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<PAGE>
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 January 1, 2000 Commission File Number 0-1989
Seneca Foods Corporation
(Exact name of Company 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)
Company'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 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
---- ----
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, 2000
------------ -------------------------------
Common Stock Class A, $.25 Par 3,776,858
Common Stock Class B, $.25 Par 2,767,357
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
SENECA FOODS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands of Dollars)
<CAPTION>
1/1/00 3/31/99
------ -------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Short-term Investments $ 24,582 $ 31,003
Accounts Receivable, Net 36,547 35,717
Inventories:
Finished Goods 185,850 107,127
Work in Process 6,775 11,143
Raw Materials 36,678 34,364
------- -------
229,303 152,634
Off-Season Reserve (Note 3) (35,711) -
Deferred Tax Asset, Net 3,276 3,276
Refundable Income Taxes 181 -
Other Current Assets 1,052 911
-------------- ---------------
Total Current Assets 259,230 223,541
Property, Plant and Equipment, Net 176,691 178,658
Escrow Fund 5,207 -
Other Assets 2,833 2,671
-------------- ---------------
$ 443,961 $ 404,870
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 57,000 $ 27,034
Accrued Expenses 18,984 20,952
Income Taxes - 309
Current Portion of Long-Term Debt and Capital
Lease Obligations 8,204 7,811
--------------- ---------------
Total Current Liabilities 84,188 56,106
Long-Term Debt 186,407 179,533
Capital Lease Obligations 7,500 8,371
Deferred Income Taxes 8,381 6,870
Other Long-Term Liabilities 10,236 9,402
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 43,115 46,363
Common Stock 2,816 2,748
Paid in Capital 13,120 9,940
Accumulated Other Comprehensive Income 991 877
Retained Earnings 87,137 84,590
--------------- ---------------
Stockholders' Equity 147,249 144,588
--------------- ---------------
$ 443,961 $ 404,870
=============== ===============
<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
-------------------
1/1/00 12/26/98
------ --------
<S> <C> <C>
Net Sales $ 241,731 $ 246,624
Other Income - 650
------------------ -----------------
241,731 247,274
Costs and Expenses:
Cost of Product Sold 228,086 237,126
Selling, General, and Administrative 6,272 5,961
Interest Expense 3,917 5,089
------------------ -----------------
Total Costs and Expenses 238,275 248,176
------------------ -----------------
Earnings (Loss) From Continuing Operations
Before Income Taxes 3,456 (902)
Income Taxes 1,244 (288)
------------------ ------------------
Earnings (Loss) from Continuing
Operations 2,212 (614)
Earnings from Discontinued
Operations Net of Income Taxes - 1,072
------------------ -----------------
Net Earnings $ 2,212 $ 458
================= ================
Basic:
Earnings (Loss) From Continuing
Operations Per Common Share $ .34 $ (.10)
================= ================
Earnings From Discontinued Operations
Per Common Share $ .00 $ .17
================= ================
Earnings Per Common Share $ .34 $ .07
================= ================
Diluted:
Earnings (Loss) From Continuing
Operations Per Common Share $ .22 $ (.10)
================= ================
Earnings From Discontinued Operations
Per Common Share $ .00 $ .17
================= ================
Earnings Per Common Share $ .22 $ .07
================= ================
<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
-----------------
1/1/00 12/26/98
------ --------
<S> <C> <C>
Net Sales $ 510,917 $ 490,882
Other Income 965 650
------------------ -----------------
511,882 491,532
Costs and Expenses:
Cost of Product Sold 478,798 462,634
Selling, General, and Administrative 17,041 13,318
Interest Expense 12,025 17,400
------------------ -----------------
Total Costs and Expenses 507,864 493,352
------------------ -----------------
Earnings (Loss) From Continuing Operations
Before Income Taxes 4,018 (1,820)
Income Taxes 1,446 (582)
------------------ ------------------
Earnings (Loss) from Continuing
Operations 2,572 (1,238)
Loss from Discontinued
Operations Net of Income Taxes - (703)
------------------ -----------------
Net Earnings (Loss) $ 2,572 $ (1,941)
================= ================
Basic:
Earnings (Loss) from Continuing
Operations Per Common Share $ .39 $ (.21)
================= ================
