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, 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, 1994
Common Stock, $.25 Par 2,893,170
<TABLE>
PART I FINANCIAL INFORMATION
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands of Dollars)
<CAPTION>
1/29/94 7/31/93
_______ _______
<S> <C> <C>
ASSETS
Current Assets:
Cash and Short-term Investments $ 6,280 $ 15,522
Accounts Receivable, Net 31,779 24,398
Inventories:
Finished Goods 53,950 38,350
Work in Process 26,255 16,366
Raw Materials 15,938 27,870
96,143 82,586
Off-Season Reserve (Note 3) (11,270) -
Deferred Tax (Net) (Note 6) 2,422 -
Other Current Assets 476 250
------- -------
Total Current Assets 125,830 122,756
Property, Plant and Equipment, Net 78,633 74,089
Common Stock of Moog Inc. (Note 4) 6,078 6,079
Other Assets 200 214
-------- --------
$210,741 $203,138
</TABLE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
<S> <C> <C>
Notes Payable $ - $ -
Accounts Payable 19,832 19,742
Accrued Expenses 18,155 12,980
Income Taxes 2,658 567
Current Portion of Long-Term Debt and Capital
Lease Obligations 6,783 5,057
------ ------
Total Current Liabilities 47,428 38,346
Long-Term Debt 68,640 71,534
Capital Lease Obligations 940 1,022
Deferred Income Taxes 9,684 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 1,911 1,948
Additional Paid-in Capital 344 3,157
Retained Earnings 81,724 76,121
-------- --------
Stockholders' Equity 84,049 81,296
-------- --------
$210,741 $203,138
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except Share Data)
<CAPTION>
Three Months Ended
------------------
1/29/94 1/30/93
------- -------
<S> <C> <C>
Net Sales $ 83,780 $ 71,510
Costs and Expenses:
Cost of Product Sold 71,354 62,494
Selling and Administrative 8,811 7,281
Interest Expense 1,643 2,041
------ ------
Total Costs and Expenses 81,808 71,816
------ ------
Earnings Before Income Taxes 1,972 (306)
Income Taxes 769 (100)
Earnings from Continuing Operations 1,203 (206)
Earnings from Discontinued Operations - 210
---------- ----------
Net Earnings $ 1,203 $ 4
========== ==========
Net Earnings from Continuing Operations
Applicable to Common Stock $ 1,197 $ (212)
Net Earnings Applicable to
Common Stock 1,197 (2)
Weighted Average Common
Shares Outstanding 2,918,199 3,093,666
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Earnings from Continuing Operations $ .41 $ (.06)
Earnings from Discontinued Operations - .06
----------- ----------
Net Earnings $ .41 $ .00
=========== ==========
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except Share Data)
<CAPTION>
Six Months Ended
----------------
1/29/94 1/30/93
------- -------
<S> <C> <C>
Net Sales $ 145,783 $ 129,961
Costs and Expenses:
Cost of Product Sold 124,739 112,194
Selling and Administrative 15,448 13,694
Interest Expense 3,200 4,172
------- -------
Total Costs and Expenses 143,387 130,060
Earnings Before Income Taxes 2,396 (99)
Income Taxes 934 (22)
Earnings from Continuing Operations 1,462 (77)
Earnings from Discontinued Operations 46 384
Gain on the Sale of Discontinued Operations
Net of Income Taxes 2,101 -
Cumulative Effect of Change in Accounting
Principle (Note 6) 2,006 -
---------- ----------
Net Earnings $ 5,615 $ 307
========== ==========
Net Earnings from Continuing Operations
Applicable to Common Stock $ 1,450 $ (89)
Net Earnings Applicable to
Common Stock 5,603 295
Weighted Average Common
Shares Outstanding 2,968,466 3,093,666
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Earnings from Continuing Operations $ .49 $ (.02)
Earnings from Discontinued Operations .02 .12
Gain on the Sale of Discontinued
Operations .71 -
Cumulative Effect of Change in
Accounting Principle .67 -
----------- ----------
Net Earnings $ 1.89 $ .10
=========== ==========
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<CAPTION>
Three Months Ended
__________________
1/29/94 1/30/93
_______ _______
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $ 1,203 $ 4
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 2,332 2,318
Deferred Income Taxes 1,180 71
Changes in Working Capital:
Accounts Receivable (10,143) (7,745)
Inventories 29,694 20,643
Off-Season Reserve (3,587) (2,426)
Other Current Assets 485 80
Income Taxes (1,819) (517)
Accounts Payable and
Accrued Expenses (9,906) (13,619)
________ ________
Net Cash Provided (Used)
by Operations 9,439 (1,191)
Cash Flows From Investing Activities:
Common Stock of Moog 1 -
Acquisitions (11,670) -
Additions to Property, Plant,
and Equipment (2,574) (51)
________ ________
Net Cash Used in Investing
Activities (14,243) (51)
Cash Flows From Financing Activities:
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (160) 830
Other 2 (76)
Common Stock Retirement (38) -
Notes Payable - 500
Dividends Paid (12) (12)
__________ __________
Net Cash Provided (Used) in
Financing Activities (208) 1,242
__________ __________
Net Decrease in Cash and
Short-Term Investments (5,012) -
Cash and Short-Term Investments,
Beginning of Period 11,292 400
