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Previous: SEARS ROEBUCK ACCEPTANCE CORP, 424B2, 1996-02-13 |
Next: SHAW INDUSTRIES INC, SC 13G/A, 1996-02-13 |
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 December 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 January 31, 1996
Common Stock Class A, $.25 Par 2,796,555
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>
12/30/95 3/31/95
________ _______
<S> <C> <C>
ASSETS
Current Assets:
Cash and Short-term Investments $ 2,529 $ 26,538
Accounts Receivable, Net 31,624 32,601
Inventories:
Finished Goods 188,507 64,613
Work in Process 29,007 19,531
Raw Materials 41,259 48,260
-------------- ---------------
258,773 132,404
Off-Season Reserve (Note 3) (38,982) -
Deferred Tax (Net) 1,933 1,933
Other Current Assets 4,501 801
-------------- ---------------
Total Current Assets 260,378 194,277
Property, Plant and Equipment, Net 221,158 179,718
Common Stock of Moog Inc. 13,333 7,494
Other Assets 512 237
-------------- ---------------
$495,381 $381,726
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable $ 120,950 $ -
Accounts Payable 32,888 36,089
Accrued Expenses 16,114 19,599
Income Taxes - 125
Current Portion of Long-Term Debt and Capital
Lease Obligations 618 5,594
--------------- ---------------
Total Current Liabilities 170,570 61,407
Long-Term Debt 222,959 220,677
Capital Lease Obligations 9,660 803
Deferred Income Taxes 11,265 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 2,579 1,880
Net Unrealized Gain on Available-For-Sale Securities 4,570 892
Retained Earnings 73,708 84,507
--------------- ---------------
Stockholders' Equity 80,927 87,349
--------------- ---------------
$495,381 $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
__________________
12/30/95 12/24/94
________ ________
<S> <C> <C>
Net Sales $ 201,032 $ 96,852
Other Income (See Notes) 4,279 -
------------------ -----------------
Total Revenue 205,311 96,852
Costs and Expenses:
Cost of Product Sold 190,195 85,452
Selling, General, and Administrative 7,790 8,680
Interest Expense 7,669 1,736
Nonrecurring Charge (See Notes) (1,416) -
------------------ -----------------
Total Costs and Expenses 204,238 95,868
------------------ -----------------
Earnings Before Income Taxes 1,073 984
Income Taxes 855 365
------------------ -----------------
Earnings from Continuing Operations 218 619
Extraordinary Losses
Net of Income Taxes - -
------------------ -----------------
Net Earnings $ 218 $ 619
================== =================
Net Earnings from Continuing Operations
Applicable to Common Stock $ 212 $ 613
Net Earnings Applicable to
Common Stock 212 613
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 $ .04 $ .11
Extraordinary Loss - -
------------------ ------------------
Net Earnings (Loss) $ .04 $ .11
================== ==================
<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>
Nine Months Ended
_________________
12/30/95 12/24/94
________ ________
<S> <C> <C>
Net Sales $ 414,956 $ 239,938
Other Income (See Notes) 4,279 -
------------------ -----------------
Total Revenue 419,235 239,938
Costs and Expenses:
Cost of Product Sold 377,048 209,324
Selling, General, and Administrative 23,758 22,389
Interest Expense 20,034 4,465
Nonrecurring Charge (See Notes) 13,662 -
------------------ -----------------
Total Costs and Expenses 434,502 236,178
------------------ -----------------
Earnings Before Income Taxes (15,267) 3,760
Income Taxes (5,191) 1,104
------------------ -----------------
Earnings (loss) from Continuing Operations (10,076) 2,656
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) $ (10,076) $ 2,228
================== =================
Net Earnings from Continuing Operations
Applicable to Common Stock $ (10,093) $ 2,639
Net Earnings Applicable to
Common Stock (10,093) 2,211
Weighted Average Common
Shares Outstanding 5,593,110 5,593,776
Primary and Fully Diluted Earnings Per
Share of Common Stock (Exhibit II):
Earnings from Continuing Operations $ (1.80) $ .48
Earnings from Discontinued Operations - .00
Gain on the Sales of Discontinued
Operations - .03
Extraordinary Loss - (.11)
------------------ ---------------
Net Earnings (Loss) $ (1.80) $ .40
================== ===============
<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
__________________
12/30/95 12/24/94
________ ________
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $ 218 $ 619
Adjustments to Reconcile Net Earnings to
Net Cash Used by Operating Activities:
