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 December 30, 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, 2001 Common Stock Class A, $.25 Par 3,813,595 Common Stock Class B, $.25 Par 2,767,357
<TABLE> PART I FINANCIAL INFORMATION SENECA FOODS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In Thousands of Dollars) <CAPTION> 12/30/00 3/31/00 -------- ------- <S> <C> <C> ASSETS Current Assets: Cash and Short-term Investments $ 2,750 $ 11,348 Accounts Receivable, Net 30,736 31,702 Inventories: Finished Goods 222,656 156,349 Work in Process 33,827 4,610 Raw Materials 27,762 42,214 ------- ------- 284,245 203,173 Off-Season Reserve (Note 3) (43,036) - Deferred Tax Asset (Net) 4,811 4,812 Refundable Income Taxes 41 - Other Current Assets 794 528 -------------- --------------- Total Current Assets 280,341 251,563 Property, Plant and Equipment, Net 171,237 179,146 Other Assets 4,270 7,831 -------------- --------------- $ 455,848 $ 438,540 ============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes Payable $ 40,593 $ - Accounts Payable 31,544 48,699 Accrued Expenses 24,385 25,033 Income Taxes 1,435 645 Current Portion of Long-Term Debt and Capital Lease Obligations 8,669 8,214 --------------- --------------- Total Current Liabilities 106,626 82,591 Long-Term Debt 178,143 182,468 Capital Lease Obligations 7,095 7,500 Deferred Income Taxes 6,394 8,383 Other Long-Term Liabilities 6,421 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 42,677 42,870 Common Stock 2,824 2,822 Paid in Capital 13,549 13,359 Accumulated Other Comprehensive Income 959 991 Retained Earnings 91,090 88,887 --------------- --------------- Stockholders' Equity 151,169 148,999 --------------- --------------- $ 455,848 $ 438,540 =============== =============== <FN> The accompanying notes are an integral part of these financial statements. </FN> </TABLE>
<TABLE> SENECA FOODS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) (In Thousands, except Share Data) <CAPTION> Three Months Ended ------------------ 12/30/00 1/1/00 -------- ------ <S> <C> <C> Net Sales $ 242,808 $ 241,731 Costs and Expenses: Cost of Product Sold 233,099 228,086 Selling, General, and Administrative 6,623 6,272 Interest Expense 4,667 3,917 ------------------ ----------------- Total Costs and Expenses 244,389 238,275 ------------------ ----------------- Earnings (Loss) From Continuing Operations Before Income Taxes (1,581) 3,456 Income Taxes (465) 1,244 ------------------ ----------------- Net Earnings (Loss) (1,116) 2,212 ================== ================= Basic Earnings (Loss) Per Common Share $ (.17) $ .34 ================= ================ Diluted Earnings (Loss) Per Common Share $ (.11) $ .22 ================= ================ <FN> The accompanying notes are an integral part of these condensed financial statements. </FN> </TABLE>
<TABLE> SENECA FOODS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) (In Thousands, except Share Data) <CAPTION> Nine Months Ended ------------------ 12/30/00 1/1/00 -------- ------ <S> <C> <C> Net Sales $ 553,816 $ 510,917 Other Income 1,151 965 ------------------ ----------------- 554,967 511,882 Costs and Expenses: Cost of Product Sold 518,911 478,798 Selling, General, and Administrative 18,670 17,041 Interest Expense 13,744 12,025 ------------------ ----------------- Total Costs and Expenses 551,325 507,864 ------------------ ----------------- Earnings From Continuing Operations Before Income Taxes 3,642 4,018 Income Taxes 1,415 1,446 ------------------ ----------------- Net Earnings $ 2,227 $ 2,572 ================= ================ Basic Earnings Per Common Share $ .34 $ .39 ================= ================ Diluted Earnings Per Common Share $ .22 $ .25 ================= ================ <FN> The accompanying notes are an integral part of these condensed financial statements. </FN> </TABLE>
<TABLE> SENECA FOODS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands) <CAPTION> Nine Months Ended ------------------ 12/30/00 1/01/00 -------- ------- <S> <C> <C> Cash Flows from Operating Activities: Net Earnings $ 2,227 $ 2,572 Adjustments to Reconcile Net Earnings to Net Cash (Used in) Provided by Operating Activities: Depreciation and Amortization 17,827 17,406 Deferred Income Taxes (2,021) 1,446 Gain on the Sale of Assets (1,151) (965) Changes in Operating Assets and Liabilities: Accounts Receivable 966 (830) Inventories (81,072) (33,186) Off-Season Reserve 43,036 35,711 Other Current Assets (266) (141) Income Taxes 749 (490) Accounts Payable, Accrued Expenses and Other (19,981) 28,659 ------------------ ----------------- Net Cash (Used in) Provided by Operations (39,686) 50,182 ------------------ ----------------- Cash Flows From Investing Activities: Additions to Property, Plant, and Equipment (11,448) (11,304) Glencoe Escrow 3,548 (5,207) Proceeds from the Sale of Assets 2,514 1,800 Acquisition - (48,459) Disposals 166 179 ------------------ ----------------- Net Cash Used in Investing Activities (5,220) (62,991) ------------------ ----------------- Cash Flows From Financing Activities: Notes Payable 40,593 - Payments and Current Portion of Long-Term Debt and Capital Lease Obligations (4,275) (4,582) Other 14 16 Long-Term Borrowing - 10,978 Dividends (24) (24) ------------------ ----------------- Net Cash Provided by Financing Activities 36,308 6,388 ------------------ ----------------- Net Decrease in Cash and Short- Term Investments (8,598) (6,421) Cash and Short-Term Investments, Beginning of Period 11,348 31,003 ------------------ ----------------- Cash and Short-Term Investments, End of Period $ 2,750 $ 24,582 ================== ================== <FN> The accompanying notes are an integral part of these condensed financial statements. </FN> </TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS December 30, 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 December 30, 2000 and results of operations for the three and nine month periods ended, December 30, 2000 and January 1, 2000. 