-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Awa8NbALbmvZWj8k8mAjg8W0MrXTBGoU9yLtxIfCTzKpEhVgBi/+aD1q7OqfyEXT kBndUHLdUDKoQsfMiadbcQ== 0000088948-95-000006.txt : 199506290000088948-95-000006.hdr.sgml : 19950629 ACCESSION NUMBER: 0000088948-95-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950628 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SENECA FOODS CORP /NY/ CENTRAL INDEX KEY: 0000088948 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FRUITS, VEG & PRESERVES, JAMS & JELLIES [2033] IRS NUMBER: 160733425 STATE OF INCORPORATION: NY FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-01989 FILM NUMBER: 95550367 BUSINESS ADDRESS: STREET 1: 1162 PITTSFORD VICTOR RD CITY: PITTSFORD STATE: NY ZIP: 14534 BUSINESS PHONE: 7163859500 FORMER COMPANY: FORMER CONFORMED NAME: PIERCE S S COMPANY INC DATE OF NAME CHANGE: 19861210 FORMER COMPANY: FORMER CONFORMED NAME: SENECA FOODS CORP DATE OF NAME CHANGE: 19780425 FORMER COMPANY: FORMER CONFORMED NAME: SENECA GRAPE JUICE CORP DATE OF NAME CHANGE: 19710419 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the transition period from August 1, 1994 to March 31, 1995 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 Identification No.) incorporation or organization) 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 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Title of Each Class Which Registered None None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.25 Par (Title of Class) Check mark indicates whether registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes X No ----- ----- The aggregate market value of the Registrant's voting securities held by non-affiliates based on the closing sales price per market reports by the NASDAQ National Market System on May 1, 1995 was approximately $95,083,000. Common shares outstanding as of May 1, 1995 were 2,796,555. Documents Incorporated by Reference: (1) Proxy Statement to be issued prior to June 30, 1995 in connection with the registrant's annual meeting of stockholders (the "Proxy Statement") applicable to Part III, Items 10-13 of Form 10-K. (2) Portions of the Annual Report to shareholders for the transition period ended March 31, 1995 (the "1995 Annual Report") applicable to Part II, Items 5-8 and Part IV, Item 14 of Form 10-K. TABLE OF CONTENTS FORM 10-K ANNUAL REPORT - FISCAL 1995 SENECA FOODS CORPORATION PART I. Page Item 1. Business 1-3 Item 2. Properties 3 Item 3. Legal Proceedings 4 Item 4. Submission of Matters to a Vote of Equity Security Holders 4 PART II. Item 5. Market for the Registrant's Common Stock and Related Security Holder Matters 4 Item 6. Selected Financial Data 4 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 4 Item 8. Financial Statements and Supplementary Data 4 Item 9. Changes in and Disagreements on Accounting and Financial Disclosure 4 PART III. Item 10. Directors and Executive Officers of the Registrant 6 Item 11. Executive Compensation 6 Item 12. Security Ownership of Certain Beneficial Owners and Management 6 Item 13. Certain Relationships and Related Transactions 6 PART IV. Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K 6-9 SIGNATURES 10-11 PART I Item 1 Business General Development of Business SENECA FOODS CORPORATION (herein referred to as the "Company") was organized in 1949 and incorporated under the laws of the State of New York. Seneca Foods Corporation purchased six Green Giant(R) vegetable plants from The Pillsbury Company effective February 1, 1995, resulting in vegetable products becoming nearly 80% of Seneca's overall business. Consequently, Seneca has changed its fiscal year end from July 31 to March 31 to avoid overlapping pack seasons between fiscal years. Therefore, Fiscal 1995 was an eight-month transition period. Financial Information About Industry Segments The Company's business activities are conducted in food and non-food segments. The food segment is food processing. The non-food segment is an air charter service. The air charter service represents about 1% of the Company's business and therefore the financial information related to segments is not material. Narrative Description of Business Principal Products and Markets Food Processing The principal products of this segment include grape products, apple products, and vegetables. The products are canned, bottled, and frozen and are sold to retail and institutional markets. The Company has divided the United States into four major marketing sections: Eastern, Southern, Northwestern, and Southwestern. Plant locations in New York, North Carolina, and Washington provide ready access to the domestic sources of grapes and apples necessary to support marketing efforts in their respective sections of the country. Vegetable operations are primarily supported by plant locations in New York, Wisconsin, Washington, Idaho, and Minnesota. In addition, the Company operates a mushroom canning facility in Pennsylvania. The following summarizes net sales by major category for the four years ended March 31, 1995, July 31, 1994, 1993, and 1992.
(Eight Months) 1995 1994 1993 1992 ---- ---- ---- ---- (In thousands) Vegetable $ 117,504 $ 145,010 $ 132,459 $ 151,169 Apple 62,688 78,453 71,748 78,361 Grape 10,325 17,457 19,058 19,457 Other 40,809 45,334 30,205 26,844 ------ ------ ------ ------ Total $ 231,236 $ 286,254 $ 253,470 $ 275,831 ======= = ======= = ======= = =======
Other Seneca Flight Operations provides air charter service primarily to industries in upstate New York. Source and Availability of Raw Material Food Processing The Company's food processing plants are located in major vegetable, grape, and apple producing states. Fruits and vegetables are primarily obtained through contracts with growers. Apple concentrate is purchased domestically and abroad to supplement raw fruit purchased under contract. The Company believes its sources of supply are considered equal or superior to its competition for all of its food products. Seasonal Business Food Processing While individual fruits and vegetables have seasonal cycles of peak production and sales, the different cycles are usually offsetting to some extent. The supply of commodities, current pricing, and expected new crop quantity and quality affect the timing of the Company's sales and earnings. An Off Season Allowance is established during the year to minimize the effect of seasonal production on earnings. This is zero at fiscal year end. Backlog Food Processing In the food processing business the end of year sales order backlog is not considered meaningful. Traditionally, larger customers provide tentative bookings for their expected purchases for the upcoming season. These bookings are further developed as data on the expected size of the related national harvests becomes available. In general these bookings serve as a yardstick, rather than as a firm commitment, since actual harvest results can vary notably from early estimates. In actual practice, the Company has substantially all of its expected seasonal production identified to potential sales outlets before the seasonal production is completed. Competition and Customers Food Processing Competition in the food business is substantial with imaginative brand registration, quality service, and pricing being the major determinants in the Company's relative market position. Except for the Seneca apple and grape products and Libby's vegetable products data mentioned below, no reliable statistics are available to establish the exact market position of the Company's own food products. During the past year approximately 47% of the Company's processed foods were packed for retail customers under the Company branded labels of Libby's(R), Nature's Favorite(R), TreeSweet(R), and Seneca(R). About 15% of the processed foods were packed for institutional food distributors and the remaining 38% of processed foods were retail packed under the private label of customers. The customers represent a full cross section of the retail, institutional, distributor, and industrial markets and the Company does not consider itself dependent on any single sales source. In 1996 and in the future, The Pillsbury Company will represent our largest customer as a result of the 20-year supply agreement entered into during 1995. The principal branded products are Seneca Frozen Apple Juice Concentrate, rated the number one seller nationally, Seneca Frozen Natural Grape Juice Concentrate, Seneca applesauce, and Libby's canned vegetable products which rate among the top five national brands. The information under the heading Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations in the 1995 Annual Report is incorporated by reference. Environmental Protection Environmental protection is an area that the Company has worked on diligently at each food processing facility. In all locations the Company has cooperated with federal, state, and local environmental protection authorities in developing and maintaining suitable antipollution facilities. In general, the Company believes its pollution control facilities are equal to or superior to those of its competitors and are within environmental protection standards. The Company does not expect any material capital expenditures to comply with environmental regulations in the near future. Employment Food processing - Full time 1,909 - Seasonal 553 ----- 2,462 Other 124 ----- 2,586 Foreign Operations Export sales for the Company are a relatively small portion (less than 3%) of the food processing sales. Item 2 Properties The Company has nine food processing, packaging, and warehousing facilities located in New York State that provide approximately 1,507,000 square feet of food packaging, freezing and freezer storage, and warehouse storage space. These facilities process and package fruit and vegetable products. The Company is a lessee under a number of operating and capital leases for equipment and real property used for processing and warehousing. Five other processing, packaging, and warehousing facilities are located in the states of North Carolina (223,000 square feet), Pennsylvania (39,000 square feet), and in Washington (three locations totaling 292,000 square feet). Processing operations in North Carolina are primarily devoted to apple juice products; in Washington, grape juice, apple juice, fruit chips, and sauce; and in Pennsylvania, mushroom canning and warehousing. Four facilities in Minnesota, one facility in Michigan, one facility in