EX-13 3 ex13-10k02.txt 2002 ANNUAL REPORT Five Year Selected Financial Data Summary of Operations and Financial Condition (In thousands of dollars, except per share data)
Years ended March 31, 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------- Net sales $651,075 $ 674,300 $ 621,078 $ 588,049 $ 572,039 ------------------------------------------------------------------------------------------------------------------- Operating earnings (before Corporate interest and administrative expense) $ 23,188 $ 23,879 $ 27,335 $ 27,138 $ 22,732 Earnings (loss) from continuing operations before extraordinary item and cumulative effect of accounting change 1,140 813 4,320 1,420 (3,181) Loss from discontinued operations - - - (6,791) (1,963) Gain on sale of discontinued operations - - - 11,756 - Earnings (loss) before extraordinary item and cumulative effect of accounting change 1,140 813 4,320 6,385 (5,144) Extraordinary loss - - - (1,222) - Net earnings (loss) 1,140 813 4,320 5,163 (5,144) ------------------------------------------------------------------------------------------------------------------ Basic earnings (loss) from continuing operations per common share $ .17 $ .12 $ .66 $ .23 $ (.54) Basic earnings (loss) per common share before extraordinary item and cumulative effect of accounting change .17 .12 .66 1.05 (.87) Basic earnings (loss) per common share .17 .12 .66 .85 (.87) ------------------------------------------------------------------------------------------------------------------ Working capital $ 163,606 $ 163,367 $ 168,972 $ 167,435 $ 112,299 Inventories 181,835 229,170 203,173 152,634 194,044 Net property, plant, and equipment 155,189 167,450 179,146 178,658 218,408 Total assets 403,576 444,233 438,540 404,870 474,926 Long-term debt and capital lease obligations 156,100 171,346 189,968 187,904 227,858 Stockholders' equity 151,123 149,759 148,999 144,588 89,125 ------------------------------------------------------------------------------------------------------------------ Additions to property, plant, and equipment $ 13,423 $ 15,395 $ 19,875 $ 9,494 $ 15,693 Interest expense, net 17,441 18,662 16,147 21,594 23,913 ----------------------------------------------------------------------------------------------------------------- Net earnings/average equity 0.9% 0.7% 3.6% 4.4% (5.6)% Continuing earnings before taxes/sales 0.3% 0.2% 1.1% 0.3% (0.9)% Net earnings/sales 0.2% 0.1% 0.7% 0.9% (0.9)% Long-term debt/equity 103% 114% 127% 130% 256% Current ratio 3.0:1 2.5:1 3.1:1 4.0:1 1.8:1 ----------------------------------------------------------------------------------------------------------------- Stockholders' equity per common share $ 16.46 $ 16.26 $ 16.16 $ 15.65 $ 14.99 Class A National Market System closing price range 14 3/4-11 1/2 15 1/4-11 15 1/2-10 1/4 17 1/8-10 18 3/4-15 3/4 Class B National Market System closing price range 14 7/9-12 14 7/8-10 3/4 14 3/4-10 16 3/4-10 3/8 18 1/2-15 1/2 Common cash dividends declared per share - - - - - Price earnings ratio 84.3 110.2 17.1 13.1 NM ----------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- NM - not meaningful.
Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Because the Company is primarily engaged in vegetable processing, the Company's yearly business cycle shows large inventory growth during the summer and fall harvest period. The inventory peaks in the early fall and drops to its minimum level immediately prior to the next pack season (pack refers to canning and freezing of vegetables and certain fruits with each commodity at a certain time during the year which can vary based on weather conditions among other factors). 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 November 1999, the Company acquired certain assets of the Midwest private label canned vegetable business from Agrilink Foods, Inc., for approximately $48.0 million. The Company purchased one plant and inventories of the business. The annual sales of this business are approximately $73.0 million. The purchase price was partially funded by a subordinated note for $5.0 million while the balance was paid in cash. As of March 31, 2002, the Company maintained a committed revolving line of credit of $20 million and uncommitted lines of credit totaling $76 million. The Company had no short-term borrowings as of the end of 2002, $24.5 million of short-term borrowings as of the end of 2001, and no short-term bank borrowings throughout fiscal 2000. The Company believes that the credit facilities will be sufficient, with its other resources, for its anticipated working capital requirements in 2003. The Company has three major long-term debt instruments: 1) a $36.0 million note payable to The Prudential Insurance Company of America, with an interest rate of 10.78%, which is due through 2005; 2) a $57.5 million secured nonrecourse note payable to The Pillsbury Company, with an interest rate of 8%, which is due through 2009; and 3) a $37.5 million note payable to John Hancock Life Insurance Company, with an interest rate of 10.81%, which is due through 2009. The Company issued long-term debt totaling $8.1 million during 2002. The largest instrument was a $3.2 million Industrial Development Bond issued to finance the expansion of the Yakima, Washington plant. Also, a $1.5 million mortgage was issued to finance the purchase of a warehouse in Mayville, Wisconsin. In 2000, the Company issued an Industrial Revenue Development Bond for $6.0 million to finance production equipment in the Midwest. The Other Assets category includes none, $1.3 million, and $5.3 million as of the fiscal years ended 2002, 2001 and 2000, respectively, of yet unspent proceeds of this debt issue. The decrease in cash and short-term investments of $6.0 million over the three year period ended in 2002 was primarily due to the Agrilink acquisition of $43.5 million; long-term debt repayments totaling $35.8 million; and capital additions of $13.4 million, $15.4 million, and $19.9 million, in 2002, 2001, and 