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Previous: SEARS ROEBUCK ACCEPTANCE CORP, S-3, 1995-11-14 |
Next: SENSORMATIC ELECTRONICS CORP, 10-Q, 1995-11-14 |
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 September 30, 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 October 31, 1995
Common Stock Class A, $.125 Par 2,796,555
Common Stock Class B, $.125 Par 2,796,555
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands of Dollars)
<CAPTION>
9/30/95 3/31/95
_______ _______
<S> <C> <C>
ASSETS
Current Assets:
Cash and Short-term Investments $ 10,740 $ 26,538
Accounts Receivable, Net 41,065 32,601
Inventories:
Finished Goods 281,325 64,613
Work in Process 17,605 19,531
Raw Materials 37,729 48,260
------- -------
336,659 132,404
Off-Season Reserve (Note 3) (36,631) -
Deferred Tax (Net) 1,933 1,933
Other Current Assets 7,497 801
-------------- ---------------
Total Current Assets 361,263 194,277
Property, Plant and Equipment, Net 228,734 179,718
Common Stock of Moog Inc. 10,857 7,494
Other Assets 348 237
-------------- ---------------
$ 601,202 $ 381,726
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable $ 109,100 $ -
Accounts Payable 145,791 36,089
Accrued Expenses 18,446 19,599
Income Taxes - 125
Current Portion of Long-Term Debt and Capital
Lease Obligations 1,305 5,594
--------------- ---------------
Total Current Liabilities 274,642 61,407
Long-Term Debt 225,024 220,677
Capital Lease Obligations 9,677 803
Deferred Income Taxes 12,698 11,490
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 Available-For-Sale Securities 3,010 892
Retained Earnings 74,201 84,507
--------------- ---------------
Stockholders' Equity 79,161 87,349
--------------- ---------------
$601,202 $ 381,726
=============== ===============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except Share Data)
<CAPTION>
Three Months Ended
__________________
9/30/95 9/24/94
_______ _______
<S> <C> <C>
Net Sales $ 131,979 $ 72,325
Costs and Expenses:
Cost of Product Sold 118,324 63,904
Selling, General, and Administrative 8,185 6,503
Interest Expense 6,820 1,373
Nonrecurring Charge (See Notes) 15,078 -
------------------ -----------------
Total Costs and Expenses 148,407 71,780
------------------ -----------------
Earnings Before Income Taxes (16,428) 545
Income Taxes (6,079) (66)
------------------ -----------------
Earnings (loss) from Continuing Operations (10,349) 611
Earnings from Discontinued Operations - 5
Gain on the Sale of Discontinued Operations
Net of Income Taxes - 138
Extraordinary Losses
Net of Income Taxes - (606)
------------------ -----------------
Net Earnings (Loss) $ (10,349) $ 148
================== =================
Net Earnings from Continuing Operations
Applicable to Common Stock $ (10,355) $ 605
Net Earnings Applicable to
Common Stock (10,355) 142
Weighted Average Common
Shares Outstanding 5,593,110 5,593,110
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Earnings from Continuing Operations $ (1.85) $ .11
Earnings from Discontinued Operations - .00
Gain on the Sales of Discontinued
Operations - .03
Extraordinary Loss - (.11)
------------------ ---------------
Net Earnings (Loss) $ (1.85) $ .03
================== ===============
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except Share Data)
<CAPTION>
Six Months Ended
________________
9/30/95 9/24/94
_______ _______
<S> <C> <C>
Net Sales $ 213,924 $ 143,086
Costs and Expenses:
Cost of Product Sold 186,853 123,872
Selling, General, and Administrative 15,968 13,709
Interest Expense 12,365 2,729
Nonrecurring Charge (See Notes) 15,078 -
------------------ -----------------
Total Costs and Expenses 230,264 140,310
------------------ -----------------
Earnings Before Income Taxes (16,340) 2,776
Income Taxes (6,046) 739
------------------ -----------------
Earnings (loss) from Continuing Operations (10,294) 2,037
Earnings from Discontinued Operations - 6
Gain on the Sale of Discontinued Operations
Net of Income Taxes - 172
Extraordinary Losses
Net of Income Taxes - (606)
------------------ -----------------
Net Earnings (Loss) $ (10,294) $ 1,609
================== =================
Net Earnings from Continuing Operations