Depreciation and Amortization 6,331 2,438
Deferred Income Taxes (2,350) 58
Changes in Working Capital:
Accounts Receivable 9,441 (2,565)
Inventories 77,886 5,168
Off-Season Reserve 2,351 61
Other Current Assets 81 770
Income Taxes 2,915 1,212
Accounts Payable and
Accrued Expenses (115,235) (15,891)
------------------ -----------------
Net Cash Used in Operations (18,362) (8,130)
------------------ -----------------
Cash Flows From Investing Activities:
Additions to Property, Plant,
and Equipment (3,385) (7,457)
Disposals of Property, Plant,
and Equipment 4,631 178
------------------ -----------------
Net Cash Provided (Used)
in Investing Activities 1,246 (7,279)
------------------ -----------------
Cash Flows From Financing Activities:
Notes Payable 11,850 16,650
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (2,769) (157)
Other (164) 3
Dividends (12) (12)
Common Stock Retirement - -
------------------ -----------------
Net Cash Provided by
Financing Activities 8,905 16,484
------------------ -----------------
Net Increase (Decrease) in Cash and Short-
Term Investments (8,211) 1,075
Cash and Short-Term Investments,
Beginning of Period 10,470 1,498
------------------ -----------------
Cash and Short-Term Investments,
End of Period $ 2,529 $ 2,573
================== ==================
<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>
Nine Months Ended
_________________
12/30/95 12/24/94
________ ________
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings (Loss) $ (10,076) $ 2,228
Adjustments to Reconcile Net Earnings to
Net Cash Used by Operating Activities:
Depreciation and Amortization 16,689 7,394
Deferred Income Taxes (2,385) 1,482
Changes in Working Capital:
Accounts Receivable 977 (7,155)
Inventories (126,369) (50,866)
Off-Season Reserve 38,982 7,766
Other Current Assets 124 34
Income Taxes (3,949) (2,953)
Accounts Payable and
Accrued Expenses (6,686) 11,343
------------------ -----------------
Net Cash Used in Operations (92,693) (30,727)
------------------ -----------------
Cash Flows From Investing Activities:
Additions to Property, Plant,
and Equipment (62,794) (11,103)
Acquisition - (3,769)
Disposals of Property, Plant,
and Equipment 4,664 1,037
------------------ -----------------
Net Cash Used in Investing Activities (58,130) (13,835)
------------------ -----------------
Cash Flows From Financing Activities:
Notes Payable 120,950 44,550
Long-Term Borrowing 9,258 -
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (3,095) (17,718)
Other (275) 9
Dividends (24) (24)
Common Stock Retirement - (1,880)
------------------ ------------------
Net Cash Provided by
Financing Activities 126,814 24,937
------------------ -----------------
Net Decrease in Cash and Short-
Term Investments (24,009) (19,625)
Cash and Short-Term Investments,
Beginning of Period 26,538 22,198
------------------ -----------------
Cash and Short-Term Investments,
End of Period $ 2,529 $ 2,573
================== ==================
<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
December 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 December 30, 1995 and March 31, 1995
and results of operations for the three and nine month periods ended
December 30, 1995 and December 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 and nine month periods ended
December 30, 1995 and December 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
anti-dilutive.
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)
December 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 included 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 and the beginning of the 1995 vegetable pack, 37 separate
major capital projects needed to be completed. There were 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. The nonrecurring charge was reduced during the third quarter
by $1,416,000 to $13,662,000. This change is due to some of the expenses
related to the charge being estimates which, as time passes, are becoming
better defined.
<PAGE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
December 30, 1995
7. During the second 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. Pillsbury has
exercised its option to convert the first two payments into Class A
Common Stock. The conversion price was $17.3125 per share. Consequently,
Seneca will be issuing 346,570 shares to Pillsbury when the necessary
registration papers have been filed and approved by the Securities and
Exchange Commission.