Washington, one facility in Idaho, and seven facilities in Wisconsin provide approximately 4,364,000 square feet of food packaging, freezing and freezer storage, and warehouse storage space. These facilities process and package various vegetable and fruit products. The facilities are owned by the Company. The Company owns three food distribution facilities in Massachusetts and New York totaling approximately 400,000 square feet which are leased out to another company through 1995-97. Sublease income of $1,333,000 was received on these facilities during the eight month period. In addition the air charter division has a 14,000 square foot facility. All of the properties are well maintained and equipped with modern machinery. Although highly utilized, most locations have the ability to expand as sales requirements justify. Because of the seasonal production cycles the exact extent of utilization is difficult to measure. In certain circumstances the theoretical full efficiency levels are being reached; however, expansion of the number of production days or hours could increase the output by up to 20% for a season. Certain of the Company's facilities are mortgaged to financial institutions to secure long-term debt and capital leases obligations. See Notes 5 and 6 of Item 8, Financial Statements and Supplementary Data, for additional information about the Company's lease commitments. Item 3 Legal Proceedings The Company is not involved in any material legal proceedings. Item 4 Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of shareholders during the last quarter of the fiscal period covered by this report. PART II Item 5 Market for the Registrant's Common Stock and Related Stockholder Matters Each class of preferred stock receives preference as to dividend payment and declaration over any common stock. In addition, refer to the information in the 1995 Annual Report, page 16, "Shareholder Information", which is incorporated by reference. Item 6 Selected Financial Data Refer to the information in the 1995 Annual Report page 3, "Five Year Selected Financial Data", which is incorporated by reference. Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Refer to the information in the 1995 Annual Report page 4, "Management's Discussion and Analysis of Financial Condition and Results of Operations", which is incorporated by reference. Item 8 Financial Statements and Supplementary Data Refer to the information in the 1995 Annual Report pages 5 through 14, "Consolidated Financial Statements and Notes thereto including Independent Auditors' Report", which is incorporated by reference. Item 9 Changes in and Disagreements on Accounting and Financial Disclosure None. INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Seneca Foods Corporation Pittsford, New York We have audited the consolidated financial statements of Seneca Foods Corporation and subsidiaries as of March 31, 1995, July 31, 1994 and July 31, 1993, and for the eight months ended March 31, 1995 and for each of the three years in the period ended July 31, 1994, and have issued our report thereon dated May 30, 1995; which report includes an explanatory paragraph as to a change in accounting for income taxes in 1994; such consolidated financial statements and report are included in your 1995 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Seneca Foods Corporation and subsidiaries, listed in Item 14(A)(2). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/Deloitte & Touche LLP Rochester, New York May 30, 1995 PART III Item 10 Directors and Executive Officers of the Registrant Item 11 Executive Compensation Item 12 Security Ownership of Certain Beneficial Owners and Management Item 13 Certain Relationships and Related Transactions Information required by Items 10 through 13 will be filed separately with the Commission, pursuant to Regulation 14A, in a definitive proxy statement involving the election of directors which is incorporated herein by reference. PART IV Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K A. Exhibits and Financial Statement Schedules 1. (i) Financial Statement Schedules - the following consolidated financial statements of the Registrant, included in the Annual Report for the transition period ended March 31, 1995, are incorporated by reference in Item 8: Consolidated Statements of Net Earnings - March 31, 1995 and July 31, 1994, 1993, and 1992 Consolidated Balance Sheets - March 31, 1995 and July 31, 1994 and 1993 Consolidated Statements of Cash Flows - March 31, 1995 and July 31, 1994, 1993, and 1992 Consolidated Statements of Stockholders' Equity - March 31, 1995 and July 31, 1994, 1993, and 1992 Notes to Consolidated Financial Statements - March 31, 1995 and July 31, 1994, 1993, and 1992 Independent Auditors' Report (ii) Financial Statements required by Rule 13a - 10(b): As a result of the Company's change in fiscal year end date from July 31 to March 31 (see Note 1 of Item 8, Financial Statements and Supplementary Data), the following is an unaudited comparison of eight months ended March 31, 1995 and March 26, 1994:
March 31 March 26 Eight Months Ended (1994 Unaudited) 1995 1994 ----------------------------------- ---- ---- (In thousands, except share amounts) Net sales $ 234,073 $ 195,048 - ------- - ------- Costs and expenses: Cost of product sold 202,285 162,356 Selling, general, and administrative expense 23,620 20,231 Interest expense, net of interest income 6,296 4,178 ----- ----- 232,201 186,765 ------- ------- Earnings from continuing operations before income taxes, extraordinary item and cumulative effect of accounting change 1,872 8,283 Income taxes 688 3,231 --- ----- Earnings from continuing operations $ 1,184 $ 5,052 = ===== = ===== Earnings from continuing operations per share $ .42 $ 1.71 = === = ==== Weighted average shares outstanding 2,796,555 2,949,642 ========= =========
Pages 2. Supplemental Schedule: Schedule II -- Valuation and Qualifying Accounts 8 Other schedules have not been filed because the conditions requiring the filing do not exist or the required information is included in the consolidated financial statements, including the notes thereto. 3. Exhibits: No. 3 - Articles of Incorporation and By-Laws - Incorporated by reference to an Exhibit to the Company's 10-Q filed October, 1992. No. 4 - Articles defining the rights of security holders - Incorporated by reference to the Company's 10-Q filed October, 1992. Instrument defining the rights of any holder of Long-Term Debt - Incorporated by reference to Exhibit 99 to the Company's 10-Q filed January 1995. The Company will furnish, upon written request to the SEC, a copy of any other instrument defining the rights of any holder of long term debt. No. 10 - Material Contracts - Incorporated by reference to the Company's 8-K dated February 24, 1995 for the First Amended and Restated Alliance Agreement and the First Amended and Restated Asset Purchase Agreement both with The Pillsbury Company. No. 11 - Computation of Earnings per Share 8 No. 13 - 1995 Annual Report to Shareholders, incorporated by reference and filed herewith. No. 21 - List of Subsidiaries 9 B. Reports on Form 8-K An 8-K dated February 24, 1995 was filed relating to the Green Giant acquisition. Schedule II VALUATION AND QUALIFYING ACCOUNTS (In thousands)
Balance at Charged to Deductions Balance beginning Charged to other from at end of period income accounts reserve of period --------- ---------- ----------- ---------- --------- Year ended March 31, 1995 Allowance for doubtful accounts $ 183 $ 166 $ -- $ 122 (a) $ 227 = === = === = == = === === = === Year ended July 31, 1994: Allowance for doubtful accounts $ 435 $ (213) $ -- $ 39 (a) $ 183 = === = ===== = == = == === = === Year ended July 31, 1993: Allowance for doubtful accounts $ 281 $ 182 $ -- $ 28 (a) $ 435 = === = === = == = == === = === Year ended July 31, 1992: Allowance for doubtful accounts $ 285 $ 448 $ -- $ 452 (a) $ 281 = === = === = == = === === = === (a) Accounts written off, net of recoveries.
EX-11 2 Exhibit 11 COMPUTATION OF EARNINGS PER SHARE (In thousands, except per share amounts)
(Eight Months) Years ended March 31 and July 31, 1995 1994 1993 1992 - --------------------------------- ---- ---- ---- ---- Primary Net earnings applicable to common stock: Net earnings $ 1,184 $ 9,104 $ 4,118 $ 891 Deduct preferred stock dividends paid 15 23 23 23 -- -- -- -- Net earnings applicable to common stock $ 1,169 $ 9,081 $ 4,095 $ 868 = ===== = ===== = ===== = === Weighted average number of common shares and common equivalents outstanding 2,797 2,899 3,085 3,096 ===== ===== ===== ===== Primary earnings per share $ .42 $ 3.13 $ 1.33 $ .28 = === = ==== = ==== = === Fully Diluted Net earnings applicable to common stock per above $ 1,169 $ 9,081 $ 4,095 $ 868 Add dividends on convertible preferred stock 13 20 20 20 -- -- -- -- Net earnings applicable to common stock on a fully diluted basis $ 1,182 $ 9,101 $ 4,115 $ 888 = ===== = ===== = ===== = === Shares used in calculating primary earnings per share above 2,797 2,899 3,085 3,096 Additional shares to be issued under full conversion of preferred stock 34 34 34 34 -- -- -- -- Total shares for fully diluted 2,831 2,933 3,119 3,130 ===== ===== ===== ===== Fully diluted earnings per share $ .42 $ 3.10 $ 1.32 $ .28 = === = ==== = ==== = ===
EX-13 3 1995 ANNUAL REPORT TO SHAREHOLDERS Financial Highlights
(Eight Months) Increase (Decrease) ------------------------ Years ended March 31 and July 31, 1995 1994 1993 1995-94 1994-93 - --------------------------------- ---- ---- ---- ------- ------- Net sales $ 234,073,000 $ 290,185,000 $ 257,402,000 NM 12.7% Earnings from continuing operations 1,184,000 5,341,000 3,153,000 NM 69.4 Earnings before extraordinary item and cumulative effect of accounting change 1,184,000 7,704,000 4,118,000 NM 87.1 Cumulative effect of accounting change -- 2,006,000 -- -- -- Net earnings 1,184,000 9,104,000 4,118,000 NM 121.1 Earnings from continuing operations per share $ .42 $ 1.84 $ 1.02 NM 80.4% Earnings before extraordinary item and cumulative effect of accounting change per share .42 2.65 1.33 NM 99.2 Cumulative effect of accounting change per share -- .69 -- -- -- Net earnings per share .42 3.13 1.33 NM 135.3 Stockholders' equity 87,349,000 85,285,000 81,296,000 NM 4.9 Common stockholders' equity per share 31.21 30.47 26.47 NM 15.1 1995 represents eight months ended March 31 due to a change in the Company's fiscal year end. NM - not meaningful.