2000, respectively. This was partially offset by: the proceeds of new long-term debt totaling $14.1 million; proceeds of the sale of assets totaling $4.5 million; and net earnings (before depreciation effect, which is non-cash). In 2002, accounts receivable increased by $500 thousand to $32.0 million. In 2001, accounts receivable decreased by $200 thousand to $31.5 million. In 2000, accounts receivable decreased by $4.0 million. In 2002, inventories decreased by $47.3 million, primarily reflecting a strategic decision by the Company to reduce its canned vegetable production during the 2001 harvest season following the inventory buildup in the prior year. In 2001, inventories increased by $26.0 million mainly due to a temporary disruption in retail canned vegetable sales patterns resulting from the Year 2000 stock-up phenomenon in the prior year. In 2000, inventories increased by $50.5 million mainly due to the acquisition of the Midwest private label canned vegetable business described above. In 2002, capital expenditures were $13.4 million versus $15.4 million in 2001 and $19.9 million in 2000. The largest project in 2002 was the expansion of production capacity in the Snack Chip plant in Yakima, Washington of $4.2 million (of which $300 thousand was spent in 2001), while the largest project in 2001 was an automatic corn cutter project in Minnesota, which totaled $3.3 million and was financed with the Industrial Revenue Development Bond discussed above. In 2000, certain expenditures of approximately $5.0 million were made to accommodate the additional volume acquired from Agrilink (since only one of three plants was purchased). Another major capital initiative in 2000 involved increasing production capacity in the Northwest. - Results of Operations The Company has an Alliance Agreement with The Pillsbury Company, whereby the Company processes canned and frozen vegetables for Pillsbury under the Green Giant brand name. Pillsbury continues to be responsible for all of the sales, marketing and customer service functions for the Green Giant products. In October 2001, General Mills, Inc. acquired Pillsbury from Diageo PLC. The Alliance Agreement has a remaining term of thirteen years. Net sales for 2002 were $651.1 million, which includes $258.4 million sold under the Alliance with Pillsbury. Net sales for 2001 were$674.3 million, which includes $290.3 million sold under the Alliance with Pillsbury. Net sales for 2000 were $621.1 million, which includes $263.3 million sold under the Alliance with Pillsbury. In 2002, Non-Alliance sales increased from $384.0 million to $392.7 million primarily reflecting growth in private label and international canned retail vegetable volume together with an improved retail canned vegetable selling price environment. These increases were partially offset by lower volume in food service canned vegetables. In 2001, Non-Alliance sales increased from $357.8 million to $384.0 million reflecting a full year of sales from the Agrilink acquisition partly offset by lower selling prices. In 2000, Non-Alliance sales increased from $298.1 million to $357.8 million reflecting the Agrilink acquisition, distribution gains in the vegetable non-branded area, and higher selling prices. This increase was partially offset by a reduction in Alliance sales reflecting a planned smaller pack than the previous year. In 2001, the Company sold a facility in Othello, Washington, which resulted in a gain of $1.2 million before income taxes. Also in 2001, the Company sold a facility in Buckley, Michigan, which resulted in a gain of $0.2 million before income taxes. In 2000, the Company sold a distribution facility in Chicopee, Massachusetts, which resulted in a gain of $1.0 million before income taxes. In 2002, earnings increased primarily due to the following reasons: 1) a $1.2 million decrease in interest expense as a result of lower interest rates and lower average debt balances; and 2) higher selling prices on vegetables, especially on branded and private label canned retail vegetables, than the previous year. In 2001, earnings decreased primarily due to the following reasons: 1) a $2.5 million increase in interest expense as a result of the higher short-term borrowings in support of an increase in average inventories; 2) lower selling prices on vegetables, especially on private label canned retail vegetables than the previous year; and 3) an increase in natural gas and fuel costs of $6.0 million (approximately $3.0 million effect on 2001 results). In 2000, earnings increased due to the following reasons: 1) a $5.4 million reduction in interest expense as a result of the $49.7 million equity offering and juice and applesauce divestitures completed in fiscal 1999; 2) better selling prices on vegetables, especially on private label canned retail and food service vegetables than the previous year; and 3) additional sales due to the acquired business described above. These gains were partially offset by a provision principally to reflect the expected liquidation costs of our maraschino cherry business, including a plant closure, of $2.0 million, established in 2000. A deferred tax valuation allowance as of March 31, 2002, was not deemed necessary due to the fact that there was positive evidence that outweighed the negative evidence that it was more likely than not that these tax assets will be realized. While the Company has suffered a loss in one of the last five fiscal years, the Company does not believe that such a loss should be considered a trend, and that other evidence, including the fact that the Company has never had a net operating loss expire, should be considered in evaluating whether a valuation allowance is necessary. In general, inflation played a relatively small role in the operating results and cash flows of 2002, 2001, and 2000. Significant Accounting Policy During the year ended 2002, the Company sold for cash, $229 million of finished goods inventory to a special purpose entity (SPE), versus $241 million