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 June 29, 1996 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 July 31, 1996 Common Stock Class A, $.25 Par 3,143,125 Common Stock Class B, $.25 Par 2,796,555
<TABLE> PART I FINANCIAL INFORMATION SENECA FOODS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In Thousands of Dollars) <CAPTION> 6/29/96 3/31/96 ------- ------- <S> <C> <C> ASSETS Current Assets: Cash and Short-term Investments $ 7,008 $ 1,297 Common Stock of Moog Inc. - 12,863 Accounts Receivable, Net 36,240 51,118 Inventories: Finished Goods 155,935 138,953 Work in Process 23,438 63,730 Raw Materials 33,229 27,076 ------- ------- 212,602 229,759 Off-Season Reserve (Note 3) 28,271 - Deferred Tax (Net) 53 53 Refundable Income Taxes 3,575 3,503 Other Current Assets 681 1,041 -------------- --------------- Total Current Assets 288,430 299,634 Property, Plant and Equipment, Net 222,541 222,720 Common Stock of Moog Inc. 1,338 1,048 Other Assets 417 457 -------------- --------------- $512,726 $523,859 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes Payable $ 98,000 $ 113,000 Accounts Payable 48,556 48,930 Accrued Expenses 31,519 28,253 Current Portion of Long-Term Debt and Capital Lease Obligations 2,436 690 --------------- --------------- Total Current Liabilities 180,511 190,873 Long-Term Debt 215,351 216,928 Capital Lease Obligations 9,622 9,646 Deferred Income Taxes 12,111 11,414 Deferred Gain 4,124 4,059 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 Common Stock 2,666 2,666 Paid in Capital 5,913 5,913 Net Unrealized Gain on Available-For-Sale Securities 410 5,169 Retained Earnings 81,948 77,121 --------------- --------------- Stockholders' Equity 91,007 90,939 --------------- --------------- $512,726 $523,859 ======== ======== <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 ------------------ 6/29/96 7/1/95 ------- ------ <S> <C> <C> Net Sales $ 123,694 $ 81,945 Other Income (See Notes) 7,501 - ------------------ ----------------- 131,195 81,945 Costs and Expenses: Cost of Product Sold 109,406 68,529 Selling, General, and Administrative 6,584 7,783 Interest Expense 7,481 5,545 ------------------ ----------------- Total Costs and Expenses 123,471 81,857 ------------------ ----------------- Earnings Before Income Taxes 7,724 88 Income Taxes 2,897 33 ------------------ ----------------- Net Earnings $ 4,827 $ 55 ================== ================= Net Earnings Applicable to Common Stock 4,821 49 Weighted Average Common Shares Outstanding 5,939,680 5,593,110 Primary and Fully Diluted Earnings Per Share of Common Stock (Exhibit II): Net Earnings $ .81 $ .01 ================== ================= <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> Three Months Ended ------------------ 6/29/96 7/1/95 ------- ------ <S> <C> <C> Cash Flows From Operating Activities: Net Earnings $ 4,827 $ 55 Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities: Depreciation and Amortization 6,374 4,496 Deferred Income Taxes 697 (22) Gain on the Sale (7,501) - Changes in Working Capital: Accounts Receivable 14,878 2,157 Inventories 17,157 (32,619) Off-Season Reserve (28,271) (17,916) Other Current Assets 360 238 Income Taxes 2,380 (153) Accounts Payable and Accrued Expenses 2,957 8,696 ------------------ ----------------- Net Cash Provided (Used) by Operations 13,858 (35,068) ------------------ ----------------- Cash Flows From Investing Activities: Proceeds from the Sale of Moog Stock 12,863 - Additions to Property, Plant, and Equipment (6,195) (36,792) ------------------ ----------------- Net Cash Provided (Used) in Investing Activities 6,668 (36,792) ------------------ ------------------ Cash Flows From Financing Activities: Notes Payable (15,000) 48,000 Long-Term Borrowing 230 - Payments and Current Portion of Long-Term Debt and Capital Lease Obligations (85) (311) Other 40 (24) Dividends - (12) ------------------ ----------------- Net Cash Provided (Used) in Financing Activities (14,815) 47,653 ------------------ ----------------- Net Increase (Decrease) in Cash and Short- Term Investments 5,711 (24,207) Cash and Short-Term Investments, Beginning of Period 1,297 26,538 ------------------ ----------------- Cash and Short-Term Investments, End of Period $ 7,008 $ 2,331 ================== ================== <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 June 29, 1996 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 June 29, 1996 and March 31, 1996 and results of operations for the three month periods ended June 29, 1996 and July 1, 1995. All significant intercompany transactions and accounts have been eliminated in consolidation. The March 31, 1996 balance sheet was derived from audited financial statements. The results of operations for the three month periods ended June 29, 1996 and July 1, 1995 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 to the Registrant's financial statements in the 1996 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, 1996 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 immaterial. The difference between primary and fully diluted earnings per share is immaterial. 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 issued a stock split in the form of a dividend during 1996. This has been reflected in the prior year of these financial statements as if it had occurred at the beginning of the year.