8. During the second 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.
9. During the third quarter, the Registrant sold its Peabody,
Massachusetts facility for cash, resulting in a gain of $4,279,000
before income tax expense. The Registrant had leased this facility to
a third party.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
December 30, 1995
Results of Operations:
Sales:
Sales reflect an increase of 108.0% for the third 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:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
__________________ _________________
12/30/95 12/24/94 12/30/95 12/24/94
________ ________ ________ ________
<S> <C> <C> <C> <C>
Cost of Product Sold 92.7 88.3 89.9% 87.2%
Selling 2.9 6.1 4.2 6.2
Administrative 0.9 2.8 1.4 3.1
Interest Expense 3.7 1.8 4.8 1.9
Nonrecurring Charge (0.7) - 3.3 -
--------------------------------------------------
99.5% 99.0% 103.6% 98.4%
====================================================
</TABLE>
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 and capital expenditures 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 34% and in fiscal 1995 it is
29.4%. 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 December Ended March
_______________ ____________
1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Working Capital Balance $89,808 $56,743 $132,870 $78,180
Quarter Change 3,187 (4,207) - -
Notes Payable 120,950 44,550 - -
Long-Term Debt 232,619 51,394 221,480 68,546
Current Ratio 1.53:1 1.57:1 3.16:1 2.67:1
Inventory (Average) Turnover 2.6 2.6 1.9 1.8
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
December 30, 1995
The Working Capital Balance is higher than the prior year largely due to
acquisition of Green Giant assets in the prior year. 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. The increase in Working Capital for the
quarter is due to part to the sale of the Peabody facility (see footnotes for
discussion of the sale) which more than offset the Capital Expenditures for the
quarter of $3,385,000. 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).
The Registrant was not in compliance with certain debt covenants related to
Long-Term Debt at December 30, 1995. However, subsequently all provisions have
been met or waived. The Registrant is in the process of renegotiating certain of
its Long-Term Debt covenants. Any amendment is subject to the approval of the
short-term lenders. If the Long-Term Debt is not amended by February 28, 1996,
then certain Short-Term Debt covenants will also be out of compliance. The
Registrant anticipates the debt coventants will be amended by February 28, 1996.
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 - None during the period.
<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
_______________________
February 13, 1995 Kraig H. Kayser
President and
Chief Executive Officer
/s/Jeffrey L. Van Riper
________________________
February 13, 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 Nine Months Ended
__________________ _________________
12/30/95 12/24/94 12/30/95 12/24/94
________ ________ ________ ________
<S> <C> <C> <C> <C>
Net Earnings Applicable to Common Stock:
Primary:
Net Earnings $ 218 $ 619 $ (10,076) $ 2,228
Deduct Preferred Cash Dividends 6 6 17 17
----------------------------------------------------------------------
Net Earnings Applicable to
Common Stock $ 212 $ 613 $ (10,093) $ 2,211
=======================================================================
Weighted Average Common
Shares Outstanding 5,593,110 5,593,110 5,593,110 5,593,776
Effect of Common Stock Equivalent - - - -
----------------------------------------------------------------------
Weighted Average Common Shares Out-
standing for Primary 5,593,110 5,593,110 5,593,110 5,593,776
======================================================================
Primary Earnings Per Share $ .04 $ .11 $ (1.80) $ .40
======================================================================
</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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-30-1995
<CASH> 2529
<SECURITIES> 0
<RECEIVABLES> 31799
<ALLOWANCES> 175
<INVENTORY> 258773
<CURRENT-ASSETS> 360378
<PP&E> 341993
<DEPRECIATION> 120835
<TOTAL-ASSETS> 495381
<CURRENT-LIABILITIES> 170570
<BONDS> 232619
0
70
<COMMON> 2579
<OTHER-SE> 78278
<TOTAL-LIABILITY-AND-EQUITY> 495381
<SALES> 414956
<TOTAL-REVENUES> 419235
<CGS> 377049
<TOTAL-COSTS> 377049
<OTHER-EXPENSES> 37419
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20034
<INCOME-PRETAX> (15267)
<INCOME-TAX> (5191)
<INCOME-CONTINUING> (10076)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10076)
<EPS-PRIMARY> (1.80)
<EPS-DILUTED> (1.80)
<FN>
Selling, General and Administrative Expenses 23758 and Nonrecurring charge 13661.
</FN>
</TABLE>
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