Applicable to Common Stock $ (10,306) $ 2,025
Net Earnings Applicable to
Common Stock (10,306) 1,597
Weighted Average Common
Shares Outstanding 5,593,110 5,593,860
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Earnings from Continuing Operations $ (1.84) $ .37
Earnings from Discontinued Operations - .00
Gain on the Sales of Discontinued
Operations - .03
Extraordinary Loss - (.11)
------------------ ---------------
Net Earnings (Loss) $ (1.84) $ .29
================== ===============
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<CAPTION>
Three Months Ended
__________________
9/30/95 9/24/94
_______ _______
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $ (10,349) $ 148
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 5,862 2,623
Deferred Income Taxes (13) (134)
Changes in Working Capital:
Accounts Receivable (10,621) (11,495)
Inventories (98,374) (64,150)
Off-Season Reserve (18,715) 13,957
Other Current Assets (195) 2,426
Income Taxes (6,711) (2,345)
Accounts Payable and
Accrued Expenses 99,853 26,762
------------------ -----------------
Net Cash Used in Operations (39,263) (32,208)
------------------ -----------------
Cash Flows From Investing Activities:
Additions to Property, Plant,
and Equipment (22,617) (2,008)
Acquisition - (3,769)
Disposals of Property, Plant,
and Equipment 33 859
------------------ -----------------
Net Cash Used in Investing Activities (22,584) (4,918)
------------------ -----------------
Cash Flows From Financing Activities:
Notes Payable 61,100 27,900
Long-Term Borrowing 9,258 -
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (15) (16,679)
Other (87) 3
Dividends - -
Common Stock Retirement - (2)
------------------ ------------------
Net Cash Provided by
Financing Activities 70,256 11,222
------------------ -----------------
Net Increase (Decrease) in Cash and Short-
Term Investments 8,409 (25,904)
Cash and Short-Term Investments,
Beginning of Period 2,331 27,402
------------------ -----------------
Cash and Short-Term Investments,
End of Period $ 10,740 $ 1,498
================== ==================
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<CAPTION>
Six Months Ended
________________
9/30/95 9/24/94
_______ _______
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $ (10,294) $ 1,609
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 10,358 4,956
Deferred Income Taxes (35) 1,424
Changes in Working Capital:
Accounts Receivable (8,464) (4,590)
Inventories (130,993) (56,034)
Off-Season Reserve (36,631) 7,705
Other Current Assets 43 (736)
Income Taxes (6,864) (4,165)
Accounts Payable and
Accrued Expenses 108,549 27,234
------------------ -----------------
Net Cash Used in Operations (74,331) (22,597)
------------------ -----------------
Cash Flows From Investing Activities:
Additions to Property, Plant,
and Equipment (59,409) (3,646)
Acquisition - (3,769)
Disposals of Property, Plant,
and Equipment 33 859
------------------ -----------------
Net Cash Used in Investing Activities (59,376) (6,556)
------------------ -----------------
Cash Flows From Financing Activities:
Notes Payable 109,100 27,900
Long-Term Borrowing 9,258 -
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (326) (17,561)
Other (111) 6
Dividends (12) (12)
Common Stock Retirement - (1,880)
------------------ ------------------
Net Cash Provided by
Financing Activities 117,909 8,453
------------------ -----------------
Net Decrease in Cash and Short-
Term Investments (15,798) (20,700)
Cash and Short-Term Investments,
Beginning of Period 26,538 22,198
------------------ -----------------
Cash and Short-Term Investments,
End of Period $ 10,740 $ 1,498
================== ==================
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</FN>
</TABLE>
<PAGE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 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 September 30, 1995 and March 31, 1995
and results of operations for the three and six month periods ended
September 30, 1995 and September 24, 1994. All significant intercompany
transactions and accounts have been eliminated in consolidation. The
March 31, 1995 balance sheet was derived from audited financial
statements.