Description of Business Seneca Foods Corporation conducts its business almost entirely in food processing which currently contributes about 99% of the Company's sales. Canned and frozen vegetables represent 51% of the food processing volume. Within the apple products category, which contributed 27% of all processed food sales, the Company's Seneca(R) brand frozen apple concentrate continues its position as the nation's number one seller. Of the remaining food processing sales, grape products account for 4%, and bottled, canned, and frozen fruit juice drinks account for the remaining 18%. Approximately 47% of the Company's food products are packed under its own brands including Seneca(R), Libby's(R), Nature's Favorite(R) and TreeSweet(R). About 38% of the processed foods are packed under private labels with the remaining 15% sold to institutional food distributors. The Company also operates a non-food division which contributes about 1% to the Company's sales. Seneca Flight Operations provides air charter service primarily to industries located in upstate New York. Pittsford, New York June 16, 1995 To our Fellow Shareholders Fiscal 1995 was a busy year for the Company. While the Company had substantial revenue growth, margins were squeezed by an oversupply of vegetables due to last summer's bumper crops. The biggest highlight of 1995 was the formation of our Alliance with The Pillsbury Company whereby Seneca purchased six vegetable plants from Pillsbury and signed a 20 year agreement under which Seneca becomes the primary supplier of Green Giant canned and frozen vegetables to Pillsbury. As a result of the Alliance, we have implemented a change in our fiscal year-end from July 31st to March 31st. We had long struggled with closing our fiscal year on July 31st, which was well into the vegetable pack season. However, with the Pillsbury Alliance, our vegetable revenues will grow to nearly 80% of total revenues. By moving our fiscal year end to March, we will avoid overlapping the pack season which begins in April with asparagus. Consequently, fiscal 1995 is an eight month period. For the eight months, Seneca earned $1,184,000 or $.42 per share on revenues of $234,073,000. In fiscal 1994 for twelve months, Seneca's earnings from continuing operations were $5,341,000, or $1.84 per share, on revenues of $290,185,000. As we mentioned earlier, the harvest last summer was more bountiful than anytime in recent memory. Weather conditions were ideal, and Seneca as well as its competitors had very successful pack seasons. Unfortunately in our business, this often leads to price pressures as supply outstrips demand. We aggressively sold our vegetables throughout the year and are entering the new pack season in a reasonable inventory position. On the juice side of the business, Seneca took advantage of low apple raw stock prices to increase its #1 share in the frozen concentrated apple juice market and built both share and distribution in shelf stable apple juice. Our grape, cranberry and citrus juices also did well in 1995. On February 1st, we completed our aforementioned transaction with Pillsbury. This project involved the closing of four Pillsbury plants and moving the production into both Seneca plants and former Pillsbury plants now owned by Seneca. We are investing over $50 million in this project. When completed, we will have significantly increased the efficiencies and capacities of our plants. Much of the investment is going into dry and frozen warehousing and new state-of-the-art production and harvesting equipment. In fact, the entire project will be completed with very little additional manufacturing space being constructed. We believe the Alliance is a prime example of how two companies can blend their core competencies to make the combined business more efficient. Seneca has a strong manufacturing expertise, while Pillsbury has a strong marketing focus. Our joint relationship has already created cost savings and other benefits for both parties. As we look to the immediate future, we are working feverishly to get the plants ready before the pack season. Weather has thus far been mixed with cool wet weather in the Midwest impeding our planting schedule, and with dry weather in New York potentially effecting the yields this summer. Nevertheless, it is still far to early to attempt to predict the final crop outcome. Our Company is unusual for a company our size in that a significant part of our stock is owned by management. Consequently, we pay less attention to quarter-to-quarter performance, rather we focus on the long haul. Our goal is to invest in the people and in the plants that will place us in the forefront of our peers in the industry. As part of this strategy, we are asking our shareholders to approve a new class of stock which would be distributed as a stock dividend giving one share of the new class for each share of Common Stock you currently hold. This stock will carry nearly all of the rights of the current Common Stock; but will carry only 1/20th of the vote of the current Common Stock. This distribution of shares will increase the financing flexibility of the Company. Finally, thank you to the many Seneca Employees who have put in long hours this past year to help us meet our ambitious objectives. /s/Arthur S. Wolcott /s/Kraig H. Kayser Chairman President and Chief Executive Officer Five Year Selected Financial Data Summary of Operations and Financial Condition
(Eight Months) Years ended March 31 and July 31, 1995 1994 1993 1992 1991 1990 - --------------------------------- ---- ---- ---- ---- ---- ---- (In thousands of dollars, except per share data) Net sales $ 234,073 $ 290,185 $ 257,402 $ 279,708 $ 279,973 $ 295,120 - --------- - ------- - ------- - ------- - ------- - ------- - ------- Operating earnings (before Corporate interest and administrative) $ 11,163 $ 18,354 $ 12,843 $ 12,870 $ 21,544 $ 20,206 Earnings (loss) from continuing operations before extraordinary item and cumulative effect of accounting change 1,184 5,341 3,153 (305) 5,252 4,028 Earnings from discontinued operations -- 90 965 1,663 651 1,778 Gain on the sale of discontinued operations -- 2,273 -- -- -- -- Earnings before extraordinary item and cumulative effect of accounting change 1,184 7,704 4,118 1,358 5,903 5,806 Extraordinary loss -- (606) -- (467) -- -- Cumulative effect of accounting change -- 2,006 -- -- -- -- Net earnings 1,184 9,104 4,118 891 5,903 5,806 - ------------ ----- ----- ----- --- ----- ----- Earnings (loss) from continuing operations per common share $ .42 $ 1.84 $ 1.02 $ (.11) $ 1.69 $ 1.25 Earnings per common share before extraordinary item and cumulative effect of accounting change .42 2.65 1.33 .43 1.90 1.80 Net earnings per common share .42 3.13 1.33 .28 1.90 1.80 - ----------------------------- --- ---- ---- --- ---- ---- Working capital $ 132,870 $ 62,794 $ 84,410 $ 76,650 $ 77,703 $ 61,590 Inventories 132,404 92,710 82,586 86,309 92,248 84,927 Net property, plant, and equipment 179,718 78,216 74,089 81,718 82,754 73,951 Total assets 381,726 200,601 203,138 205,814 211,070 194,036 Long-term debt and capital lease obligations 221,480 51,476 72,556 77,614 79,938 57,885 Stockholders' equity 87,349 85,285 81,296 75,828 76,798 70,918 - -------------------- ------ ------ ------ ------ ------ ------ Additions to property, plant, and equipment $ 26,966 $ 9,384 $ 1,723 $ 8,702 $ 17,167 $ 11,981 Interest expense, net 6,296 6,046 5,834 10,186 9,289 10,106 - --------------------- ----- ----- ----- ------ ----- ------ Net earnings/average equity 1.4 % 10.9 % 5.2 % 1.2 % 8.0% 8.2% Continuing earnings before taxes/sales 0.8 % 2.8 % 1.3 % (0.2)% 3.0% 2.2% Net earnings/sales 0.5 % 3.1 % 1.6 % 0.3 % 2.1% 2.0% Long-term debt/equity 254 % 60 % 89 % 102 % 104% 82% Current ratio 3.2:1 2.2:1 3.2:1 2.8:1 2.8:1 2.2:1 - ------------- ----- ----- ----- ----- ----- ----- Common stockholders' equity per share $ 31.21 $ 30.47 $ 26.47 $ 24.49 $ 24.77 $ 22.87 National Market System closing price range 35 1/2-21 22 3/4-15 1/2 16 3/8-14 3/4 21 1/4-15 1/4 25 1/4-20 25 1/4-18 Common cash dividends declared per share -- -- -- -- -- -- Price earnings ratio 81.5x 6.8x 11.7x 55.4x 10.5x 13.6x - -------------------- ----- ---- ----- ----- ----- ---- 1995 represents eight months ended March 31.
Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Because of the food processing segment, the Company's yearly business cycle shows large inventory growth during the summer and fall harvest period. The inventory peaks in the early winter and drops to its minimum level immediately prior to the next pack season. These peaks are financed through seasonal borrowings whose high and low points essentially correspond with the changes in inventory, or by a reduction in short-term investments. Accordingly, inventory management is key to liquidity. During February 1995 the Company acquired certain assets (see Acquisitions, note 13) of the Green Giant division of The Pillsbury Company (referred to as "Pillsbury"), a subsidiary of Grand Metropolitan Incorporated. Under an Alliance Agreement concurrently executed by the Company, Pillsbury and Grand Metropolitan Incorporated, Pillsbury will continue to be responsible for all of the sales, marketing and customer service functions for the Green Giant brand, while the Company will handle vegetable processing and canning operations. Pillsbury continues to own all the trademark rights to the Green Giant brand and its proprietary seed varieties. The assets acquired include certain raw material and supplies inventory and six manufacturing facilities located in the Midwestern and Northwestern United States. The purchase price of $86.1 million was funded by a subordinated note issued by the Company for $73.0 million and the balance was funded out of working capital. In conjunction with this acquisition, the Company has entered into a revolving credit facility for up to $150.0 million from a syndicate of eleven banks. The facility provides the borrowing capability needed for the acquisition and the Company's existing business. In addition, the Company issued two new senior debt notes. The first is a $75.0 million unsecured note issued to The Prudential Insurance Company of America, with repayment due beginning in March 1998, a final maturity date of February 2005, and an interest rate of 10.78% (see Long-Term Debt, note 5). The second is a $50.0 million unsecured note issued to John Hancock Mutual Life Insurance Company, with repayment due beginning March 2001, a final maturity of January 2009, and an interest rate of 10.81%. The proceeds of these two notes were used to finance or replenish the working capital for the following: 1) capital expenditures of $50.0 million related to the Alliance Agreement with Pillsbury; 2) repayment of two notes due to an insurance company, one repaid in July 1994 for $13.8 million, the other for $26.6 million which was repaid when the new debt was issued; 3) three small acquisitions made over the last fifteen months totaling $15.6 million; and 4) the balance, $19.0 million, for capital expenditures made over the last three years. During 1994 the Company prepaid an issue of high interest long-term debt totaling $13.8 million. This resulted in an extraordinary loss of $0.6 million after taxes. Also during 1994 the Company made two small acquisitions totaling $11.7 million. The debt prepayment and acquisitions were funded from working capital and current operations. During 1994 and 1993 the Company had no new long-term financing. During 1992 the Company began refunding $22.6 million of tax exempt industrial revenue bonds that was completed in 1993. As mentioned above, during 1995 the Company entered into an unsecured revolving credit agreement for up to $150.0 million. Previously, the Company maintained uncommitted lines of credit. The peak borrowings reached $54.1 million during 1995. Credit lines provide for interest rate options based on prime, eurodollar, or money market. There were $1.6 million of borrowings outstanding under the lines at the end of 1994 and none for years 1995, 1993 and 1992. The increase in cash and short-term investments of $24.7 million over the four fiscal year period ended in 1995 was primarily due to proceeds of the three new long-term debt issues totaling $198.0 million, proceeds from the disposal of the textile segment of $8.4 million, an income tax refund in 1993 of $4.2 million, and net earnings. This was partially offset by the Green Giant acquisition of $86.1 million, the debt prepayments totaling $40.4 million; three small acquisitions totaling $15.6 million; the common stock retirement of $5.1 million; capital additions of $27.0 million, $9.4 million, $1.7 million, and $8.7 million in 1995, 1994, 1993, and 1992, respectively; and smaller items not identified. The 1995 capital expenditures of $27.0 million largely reflect part of the expected $50.0 million to be spent related to the Alliance Agreement with Pillsbury as mentioned above. During 1994 capital expenditures were higher than both 1993 and 1992. During 1995 the Company began installation of a green bean processing line in the Eastern Division, cold storage facilities in the Central Division in the midwest and northwest, and a frozen vegetable processing expansion in the Central Division. During 1994 the Company upgraded its vegetable processing and juice bottling equipment in the Eastern Division. During 1992 the Company upgraded a portion of its can manufacturing equipment in the midwest. During August 1993 the Company sold its textile division for approximately $8.4 million. It represented about 6% of the Company's assets and 13% of the Company's sales in 1993. Results of Operations During 1995, the Company changed its fiscal year end to March 31 from July 31. With the acquisition of the Green Giant plants, vegetables now represent a substantial portion of the Company's business. The July year end fell in the middle of the pack season for certain vegetable commodities while March 31 is before any packs begin. The Company's sales were $234.1 million in the eight month transition period ended 1995. It is not appropriate to annualize this amount since some of the commodities sold are only packed annually and certain vegetable inventories were depleted well before the new pack. A full year's sales in 1995 would have shown an increase over 1994. Sales increased by 12.7% in 1994 and decreased 8.0% and 0.1% in 1993 and 1992, respectively. In 1995 vegetable unit sales were sharply higher due to the industrywide large packs. Unit selling prices were down which partially offset the vegetable dollar sales increases due to volume. The three small acquisitions (one in 1995 and two in 1994) also contributed to the increase (see Acquisitions, note 13). In 1994 vegetable sales increased 9.5% due to sharply higher unit selling prices that resulted from 1993's flooding in the midwest. In 1994 fruit and juice sales were up 16.7% led by apple juice which was up 9.3%. The two small acquisitions also contributed to the increase (see Acquisitions, note 13). In 1993 vegetable sales declined 12.4% due to lower unit sales and selling prices while apple and grape sales declined by 8.4% and 2.1%, respectively. This was partially offset by an increase in co-pack sales. Vegetable sales decreased due, in part, to a continued oversupply of processed vegetables in the industry. In 1992 vegetable sales increased due to greater unit sales while apple and grape sales declined. Apple sales in 1992 declined due to the second consecutive year of the worldwide apple shortage. In 1995 earnings decreased due, in part, to lower selling prices caused by an industrywide oversupply of processed vegetables. In 1994 earnings increased for the following reasons: 1) lower apple cost of product sold due to a greater availability of apples, 2) higher selling prices on vegetables which more than offset higher cost of goods sold, 3) the sale of the textile segment and, 4) the $2.0 million gain due to implementing Statement of Financial Accounting Standards (SFAS) 109, Accounting for Income Taxes (see Income Taxes, note 7). In 1993 earnings increased for the following reasons: 1) lower apple cost of product sold due to a greater availability of apples, 2) lower interest cost since there were lower short-term rates, 3) the refinancing mentioned below and, 4) the $1.7 million of interest income from the Internal Revenue Service (see Income Taxes, note 7). In 1992 earnings decreased due, in part, to lower selling prices caused by an industrywide oversupply of processed vegetables. In addition a major shortage of processing apples in Europe and the U. S. caused unprecedented increases in the cost of goods sold which resulted in lower earnings. The 1992 earnings included an extraordinary loss of $0.5 million (after tax benefit) related to a prepayment penalty paid for early extinguishment of Industrial Revenue Bonds and accelerated amortization of their deferred financing costs. Interest savings in the first year more than offset the costs of refinancing (see Long-Term Debt, note 5). In general, inflation played a relatively small role in the operating results and cash flows of 1995, 1994, 1993 and 1992 since the Company values its inventories on a last-in, first-out (LIFO) basis and depreciates its fixed assets under accelerated depreciation methods for tax purposes. Consolidated Statements of Net Earnings - -------------------------------------------------------------------------------------------------------- Seneca Foods Corporation and Subsidiaries
(Eight Months) Years ended March 31 and July 31, 1995 1994 1993 1992 - ---------------------------------- ---- ---- ---- ---- (In thousands of dollars, except share amounts) Net sales $ 234,073 $ 290,185 $ 257,402 $ 279,708 - --------- - ------- - ------- - ------- - ------- Costs and expenses: Cost of product sold 202,285 247,158 222,143 241,361 Selling, general, and administrative expense 23,620 28,824 26,166 28,681 Interest expense, net of interest income of $116, $528, $1,865, and $196, respectively (Note 7) 6,296 6,046 5,834 10,186 ----- ----- ----- ------ 232,201 282,028 254,143 280,228 ------- ------- ------- ------- Earnings (loss) from continuing operations before income taxes, extraordinary item and cumulative effect of accounting change 1,872 8,157 3,259 (520) Income taxes (Note 7) 688 2,816 106 (215) --- ----- --- ---- Earnings (loss) from continuing operations before extraordinary item and cumulative effect of accounting change 1,184 5,341 3,153 (305) Earnings from discontinued operations, less applicable income taxes of $46, $591, and $939, respectively (Note 11) -- 90 965 1,663 Gain on the sale of discontinued operations, less applicable income taxes of $1,171 (Note 11) -- 2,273 -- -- Extraordinary losses on early extinguishment of debt, less applicable income tax benefit of $312 and $303 -- (606) -- (467) Cumulative effect of accounting change (Note 7) -- 2,006 -- -- -- -- -- -- ----- ----- ----- --- Net earnings $ 1,184 $ 9,104 $ 4,118 $ 891 ============ = ===== = ===== = ===== = === Earnings (loss) from continuing operations per common share $ .42 $ 1.84 $ 1.02 $ (.11) Earnings from discontinued operations per common share -- .03 .31 .54 Gain on the sale of discontinued operations per common share -- .78 -- -- Extraordinary losses on early extinguishment of debt per common share -- (.21) -- (.15) Cumulative effect of accounting change per common share -- .69 -- -- -- --- -- -- Net earnings per common share $ .42 $ 3.13 $ 1.33 $ .28 ============================= = === = ==== = ==== = === Weighted average shares outstanding 2,796,555 2,898,863 3,085,333 3,095,887 =================================== ========= ========= ========= ========= See notes to consolidated financial statements.
