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 October 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 No X
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 November 30, 1994
Common Stock, $.25 Par 2,796,555
<TABLE>
PART I FINANCIAL INFORMATION
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands of Dollars)
<CAPTION>
10/29/94 7/31/94
________ _______
ASSETS
<S> <C> <C>
Current Assets:
Cash and Short-term Investments $ 2,514 $ 2,325
Accounts Receivable, Net 35,274 18,651
Inventories:
Finished Goods 103,609 46,530
Work in Process 22,938 17,980
Raw Materials 16,224 28,200
_______ _______
142,771 92,710
Off-Season Reserve (Note 3) (16,181) -
Deferred Tax (Net) (Note 6) 1,194 1,194
Other Current Assets 2,425 1,233
_______ _______
Total Current Assets 167,997 116,113
Property, Plant and Equipment, Net 79,877 78,216
Common Stock of Moog Inc. (Note 4) 6,483 6,079
Other Assets 191 193
_______ _______
$254,548 $200,601
======= =======
</TABLE>
<TABLE>
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable $ 38,700 $ 1,600
Accounts Payable 42,970 31,829
Accrued Expenses 18,223 13,541
Current Portion of Long-Term Debt and Capital
Lease Obligations 6,233 6,349
_______ _______
Total Current Liabilities 106,126 53,319
Long-Term Debt 50,576 50,619
Capital Lease Obligations 832 857
Deferred Income Taxes 10,741 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 255 -
Retained Earnings 84,068 83,335
_______ _______
Stockholders' Equity 86,273 85,285
_______ _______
$254,548 $200,601
======= =======
<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
__________________
10/29/94 10/30/93
________ ________
<S> <C> <C>
Net Sales $ 88,827 $ 62,003
Costs and Expenses:
Cost of Product Sold 77,982 53,385
Selling, General, and Administrative 8,240 6,637
Interest Expense 1,441 1,557
_______ _______
Total Costs and Expenses 87,663 61,579
Earnings Before Income Taxes 1,164 424
Income Taxes 431 165
______ ______
Earnings from Continuing Operations 733 259
Earnings from Discontinued Operations - 46
Gain on the Sale of Discontinued Operations
Net of Income Taxes of $1,343 - 2,101
Cumulative Effect of Change in Accounting
Principle - 2,006
_______ _______
Net Earnings $ 733 $ 4,412
======= =======
Net Earnings from Continuing Operations
Applicable to Common Stock $ 727 $ 253
Net Earnings Applicable to
Common Stock 727 4,406
Weighted Average Common
Shares Outstanding 2,796,555 3,018,666
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Earnings from Continuing Operations $ .26 $ .08
Earnings from Discontinued Operations - .02
Gain on the Sales of Discontinued
Operations - .70
Cumulative Effect of Change in
Accounting Principle - .66
________ ________
Net Earnings $ .26 $ 1.46
======== ========
<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
__________________
10/29/94 10/30/93
________ ________
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $ 733 $ 4,412
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 2,598 2,233
Deferred Income Taxes 220 (2,436)
Gain on the Sale of Discontinued
Operations - (3,444)
Changes in Working Capital:
Accounts Receivable (16,403) 1,157
Inventories (48,698) (43,165)
Off-Season Reserve 16,181 14,857
Other Current Assets (1,464) (765)
Income Taxes 272 1,488
Accounts Payable and
Accrued Expenses 15,809 18,640
________ ________
Net Cash Used by Operations (30,752) (7,023)
Cash Flows From Investing Activities:
Acquistion (3,769) -
Proceeds from Sale of Segment - 8,356
Common Stock of Moog (149) -
Additions to Property, Plant,
and Equipment (2,059) (1,672)
_______ _______
Net Cash Provided (Used) in Investing
Activities (5,977) 6,684
Cash Flows From Financing Activities:
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (184) (1,090)
Other 2 12
Common Stock Retirement - (2,813)
Notes Payable 37,100 -
_______ _______
Net Cash Provided (Used) in
Financing Activities 36,918 (3,891)
Net Decrease in Cash and Short-
Term Investments 189 (4,230)
Cash and Short-Term Investments,
Beginning of Period 2,325 15,522
_______ _______
Cash and Short-Term Investments,
End of Period $ 2,514 $ 11,292
======= =======
<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
October 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 October 29, 1994 and July 31, 1994 and
results of operations for the three month periods ended October 29, 1994
and October 30, 1993. 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 month periods ended October 29,
1994 and October 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 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 Food
Processing segment 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 $6,483,000
as of October 29, 1994. There were no realized gains or losses during
the periods presented. Unrealized gains were $404,000 at October 29,
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
October 29, 1994
5. 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
October 29, 1994
Results of Operations:
Sales:
Sales reflect an increase of 43.3% for the first three months versus 1993.