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 nine month periods ended December 30, 2000 and January 1, 2000 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: Nine Months Ended December 2000 1999 ---- ---- Net Earnings $2,227 $2,572 Other Comprehensive Earnings, Net of Tax: Net Unrealized (Loss) Gain Change on Moog, Inc. Stock (32) 114 ------------------- Comprehensive Earnings $2,195 $2,686 ===================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF OPERATIONS December 30, 2000 Results of Operations: Sales: Sales reflect an increase of 8.4% for the nine months versus 1999. The higher sales, are due to higher canned vegetable dollars sales sold under both the Company's Non-Alliance business and the Company's Alliance business. Non-Alliance vegetable sales dollars were up 7.0% including sales from the Midwest private label canned vegetable business acquired from Agrilink Foods, Inc. in November 1999. Alliance vegetable sales dollars were up 9.8%. Costs and Expenses: The following table shows costs and expenses as a percentage of sales: <TABLE> <CAPTION> Three Months Ended Nine Months Ended ------------------ ----------------- 12/30/00 1/1/00 12/30/00 1/1/00 -------- ------ -------- ------ <S> <C> <C> <C> <C> Cost of Product Sold 96.1% 94.4% 93.8% 93.7% Selling 2.2 2.1 2.7 2.6 Administrative 0.5 0.5 0.6 0.7 Interest Expense 1.9 1.6 2.5 2.4 --------------------------------------------------------- 100.7% 98.6% 99.6% 99.4% ========================================================= </TABLE> Lower selling prices as compared to the prior year, especially in the Private Label business, were a major contributing factor to lower profitability in the current quarter. Income Taxes: The effective tax rate used in fiscal 2001 is 39% and 2000 is 36%. New Accounting Standards Effective April 1, 2001, the Company will adopt the Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 133 (as amended by SFAS No. 137 and 138), "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 is required to be adopted for all fiscal quarters of all fiscal years beginning after June 15, 2000 and relates to accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities and measure those instruments at fair value. The Company has not yet determined the effect that this standard will have, if any, on the Company's financial position, results of operations or cash flows. In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities," which replaces SFAS No. 125, of the same name. This standard in effective for transfers occurring after March 31, 2001, with certain disclosure requirements effective for the year ending March 31, 2001. The Company does not believe this standard will have on impact on the Company's financial position, results of operations or cash flows.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF OPERATIONS December 30, 2000 In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation, and disclosure of or revenue in financial statements filed with the SEC. Although the Company has not fully accessed the implications of SAB 101, management does not believe the adoption of SAB 101 will have a significant impact on the Company's financial postion, results of operations or cash flow.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS December 30, 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 December Ended March -------------- ----------- 2000 1999 2000 1999 ---- ---- ---- ---- <S> <C> <C> <C> <C> Working Capital Balance $173,715 $175,042 $168,972 $167,435 Quarter Change (4,916) 2,175 - - Notes Payable 40,593 - - - Long-Term Debt 185,238 193,907 189,968 187,904 Current Ratio 2.63:1 3.08:1 3.05:1 3.98:1 </TABLE> The change in the Working Capital for the December 2000 quarter from the December 1999 quarter is largely due to lower earnings in the current year than the prior year ($1.1 million current loss and $2.2 million earnings prior), and a payment of $2.0 million in the current year for an IRS audit settlement related to the years 1999, 1998, and 1997. In the first nine months ended December 2000, Capital Expenditures were $11.4 million ($11.3 million for the same period in the prior year)of which $3.5 million of capital expenditures were funded via a capital escrow account, which was a result of an Industrial Revenue Bond issued last year. Notes payable is $41 million higher than the prior year largely due to $55 million higher Inventory in the current year than the prior year. This was partially offset by the Off Season Reserve which is a credit of $43 million in the current year a compared to a credit of $36 million in the prior 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.
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). Reports on Form 8-K - None during the quarter.
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 12, 2001 Kraig H. Kayser President and Chief Executive Officer /s/Jeffrey L. Van Riper February 12, 2001 Jeffrey L. Van Riper Controller and Chief Accounting Officer