Consolidated Balance Sheets Seneca Foods Corporation and Subsidiaries
March 31 and July 31, 1995 1994 1993 - --------------------- ---- ---- ---- (In thousands) Assets Current Assets: Cash and short-term investments $ 26,538 $ 2,325 $ 15,522 Accounts receivable, less allowance for doubtful accounts of $227, $183 and $435, respectively 32,601 18,651 24,398 Inventories (Note 2): Finished products 64,613 46,530 38,350 In process 19,531 17,980 16,366 Raw materials and supplies 48,260 28,200 27,870 Refundable income taxes (Note 7) -- 890 -- Deferred tax asset (Note 7) 1,933 1,194 -- Prepaid expenses 801 343 250 --- --- --- Total Current Assets 194,277 116,113 122,756 -------------------- ------- ------- ------- Common Stock of Moog Inc. (Note 3) 7,494 6,079 6,079 Other Assets 237 193 214 - ------------ --- --- --- Property, Plant, and Equipment (Note 6): Land 7,810 4,714 4,526 Buildings 89,298 51,462 50,582 Equipment 189,545 122,865 112,628 ------- ------- ------- 286,653 179,041 167,736 Less accumulated depreciation and amortization 106,935 100,825 93,647 ------- ------- ------ Net Property, Plant, and Equipment 179,718 78,216 74,089 ---------------------------------- ------- ------ ------ Total Assets $ 381,726 $ 200,601 $ 203,138 ============ = ======= = ======= = ======= Liabilities and Stockholders' Equity Current Liabilities: Notes payable (Note 4) $ -- $ 1,600 $ -- Accounts payable 36,089 31,829 19,742 Accrued expenses 19,599 13,541 12,980 Current portion of long-term debt and capital lease obligations 5,594 6,349 5,057 Income taxes (Note 7) 125 -- 567 --- -- --- Total Current Liabilities 61,407 53,319 38,346 Long-Term Debt (Note 5) 220,677 50,619 71,534 Capital Lease Obligations (Note 6) 803 857 1,022 Deferred Income Taxes (Note 7) 11,490 10,521 10,940 Commitments (Note 6) -- -- -- -- -- -- Total Liabilities 294,377 115,316 121,842 ----------------- ------- ------- ------- Stockholders' Equity (Notes 5 and 8): Preferred stock 70 70 70 Common stock 1,880 1,880 1,948 ----- ----- ----- Total Capital Stock 1,950 1,950 2,018 Additional paid-in capital -- -- 3,157 Net unrealized gain on available-for-sale securities (Note 3) 892 -- -- Retained earnings 84,507 83,335 76,121 ------ ------ ------ Total Stockholders' Equity 87,349 85,285 81,296 -------------------------- ------ ------- ------ Total Liabilities and Stockholders' Equity $ 381,726 $ 200,601 $ 203,138 ========================================== = ======= = ======= = ======= See notes to consolidated financial statements.
Consolidated Statements of Cash Flows - --------------------------------------------------------------------------------------------------------- Seneca Foods Corporation and Subsidiaries
(Eight Months) Years ended March 31 and July 31, 1995 1994 1993 1992 - --------------------------------- ---- ---- ---- ---- (In thousands) Cash flows from operating activities: Net earnings $ 1,184 $ 9,104 $ 4,118 $ 891 Adjustments to reconcile net earnings to net cash provided (used) by operations: Depreciation and amortization 6,773 9,253 9,270 9,642 Deferred income taxes 446 1,587 1,615 (904) Gain on the sale of discontinued operations -- (3,444) -- -- Cumulative effect of accounting change -- (2,006) -- -- Extraordinary losses on early extinguishment of debt -- 606 -- 467 Changes in working capital: Accounts receivable (13,536) 4,142 822 2,006 Inventories (25,039) (10,038) 3,723 5,939 Prepaid expenses (458) (147) 22 (31) Accounts payable and accrued expenses 3,275 16,117 (7,981) 5,044 Income taxes 276 (2,651) 573 303 --- ------- --- --- Net cash provided (used) by operations (27,079) 22,523 12,162 23,357 -------------------------------------- -------- ------ ------ ------ Cash flows from investing activities: Acquisitions (16,837) (11,670) -- -- Additions to property, plant, and equipment (26,966) (9,384) (1,723) (8,702) Disposals of property, plant, and equipment 527 866 82 96 Proceeds from the disposal of a segment -- 8,356 -- -- -- ----- -- -- Net cash provided (used) in investing activities (43,276) (11,832) (1,641) (8,606) ------------------------------------------------ -------- -------- ------- ------ Cash flows from financing activities: Proceeds from issuance of long-term debt 125,000 -- -- 22,630 Payments of long-term debt and capital lease obligations (28,776) (19,788) (2,345) (31,056) Notes payable (1,600) 1,600 -- -- Other assets (44) 21 (137) 352 Dividends paid (12) (23) (23) (23) Common stock retirements -- (5,092) (384) (81) Extraordinary losses on early extinguishment of debt -- (606) -- (467) ------ ------- ------ ------ Net cash provided (used) in financing activities 94,568 (23,888) (2,889) (8,645) ------------------------------------------------ ------ -------- ------- ------ Net increase (decrease) in cash and short-term investments 24,213 (13,197) 7,632 6,106 Cash and short-term investments, beginning of year 2,325 15,522 7,890 1,784 ----- ------ ----- ----- Cash and short-term investments, end of year $ 26,538 $ 2,325 $ 15,522 $ 7,890 ============================================ = ====== = ===== = ====== = ===== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 5,543 $ 7,170 $ 9,400 $ 10,853 Income taxes (33) 4,785 1,076 1,022 Supplemental information on noncash investing and financing activities: The Company issued a secured nonrecourse subordinated promissory note for $73,025,000 in 1995 in conjunction with the acquisition of Green Giant. See notes to consolidated financial statements.
Consolidated Statements of Stockholders' Equity - --------------------------------------------------------------------------------------------------------- Seneca Foods Corporation and Subsidiaries
Preferred Stock Class A 6% Cumulative 10% Cumulative Net Unrealized Par Value $.25 Par Value $.025 Additional Gain (Loss) on Callable at Par Convertible Common Stock Paid-In Available-For-Sale Retained Voting Voting Par Value $.25 Capital Securities Earnings --------------- --------------- -------------- ---------- ------------------ -------- (In thousands, except share amounts) Shares authorized 200,000 1,400,000 10,000,000 ================= ======= ========= ========== Shares issued and outstanding: July 31, 1992 200,000 807,240 3,093,666 ============= ======= ======= ========= July 31, 1993 200,000 807,240 3,068,666 ============= ======= ======= ========= July 31, 1994 200,000 807,240 2,796,555 ============= ======= ======= ========= March 31, 1995 200,000 807,240 2,796,555 ============== ======= ======= ========= Balance July 31, 1991 $50 $20 $1,955 $ 3,615 $ -- $ 71,158 Net earnings -- -- -- -- -- 891 Cash dividends paid on preferred stock -- -- -- -- -- (23) Retirement of common stock -- -- (1) (80) -- -- Net unrealized loss -- -- -- -- (1,757) -- ------------------- --- --- ----- ----- ------- ------ Balance July 31, 1992 50 20 1,954 3,535 (1,757) 72,026 Net earnings -- -- -- -- -- 4,118 Cash dividends paid on preferred stock -- -- -- -- -- (23) Retirement of common stock -- -- (6) (378) -- -- Net unrealized gain -- -- -- -- 1,757 -- ------------------- --- --- ----- ----- ----- ------ Balance July 31, 1993 50 20 1,948 3,157 -- 76,121 Net earnings -- -- -- -- -- 9,104 Cash dividends paid on preferred stock -- -- -- -- -- (23) Retirement of common stock -- -- (68) (3,157) -- (1,867) ------------ --- --- ----- ------- ----- ------ Balance July 31, 1994 50 20 1,880 -- -- 83,335 Net earnings -- -- -- -- -- 1,184 Cash dividends paid on preferred stock -- -- -- -- -- (12) Net unrealized gain -- -- -- -- 892 -- ------------------- -- --- ------ ------- ------ ------ Balance March 31, 1995 $50 $20 $1,880 $ -- $ 892 $ 84,507 ====================== === === ====== = == = === = ====== See notes to consolidated financial statements.