The higher sales, in large part, are due to higher canned vegetables
quantities sold than the previous period and acquisitions made within the
last year.
Costs and Expenses:
The following table shows cost and expenses as a percentage of sales:
Three Months Ended
__________________
10/29/94 10/30/93
________ ________
Cost of Product Sold 87.9% 86.1%
Selling 6.4 7.2
Administrative 2.8 3.5
Interest Expense 1.6 2.5
____ ____
98.7% 99.3%
==== ====
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):
<TABLE>
<CAPTION>
For the Quarter For the Year
Ended October Ended July
_______________ ____________
1994 1993 1994 1993
____ ____ ____ ____
<S> <C> <C> <C> <C>
Working Capital Balance $61,871 $85,454 $62,794 $84,410
Quarter Change (923) 1,044 - -
Notes Payable 38,700 - - -
Long-Term Debt 50,576 70,461 50,619 71,534
Current Ratio 1.58:1 2.55:1 2.18:1 3.20:1
Inventory (Average) Turnover 2.6 2.1 2.8 2.8
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
October 29, 1994
The change in the Working Capital for the quarter from the prior year is
largely due to acquisition of M. C. Snack assets (see footnotes for details)
in the current year. The sale of the Textile Segment more than offset the
Common Stock Retirement and other items in the prior year. Notes Payable is
$38.7 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 plus the acquisitions made over the last
year. 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
The annual meeting of shareholders of the Registrant was held on
December 3, 1994 and the following were the voting results: (1)
Management's nominees for Director positions were elected, (2) a
management proposal to ratify the appointment of Deloitte &
Touche as independent auditors was adopted.
Item 5. Other Information
A December 8, 1994 Press Release announced the signing of a long-
term agreement with the Green Giant division of Pillsbury that
makes the Registrant the primary processor of the Green Giant
vegetable line. In connection with the transaction, the
Registrant is acquiring six Green Giant production facilities for
$72 millon (see Exhibit III attached).
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) December 8, 1994 Press Release.
(d) Reports on Form 8-K - None during the 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
_______________________
December 9, 1994 Kraig H. Kayser
President and
Chief Executive Officer
/s/Jeffrey L. Van Riper
________________________
December 9, 1994 Jeffrey L. Van Riper
Controller and
Chief Accounting Officer
<TABLE>
EXHIBIT 11
SENECA FOODS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands except share data)
<CAPTION>
Three Months Ended
__________________
10/29/94 10/30/93
________ ________
<S> <C> <C>
Net Earnings Applicable to Common Stock:
Net Earnings $ 733 $ 4,412
Deduct Preferred Cash Dividends 6 6
________ _______
Net Earnings Applicable to
Common Stock $ 727 $ 4,406
======== ========
Weighted Average Common
Shares Outstanding 2,796,555 3,018,666
Effect of Common Stock Equivalent - -
_________ _________
Weighted Average Common Shares Outstanding
for Primary Earnings per Share 2,796,555 3,018,666
========= =========
Primary and Fully Diluted
Earnings Per Share $ .26 $ 1.46
======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Commercial and Industrial Companies
Article 5 of Regulation S-X
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> OCT-29-1994
<CASH> 2514
<SECURITIES> 0
<RECEIVABLES> 35425
<ALLOWANCES> 151
<INVENTORY> 142771
<CURRENT-ASSETS> 167997
<PP&E> 183298
<DEPRECIATION> 103421
<TOTAL-ASSETS> 254548
<CURRENT-LIABILITIES> 106126
<BONDS> 51408
<COMMON> 1880
0
70
<OTHER-SE> 84068
<TOTAL-LIABILITY-AND-EQUITY> 254548
<SALES> 88827
<TOTAL-REVENUES> 88827
<CGS> 77982
<TOTAL-COSTS> 77982
<OTHER-EXPENSES> 8240
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1441
