Income Taxes 1,972 (306)2,839 (530)
Income Taxes 769 (100)1,055 (376)
Earnings from Continuing Operations 1,203 (206)1,784 (154)
Gain on the Sale of Discontinued Operations 34 -
Earnings from Discontinued Operations - 210
---------- ----------39 406
--------- ---------
Net Earnings $ 1,2031,857 $ 4
========== ==========252
========= =========
Net Earnings from Continuing Operations
Applicable to Common Stock $ 1,1971,778 $ (212)(160)
Net Earnings Applicable to
Common Stock 1,197 (2)1,851 246
Weighted Average Common
Shares Outstanding 2,918,199 3,093,6662,861,465 3,085,333
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Earnings from Continuing Operations $ .41.63 $ (.06)(.04)
Gain on Sale of Discontinued Operations .01 -
Earnings from Discontinued Operations - .06
-----------.01 .12
---------- ---------
Net Earnings $ .41.65 $ .00
===========.08
========== =========
The accompanying notes are an integral part of these condensed financial
statements.
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except Share Data)
SixNine Months Ended
----------------
1/29/-----------------
4/30/94 5/1/30/93
------- -------------
Net Sales $ 145,783228,369 $ 129,961197,596
Costs and Expenses:
Cost of Product Sold 124,739 112,194195,432 173,474
Selling and Administrative 15,448 13,69423,055 20,527
Interest Expense 3,200 4,172
------- -------4,647 4,224
Total Costs and Expenses 143,387 130,060223,134 198,225
Earnings Before Income Taxes 2,396 (99)5,235 (629)
Income Taxes 934 (22)1,989 (398)
------- ------
Earnings from Continuing Operations 1,462 (77)3,246 (231)
Earnings from Discontinued Operations 46 38485 790
Gain on the Sale of Discontinued Operations
Net of Income Taxes 2,101(Note 6) 2,135 -
Cumulative Effect of Change in Accounting
Principle (Note 6) 2,006 -
---------- ------------------ --------
Net Earnings $ 5,6157,472 $ 307
========== ==========559
======== ========
Net Earnings from Continuing Operations
Applicable to Common Stock $ 1,4503,229 $ (89)(248)
Net Earnings Applicable to
Common Stock 5,603 2957,455 542
Weighted Average Common
Shares Outstanding 2,968,466 3,093,6662,933,021 3,090,888
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Earnings from Continuing Operations $ .491.10 $ (.02)(.08 )
Earnings from Discontinued Operations .02 .12.03 .26
Gain on the Sale of Discontinued
Operations .71.73 -
Cumulative Effect of Change in
Accounting Principle .67.68 -
----------- ---------- ---------
Net Earnings $ 1.892.54 $ .10
===========.18
========== =========
The accompanying notes are an integral part of these condensed financial
statements.
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Three Months Ended
__________________
1/29/------------------
4/30/94 5/1/30/93
_______ _______------- ------
Cash Flows From Operating Activities:
Net Earnings $ 1,2031,857 $ 4252
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 2,332 2,3182,313 2,265
Deferred Income Taxes 1,180 712,061 1,583
Changes in Working Capital:
Accounts Receivable (10,143) (7,745)4,888 4,807
Inventories 29,694 20,64325,292 26,410
Off-Season Reserve (3,587) (2,426)(6,642) (5,064)
Other Current Assets 485 80(87) (138)
Income Taxes (1,819) (517)(1,954) (3,339)
Accounts Payable and
Accrued Expenses (9,906) (13,619)
________ ________59 (4,923)
-------- --------
Net Cash Provided
(Used)
by Operations 9,439 (1,191)27,787 21,853
Cash Flows From Investing Activities:
Common StockProceeds from the Sale of Moog 1 -
Acquisitions (11,670)Textile Segment 60 -
Additions to Property, Plant,
and Equipment (2,574) (51)
________ ________(3,147) (143)
------- --------
Net Cash Used in Investing
Activities (14,243) (51)(3,087) (143)
Cash Flows From Financing Activities:
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (160) 830(1,160) (1,038)
Other 2 (76)6 12
Common Stock Retirement (38) -(2,210) (384)
Notes Payable - 500(20,300)
Dividends Paid (12) (12)
__________ __________- -
-------- -------
Net Cash Provided (Used) in
Financing Activities (208) 1,242
__________ __________(3,364) (21,710)
Net DecreaseIncrease in Cash and
Short-Term Investments (5,012)21,336 -
Cash and Short-Term Investments,
Beginning of Period 11,2926,280 400
__________ ___________--------- ----------
Cash and Short-Term Investments,
End of Period $ 6,28027,616 $ 400
========= ========== ===========
The accompanying notes are an integral part of these condensed financial
statements.