Notes to Consolidated Financial Statements - -------------------------------------------------- Seneca Foods Corporation and Subsidiaries 1. Summary of Significant Accounting Policies Accounting Period - In 1995, the Company changed its fiscal year end to March 31. Fiscal 1995 is an eight-month transition period ended March 31, 1995. Principles of Consolidation - The consolidated financial statements include the accounts for the parent Company and all of its wholly-owned subsidiaries after elimination of intercompany transactions, profits, and balances. Revenue Recognition - Sales and related cost of product sold are recognized primarily upon shipment of products. Concentration of Credit Risk - Financial instruments that potentially subject the Company to credit risk consist of trade receivables and interest-bearing investments. Wholesale and retail food distributors comprise a significant portion of the trade receivables; collateral is not required. The risk associated with the concentration is limited due to the large number of wholesalers and retailers and their geographic dispersion. The Company places substantially all its interest-bearing investments with financial institutions and monitors credit exposure. Cash and Short-Term Investments - For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased for a maturity of three months or less as short-term investments. Inventories - Inventories are stated at lower of cost; last-in, first-out (LIFO); or market. Income Taxes - The provision for income taxes includes federal, foreign, and state income taxes currently payable and those deferred because of temporary differences between the financial statement and tax bases of assets and liabilities. Depreciation - Property, plant, and equipment is stated at cost or, in the case of capital leases, the present value of future lease payments. For financial reporting, the Company provides for depreciation and capital lease amortization on the straight-line method at rates based upon the estimated useful lives of the various assets. Earnings per Common Share - Primary earnings per share are calculated on the basis of weighted average common shares outstanding since the effect of common stock equivalents is immaterial. The difference between primary and fully diluted earnings per share is also immaterial. 2. Inventories The replacement value of the LIFO based inventory was $138,192,000 at March 31, 1995, and $99,647,000 and $88,864,000 at July 31, 1994 and 1993, respectively. Notes to Consolidated Financial Statements (continued) 3. Common Stock of Moog Inc. The Company's investment in the common stock of Moog Inc. is carried at fair value in 1995 in accordance with the Statement of Financial Accounting Standards (SFAS) No. 115. There were no realized gains or losses in 1995, 1994, 1993, or 1992, and gross unrealized holding gains of $1,416,000 at March 31, 1995, $708,000 at July 31, 1994, and $100,000 at July 31, 1993. The Company owns about 7% of the voting stock of Moog Inc. as of March 31, 1995. The Company has the ability and intent to hold these securities for the foreseeable future. 4. Lines of Credit The Company obtains required short-term funds through bank borrowings. During 1995 the Company entered into an unsecured revolving credit agreement with various banks. At March 31, 1995, the Company had $3,833,000 outstanding for letters of credit and an unsecured revolving line of credit totaling $150,000,000. The line is renewable in three years and provides for loans of varying maturities at rate options based on Prime, Eurodollar, or Money Market. Selected details are as follows:
1995 1994 1993 1992 ---- ---- ---- ---- (In thousands of dollars) Borrowings at year end: Amount $ -- $ 1,600 $ -- $ -- Interest rate -- 5.34% -- -- Maximum borrowings during the year $ 54,140 $ 7,000 $ 38,300 $ 40,500 Average borrowings during the year: Amount $ 20,467 $ 158 $ 14,703 $ 22,563 Interest rate 6.06% 4.53% 4.17 % 5.44%
The average borrowings were computed by dividing the total daily outstanding balances by 365 days. The average interest rate was computed by dividing the actual interest expense by the average borrowings. Notes to Consolidated Financial Statements (continued) 5. Long-Term Debt
1995 1994 1993 ---- ---- ---- (In thousands) Note payable to insurance company, 10.78%, due through 2005 $ 75,000 $ -- $ -- Secured nonrecourse subordinated promissory note, 8.00%, due 73,025 -- -- through 2009 Note payable to insurance company, 10.81%, due through 2009 50,000 -- -- Note payable to insurance company, 9.78%, due through 2001 -- 28,300 30,000 Note payable to insurance company, 13.25%, due through 2001 -- -- 16,800 Industrial Revenue Development Bonds, variable rate, 12.76%, or varies with prime, due through 2028 26,480 26,780 27,430 Subordinated debentures, 12% or varies with prime, due through 1996 471 471 471 Notes payable to others, 3% to 8.55%, due through 2012 1,186 1,252 1,263 ------- ------- ------- 226,162 56,803 75,964 Less current portion 5,485 6,184 4,430 ------- ------- ------- $220,677 $50,619 $71,534
Debt agreements provide various financial covenants including a provision that the Company may pay dividends on common stock only from consolidated net earnings available for distribution. There was $1,382,000 of earnings available for distribution as of March 31, 1995. All provisions have been met at March 31, 1995. In connection with the Company's acquisition of manufacturing facilities from The Pillsbury Company, a secured nonrecourse subordinated promissory note was issued totaling $73,025,000 (see Acquisitions, note 13). The Company has four Industrial Revenue Bonds ("IRB's") totaling $22,630,000 which are backed by direct pay letters of credit. Debt repayment requirements for the next five fiscal years are: (In thousands) 1996 $ 5,485 1997 3,747 1998 9,334 1999 11,310 2000 15,951 During 1995 the Company paid off its 9.78% note payable to the insurance company and the related prepayment penalty was not significant. Notes to Consolidated Financial Statements (continued) 6. Leases The Company leases a portion of its equipment and buildings. Capitalized leases consist primarily of industrial development agency financing instruments which bear interest rates from 5.85% to 6.75%. Other leases include non-cancelable operating leases expiring at various dates through 2010. Leased assets under capital leases consist of the following:
1995 1994 1993 ---- ---- ---- (In thousands) Land $ 93 $ 93 $ 156 Buildings 1,792 1,792 5,892 Equipment 1,194 1,167 4,004 ----- ----- ----- 3,079 3,052 10,052 Less accumulated amortization 1,821 1,791 6,070 ----- ----- ----- $ 1,258 $ 1,261 $ 3,982 = ===== = ===== = =====
The following is a schedule by year of minimum payments due under leases as of March 31, 1995:
Operating Capital --------- ------- (In thousands) Year ending March 31: 1996 $ 4,437 $ 167 1997 3,468 124 1998 2,364 124 1999 2,003 124 2000 1,782 124 2001-2010 4,312 560 ----- --- Total minimum payment required $ 18,366 1,223 ============================== = ====== Less interest 311 Present value of minimum lease payments 912 Amount due within one year 109 --- Long-term capital lease obligations $ 803 =================================== = ===
Aggregate rental expense in 1995, 1994, 1993, and 1992 was $2,031,000, $2,190,000, $2,266,000, and $2,684,000, respectively. Notes to Consolidated Financial Statements (continued) 7. Income Taxes The Company files a consolidated income tax return. The provision for income taxes includes the effect of continuing and discontinued operations and the extraordinary items as follows:
(Eight Months) 1995 1994 1993 1992 ---- ---- ---- ---- (In thousands) Current: Federal $ 716 $ 2,970 $ 1,175 $ 1,276 State 107 430 363 200 --- --- --- --- 823 3,400 1,538 1,476 --- ----- ----- ----- Deferred: Federal (203) 275 (784) (897) State 68 46 (57) (158) -- -- ---- ---- (135) 321 (841) (1,055) ----- --- ---- ------ Total income taxes $ 688 $ 3,721 $ 697 $ 421 ================== = === = ===== = === = ===
In August, 1992 the Internal Revenue Service completed its audit of fiscal years 1983 and 1984. This conclusion allowed the Company to file a refund claim for the years 1985 and 1986. This refund was received during the 1993 fiscal year resulting in a $1,000,000 reduction in the provision for income taxes. Also in 1993, interest income of $1,680,000 has been netted against the interest expense category in the Consolidated Statements of Net Earnings. The cumulative effect of the adoption of SFAS No. 109 on August 1, 1993 was $2,006,000. This change is reported in the 1994 Consolidated Statements of Net Earnings. As permitted under this rule, prior years financial statements have not been restated to apply the provisions of SFAS No. 109. A reconciliation of the expected U.S.statutory rate to the effective rate follows:
1995 1994 1993 1992 ---- ---- ---- ---- Computed (expected tax rate) 34.0 % 34.0 % 34.0 % 34.0 % State income taxes (net of federal tax benefit) 6.2 2.4 4.2 2.1 Depreciation adjustment -- -- 0.1 0.6 IRS settlement -- -- (20.8) -- Other (3.5) (1.9) (3.0) (4.6) ----- ----- ----- ---- Effective tax rate 36.7 % 34.5 % 14.5 % 32.1 % ================== ==== = ==== = ==== = ====
The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of March 31, 1995 and July 31, 1994:
1995 1994 ---- ---- (In thousands) Deferred tax liabilities: Basis and depreciation difference $ 10,208 $ 9,946 LIFO 1,061 622 State taxes 758 789 Moog investment 524 -- Other -- 538 ------ ------ 12,551 11,895 ------ ------ Deferred tax assets: Employee benefits 756 586 Future tax credits 720 -- Pension 574 497 Other 424 321 Insurance 381 466 Sales tax 112 114 Inventory valuation 27 584 ----- ----- 2,994 2,568 ----- ----- Deferred tax liability $ 9,557 $ 9,327 ====================== = ===== = =====
Net current assets of $1,933,000 and $1,194,000 and net non-current liabilities of $11,490,000 and $10,521,000 as of March 31, 1995 and July 31, 1994, respectively, are recognized in the balance sheets. As required by SFAS No. 109, the deferred tax asset was recorded on the balance sheet as a current asset. Certain items in the prior year have been reclassified to conform to current year classifications. Prior to the change in accounting methods, the sources of deferred tax items and the corresponding tax effects during 1993 and 1992 were as follows:
1993 1992 ---- ---- (In thousands) Accelerated depreciation: Federal $ 275 $ (94) State 19 (20) Vacation accrual 5 (4) Bad debts (92) 1 Inventory valuation (91) (586) Involuntary conversion (30) (30) Insurance accrual (157) 321 Promotion accrual 6 49 Prepayments: Debt extinguishment 262 (262) Lease 48 (103) IRS settlement (1,000) -- Other (86) (327) ----- ------- Total deferred taxes $ (841) $(1,055) ==================== = ===== ========
Notes to Consolidated Financial Statements (continued) 8. Stockholders' Equity Preferred Stock - The outstanding 10% cumulative, convertible, voting preferred stock consists of 407,240 series A shares, convertible at the rate of one common share for every twenty preferred shares, and 400,000 series B shares, which carry a one for thirty conversion rate. The series A and B shares have a $.25 stated value and a $.025 par value. There are 2,600,000 shares authorized of Class A $.025 par value stock which are unissued and undesignated. In addition there are 30,000 shares of no par stock which are also unissued and undesignated. Common Stock - Unissued shares of common stock reserved for conversion privileges were 33,695 at March 31, 1995, and July 31, 1994, 1993, and 1992. 9. Quarterly Results (Unaudited) The following is a summary of the unaudited interim results of operations by quarter:
First Second Third Fourth ----- ------ ----- ------ (In thousands, except per share data) Year ended March 31, 1995: Net sales $ 88,827 $ 87,935 $ 57,311* NA Gross margin 10,845 10,353 10,590* NA Earnings from continuing operations 733 159 292* NA Earnings from continuing operations per share .26 .05 .11* NA Net earnings 733 159 292* NA Net earnings per common share .26 .05 .11* NA Year ended July 31, 1994: Net sales $ 62,003 $ 83,780 $ 82,586 $ 61,816 Gross margin 8,618 12,426 11,893 10,090 Earnings from continuing operations 259 1,203 1,784 2,095 Earnings from continuing operations per share .07 .41 .62 .74 Earnings before extraordinary item and accounting change 2,406 1,203 1,857 2,238 Earnings before extraordinary item and accounting change per share .80 .41 .64 .80 Net earnings 4,412 1,203 1,857 1,632 Net earnings per common share 1.47 .42 .66 .58 Year ended July 31, 1993: Net sales $ 58,451 $ 71,510 $ 67,635 $ 59,806 Gross margin 8,751 8,993 6,355 11,160 Earnings (loss) from continuing operations 129 (206) (153) 3,383 Earnings (loss) from continuing operations per share .04 (.07) (.05) 1.10 Net earnings 303 4 252 3,559 Net earnings per common share .10 .00 .08 1.15 *Represents two months of activity.
Earnings for the fourth quarter (third quarter in 1995) have historically reflected adjustments of previously estimated raw material costs and production levels. Due to the dependence on fruit and vegetable yields of the Company's food processing segment, interim costing must be estimated. The volatile nature of inventory quantities and costs within the food processing segment also necessitates estimates of interim changes to the Company's LIFO reserve. Notes to Consolidated Financial Statements (continued) 10. Retirement Plan The Company has a noncontributory defined benefit pension plan covering all employees who meet certain age entry requirements and work a stated minimum number of hours per year. Annual contributions are made to the Plan sufficient to satisfy legal funding requirements. Pension expense includes the following:
(Eight Months) 1995 1994 1993 1992 ---- ---- ---- ---- (In thousands) Service cost for benefits earned during the period $ 484 $ 818 $ 838 $ 701 Interest cost on projected benefit obligation 745 998 983 905 Actual (return) loss on plan assets (2,474) (1,691) (655) 337 Net deferral of actuarial gains (losses) 1,593 673 (568) (1,659) Amortization of net unrecognized gain at August 1, 1987 (184) (276) (276) (276) Amortization of losses -- 144 -- -- Amortization of prior service cost 62 94 94 94 -- -- -- -- Pension expense $ 226 $ 760 $ 416 $ 102 =============== = === = === = === = ===
The following table summarizes the funded status and related amounts that are recognized in the consolidated balance sheets:
1995 1994 1993 1992 ---- ---- ---- ---- (In thousands) Actuarial present value of accumulated benefit obligation: Vested $ 10,717 $ 11,214 $ 8,478 $ 7,896 Nonvested 562 689 507 262 --- --- --- --- Total $ 11,279 $ 11,903 $ 8,985 $ 8,158 ===== = ====== = ====== = ===== = ===== Plan assets at fair market value, primarily listed stocks and fixed income securities $ 18,165 $ 16,009 $ 14,867 $14,739 Projected benefit obligation 15,113 15,684 12,920 11,877 ------ ------ ------ ------ Plan assets in excess of projected benefit obligation 3,052 325 1,947 2,862 Unrecognized gain at transition (4,647) (4,832) (5,108) (5,384) Unrecognized prior service cost 688 750 844 938 Unrecognized net (gain) loss (781) 2,295 1,616 1,299 ----- ----- ----- ----- Accrued pension liability $ (1,688) $ (1,462) $ (701) $ (285) ========================= = ======= = ======= = ===== = ====
The projected benefit obligation was determined using an assumed discount rate of 8% and an assumed long-term salary increase rate of 5%. The assumed long-term rate of return on plan assets was 8.5%. The Plan holds the Company's stock with a fair market value of $2,678,000. Notes to Consolidated Financial Statements (continued) 11. Discontinued Operations In August 1993 the Company completed its sale of the textile division for $8,400,000 in cash and reported a net gain of $2,273,000 in the first quarter of 1994. As a result of the sale, textile operations have been accounted for as discontinued operations in prior periods in the Consolidated Statements of Net Earnings. Net sales for the textile division were $2,246,000 in 1994, $43,087,000 in 1993, and $49,265,000 in 1992. Total assets were $8,400,000 and total liabilities were $3,500,000 resulting in $4,900,000 of net assets as of the August 1993 closing. 12. Fair Value of Financial Instruments As of March 31, 1995, the carrying amount and the fair value of the Company's financial instruments, as determined under SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", were as follows:
Carrying Estimated Amount Fair Value -------- ---------- (In thousands) Long-term debt, including current portion $226,162 $226,371 Common stock of Moog Inc. 7,494 7,494