Earnings (Loss) from Discontinued
Operations Per Common Share $ .00 $ (.12)
================= ================
Earnings (Loss) Per Common Share $ .39 $ (.33)
================= ================
Diluted:
Earnings (Loss) From Continuing
Operations Per Common Share $ .25 $ (.21)
================= ================
Earnings (Loss) From Discontinued Operations
Per Common Share $ .00 $ (.12)
================= ================
Earnings (Loss) Per Common Share $ .25 $ (.33)
================= ================
<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
-----------------
1/01/00 12/26/98
------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Earnings (Loss) $ 2,572 $ (1,941)
Adjustments to Reconcile Net Earnings
(Loss) to Net Cash Provided
by Operating Activities:
Depreciation and Amortization 17,406 21,348
Deferred Income Taxes 1,446 (1,178)
Gain on the Sale of Assets (965) (650)
Contribution of Stock to Benefit Plan - 761
Changes in Operating Assets
and Liabilities:
Accounts Receivable (830) 6,418
Inventories (33,186) (43,314)
Off-Season Reserve 35,711 42,549
Other Current Assets (141) (20)
Income Taxes (490) 1,343
Accounts Payable and
Accrued Expenses 28,659 9,488
------------------ -----------------
Net Cash Provided
by Operations 50,182 34,804
------------------ -----------------
Cash Flows From Investing Activities:
Acquisition (48,459) -
Additions to Property, Plant,
and Equipment (11,304) (4,774)
Glencoe Escrow (5,207) -
Proceeds from the Sale of Assets 1,800 843
Disposals 179 377
------------------ -----------------
Net Cash Used in Investing
Activities (62,991) (3,554)
------------------ -----------------
Cash Flows From Financing Activities:
Long-Term Borrowing 10,978 -
Payments and Current Portion of Long-Term
Debt and Capital Lease Obligations (4,582) (4,047)
Other 16 33
Notes Payable - (62,270)
Rights Offering - 49,712
Dividends (24) (24)
------------------ -----------------
Net Cash Provided by (Used in)
Financing Activities 6,388 (16,596)
------------------ -----------------
Net (Decrease) Increase in Cash and Short-
Term Investments (6,421) 14,654
Cash and Short-Term Investments,
Beginning of Period 31,003 4,077
------------------ -----------------
Cash and Short-Term Investments,
End of Period $ 24,582 $ 18,731
================== ==================
<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
January 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 January 1, 2000 and results of operations
for the three and nine month periods ended January 1, 2000 and December
26, 1998. All significant intercompany transactions and accounts have
been eliminated in consolidation. The March 31, 1999 balance sheet was
derived from audited financial statements.
The results of operations for the nine month periods ended January 1,
2000 and December 26, 1998 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 1999 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 1999 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:
Nine Months December
1999 1998
---- ----
Net Earnings (Loss) $2,572 $(1,941)
Other Comprehensive Earnings, Net of Tax:
Net Unrealized Gain Change on
Moog, Inc. Stock 114 211
------------------
Comprehensive Earnings (Loss) $2,686 $(1,730)
=====================
<PAGE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
January 1, 2000
4. In November 1999, the Company acquired certain assets of the Midwest
private label canned vegetable business, of Agrilink Foods, Inc., a
wholly owned subsidiary of Pro-Fac Cooperative. The Company purchased a
plant and equipment in Arlington, Minnesota and inventories of the
acquired business. The annual sales of this business are approximately
$73 million. The purchase price was approximately $48 million, partially
funded by a subordinated note for $5 million and the balance paid in
cash.
The Company also had a commitment to purchase Agrilink Food's Cambria,
Wisconsin plant, but this plant was purchased by another Company.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION RESULTS OF OPERATIONS
January 1, 2000
Results of Operations:
Sales:
Sales reflect an increase of 4.1% for the nine months versus 1998. The higher
sales, in large part, are due to higher canned vegetables quantities sold under
the Company's Non-Alliance business. Non-Alliance vegetable sales quantities
were up 13.5% including sales from the Midwest private label canned vegetable
business acquired from Agrilink Foods, Inc. (see acquisition discussion in
footnotes).