<INCOME-PRETAX> 1164
<INCOME-TAX> 431
<INCOME-CONTINUING> 733
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 733
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
</TABLE>
EXHIBIT 99
For Immediate Release Contacts: Devra A. Bevona
Seneca Foods Corporation (716) 383-4603
Terry Thompson
Pillsbury
(612) 330-4768
SENECA FOODS ENTERS ALLIANCE WITH PILLSBURY FOR
PROCESSING OF GREEN GIANT'S CANNED VEGETABLE LINE
PITTSFORD, New York -- December 8, 1994 -- Seneca Foods Corporation said
today it had signed a long-term agreement with the Green Giant division of
Pillsbury, a subsidiary of Grand Metropolitan PLC, that makes Seneca the
primary processor of the Green Giant line of canned vegetables.
The transaction calls for the acquisition of six Green Giant facilities from
Pillsbury. In addition, four other Green Giant plants will be closed by
Pillsbury over the next 18 months.
Pillsbury will continue to be responsible for all of the sales, marketing and
customer service functions for the Green Giant brand, while Seneca will
assume full responsibility for Green Giant's processing and inventory
management. Pillsbury will continue to own all of the trademark rights to
the Green Giant brand, and will retain its ownership of its proprietary seed
varieties, which go into the many Green Giant products.
Pillsbury officials said that the agreement with Seneca will enable Green
Giant to accelerate it progress in North American vegetable industry by
enhancing overall competitiveness and strengthening customer service.
Green Giant is a healthy and growing business, and the actions we are
announcing today will continue to strengthen our position in the market,
said Paul S. Walsh CEO of Pillsbury. More than ever we are in a position to
concentrate on product development and marketing and let our processing
partners do what they do best.
Kraig H. Kayser, President and CEO of Seneca Foods Corporation, is
enthusiastic about the agreement and about Seneca's involvement with Green
Giant. They have an outstanding reputation for quality people and quality
plants.
Plants being sold to Seneca are located in Mayville, Wisconsin; Dayton,
Washington; Buhl, Idaho; Glencoe, Minnesota; Montgomery, Minnesota; and Blue
Earth, Minnesota, with an estimated 400 full-time employees.
The facilities that will close are located in Ripon, Wisconsin; Beaver Dam,
Wisconsin; Hoopeston, Illinois; and LeSueur, Minnesota. Although production
in LeSueur will end, Green Giant will maintain facilities dedicated to
biotechnology, variety seed development, and agricultural services in that
community and in Green Giant's major technical facility in Minneapolis.
Another facility in Belvidere, Illinois will cease seasonal production only.
Pending close of this agreement, Seneca will have 21 plants involved in fruit
and vegetable processing around the country.
The agreement is subject to regulatory and other approvals.
Pillsbury, a North American-based subsidiary of Grand Metropolitan PLC,
produces a range of grocery items, frozen foods, and refrigerated dough
products for international consumer markets. The Company is also a major
supplier of baking and other food products to the U.S. foodservice and
commercial baking industries. The Pillsbury portfolio of marketing-leading
brands includes Pillsbury, Green Giant, Hungry Jack, Martha White, Aunt
Nellie's, Jeno's, Totino's, Pappalo's, Haagen-Dazs, and Alpo Petfoods. Other
U.S. subsidiaries of GrandMet include Burger King, Carillon Importers,
Heublein, the Paddington Corporation, and Pearle, Inc.
Seneca Foods Corporation is primarily a fruit and vegetable processing
company headquartered in Pittsford, New York with manufacturing facilities
located throughout the United States. Its common stock is traded on the
National Market System under the symbol SENE.
