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 28, 1995 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, 1995
Common Stock, $.25 Par 2,796,555
PART I FINANCIAL INFORMATION
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands of Dollars)
1/28/95 7/31/94
_______ _______
ASSETS
Current Assets:
Cash and Short-term Investments $ 976 $ 2,325
Accounts Receivable, Net 30,276 18,651
Inventories:
Finished Goods 76,303 46,530
Work in Process 22,978 17,980
Raw Materials 26,074 28,200
_______ _______
125,355 92,710
Off-Season Reserve (Note 3) (11,314) -
Deferred Tax (Net) 1,194 1,194
Other Current Assets 719 1,233
_______ _______
Total Current Assets 147,206 116,113
Property, Plant and Equipment, Net 87,823 78,216
Common Stock of Moog Inc. (Note 4) 7,393 6,079
Other Assets 188 193
_______ _______
$242,610 $200,601
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable $ 45,360 $ 1,600
Accounts Payable 27,454 31,829
Accrued Expenses 15,928 13,541
Current Portion of Long-Term Debt and Capital
Lease Obligations 6,110 6,349
______ ______
Total Current Liabilities 94,852 53,319
Long-Term Debt 48,866 50,619
Capital Lease Obligations 807 857
Deferred Income Taxes 11,092 10,521
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 1,880 1,880
Net Unrealized Gain on Noncurrent Securities 828 -
Retained Earnings 84,215 83,335
_______ _______
Stockholders' Equity 86,993 85,285
_______ _______
$242,610 $200,601
======= =======
<FN>
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
1/28/95 1/29/94
_______ _______
Net Sales $ 87,935 $ 83,780
Costs and Expenses:
Cost of Product Sold 77,582 71,354
Selling and Administrative 8,289 8,811
Interest Expense 1,812 1,643
______ ______
Total Costs and Expenses 87,683 81,808
______ ______
Earnings Before Income Taxes 252 1,972
Income Taxes 93 769
______ ______
Net Earnings $ 159 $ 1,203
====== ======
Net Earnings Applicable to
Common Stock 153 1,197
====== ======
Weighted Average Common
Shares Outstanding 2,796,555 2,918,199
========= =========
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Net Earnings $ .05 $ .41
======== ========
<FN>
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)
Six Months Ended
1/28/95 1/29/94
_______ _______
Net Sales $ 176,762 $ 145,783
Costs and Expenses:
Cost of Product Sold 155,564 124,739
Selling and Administrative 16,529 15,448
Interest Expense 3,253 3,200
_______ _______
Total Costs and Expenses 175,346 143,387
Earnings Before Income Taxes 1,416 2,396
Income Taxes 524 934
_______ _______
Earnings from Continuing Operations 892 1,462
Earnings from Discontinued Operations - 46
Gain on the Sale of Discontinued Operations
Net of Income Taxes (Note 6) - 2,101
Cumulative Effect of Change in Accounting
Principle - 2,006
________ ________
Net Earnings $ 892 $ 5,615
======== ========
Net Earnings from Continuing Operations
Applicable to Common Stock $ 880 $ 1,450
======== ========
Net Earnings Applicable to
Common Stock $ 880 $ 5,603
======== ========
Weighted Average Common
Shares Outstanding 2,796,555 2,968,466
========= =========
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Earnings from Continuing Operations $ .31 $ .49
Earnings from Discontinued Operations - .02
Gain on the Sale of Discontinued
Operations - .71
Cumulative Effect of Change in
Accounting Principle - .67
________ ________
Net Earnings $ .31 $ 1.89
======== ========
<FN>
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
1/28/95 1/29/94
_______ _______
Cash Flows From Operating Activities:
Net Earnings $ 159 $ 1,203
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 2,495 2,332
Deferred Income Taxes 351 1,180
Changes in Working Capital:
Accounts Receivable 4,998 (10,143)
Inventories 17,416 29,694
Off-Season Reserve (4,867) (3,587)
Other Current Assets 1,218 485
Income Taxes 151 (1,819)
Accounts Payable and
Accrued Expenses (17,811) (9,906)
_______ _______
Net Cash Provided
by Operations 4,110 9,439
Cash Flows From Investing Activities:
Common Stock of Moog - 1
Acquisitions - (11,670)
Additions to Property, Plant,
and Equipment (10,441) (2,574)
_______ _______
Net Cash Used in Investing
Activities (10,441) (14,243)
Cash Flows From Financing Activities:
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (1,858) (160)
Other 3 2
Common Stock Retirement - (38)
Notes Payable 6,660 -
Dividends Paid (12) (12)
_______ _______
Net Cash Provided (Used) in
Financing Activities 4,793 (208)
_______ _______
Net Decrease in Cash and
Short-Term Investments (1,538) (5,012)
Cash and Short-Term Investments,
Beginning of Period 2,514 11,292
_______ _______
Cash and Short-Term Investments,
End of Period $ 976 $ 6,280
======= =======
<FN>
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)
Six Months Ended
1/28/95 1/29/94
_______ _______
Cash Flows From Operating Activities:
Net Earnings $ 892 $ 5,615
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 5,093 4,565
Deferred Income Taxes 571 (1,256)
Gain on Sale of Textile Segment - (3,444)
Changes in Working Capital:
Accounts Receivable (11,405) (8,952)
Inventories (31,282) (13,498)
Off-Season Reserve 11,314 11,270
Other Current Assets (246) (228)
Income Taxes 274 (331)
Accounts Payable and
Accrued Expenses (2,002) 8,735
_______ _______
Net Cash Provided (Used)
by Operations (26,791) 2,476
Cash Flows From Investing Activities:
Common Stock of Moog - 1
Acquisitions (3,769) (11,670)
Proceeds from Sale of Textile Segment - 8,296
Additions to Property, Plant,
and Equipment (12,500) (4,246)
_______ _______
Net Cash Used in Investing
Activities (16,269) (7,619)
Cash Flows From Financing Activities:
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (2,042) (1,250)
Other 5 14
Common Stock Retirement - (2,851)
Notes Payable 43,760 -
Dividends Paid (12) (12)
_______ _______
Net Cash Provided (Used) in
Financing Activities 41,711 (4,099)
_______ _______
Net Decrease in Cash and
Short-Term Investments (1,349) (9,242)
Cash and Short-Term Investments,
Beginning of Period 2,325 15,522
_______ ________
Cash and Short-Term Investments,
End of Period $ 976 $ 6,280
======= ========
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
January 28, 1995
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 28, 1995 and July 31, 1994 and
results of operations for the three and six month periods ended January
28, 1995 and January 29, 1994. All significant intercompany
transactions and accounts have been eliminated in consolidation. The
July 31, 1994 balance sheet was derived from audited financial
statements.