The results of operations for the three month periods ended September
30, 1995 and September 24, 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 1995 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 March 31, 1995
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 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 changed its fiscal year end from July 31 to March 31
during Fiscal 1995. These financial statements reflect the prior year as
if the fiscal year ended March 31.
<PAGE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
September 30, 1995
5. A proposed amendment to the Registrant's Certificate of Incorporation
which effected a recapitalization of the Registrant by creating a second
class of Common Stock (which is being distributed to all common
shareholders in the form of a stock dividend) was adopted at the Annual
Meeting held on August 5, 1995. This recapitalization amendment (i)
reclassifies the existing Common Stock as Class B Common Stock, (ii)
authorizes a new class of 10,000,000 shares designated as Class A Common
Stock and (iii) establishes the express terms of the Class A Common Stock
and the Class B Common Stock. The Class A Common Stock and the Class B
Common Stock have substantially identical rights with respect to any
dividends or distributions of cash or property declared on shares of common
stock and rank equally as to the right to receive proceeds on liquidation
or dissolution of the Registrant after payment of the Registrant's
indebtedness and liquidation right to the holders of preferred shares.
However, holders of Class B Common Stock retain full vote per share whereas
the holders of Class A Common Stock have voting rights of 1/20th of one
vote per share on all matters as to which shareholders of the Registrant
are entitled to vote.
6. The second quarter results include a nonrecurring charge of $15,078,000,
before income tax benefit, due to combination of start-up costs related to
the Pillsbury Alliance and severe drought conditions that New York State
suffered during the entire summer. The Registrant undertook an ambitious
capital expenditure program related to the Pillsbury Alliance. In the
relatively short time between the February 1995 closing of the Pillsbury
Alliance deal and the beginning of the 1995 vegetable pack, 37 separate
major capital projects needed to be completed. There was some unforeseen
problems related to a few of these projects, mostly in the New York plants.
Some of the used equipment transferred from the closed plants had operating
difficulties and was not always easily repaired, causing downtime. As a
result, plant throughput and yields were poor at some plants causing
unfavorable manufacturing variances. The problems were magnified when
drought and hot weather conditions forced the uneven timing of maturities
of vegetables.
7. During the quarter, Pillsbury agreed to delay the first two principal
payments on the $73,025,000 subordinated promissory note until October
1998 with an option to convert the payments into the Registrant's
equity. Each payment was to be $3,000,000.
<PAGE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
September 30, 1995
8. During the quarter, the Registrant entered into a Sale/Leaseback
transaction where three of its wastewater facilities in New York State
were sold to the Wayne County Water and Sewer Authority with net
proceeds of $9,000,000.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
September 30, 1995
Results of Operations:
Sales:
Sales reflect an increase of 80.0% for the second quarter versus 1994. 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 Six Months Ended
__________________ ________________
9/30/95 9/24/94 9/30/95 9/24/94
_______ _______ _______ _______
Cost of Product Sold 89.6% 88.3% 87.3% 86.6%
Selling 4.5 5.3 5.5 6.2
Administrative 1.7 3.7 2.0 3.4
Interest Expense 5.2 1.9 5.8 1.9
Nonrecurring Charge 11.4 - 7.0 -
------------------------------------------
112.4% 99.2% 107.6% 98.1%
==========================================
Higher Cost of Product Sold percentages (i.e. lower Gross Margins)
reflect, in part, higher costs for vegetable and apple products than
in the prior year due to the relatively short packs of vegetables
throughout the U. S. and a worldwide shortage of apple. The Interest
Expense is higher largely due to the debt issued to finance the
acquisitions made over the last year. Refer to the footnotes for the
discussion of the Nonrecurring Charge.
Income Taxes:
The effective tax rate used in fiscal 1996 is 37% and in fiscal 1995 it is
26.6%. 1995 effective tax rate reflects a year-end adjustment to arrive at a
34.5% annual rate.