__________ ___________
Cash and Short-Term Investments,
End of Period $ 6,280 $ 400
========== ===========
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<CAPTION>
Six Months Ended
_________________
1/29/94 1/30/93
_______ _______
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $ 5,615 $ 307
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 4,565 4,765
Deferred Income Taxes (1,256) (17)
Gain on Sale of Textile Segment (3,444) -
Changes in Working Capital:
Accounts Receivable (8,952) (11,190)
Inventories (13,498) (32,157)
Off-Season Reserve 11,270 11,122
Other Current Assets (228) 116
Income Taxes (331) (404)
Accounts Payable and
Accrued Expenses 8,735 (3,903)
__________ ________
Net Cash Provided (Used)
by Operations 2,476 (31,361)
Cash Flows From Investing Activities:
Common Stock of Moog 1 -
Acquisitions (11,670) -
Proceeds from Sale of Textile Segment 8,296 -
Additions to Property, Plant,
and Equipment (4,246) (548)
________ _________
Net Cash Used in Investing
Activities (7,619) (548)
Cash Flows From Financing Activities:
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (1,250) 192
Other 14 (161)
Common Stock Retirement (2,851) -
Notes Payable - 24,400
Dividends Paid (12) (12)
________ ________
Net Cash Provided (Used) in
Financing Activities (4,099) 24,419
Net Decrease in Cash and
Short-Term Investments (9,242) (7,490)
Cash and Short-Term Investments,
Beginning of Period 15,522 7,890
__________ ___________
Cash and Short-Term Investments,
End of Period $ 6,280 $ 400
========== ===========
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
January 29, 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, 1994 and July 31, 1993 and
results of operations for the three and six month periods ended January
29, 1994 and January 30, 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 six month periods ended
January 29, 1994 and January 30, 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 as of January 29, 1994. There were no realized
gains or losses during the periods presented. Unrealized gains were
$886,000 at January 29, 1994. The Registrant has the ability and intent
to hold these securities for the foreseeable future.
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 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 six months ended January 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, 1994
Results of Operations:
Sales:
Sales reflect an increase of 12.2% for the first six months versus 1993. The
higher sales, in large part, are due to higher canned vegetables selling
prices and quantities sold than the previous periods.
Costs and Expenses:
The following table shows cost and expenses as a percentage of sales:
Three Months Ended Six Months Ended
__________________ ________________
1/29/94 1/30/93 1/29/94 1/30/93
_______ _______ _______ _______
Cost of Product Sold 85.1% 87.3% 85.6% 86.4%
Selling 6.6 7.0 6.9 7.0
Administrative 3.9 3.2 3.7 3.5
Interest Expense 2.0 2.9 2.2 3.2
____ _____ ____ _____
97.6% 100.4% 98.4% 100.1%
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. The Interest Expense is lower largely due
to the debt refinancing and lower inventories.
Income Taxes:
The effective tax rate used in fiscal 1994 is 39% and in fiscal 1993 it is
22%. 1993 is lower 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.
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
______________ ____________
1994 1993 1993 1992
____ ____ ____ ____
Working Capital Balance $78,402 $79,655 $84,410 $76,650
Quarter Change (7,052) 2,086 - -
Notes Payable - 24,400 - -
Long-Term Debt 69,580 76,285 71,534 75,967
Current Ratio 2.65:1 2.23:1 3.20:1 2.78:1
Inventory (Average) Turnover 3.3 2.2 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 in
current year with nothing comparable 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 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 11, 1994 Kraig H. Kayser
President and
Chief Executive Officer
/s/Jeffrey L. Van Riper
March 11, 1994 Jeffrey L. Van Riper
Controller and
Chief Accounting Officer
EXHIBIT II
SENECA FOODS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands except share data)
Three Months Ended Six Months Ended
__________________ ________________
1/29/94 1/30/93 1/29/94 1/30/93
_______ _______ _______ _______
Net Earnings Applicable to Common Stock:
Net Earnings $ 1,203 $ 4 $ 5,615 $ 307
Deduct Preferred Cash Dividends 6 6 12 12
__________ _________ _________ _________
Net Earnings Applicable to
Common Stock $ 1,197 $ (2) $ 5,603 $ 295
========== ========= ========= ========
Weighted Average Common
Shares Outstanding 2,918,199 3,093,666 2,968,466 3,093,666
Effect of Common Stock Equivalent - - - -
_________ _________ _________ _________
Weighted Average Common Shares Out-
standing for Primary 2,918,199 3,093,066 2,968,466 3,093,666
========= ========= ========= =========
Primary and Fully Diluted
Earnings Per Share $ .41 $ .00 $ 1.89 $ .10
========= ========= ========= =========