SENECA FOODS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS June 29, 1996 5. During the first quarter, the Registrant sold its investment in Moog, Inc. Class A Common Stock back to Moog. This resulted in a Pre-Tax gain of $7,501,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF OPERATIONS June 29, 1996 Results of Operations: Sales: Sales reflect an increase of 50.9% for the first three months versus 1995. The higher sales, in large part, are due to higher canned vegetables quantities sold to Pillsbury under the Alliance. Under this Alliance Net Sales were $43,761,000 for three months ended June 1996 versus $3,828,000 for the comparable period in the previous year. This previous period Net Sales were low because the Alliance had just begun and the Registrant did not buy the inventory on hand at the start of the Alliance. Non-Alliance vegetable sales quantities were up 8.8% while juice and fruit sales quantities were down 16.1%. Costs and Expenses: The following table shows cost and expenses as a percentage of sales: <TABLE> <CAPTION> Three Months Ended ------------------ 6/29/96 7/1/95 ------- ------ <S> <C> <C> Cost of Product Sold 88.5% 83.6% Selling 4.0 7.1 Administrative 1.3 2.4 Interest Expense 6.0 6.8 --------------------- 99.8% 96.8% ===================== </TABLE> Higher Cost of Product Sold percentages (i.e. lower Gross Margins) reflect, in part, substantially higher sales to the Pillsbury Alliance which are at low Gross Margins. The Interest Expense is higher largely due to the debt issued to finance the acquisitions and capital expenditures made over the last year. Income Taxes: The effective tax rate used in fiscal 1997 and 1996 is 38%.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF OPERATIONS June 29, 1996 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 June Ended March ---------- ----------- 1996 1995 1996 1995 ---- ---- ---- ---- <S> <C> <C> <C> <C> Working Capital Balance $107,919 $100,283 $108,761 $136,342 Quarter Change (842) (32,587) - - Notes Payable 98,000 48,000 - - Long-Term Debt 224,973 221,192 226,574 221,480 Current Ratio 1.60:1 1.85:1 1.57:1 3.21:1 Inventory (Average) Turnover 2.1 1.8 2.0 2.2 </TABLE> The change in the Working Capital for the quarter from the prior year is largely due to acquisition of Green Giant assets in the prior year and the capital expenditure program needed for the Registrant's plants to take on some of the canned vegetable volume added by the acquisition. As part of the Alliance with Pillsbury (see 1996 Annual Report for details), Pillsbury takes Green Giant inventory as it needs it or at least by the take-or-pay date (varies by commodity). The Registrant was in compliance with its debt covenants related to Short-Term and Long-Term Debt. See Consolidated Statements of Cash Flows for further details.
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 The annual meeting of shareholders of the Registrant was held on August 3, 1996 and the following were the voting results: (1) Management's nominees for Director positions were elected, and (2) a management proposal to ratify the appointment of Deloitte & Touche L.L.P. as independent auditors was adopted. A summary of the voting results follows (In thousands): <TABLE> <CAPTION> Proposal For Withheld Against Abstain Broker Non-Votes <S> <C> <C> <C> <C> <C> Directors: R. T. Brady 3,470 8 A. S. Wolcott 3,470 8 Appointment of Auditors 3,467 7 4 Such other business 3,478 </TABLE> 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 quarter.
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 August 12, 1996 Kraig H. Kayser President and Chief Executive Officer /s/Jeffrey L. Van Riper August 12, 1996 Jeffrey L. Van Riper Controller and Chief Accounting Officer