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 September Ended March
_______________ ____________
1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Working Capital Balance $86,621 $60,950 $132,870 $78,180
Quarter Change (13,662) 18,641 - -
Notes Payable 109,100 27,900 - -
Long-Term Debt 234,701 51,428 221,480 68,546
Current Ratio 1.32:1 1.62:1 3.16:1 2.67:1
Inventory (Average) Turnover 1.6 2.3 1.9 1.8
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
September 30, 1995
The change in the Working Capital for the quarter from the prior year is largely
due to acquisition of Green Giant assets in the prior year and the capital
expenditure program needed for the Registrant's plants to take on some of the
canned vegetable volume added by the acquisition. When the Registrant acquired
the Green Giant assets, it did not acquire the Finished Goods. Therefore, as the
Registrant produces finished goods for Pillsbury, working capital needs increase
accordingly. Capital Expenditures related to the Pillsbury Alliance exceeded
their original projected costs due to unforeseen issues and time constraints.
Overtime and outside contractor costs were high in an effort to complete the
projects by the pack season (see footnotes for discussion of Nonrecurring
Charge).
As part of the Alliance with Pillsbury (see 1995 Annual Report for details),
Pillsbury takes Green Giant inventory as it needs it or at least by the
take-or-pay date (varies by commodity). Due to the industrywide high carry-in
inventory, Pillsbury began taking the Green Giant inventory in significant
quantities later than expected. This has reduced the Registrant's sales
and increased its inventories and associated borrowing needs for the second
quarter of 1996.
The Registrant was not in compliance with certain debt covenants related to
Short-Term and Long-Term Debt. However, all provisions have been met or waived.
The Registrant is in the process of renegotiating certain of its debt covenants.
See Consolidated Statements of Cash Flows for further details.
<PAGE>
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) Reports on Form 8-K - An 8-K/A was filed in August
1995 related to an amendment to an 8-K previously filed.
<PAGE>
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
___________________
November 14, 1995 Kraig H. Kayser
President and
Chief Executive Officer
/s/Jeffrey L. Van Riper
_______________________
November 14, 1995 Jeffrey L. Van Riper
Controller and
Chief Accounting Officer
<PAGE>
<TABLE>
EXHIBIT 11
SENECA FOODS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands except share data)
<CAPTION>
Three Months Ended Six Months Ended
__________________ ________________
9/30/95 9/24/94 9/30/95 9/24/94
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Net Earnings Applicable to Common Stock:
Net Earnings $ (10,349) $ 148 $ (10,294) $ 1,609
Deduct Preferred Cash Dividends 6 6 12 12
-------------------------------------------------------------------
Net Earnings Applicable to
Common Stock $ (10,355) $ 142 $ (10,306) $ 1,597
====================================================================
Weighted Average Common
Shares Outstanding 5,593,110 5,593,110 5,593,110 5,593,860
Effect of Common Stock Equivalent - - - -
-------------------------------------------------------------------
Weighted Average Common Shares Out-
standing for Primary 5,593,110 5,593,110 5,593,110 5,593,860
===================================================================
Primary and Fully Diluted
Earnings Per Share $ (1.85) $ .03 $ (1.84) $ .29
===================================================================
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Commercial and Industrial Companies
Article 5 of Regulation S-X
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 10740
<SECURITIES> 0
<RECEIVABLES> 41305
<ALLOWANCES> 240
<INVENTORY> 336659
<CURRENT-ASSETS> 361263
<PP&E> 346001
<DEPRECIATION> 117267
<TOTAL-ASSETS> 601202
<CURRENT-LIABILITIES> 274642
<BONDS> 234701
<COMMON> 1880
0
70
<OTHER-SE> 79091
<TOTAL-LIABILITY-AND-EQUITY> 601202
<SALES> 213924
<TOTAL-REVENUES> 213924
<CGS> 186853
<TOTAL-COSTS> 186853
<OTHER-EXPENSES> 31046
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12365
<INCOME-PRETAX> (16340)
<INCOME-TAX> (6046)
<INCOME-CONTINUING> (10294)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10294)
<EPS-PRIMARY> (1.84)
<EPS-DILUTED> (1.84)
<FN>
OTHER-EXPENSES is Selling, General and Administrative Expenses 15968 and
Nonrecurring charge 15078.
</FN>
</TABLE>
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