Costs and Expenses:
The following table shows costs and expenses as a percentage of sales:
Three Months Ended Nine Months Ended
------------------ ------------------
1/1/00 12/26/98 1/1/00 12/26/98
------ -------- ------ --------
Cost of Product Sold 94.4% 96.0% 93.7% 94.2%
Selling 2.1 2.1 2.6 2.2
Administrative 0.5 0.4 0.7 0.6
Interest Expense 1.6 2.1 2.4 3.5
---------------------------------------------------------
98.6% 100.6% 99.4% 100.5%
=========================================================
Lower interest expense percentage in 1999 is as a result of the $50 million
equity sale last year and the divestiture of the juice and sauce businesses also
during last year.
Income Taxes:
The effective tax rate used in fiscal 1999 is 36% and 1998 is 32%.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
January 1, 2000
Financial Condition:
The financial condition of the Company is summarized in the following table and
explanatory review (In Thousands):
For the Quarter For the Year
Ended December Ended March
1999 1998 1999 1998
---- ---- ---- ----
Working Capital Balance $175,042 $173,475 $167,435 $112,299
Quarter Change 2,175 3,604 - -
Notes Payable - - - 62,270
Long-Term Debt 193,907 223,805 187,904 227,858
Current Ratio 3.08:1 2.97:1 3.98:1 1.79:1
The change in the Working Capital for the December 1999 quarter from the
December 1998 quarter is largely due to greater capital additions in the current
year than the prior year($3.7 million current and $700 thousand prior). The
equity sale of $50 million and the divestiture of the Juice and Applesauce
businesses for $57 million, both completed last year, dramatically reduced our
short-term borrowing needs.
New Long-Term Debt:
During the Third Quarter of this year, the Company issued an Industrial Revenue
Development Bond for $6 million where proceeds are being used to finance
production equipment in the Midwest. The Escrow Fund of $5.2 million on the
Balance Sheet as a long-term asset is the yet upspent proceeds of this debt
issue.
See Consolidated Condensed Statements of Cash Flows for further details.
Acquistion:
In November 1999, the Company acquired certain assets of the Midwest private
label canned vegetable business, of Agrilink Foods, Inc., a wholly owned
subsidiary of Pro-Fac Cooperative. The Company purchased a plant and equipment
in Arlington, Minnesota and inventories of the acquired business. The annual
sales of this business are approximately $73 million. The purchase price was
approximately $48 million, partially funded by a subordinated note for $5
million and the balance paid in cash.
The Company also had a commitment to purchase Agrilink Food's Cambria, Wisconsin
plant, but this plant was purchased by another Company.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
January 1, 2000
Quantitative and Qualitative Disclosures about Market Risk:
As a result of its operating and financing activities, the Company is exposed to
certain market risks including changes in commodity pricing and fluctuations in
interest rates. Commodity pricing exposure includes weather phenomena and their
effect on industry volumes, prices, product quality, and costs. The Company
manages its exposure to commodity price risk primarily through its regular
operating activities. The Company has not used derivative financial instruments.
The Company has not utilized financial instruments for trading or other
speculative purposes.
Interest Rate Risk:
As a result of its regular financing requirements, the Company's operating
results are exposed to fluctuations in interest rates, which it manages
primarily through its regular financing activities. Although the Company does
not have any short-term debt as of January 1, 2000, it uses bank lines of credit
with variable interest rates to finance seasonal working capital requirements.
The Company maintains investments in cash equivalents ($22.2 million as of
January 1, 2000) and does have investments in a modest amount of marketable
securities. Long-term debt represents secured and unsecured notes and debentures
and certain notes payable to insurance companies used to finance long-term
investments such as business acquisitions. Long-term debt bears interest at
fixed and variable rates. The following table provides information about the
Company's financial instruments that are sensitive to changes in interest rates.
The table presents principal cash flows and sinking fund requirements and
related weighted-average interest rates by expected maturity date.