The results of operations for the three and six month periods ended
January 28, 1995 and January 29, 1994 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 1994 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, 1994 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 market value as required by SFAS 115 which the Company implemented
effective this year. The market value of these securities was $7,393,000
as of January 28, 1995. There were no realized gains or losses during
the periods presented. Unrealized gains were $1,315,000 at January 28,
1995. 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)
January 28, 1995
5. As reported on a February 1995 8-K, the Registrant acquired certain
assets of the Green Giant Division of The Pillsbury Company in which the
purchase price totalled $87,025,000. The transaction occurred subsequent
to the end of the quarter and therefore is not reflected in these
financial statements.
6. The Registrant acquired the assets of M. C. Snack, Inc. of Yakima,
Washington, a snack food maker of apple chips under the Nature's Favorite
Brand for $3,769,000 during August 1994.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
January 29, 1994
Results of Operations:
Sales:
Sales reflect an increase of 21.3% for the first six months versus 1994. The
higher sales, in large part, are due to higher canned vegetables quantities
sold than the previous period.
Costs and Expenses:
The following table shows cost and expenses as a percentage of sales:
Three Months Ended Six Months Ended
__________________ ________________
1/28/95 1/29/94 1/28/95 1/29/94
_______ _______ _______ _______
Cost of Product Sold 88.3% 85.2% 88.1% 85.6%
Selling 6.3 6.6 6.4 6.9
Administrative 3.2 3.9 3.0 3.7
Interest Expense 2.1 2.0 1.8 2.2
____ ____ ____ ____
99.9% 97.7% 99.3% 98.4%
Higher Cost of Product Sold percentages (i.e. lower Gross Margins) reflect,
in part, lower selling prices for vegetable products than in the prior year
due to the relatively high packs of vegetables throughout the U. S. after the
previous year which saw unprecidented floods in the Midwest. The Interest
Expense is lower largely due to the debt refinancing and higher sales.
Income Taxes:
The effective tax rate used in fiscal 1995 is 37% and in fiscal 1994 it is
39%.
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 January Ended July
_______________ ____________
1995 1994 1994 1993
____ ____ ____ ____
Working Capital Balance $52,354 $78,402 $62,794 $84,410
Quarter Change (9,517) (7,052) - -
Notes Payable 45,360 - - -
Long-Term Debt 49,673 69,580 50,619 71,534
Current Ratio 1.55:1 2.65:1 2.18:1 3.20:1
Inventory (Average) Turnover 2.9 2.6 2.8 2.8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
January 28, 1995
The change in the Working Capital for the quarter from the prior year is
largely due to higher capital expenditures in the current year tham the
previous year. Notes Payable is $45.4 million greater than the prior period
due to high vegetable pack in the current year and the low vegetable pack in
the previous year which was caused by the Midwest's flood conditions, the
acquisitions made over the last year, and the prepayment of a long-term debt
issue totaling $13.8 million in July 1994. Accounts Receivable is higher than
the July balance due to the relatively low sales in July, but lower than the
January 1994 due to the higher sales in that month. 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 11 - (11) Computation of earnings per share
(b) Exhibit 27 - (27) Financial Data Schedules
(c) Exhibit 99 - (99) Note Agreement related to the $75,000,000
note with The Prudential Insurance Company of America and
$50,000,000 note with John Hancock Mutual Life Insurance
Company.
(d) Reports on Form 8-K - a December 1994 and a February 1995 8-K
described an acquisition made by the Registrant (see
footnotes for details).
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 13, 1995 Kraig H. Kayser
President and
Chief Executive Officer
/s/Jeffrey L. Van Riper
March 13, 1995 Jeffrey L. Van Riper
Controller and
Chief Accounting Officer