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Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended July 1, 2000 Commission File Number 0-1989
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Seneca Foods Corporation
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(Exact name of Company as specified in its charter)
New York 16-0733425
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(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
1162 Pittsford-Victor Road, Pittsford, New York 14534
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(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code 716/385-9500
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Not Applicable
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Former name, former address and former fiscal year,
if changed since last report
Check mark indicates whether Company (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding
12 months (or for such shorter period that the Company was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
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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, 2000
Common Stock Class A, $.25 Par 3,804,920
Common Stock Class B, $.25 Par 2,767,357
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PART I FINANCIAL INFORMATION
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands of Dollars)
7/1/00 3/31/00
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ASSETS
Current Assets:
Cash and Short-term Investments $ 1,533 $ 11,348
Accounts Receivable, Net 34,349 31,702
Inventories:
Finished Goods 151,248 156,349
Work in Process 10,386 4,610
Raw Materials 49,719 42,214
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211,353 203,173
Off-Season Reserve (Note 3) 30,998 -
Deferred Tax Asset (Net) 4,811 4,812
Refundable Income Taxes 62 -
Other Current Assets 1,888 528
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Total Current Assets 284,994 251,563
Property, Plant and Equipment, Net 179,110 179,146
Other Assets 5,535 7,831
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$469,639 $438,540
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable $ 10,470 $ -
Accounts Payable 67,109 48,699
Accrued Expenses 25,726 25,033
Income Taxes - 645
Current Portion of Long-Term Debt and Capital
Lease Obligations 8,222 8,214
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Total Current Liabilities 111,527 82,591
Long-Term Debt 182,334 182,468
Capital Lease Obligations 7,500 7,500
Deferred Income Taxes 9,123 8,383
Other Long-Term Liabilities 8,894 8,599
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
Convertible, Participating Preferred Stock, $12
Stated Value 42,787 42,870
Common Stock 2,823 2,822
Paid in Capital 13,441 13,359
Accumulated Other Comprehensive Income 975 991
Retained Earnings 90,165 88,887
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Stockholders' Equity 150,261 148,999
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$469,639 $438,540
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The accompanying notes are an integral part of these financial statements.
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SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except Share Data)
Three Months Ended
7/1/00 7/3/99
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Net Sales $ 127,827 $ 87,735
Other Income 1,151 965
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128,978 88,700
Costs and Expenses:
Cost of Product Sold 116,224 79,204
Selling, General, and Administrative 6,071 5,340
Interest Expense 4,668 4,102
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Total Costs and Expenses 126,957 88,646
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Earnings Before Income Taxes 2,015 54
Income Taxes 725 19
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Net Earnings $ 1,290 $ 35
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Basic:
Earnings Per Common Share .20 .00
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Diluted:
Earnings Per Common Share .13 .00
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The accompanying notes are an integral part of these condensed financial
statements.
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SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Three Months Ended
7/1/00 7/3/99
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Cash Flows From Operating Activities:
Net Earnings (Loss) $ 1,290 $ 35
Adjustments to Reconcile Net Earnings (Loss)
to Net Cash Used by Operating Activities:
Depreciation and Amortization 5,881 5,697
Deferred Income Taxes 725 -
Gain on Sale of Assets (1,151) (965)
Changes in Working Capital:
Accounts Receivable (2,647) 4,978
Inventories (8,180) (27,590)
Off-Season Reserve (30,998) (27,097)
Other Current Assets (1,360) 128
Income Taxes (707) (359)
Accounts Payable, Accrued Expenses
and Other 19,398 20,094
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Net Cash Used
by Operations (17,749) (25,079)
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Cash Flows From Investing Activities:
Additions to Property, Plant,
and Equipment (7,265) (4,105)
Disposals 57 194
Escrow Fund 2,292 -
Proceed from the Sale of Assets 2,514 1,800
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Net Cash Used in Investing
Activities (2,402) (2,111)
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Cash Flows From Financing Activities:
Notes Payable 10,470 -
Other 4 4
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (126) (609)
Dividends (12) (12)
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Net Cash Provided by (Used in)
Financing Activities 10,336 (617)
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Net Decrease in Cash and Short-
Term Investments (9,815) (27,807)
Cash and Short-Term Investments,
Beginning of Period 11,348 31,003
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Cash and Short-Term Investments,
End of Period $ 1,533 $ 3,196
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The accompanying notes are an integral part of these condensed financial
statements.