The estimated fair values were determined as follows: Long-term debt - The quoted market prices for similar debt or current rates offered to the Company for debt with the same maturities. Common stock of Moog Inc. - Based on quoted market prices. Notes to Consolidated Financial Statements (continued) 13. Acquisitions On February 10, 1995 the Company acquired certain assets of the Green Giant division of The Pillsbury Company (referred to as "Pillsbury"), a subsidiary of Grand Metropolitan Incorporated. Under an Alliance Agreement concurrently executed by the Company, Pillsbury and Grand Metropolitan Incorporated, Pillsbury will continue to be responsible for all of the sales, marketing and customer service functions for the Green Giant brand, while the Company will handle vegetable processing and canning operations. Pillsbury continues to own all the trademark rights to the Green Giant brand and its proprietary seed varieties. The assets acquired include certain raw material and supplies inventory and six manufacturing facilities located in the Midwestern and Northwestern United States. The purchase price was based on the book value of the assets acquired. The purchase price of $86,093,000 was funded by a secured nonrecourse subordinated promissory note issued by the Company for $73,025,000 and the balance was funded out of working capital. On August 17, 1994 the Company acquired the assets of M.C. Snack, Inc. of Yakima, Washington, a snack food maker of apple chips. The purchase price of $3,769,000 was funded out of working capital. On December 20, 1993 the Company acquired certain assets of ERLY Juice, Inc. and WorldMark, Inc. The assets acquired include certain trademarks, inventory, accounts receivable, and manufacturing facilities located in Eau Claire, Michigan. Most of the products are sold under the TreeSweet brand. The purchase price was $8,372,000 which was funded out of working capital. The Company acquired the Wapato, Washington juice processing business of Sanofi Bio-Industries, Inc. on November 30, 1993. The purchase price was $3,298,000 which was funded out of working capital. All acquisitions were accounted for under the purchase method and, accordingly, the operating results of the acquired have been included in the consolidated operating results since the dates of acquisition. The following summary, prepared on a pro forma basis, combines the consolidated results of operations as if Green Giant, M.C. Snack, ERLY and Sanofi were acquired at the beginning of the periods presented:
(Eight Months) 1995 1994 ---- ---- (Unaudited) (In thousands, except per share amounts) Net sales $ 422,220 $ 572,405 ========= = ======= = ======= Net earnings from continuing operations $ 4,317 $ 10,041 ======================================= = ===== = ====== Net earnings from continuing operations per share $ 1.54 $ 3.47 ================================================= = ==== = ====
Independent Auditors' Report To the Board of Directors and Stockholders of Seneca Foods Corporation Pittsford, New York We have audited the accompanying consolidated balance sheets of Seneca Foods Corporation and subsidiaries as of March 31, 1995, July 31, 1994 and July 31, 1993, and the related consolidated statements of net earnings, stockholders' equity, and cash flows for the eight months ended March 31, 1995 and for each of the three years in the period ended July 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Seneca Foods Corporation and subsidiaries as of March 31, 1995, July 31, 1994 and July 31, 1993, and the results of their operations and their cash flows for the eight months ended March 31, 1995 and for each of the three years in the period ended July 31, 1994 in conformity with generally accepted accounting principles. As discussed in Note 7 to the consolidated financial statements, in fiscal 1994 the Company changed its method of accounting for income taxes to conform with Statement of Financial Accounting Standards No. 109. /s/Deloitte & Touche LLP Rochester, New York May 30, 1995 Directors Robert T. Brady President and Chief Executive Officer Moog Inc. David L. Call Dean, College of Agriculture and Life Sciences Cornell University Edward O. Gaylord President Gaylord & Company G. Brymer Humphreys President Humphreys Farm Inc. Kraig H. Kayser President and Chief Executive Officer Michael A. Schaeffer Vice-President - Production, Pillsbury Brands Grand Metropolitan, PLC Susan W. Stuart Marketing Consultant Arthur S. Wolcott Chairman Officers Corporate Arthur S. Wolcott Chairman Kraig H. Kayser President and Chief Executive Officer Alvin L. Gauvin Senior Vice President, Branded Sales and Marketing Ricke A. Kress Senior Vice President, Operations Devra A. Bevona Treasurer Jeffrey L. Van Riper Controller and Secretary Processed Food Group Seneca Foods - Central Michael H. Haney President Eastern Steven E. Klus President Western Edward J. Johnson President Kennett Richard O. Mayo President Sales and Marketing Groups - Branded Sales Michael B. Malone Vice President Non-Branded Sales and Strategic Relations R. Russell Curtis Vice President Technical Services Group - Vincent J. Lammers Vice President Non-Food Group Seneca Flight Operations Paul E. Middlebrook President Corporate Offices 1162 Pittsford-Victor Road Pittsford, New York 14534 Telephone (716) 385-9500 Independent Auditors Deloitte & Touche LLP Rochester, New York General Counsel Jaeckle, Fleischmann & Mugel Buffalo, New York Transfer Agent and Registrar Seneca Foods Corporation Suite 1010, 1605 Main Street Sarasota, Florida 34236 Manufacturing Plants and Warehouses Food Group Buhl, Idaho Eau Claire, Michigan Blue Earth. Minnesota Glencoe, Minnesota Montgomery, Minnesota Rochester, Minnesota Dundee, New York East Williamson, New York Geneva, New York Marion, New York Newark, New York Oaks Corners, New York Portland, New York Seneca Castle, New York Mountain Home, North Carolina Kennett Square, Pennsylvania Dayton, Washington Othello, Washington Prosser, Washington Yakima, Washington Baraboo, Wisconsin Cumberland, Wisconsin Jackson, Wisconsin Janesville, Wisconsin Mayville, Wisconsin Non-Food Group Chicopee, Massachusetts Peabody, Massachusetts Clifton Park, New York Penn Yan, New York Notice of Annual Meeting The 1995 Annual Meeting of Shareholders will be held on Saturday, August 5, 1995, beginning at 9:00 A.M. at the Company's facilities at 74 Seneca Street, Dundee, New York. A formal notice of the meeting together with a proxy statement and proxy form will be mailed to shareholders of record as of June 16, 1995. Additional Information A copy of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1995, as filed with the Securities and Exchange Commission, will be provided by the Company to any shareholder who so requests in writing. Requests should be sent to Devra A. Bevona, Seneca Foods Corporation, 1162 Pittsford-Victor Road, Pittsford, New York 14534. Shareholder Information The Company's common stock is traded on NASDAQ National Market System. The 2.8 million outstanding shares are owned by 639 shareholders of record. The high and low prices of the Company's common stock during each quarter of the past three years are shown below.
1995 1994 1993 ---- ---- ---- Quarter High Low High Low High Low ------- ---- --- ---- --- ---- --- First $ 24.50 $ 21.00 $ 19.50 $ 15.50 $ 16.00 $ 15.25 Second 35.00 23.50 20.00 18.50 16.25 15.25 Third 35.50 32.50 21.00 19.00 16.25 15.25 Fourth NA NA 22.75 19.50 16.38 14.75
The Company may pay dividends on common stock only from consolidated net earnings available for distribution which were $1,382,000 as of March 31, 1995. Payment of dividends to common stockholders is made at the discretion of the Company's Board of Directors and depends, among other factors, on earnings, capital requirements, operating and financial condition of the Company. The Company has not declared or paid a common dividend in many years. EX-21 4 Exhibit 21 LIST OF SUBSIDIARIES The following is a listing of subsidiaries 100% owned by Seneca Foods Corporation, directly or indirectly: Name State Marion Foods, Inc. New York Seneca Foods International, Ltd. New York SSP Company, Inc. Massachusetts SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) 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 By/s/ Jeffrey L. Van Riper June 22, 1995 -------------------- Jeffrey L. Van Riper Controller and Secretary (Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date /s/Arthur S. Wolcott Chairman and Director June 22, 1995 - -------------------- Arthur S. Wolcott /s/Kraig H. Kayser President, Chief Executive Officer, June 22, 1995 - ------------------ Kraig H. Kayser and Director /s/Devra A. Bevona Treasurer June 22, 1995 Devra A. Bevona /s/Jeffrey L. Van Riper Controller and Secretary June 22, 1995 - ----------------------- Jeffrey L. Van Riper (Principal Accounting Officer) /s/Robert T. Brady Director June 22, 1995 - --------------------- Robert T. Brady /s/David L. Call Director June 22, 1995 - ---------------------- David L. Call Continued Signature Title Date /s/Edward O. Gaylord Director June 22, 1995 - ----------------------- Edward O. Gaylord /s/G. Brymer Humphreys Director June 22, 1995 - ----------------------- G. Brymer Humphreys /s/Michael A. Schaeffer Director June 22, 1995 - ----------------------- Michael A. Schaeffer /s/Susan W. Stuart Director June 22, 1995 - ----------------------- Susan W. Stuart EX-27 5
5 Commercial and Industrial Companies Article 5 of Regulation S-X 1000 8-MOS MAR-31-1995 MAR-31-1995 26538 0 32828 227 132404 194277 286653 106935 381726 61407 221480 1880 0 70 85399 381726 234073 234073 202285 202285 23620 0 6296 1872 688 1184 0 0 0 1184 0.42 0.42
-----END PRIVACY-ENHANCED MESSAGE-----