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
SixNine Months Ended
_________________
1/29/-----------------
4/30/94 5/1/30/93
_______ _______------- ------
Cash Flows From Operating Activities:
Net Earnings $ 5,6157,472 $ 307559
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 4,565 4,7656,878 7,030
Deferred Income Taxes (1,256) (17)805 1,566
Gain on Sale of Textile Segment (3,444) -
Changes in Working Capital:
Accounts Receivable (8,952) (11,190)(4,064) (6,383)
Inventories (13,498) (32,157)11,794 (5,747)
Off-Season Reserve 11,270 11,1224,628 6,058
Other Current Assets (228) 116(315) (22)
Income Taxes (331) (404)(2,285) (3,743)
Accounts Payable and
Accrued Expenses 8,735 (3,903)
__________ ________8,794 (8,826)
--------- -------
Net Cash Provided (Used)
by Operations 2,476 (31,361)30,263 (9,508)
Cash Flows From Investing Activities:
Common Stock of Moog 1 -
Acquisitions (11,670)(11,664) -
Proceeds from Sale of Textile Segment 8,2968,356 -
Additions to Property, Plant,
and Equipment (4,246) (548)
________ _________(7,399) (691)
------- --------
Net Cash Used in Investing
Activities (7,619) (548)(10,706) (691)
Cash Flows From Financing Activities:
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (1,250) 192(2,410) (846)
Other 14 (161)20 (149)
Common Stock Retirement (2,851) -(5,061) (384)
Notes Payable - 24,4004,100
Dividends Paid (12) (12)
________ ________------- -------
Net Cash Provided (Used) in
Financing Activities (4,099) 24,419(7,463) 2,709
Net DecreaseIncrease (Decrease) in Cash and
Short-Term Investments (9,242)12,094 (7,490)
Cash and Short-Term Investments,
Beginning of Period 15,522 7,890
__________ ___________--------- ----------
Cash and Short-Term Investments,
End of Period $ 6,28027,616 $ 400
========= ========== ===========
The accompanying notes are an integral part of these condensed financial
statements.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
January 29,April 30, 1994
1. Consolidated Condensed Financial Statements
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments, which are normal
and recurring in nature, necessary to present fairly the financial
position of the Registrant as of January 29,April 30, 1994 and July 31, 1993 and
results of operations for the three and sixnine month periods ended January
29,April 30,
1994 and January 30,May 1, 1993. All significant intercompany transactions and
accounts have been eliminated in consolidation. The July 31, 1993 balance
sheet was derived from audited financial statements.
The results of operations for the three and sixnine month periods ended January 29,April
30, 1994 and January 30,May 1, 1993 are not necessarily indicative of the results to
be expected for the full year.
The accounting policies followed by the Registrant are set forth in Note 1
to the Registrant's financial statements in the 1993 Seneca Foods
Corporation Annual Report and 10-K.
Other footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted. It is suggested that these consolidated
condensed financial statements be read in conjunction with the financial
statements and notes included in the Registrant's July 31, 1993 financial
report.
2. Primary earnings per share are based on the weighted average number of
common shares outstanding, as the effect of common stock equivalents is
immaterial. The difference between primary and fully diluted earnings per
share is immaterial.
3. Off-Season Reserve is the excess of absorbed expenses over incurred
expenses to date. The seasonal nature of the Registrant's business results
in a timing difference between expenses (primarily overhead expenses)
incurred and absorbed into product cost. All Off-Season Reserve balances
are zero at fiscal year end.
4. The Registrant's investment in the common stock of Moog Inc. is carried at
the lower of aggregate cost or market. The market value of these
securities was $6,964,000$6,903,000 as of January 29,April 30, 1994. There were no realized
gains or losses during the periods presented. Unrealized gains were
$886,000$824,000 at January 29,April 30, 1994. The Registrant has the ability and intent to
hold these securities for the foreseeable future.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
April 30, 1994
5. As reported on a January 1994 8-K, the Registrant acquired certain assets
of ERLY Juice, Inc. and WorldMark, Inc.(citrus juice business) which
totalled $8,372,000; and Sanofi-Bio Industries, Inc. (industrial juice
business) which totalled $3,298,000.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
January 29, 1994
6. The Registrant adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," effective August 1, 1993. The Statement
supersedes A.P.B. No. 11 and SFAS No. 96, "Accounting for Income Taxes,"
which was not adopted by the Registrant. SFAS #109 uses the liability
method of accounting for income taxes where deferred liabilities and assets
are determined based on the difference between the financial statement and
tax bases of assets and liabilities, using enacted tax rates in effect for
the year in which the differences are expected to reverse. The cumulative
effect of adopting SFAS No. 109 on the Registrant's financial statements
was to increase earnings by $2,006,000 ($.66.68 per share).
