8-K 1 senea20180628_8k.htm FORM 8-K senea20180628_8k.htm

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

__________________________

 

FORM 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (date of earliest event reported): June 28, 2018

 

 

SENECA FOODS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

 

New York

(State or Other Jurisdiction of Incorporation)

0-01989

(Commission File Number)

16-0733425

(IRS Employer Identification No.)

 

3736 South Main Street, Marion, New York 14505-9751

(Address of Principal Executive Offices, including zip code)

 

(315) 926-8100

(Registrant's telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 4.02              Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

On June 28, 2018, the Audit Committee, of Seneca Foods Corporation (the “Company”) determined that the following financial statements previously filed by the Company with the Securities and Exchange Commission (the “SEC”) should no longer be relied upon: (1) the audited consolidated financial statements as of and for the years ended March 31, 2016 and 2017, management’s report on the effectiveness of internal control over financial reporting as of March 2016 and 2017, and the independent registered public accounting firm’s reports thereon and (2) the unaudited condensed consolidated financial statements as of and for each of the interim periods within the years ended March 31, 2017 and 2018. Similarly, related press releases, earnings releases, and investor communications describing the Company’s financial statements for these periods should no longer be relied upon.

 

The Company has determined that the financial statements referred to above should be restated to correct inadvertent errors in the application of generally accepted accounting principles dealing with complex and technical accounting issues relating to “bill and hold” revenue recognition.  The Company intends to file with the SEC, as soon as practicable, a comprehensive Annual Report on Form 10-K for the year ended March 31, 2018 with expanded financial information and other disclosures in lieu of filing separate amended annual and quarterly reports for the affected periods.

 

The restatement dealing with revenue is the result of a correction in the timing of revenue recognition in connection with sales of Green Giant and other brands of canned vegetables under a contract packing agreement.  Under this agreement, title to product is transferred to the customer and the Company receives payment while continuing to maintain possession thereof. The Company had evaluated authoritative accounting guidance relating to revenue recognition for these sales and believed it had met the criteria required by the accounting standards for bill and hold treatment.

 

On May 21, 2018 the Company requested an interpretive guidance from the SEC’s Office of the Chief Accountant (“OCA”) regarding the application of bill and hold revenue recognition under SEC Staff Accounting Bulletin (“SAB”) Topic 13, Revenue Recognition, as well as under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.  On June 26, 2018 the OCA provided the Company with the guidance that it did not meet all of the criteria for bill and hold treatment for the contract in question for prior periods covered under SAB Topic 13. 

 

As a result, the Company will restate its prior financial statements to delay the recognition of revenue until the product is physically delivered rather than at the time title transfers.

 

The effect of the restatement on the Company’s annual income statement is as follows:

 

   

Year Ended

  
   

March 31, 2017

    

March 31, 2016

  
   

As

            

As

    

As

            

As

  
   

Reported

    

Correction

    

Restated

    

Reported

    

Correction

    

Restated

  

Net Sales

  

$

1,245,681

    

$

16,517

    

$

1,262,198

    

$

1,275,360

    

$

4,207

    

$

1,279,567

  

Cost of Products Sold

    

1,139,298

      

10,896

      

1,150,194

      

1,127,965

      

1,025

      

1,128,990

  

Gross Profit

    

106,383

      

5,621

      

112,004

      

147,395

      

3,182

      

150,577

  

Operating Income/(Loss)

    

29,121

      

5,621

      

34,742

      

88,549

      

3,182

      

91,731

  

Pre-Tax Earnings/(Loss)

    

20,027

      

5,621

      

25,648

      

80,457

      

3,182

      

83,639

  

Net Earnings

    

12,613

      

3,282

      

15,895

      

54,458

      

1,941

      

56,399

  

Earnings Per Common Share-Basic

  

$

1.27

    

$

0.34

    

$

1.61

    

$

5.46

    

$

0.20

    

$

5.65

  

Earnings Per Common Share-Diluted

  

$

1.27

    

$

0.33

    

$

1.60

    

$

5.42

    

$

0.20

    

$

5.61

  

 

 

 

The effect of the restatement on the Company’s balance sheet for the four previous quarters is as follows:

   

As of December 30, 2017

    

As of September 30, 2017

  
   

As

            

As

    

As

            

As

  
   

Reported

    

Correction

    

Restated

    

Reported

    

Correction

    

Restated

  

Assets

                                    

Inventory

  

$

710,118

    

$

60,584

    

$

770,702

    

$

802,387

    

$

56,759

    

$

859,146

  

Total Current Assets

    

794,510

      

60,584

      

855,094

      

932,609

      

56,759

      

989,368

  

Total Assets

    

1,072,003

      

62,234

      

1,134,237

      

1,209,968

      

61,976

      

1,271,944

  
                                                 

Liabilities and Stockholders' Equity

                                                

Deferred Revenue

  

$

545

    

$

79,606

    

$

80,151

    

$

542

    

$

74,608

    

$

75,150

  

Total Current Liabilites

    

162,423

      

79,576

      

241,999

      

322,982

      

74,551

      

397,533

  

Total Liabilities

    

635,204

      

76,594

      

711,798

      

780,214

      

72,986

      

853,200

  

Stockholders' Equity

    

436,799

      

(14,360

)

    

422,439

      

429,754

      

(11,010

)

    

418,744

  

Total Liabilities and Stockholders Equity

    

1,072,003

      

62,234

      

1,134,237

      

1,209,968

      

61,976

      

1,271,944

  

 

   

As of July 1, 2017

    

As of March 31, 2017

  
   

As

            

As

    

As

            

As

  
   

Reported

    

Correction

    

Restated

    

Reported

    

Correction

    

Restated

  

Assets

                                                

Inventory

  

$

633,505

    

$

21,914

    

$

655,419

    

$

598,056

    

$

30,879

    

$

628,935

  

Total Current Assets

    

731,857

      

21,914

      

753,771

      

688,270

      

30,879

      

719,149

  

Total Assets

    

1,006,943

      

25,038

      

1,031,981

      

946,019

      

32,249

      

978,268

  
                                                 

Liabilities and Stockholders' Equity

                                                

Deferred Revenue

  

$

472

    

$

36,865

    

$

37,337

    

$

545

    

$

45,555

    

$

46,100

  

Total Current Liabilites

    

164,200

      

36,713

      

200,913

      

132,277

      

45,487

      

177,764

  

Total Liabilities

    

573,449

      

34,202

      

607,651

      

511,758

      

41,306

      

553,064

  

Stockholders' Equity

    

433,494

      

(9,164

)

    

424,330

      

434,261

      

(9,057

)

    

425,204

  

Total Liabilities and Stockholders Equity

    

1,006,943

      

25,038

      

1,031,981

      

946,019

      

32,249

      

978,268

  

 

The Public Company Accounting Oversight Board Standards require that a restatement of financial statements be regarded as a significant deficiency in internal control over financial reporting and a strong indicator of a material weakness. Consistent with these standards, management has concluded that the restatements of its consolidated financial statements constitute a material weakness.

The Audit Committee has discussed the matters disclosed in this Item 4.02 with BDO USA, LLP, the Company’s independent registered public accounting firm.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:                    June 28, 2018

 

SENECA FOODS CORPORATION

 

By: /s/Timothy J. Benjamin

Timothy J. Benjamin

Chief Financial Officer