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SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
July 1, 2000
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 Company as of July 1, 2000 and results of operations for
the three month periods ended July 1, 2000 and July 3, 1999. All
significant intercompany transactions and accounts have been eliminated
in consolidation. The March 31, 2000 balance sheet was derived from
audited financial statements.
The results of operations for the three month periods ended July 1, 2000
and July 3, 1999 are not necessarily indicative of the results to be
expected for the full year.
The accounting policies followed by the Company are set forth in Note 1
to the Company's financial statements in the 2000 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 Company's 2000 Annual Report and
10-K.
2. Off-Season Reserve is the excess of absorbed expenses over incurred
expenses to date. The seasonal nature of the Company'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.
3 Comprehensive income consisted solely of Net Earnings and Net Unrealized
Gain Change on Moog, Inc. Stock. The following table provides the results
for the periods presented:
Three Months Ended
July 1 and July 3,
2000 1999
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Net Earnings $1,290 $35
Other Comprehensive Earnings, Net of Tax:
Net Unrealized (Loss) Gain Change on
Moog, Inc. Stock (16) 131
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Comprehensive Earnings $1,274 $166
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
July 1, 2000
Results of Operations:
Sales:
Sales reflect an increase of 45.7% for the first three months versus 1999. The
higher sales, in large part, are due to the timing of canned vegetables
quantities sold under the Company's Alliance business. Non-Alliance vegetable
sales quantities were up 5.6%.
Costs and Expenses:
The following table shows costs and expenses as a percentage of sales:
Three Months Ended
7/1/00 7/3/99
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Cost of Product Sold 90.8% 90.2%
Selling 4.0 4.7
Administrative 0.8 1.4
Interest Expense 3.7 4.7
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99.3% 101.0%
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Lower selling expense percentage in 2000 is as a result of higher sales in the
Non-Alliance business which does not incur selling expense. Improved selling
prices as compared to the prior year, especially in the Food Service segment,
were a major contributing factor to improved profitability.
Income Taxes:
The effective tax rate used in fiscal 2000 is 38% and 1999 is 35%.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
July 1, 2000
Financial Condition:
The financial condition of the Company is summarized in the following table and
explanatory review (In Thousands):
<TABLE>
<CAPTION>
For the Quarter For the Year
Ended June Ended March
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Working Capital Balance $173,467 $169,838 $168,972 $167,435
Quarter Change 4,495 2,400 - -
Notes Payable 10,470 - - -
Long-Term Debt 189,834 187,381 189,968 187,904
Current Ratio 2.56:1 3.25:1 3.05:1 3.98:1
</TABLE>
The change in the Working Capital for the June 2000 quarter from the June 1999
quarter is largely due to higher earnings in the current year quarter than the
prior year quarter ($1,290,000 as compared to $35,000 last year). Capital
expenditures were $7.3 million in 2000 as compared to $4.1 million in 1999. In
2000, $2.3 million of these capital expenditures were funded via a capital
escrow account, which was a result of an Industrial Revenue Bond issued last
year.
See Consolidated Condensed Statements of Cash Flows for further details.
Quantitative and Qualitative Disclosures about Market Risk:
The Company has not experienced any material changes in Market Risk since our
March 31, 2000 report.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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None.
Item 2. Changes in Securities
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None.
Item 3. Defaults on Senior Securities
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None.
Item 4. Submission of Matters to a Vote of Security Holders
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None.
Item 5. Other Information
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None.
Item 6. Exhibits and Reports on Form 8-K
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A. Exhibits
11 (11) Computation of earnings per share (filed herewith)
27 (27) Financial Data Schedules (filed herewith)
Reports on Form 8-K - None during the quarter.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Seneca Foods Corporation
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(Company)
/s/Kraig H. Kayser
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August 14, 2000 Kraig H. Kayser
President and
Chief Executive Officer
/s/Jeffrey L. Van Riper
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August 14, 2000 Jeffrey L. Van Riper
Controller and
Chief Accounting Officer