The primary components of temporary differences that give rise to the
Registrant's net deferred tax liability, as of August 1, 1993, are as
follows:
Deferred Tax Assets:
Accrued Expenses $2,373
Pension 238
Other 42
Valuation Allowance -
______-----
Total Deferred Tax Assets 2,653
Deferred Tax Liabilities:
Property, Plant, and Equipment (excess
of book basis over tax basis) 11,356
Inventories 231
______------
Total Deferred Liabilities 11,587
______------
Net Deferred Tax Liability $8,934
======
The Registrant believes that the components of the provision for income taxes
and actual effective rate reconciliation will not vary significantly from that
previously reported.
The provision for income taxes for the three and sixnine months ended JanuaryApril 30,
1993 is included in the Consolidated Condensed Statements of Income as
previously presented.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
January 29,April 30, 1994
Results of Operations:
Sales:
Sales reflect an increase of 12.2%15.5% for the first sixnine months versus 1993. The
higher sales, in large part, are due to higher canned vegetables selling prices
and quantities sold than the previous periods.periods and the Citrus Juice Business
acquisition (see footnotes for details).
Costs and Expenses:
The following table shows cost and expenses as a percentage of sales:
Three Months Ended SixNine Months Ended
__________________ ________________
1/29/4/30/94 5/1/30/93 1/29/4/30/94 5/1/30/93
_______ _______ _______ _______
Cost of Product Sold 85.1% 87.3%85.5% 90.5% 85.6% 86.4%87.9%
Selling 6.6 7.06.7 6.7 6.8 6.9
7.0
Administrative 3.9 3.2 3.7 3.52.6 3.4 3.3 3.4
Interest Expense 1.8 0.1 2.0 2.9 2.2 3.2
____ _____ ____ _____
97.6% 100.4% 98.4% 100.1%2.1
---- ----- ---- -----
96.6% 100.7% 97.7% 100.3%
Lower Cost of Product Sold percentages (i.e. higher Gross Margins) reflect, in
part, higher selling prices for vegetable products than in the prior year due
to the floods in the Midwest. TheAdministrative percent of sales is down mostly
due to 22% higher sales in the quarter than last year. Interest Expense is
lower largelylast year due to Interest Income received from an IRS settlement during
the debt refinancing and lower inventories.quarter in the prior year.
Income Taxes:
The effective tax rate used in fiscal 1994 is 39%38% and in fiscal 1993 it is 22%63%.
1993 is lowerhigher than 1994 because of the 1993 loss from continuing operations.
The Registrant adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", effective August 1, 1993. See footnotes for
details.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS (Continued)
April 30, 1994
Financial Condition:
The financial condition of the Registrant is summarized in the following table
and explanatory review (In Thousands):
For the Quarter For the Year
Ended JanuaryApril Ended July
______________ ____________
1994 1993 1993 1992
____ ____ ____ ____
Working Capital Balance $78,402 $79,655$78,120 $82,088 $84,410 $76,650
Quarter Change (7,052) 2,086(282) 2,433 - -
Notes Payable - 24,4004,100 - -
Long-Term Debt 69,580 76,285and Leases 68,419 75,133 71,534 75,967
Current Ratio 2.65:2.72:1 2.23:3.27:1 3.20:1 2.78:1
Inventory (Average) Turnover 3.3 2.23.0 1.8 2.8 2.9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS (Continued)
January 29, 1994
The change in the Working Capital for the quarter from the prior year is
largely due to the acquisition of certain assets of ERLY Juice, Inc. and
Worldmark, Inc.(see footnote for details) plus capital expenditures and common stock retirements in the
current year with nothing comparablesubstantially less of these items in the prior year. Notes
Payable is $24.4 million less than the prior period due to lower inventory
which was caused by lower packs in the Midwest due to the wet conditions and
due to the higher sales of vegetables. See Consolidated Statements of Cash
Flows for further details.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults on Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit II - (11) Computation of earnings per share
(b) Reports on Form 8-K - a January 1994 8-K described two
acquisitions made bynone during the Registrant (see footnotes for
details).quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Seneca Foods Corporation
(Registrant)
/s/Kraig H. Kayser
March 11,June 10, 1994 Kraig H. Kayser
President and
Chief Executive Officer
/s/Jeffrey L. Van Riper
March 11,June 10, 1994 Jeffrey L. Van Riper
Controller and
Chief Accounting Officer