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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 June 29, 1996 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 July 31, 1996
Common Stock Class A, $.25 Par 3,143,125
Common Stock Class B, $.25 Par 2,796,555
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands of Dollars)
<CAPTION>
6/29/96 3/31/96
------- -------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Short-term Investments $ 7,008 $ 1,297
Common Stock of Moog Inc. - 12,863
Accounts Receivable, Net 36,240 51,118
Inventories:
Finished Goods 155,935 138,953
Work in Process 23,438 63,730
Raw Materials 33,229 27,076
------- -------
212,602 229,759
Off-Season Reserve (Note 3) 28,271 -
Deferred Tax (Net) 53 53
Refundable Income Taxes 3,575 3,503
Other Current Assets 681 1,041
-------------- ---------------
Total Current Assets 288,430 299,634
Property, Plant and Equipment, Net 222,541 222,720
Common Stock of Moog Inc. 1,338 1,048
Other Assets 417 457
-------------- ---------------
$512,726 $523,859
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable $ 98,000 $ 113,000
Accounts Payable 48,556 48,930
Accrued Expenses 31,519 28,253
Current Portion of Long-Term Debt and Capital
Lease Obligations 2,436 690
--------------- ---------------
Total Current Liabilities 180,511 190,873
Long-Term Debt 215,351 216,928
Capital Lease Obligations 9,622 9,646
Deferred Income Taxes 12,111 11,414
Deferred Gain 4,124 4,059
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 50 50
Common Stock 2,666 2,666
Paid in Capital 5,913 5,913
Net Unrealized Gain on Available-For-Sale Securities 410 5,169
Retained Earnings 81,948 77,121
--------------- ---------------
Stockholders' Equity 91,007 90,939
--------------- ---------------
$512,726 $523,859
======== ========
<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
------------------
6/29/96 7/1/95
------- ------
<S> <C> <C>
Net Sales $ 123,694 $ 81,945
Other Income (See Notes) 7,501 -
------------------ -----------------
131,195 81,945
Costs and Expenses:
Cost of Product Sold 109,406 68,529
Selling, General, and Administrative 6,584 7,783
Interest Expense 7,481 5,545
------------------ -----------------
Total Costs and Expenses 123,471 81,857
------------------ -----------------
Earnings Before Income Taxes 7,724 88
Income Taxes 2,897 33
------------------ -----------------
Net Earnings $ 4,827 $ 55
================== =================
Net Earnings Applicable to
Common Stock 4,821 49
Weighted Average Common
Shares Outstanding 5,939,680 5,593,110
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Net Earnings $ .81 $ .01
================== =================
<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
------------------
6/29/96 7/1/95
------- ------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $ 4,827 $ 55
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 6,374 4,496
Deferred Income Taxes 697 (22)
Gain on the Sale (7,501) -
Changes in Working Capital:
Accounts Receivable 14,878 2,157
Inventories 17,157 (32,619)
Off-Season Reserve (28,271) (17,916)
Other Current Assets 360 238
Income Taxes 2,380 (153)
Accounts Payable and
Accrued Expenses 2,957 8,696
------------------ -----------------
Net Cash Provided (Used)
by Operations 13,858 (35,068)
------------------ -----------------
Cash Flows From Investing Activities:
Proceeds from the Sale of Moog Stock 12,863 -
Additions to Property, Plant,
and Equipment (6,195) (36,792)
------------------ -----------------
Net Cash Provided (Used) in Investing
Activities 6,668 (36,792)
------------------ ------------------
Cash Flows From Financing Activities:
Notes Payable (15,000) 48,000
Long-Term Borrowing 230 -
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (85) (311)
Other 40 (24)
Dividends - (12)
------------------ -----------------
Net Cash Provided (Used) in
Financing Activities (14,815) 47,653
------------------ -----------------
Net Increase (Decrease) in Cash and Short-
Term Investments 5,711 (24,207)
Cash and Short-Term Investments,
Beginning of Period 1,297 26,538
------------------ -----------------
Cash and Short-Term Investments,
End of Period $ 7,008 $ 2,331
================== ==================
<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
June 29, 1996
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 June 29, 1996 and March 31, 1996 and
results of operations for the three month periods ended June 29, 1996
and July 1, 1995. All significant intercompany transactions and accounts
have been eliminated in consolidation. The March 31, 1996 balance sheet
was derived from audited financial statements.
The results of operations for the three month periods ended June 29,
1996 and July 1, 1995 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
to the Registrant's financial statements in the 1996 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, 1996
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 issued a stock split in the form of a dividend during
1996. This has been reflected in the prior year of these financial
statements as if it had occurred at the beginning of the year.
