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 September 29, 2001 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 October 31, 2001 Common Stock Class A, $.25 Par 3,817,567 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> 9/29/01 3/31/01 ------- ------- <S> <C> <C> ASSETS Current Assets: Cash and Short-term Investments $ 5,373 $ 5,391 Accounts Receivable, Net 50,052 31,510 Inventories: Finished Goods 296,021 178,415 Work in Process 40,607 13,297 Raw Materials 26,248 37,458 ------- ------- 362,876 229,170 Off-Season Reserve (Note 3) (45,249) - Deferred Tax Asset 5,603 5,602 Refundable Income Taxes 596 - Other Current Assets 1,592 1,308 -------------- --------------- Total Current Assets 380,843 272,981 Property, Plant and Equipment, Net 164,439 167,450 Other Assets 3,499 3,802 -------------- --------------- $548,781 $444,233 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes Payable $ 26,000 $ 24,500 Accounts Payable 134,574 39,726 Accrued Expenses 31,222 26,423 Income Taxes Payable - 343 Current Portion of Long-Term Debt and Capital Lease Obligations 19,584 18,622 --------------- --------------- Total Current Liabilities 211,380 109,614 Long-Term Debt 169,769 164,251 Capital Lease Obligations 7,095 7,095 Deferred Income Taxes 6,149 7,132 Other Long-Term Liabilities 6,304 6,382 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 42,630 42,671 Common Stock 2,827 2,825 Paid in Capital 13,595 13,555 Accumulated Other Comprehensive Income 999 961 Retained Earnings 87,963 89,677 --------------- --------------- Stockholders' Equity 148,084 149,759 --------------- --------------- $548,781 $444,233 ======== ======== <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 ------------------ 9/29/01 9/30/00 ------- ------- <S> <C> <C> Net Sales $ 176,800 $ 187,773 Costs and Expenses: Cost of Product Sold 167,428 174,145 Selling, General, and Administrative 5,091 6,011 Other Expense 321 - Interest Expense 4,610 4,409 ------------------ ----------------- Total Costs and Expenses 177,450 184,565 ------------------ ----------------- (Loss) Earnings Before Income Taxes (650) 3,208 Income Taxes (234) 1,155 ------------------ ----------------- Net (Loss) Earnings $ (416) $ 2,053 ================= ================ Basic: (Loss) Earnings Per Common Share $ (.06) $ .31 ================= =============== Diluted: (Loss) Earnings Per Common Share $ (.06) $ .20 ================= =============== <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> Six Months Ended ---------------- 9/29/01 9/30/00 ------- ------- <S> <C> <C> Net Sales $ 309,493 $ 318,932 Costs and Expenses: Cost of Product Sold 292,148 293,836 Selling, General, and Administrative 10,158 11,947 Other Expense (Income) 321 (1,151) Interest Expense 9,525 9,077 ------------------ ----------------- Total Costs and Expenses 312,152 313,709 ------------------ ----------------- (Loss) Earnings Before Income Taxes (2,659) 5,223 Income Taxes (957) 1,880 ------------------ ----------------- Net (Loss) Earnings $ (1,702) $ 3,343 ================= ================ Basic: (Loss) Earnings Per Common Share $ (.26) $ .51 ================= ================ Diluted: (Loss) Earnings Per Common Share $ (.26) $ .33 ================= ================ <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> Six Months Ended ---------------- 9/29/01 9/30/00 ------- ------- <S> <C> <C> Cash Flows From Operating Activities: Net (Loss) Earnings $ (1,702) $ 3,343 Adjustments to Reconcile Net (Loss) Earnings to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization 12,056 11,747 Deferred Income Taxes (959) 1,881 Gain on Sale of Assets - (1,151) Other Expense 321 - Changes in Working Capital: Accounts Receivable (18,542) (15,723) Inventories (133,706) (217,353) Off-Season Reserve 45,249 46,825 Other Current Assets (284) (739) Income Taxes (939) (686) Accounts Payable, Accrued Expenses and Other 99,248 123,962 ------------------ ----------------- Net Cash Provided (Used) by Operations 742 (47,894) ------------------ ----------------- Cash Flows From Investing Activities: Additions to Property, Plant, and Equipment (9,139) (11,757) Disposals 94 166 Escrow Fund 308 3,423 Proceeds from the Sale of Assets - 2,514 ------------------ ----------------- Net Cash Used in Investing Activities (8,737) (5,654) ------------------ ----------------- Cash Flows From Financing Activities: Proceeds from Issuance of Long-Term Debt 6,912 - Notes Payable (net) 1,500 44,640 Payments and Current Portion of Long-Term Debt and Capital Lease Obligations (432) (255) Other 9 10 Dividends (12) (12) ------------------ ----------------- Net Cash Provided by Financing Activities 7,977 44,383 ------------------ ----------------- Net Decrease in Cash and Short- Term Investments (18) (9,165) Cash and Short-Term Investments, Beginning of Period 5,391 11,348 ------------------ ----------------- Cash and Short-Term Investments, End of Period $ 5,373 $ 2,183 ================== ================== <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 September 29, 2001 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 September 29, 2001 and results of operations for the three and six month periods ended September 29, 2001 and September 30, 2000. All significant intercompany transactions and accounts have been eliminated in consolidation. The March 31, 2001 balance sheet was derived from audited financial statements. The results of operations for the three and six month periods ended September 29, 2001 