Weighted-average interest rates on variable-rate debt are based on current rates
as of January 1, 2000:
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
January 1, 2000
<TABLE>
Interest Rate Sensitivity of Long-Term Debt and Short-Term Investments
January 1, 2000
(In Thousands)
<CAPTION>
EXPECTED MATURITY DATE
Total /
Weighted
2000 2001 2002 2003 2004 There-after Average
--------- --------- --------- --------- --------- ------------ --------
Fixed-rate debt:
<S> <C> <C> <C> <C> <C> <C> <C>
Principal cash flows $8,480 $8,213 $18,620 $21,663 $21,713 $100,792 $ 179,481
Average interest rate 9.34% 9.32% 9.28% 9.16% 8.97% 8.21% 8.89%
Variable-rate debt:
Principal cash flows $ -- $ -- $ -- $ -- $ -- $ 22,630 $ 22,630
Average interest rate 5.81% 5.81% 5.81% 5.81% 5.81% 5.81% 5.81%
Short-term investments:
Balance $ 22,237
Average interest rate 5.82%
</TABLE>
<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. Exhibits
11 (11) Computation of earnings per share (filed herewith)
27 (27) Financial Data Schedules (filed herewith)
Reports on Form 8-K - A November 1999 8-K was filed.
<PAGE>
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
(Company)
/s/Kraig H. Kayser
------------------------
February 14, 2000 Kraig H. Kayser
President and
Chief Executive Officer
/s/Jeffrey L. Van Riper
------------------------
February 14, 2000 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
------------------ -----------------
1/1/00 12/26/99 1/1/00 12/26/98
------ -------- ------ --------
<S> <C> <C> <C> <C>
Basic Net Earnings (Loss) Applicable
to Common Stock:
Net Earnings (Loss) $ 2,212 $ 458 $ 2,572 $ (1,941)
Deduct Preferred Cash Dividends 6 - 18 -
-----------------------------------------------------------------------
Net Earnings (Loss) Applicable to
Common Stock $ 2,206 $ 458 $ 2,554 $ (1,941)
=======================================================================
Weighted Average Common
Shares Outstanding 6,469,621 6,144,455 6,477,889 6,027,814
Effect of Common Stock Equivalent - - - -
-----------------------------------------------------------------------
Weighted Average Common Shares Outstanding
for Primary Earnings per Share 6,469,621 6,144,455 6,477,889 6,027,814
=======================================================================
Basic Earnings (Loss) Per Share $ .34 $ .07 $ .39 $ (.33)
=======================================================================
Diluted Net Earnings (Loss) Applicable
to Common Stock:
Net Earnings (Loss) Applicable to
Common Stock $ 2,206 $ 458 $ 2,554 $ (1,941)
Add Back Preferred Cash Dividends 5 - 15 -
-----------------------------------------------------------------------
Net Earnings (Loss) Applicable to
Common Stock $ 2,211 458 $ 2,569 $ (1,941)
=======================================================================
Weighted Average Common
Shares Outstanding 6,469,621 6,144,455 6,477,889 6,027,814
Effect of Common Stock Equivalent 3,755,374 - 3,747,106 -
-----------------------------------------------------------------------
Weighted Average Common Shares
Outstanding for Diluted Earnings
per Share 10,224,995 6,144,455 10,224,995 6,027,814
=======================================================================
Diluted Earnings (Loss) Per Share $ .22 .07 $ .25 $ (.33)
======================================================================
</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-31-2000
<PERIOD-END> JAN-1-2000
<CASH> 24582
<SECURITIES> 0
<RECEIVABLES> 37113
<ALLOWANCES> 566
<INVENTORY> 229303
<CURRENT-ASSETS> 259230
<PP&E> 356452
<DEPRECIATION> 179761
<TOTAL-ASSETS> 443961
<CURRENT-LIABILITIES> 84188
<BONDS> 193907
0
43185
<COMMON> 2816
<OTHER-SE> 101248
<TOTAL-LIABILITY-AND-EQUITY> 443961
<SALES> 510917
<TOTAL-REVENUES> 511882
<CGS> 478798
<TOTAL-COSTS> 478798
<OTHER-EXPENSES> 17041
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12025
<INCOME-PRETAX> 4018
<INCOME-TAX> 1446
<INCOME-CONTINUING> 2572
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2572
<EPS-BASIC> 0.39
<EPS-DILUTED> 0.25
<FN>
Other Expenses is Selling, General and Administrative Expenses
</FN>
</TABLE>
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