<PAGE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 29, 1996
5. During the first quarter, the Registrant sold its investment in Moog, Inc.
Class A Common Stock back to Moog. This resulted in a Pre-Tax gain of
$7,501,000.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
June 29, 1996
Results of Operations:
Sales:
Sales reflect an increase of 50.9% for the first three months versus 1995. The
higher sales, in large part, are due to higher canned vegetables quantities sold
to Pillsbury under the Alliance. Under this Alliance Net Sales were $43,761,000
for three months ended June 1996 versus $3,828,000 for the comparable period in
the previous year. This previous period Net Sales were low because the Alliance
had just begun and the Registrant did not buy the inventory on hand at the start
of the Alliance. Non-Alliance vegetable sales quantities were up 8.8% while
juice and fruit sales quantities were down 16.1%.
Costs and Expenses:
The following table shows cost and expenses as a percentage of sales:
<TABLE>
<CAPTION>
Three Months Ended
------------------
6/29/96 7/1/95
------- ------
<S> <C> <C>
Cost of Product Sold 88.5% 83.6%
Selling 4.0 7.1
Administrative 1.3 2.4
Interest Expense 6.0 6.8
---------------------
99.8% 96.8%
=====================
</TABLE>
Higher Cost of Product Sold percentages (i.e. lower Gross Margins) reflect, in
part, substantially higher sales to the Pillsbury Alliance which are at low
Gross Margins. The Interest Expense is higher largely due to the debt issued to
finance the acquisitions and capital expenditures made over the last year.
Income Taxes:
The effective tax rate used in fiscal 1997 and 1996 is 38%.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
June 29, 1996
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 June Ended March
---------- -----------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Working Capital Balance $107,919 $100,283 $108,761 $136,342
Quarter Change (842) (32,587) - -
Notes Payable 98,000 48,000 - -
Long-Term Debt 224,973 221,192 226,574 221,480
Current Ratio 1.60:1 1.85:1 1.57:1 3.21:1
Inventory (Average) Turnover 2.1 1.8 2.0 2.2
</TABLE>
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.
As part of the Alliance with Pillsbury (see 1996 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).
The Registrant was in compliance with its debt covenants related to Short-Term
and Long-Term Debt.
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
The annual meeting of shareholders of the Registrant was
held on August 3, 1996 and the following were the voting
results: (1) Management's nominees for Director positions
were elected, and (2) a management proposal to ratify the
appointment of Deloitte & Touche L.L.P. as independent
auditors was adopted. A summary of the voting results
follows (In thousands):
<TABLE>
<CAPTION>
Proposal For Withheld Against Abstain Broker Non-Votes
<S> <C> <C> <C> <C> <C>
Directors:
R. T. Brady 3,470 8
A. S. Wolcott 3,470 8
Appointment of Auditors 3,467 7 4
Such other business 3,478
</TABLE>
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 - None during the quarter.
<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
August 12, 1996 Kraig H. Kayser
President and
Chief Executive Officer
/s/Jeffrey L. Van Riper
August 12, 1996 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
------------------
6/29/96 7/1/95
------- ------
<S> <C> <C>
Net Earnings Applicable to Common Stock:
Net Earnings $ 4,827 $ 55
Deduct Preferred Cash Dividends 6 6
---------------------------
Net Earnings Applicable to
Common Stock $ 4,821 $ 49
===========================
Weighted Average Common
Shares Outstanding 5,939,680 5,593,110
Effect of Common Stock Equivalent - -
---------------------------
Weighted Average Common Shares Outstanding
for Primary Earnings per Share 5,939,680 5,593,110
Primary and Fully Diluted
Earnings Per Share $ .81 $ .01
===========================
</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> MAR-31-1997
<PERIOD-END> JUN-29-1996
<CASH> 7008
<SECURITIES> 0
<RECEIVABLES> 36396
<ALLOWANCES> 156
<INVENTORY> 212602
<CURRENT-ASSETS> 288430
<PP&E> 355165
<DEPRECIATION> 132624
<TOTAL-ASSETS> 512726
<CURRENT-LIABILITIES> 180511
<BONDS> 224973
0
70
<COMMON> 2666
<OTHER-SE> 88271
<TOTAL-LIABILITY-AND-EQUITY> 512726
<SALES> 123694
<TOTAL-REVENUES> 131195
<CGS> 109406
<TOTAL-COSTS> 109406
<OTHER-EXPENSES> 6584
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7481
<INCOME-PRETAX> 7724
<INCOME-TAX> 2897
<INCOME-CONTINUING> 4827
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4827
<EPS-PRIMARY> 0.81
<EPS-DILUTED> 0.81
<FN>
Other Expenses is Selling, General and Administrative Expenses
</FN>
</TABLE>
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