and September 30, 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 2001 Seneca Foods Corporation Annual Report and 10-K. Other footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America 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 2001 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 (Loss) Earnings and Net Unrealized Gain (Loss) Change on Moog, Inc. Stock. The following table provides the results for the periods presented: Six Months Ended September 29 and 30 2001 2000 ---- ---- Net (Loss) Earnings $(1,702) $3,343 Other Comprehensive Earnings, Net of Tax: Net Unrealized Gain (Loss) Change on Moog, Inc. Stock 38 (16) -------------------- Comprehensive (Loss) Earnings $(1,664) $3,327 ==================== 4. The Company issued Long-Term Debt of $6.9 million during the first six months of 2002. The largest instrument was a $3.2 million Industrial Development Bond issued to finance the expansion of the Yakima, Washington plant.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF OPERATIONS September 29, 2001 Results of Operations: Sales: Total Sales reflect a decrease of 5.8% for the second quarter versus 2000. The Company's Alliance business sales dollars decreased by 17.8%. Non-Alliance vegetable sales dollars increased by 7.3% and sales quantities increased 7.9%. Costs and Expenses: The following table shows costs and expenses as a percentage of sales: <TABLE> <CAPTION> Three Months Ended Six Months Ended ------------------ ---------------- 9/29/01 9/30/00 9/29/01 9/30/00 ------- ------- ------- ------- <S> <C> <C> <C> <C> Cost of Product Sold 94.7% 92.8% 94.4% 92.3% Selling 2.4 2.6 2.7 3.0 Administrative 0.5 0.6 0.6 0.7 Other Expense (Income) 0.2 0.0 0.1 (0.4) Interest Expense 2.6 2.3 3.1 2.8 --------------------------------------------------- 100.4% 98.3% 100.9% 98.4% ===================================================== </TABLE> Lower selling prices as compared to the prior year, especially in the Private Label and Food Service businesses, were a major contributing factor in lower profitability. The Other Expense is a charge of $321,000 for a severance accrual. Income Taxes: The effective tax rate used in 2002 and 2001 is 36%. 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 September Ended March --------------- ----------- 2001 2000 2001 2000 ---- ---- ---- ---- <S> <C> <C> <C> <C> Working Capital Balance $169,463 $178,632 $163,367 $168,972 Quarter Change 4,519 5,165 - - Notes Payable 26,000 44,640 24,500 - Long-Term Debt 176,864 189,407 171,346 189,968 Current Ratio 1.80:1 1.71:1 2.49:1 3.05:1 </TABLE> The change in the Working Capital for the September 2001 quarter from the September 2000 quarter is largely due to lower earnings in the current year quarter than the prior year quarter ($416,000 loss as compared to $2,053,000 earnings last year) partially offset by issuance of long-term debt, which was $2.9 million in 2001 as compared to none in 2000. During the second quarter of the current year, a $1,500,000 mortgage was issued to finance the purchase of a warehouse in Mayville, Wisconsin. See Consolidated Condensed Statements of Cash Flows for further details.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS September 29, 2001 Quantitative and Qualitative Disclosures about Market Risk: The Company has not experienced any material changes in Market Risk since our March 31, 2001 report. Forward-Looking Statements Except for the historical information contained herein, the matters discussed in this report are forward-looking statements as defined in the Private Securities Litigation Reform Act (PSLRA) of 1995. The Company wishes to take advantage of the "safe harbor" provisions of the PSLRA by cautioning that numerous important factors which involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices, and other factors discussed in the Company's filings with the Securities and Exchange Commission, in the future, could affect the Company's actual results and could cause its actual consolidated results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company. Recently Issued Accounting Standard In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 142, Goodwill and Other Intangible Assets. Since the Company does not have Goodwill on its balance sheet, this statement is not expected to have a material impact on its consolidated financial statements. In August 2001, the FASB issued SFAS No. 143, Accounting for the Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for years beginning after June 15, 2002. The Company is in the process of evaluating the impact of implementing SFAS No. 143. In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment of Long-Lived Assets, which supersedes SFAS No. 121, Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and the accounting provisions of APB No. 30, Reporting the Results of Operations-Reporting and Effects of the Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business. SFAS No. 144 is effective for years beginning after December 15, 2001. SFAS No. 144 retains many of the provisions of SFAS No. 121, but addresses certain implementation issues associated with the Statement. The Company is currently evaluating the impact of this statement.
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 ------------------------ November 9, 2001 Kraig H. Kayser President and Chief Executive Officer /s/Jeffrey L. Van Riper ------------------------ November 9, 2001 Jeffrey L. Van Riper Controller and Chief Accounting Officer