sold to the SPE for the previous year. At the time of the sale of finished goods inventory to the SPE, the finished goods inventory was complete, ready for shipment and segregated from the Company's other finished goods inventory. Further, the Company had performed all of its obligations with respect to the sale of the specified finished goods inventory. The SPE is not required to be consolidated with the Company's financial statements due, in part, to several reasons: - The majority owner of the SPE has control of the SPE and is an independent third party who has made a substantial capital contribution in the SPE. In addition, the equity capital of the SPE is always in excess of the minimum guidelines for such an entity. - The majority owner of the SPE has substantial risks and rewards of ownership of the assets of the SPE. The equity investment of the majority owner is subordinate to any debt holders. - The SPE activities are not on the exclusive behalf of the Company. Subsequent to the 2002 year-end, the Company, Pillsbury, General Mills Operations, Inc. and General Mills, Inc. entered into an amendment to the Alliance Agreement pursuant to which certain provisions were modified to (i) assign Pillsbury's rights and obligations under the Alliance Agreement to General Mills Operations, Inc. ("GMOI"), which is an indirect, wholly-owned subsidiary of General Mills, Inc.; (ii) accelerate the timing of the obligation of GMOI to purchase Green Giant inventory from the Company by requiring that such inventory be purchased at the end of each commodity production cycle (e.g. corn, peas, green beans, and asparagus); and (iii) substitute General Mills, Inc. for Diageo PLC as the guarantor of GMOI's obligations under the Alliance Agreement. In connection with the above amendment, the SPE was dissolved. Recently Issued Accounting Standards In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets. Since the Company does not have goodwill or other intangible assets on its consolidated balance sheet, this Statement is not expected to have an impact on its consolidated financial statements. In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective in fiscal year 2004. The Company is currently evaluating the impact on its consolidated financial statements of implementing SFAS No. 143. In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment of Long-Lived Assets, which supersedes SFAS No. 121, Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and the accounting provisions of APB No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business. SFAS No. 144 is effective in fiscal year 2003. SFAS No. 144 retains many of the provisions of SFAS No. 121, but addresses certain implementation issues associated with the Statement. The Company is currently evaluating the impact on its consolidated financial statements of implementing this Statement. In 2001, the Emerging Issues Task Force ("EITF") issued EITF No. 01-09, "Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products)," which addresses the recognition, measurement and income statement classification of consideration given by a vendor to a customer (including both a reseller of the vendor's products and an entity that purchases the vendor's products from a reseller). EITF No. 01-09, among other things, requires that certain consideration given by a vendor to a customer be characterized as a reduction of revenue when recognized in the vendor's income statement. The Company is required to adopt EITF No. 01-09 in its financial statements beginning April 1, 2002. The Company's current accounting and classification of these amounts are in compliance with the consensus reached in this EITF. Quantitative and Qualitative Disclosures about Market Risk As a result of its operating and financing activities, the Company is exposed to certain market risks including changes in commodity pricing and fluctuations in interest rates. Commodity pricing exposure includes weather phenomena and their effect on industry volumes, prices, product quality, and costs. The Company manages its exposure to commodity price risk primarily through its regular operating activities. The Company has not used derivative financial instruments and has not utilized financial instruments for trading or other speculative purposes. Interest Rate Risk As a result of its regular borrowing activities, the Company's operating results are exposed to fluctuations in interest rates, which it manages primarily through its regular financing activities. The Company uses bank lines of credit with variable interest rates to finance seasonal working capital requirements. The Company maintains investments in cash equivalents ($18.5 million as of March 31, 2002) and does have investments in a modest amount of marketable securities. Long-term debt represents secured and unsecured notes and debentures, certain notes payable to insurance companies used to finance long-term investments such as business acquisitions, and capital lease obligations. Long-term debt bears interest at fixed and variable rates. The following table provides informaton about the Company's financial instruments that are sensitive to changes in interest rates. The table presents principal cash flows and sinking fund requirements and related weighted-average interest rates by expected maturity date. Weighted-average interest rates on variable-rate debt are based on current rates as of March 31, 2002: Interest Rate Sensitivity of Long-Term Debt, Short-Term Debt and Short-Term Investments March 31, 2002 (In Thousands)
EXPECTED MATURITY DATE -------------------------------------------------------------------------------- Total / Estimated Weighted Fair 2003 2004 2005 2006 2007 Thereafter Average Value ------------------------------------------------------------------------------------------------------------------------------------ Fixed-rate L/T debt: Principal cash flows $22,823 $22,946 $23,081 $11,094 $10,505 $65,844 $156,293 $146,392 Average interest rate 8.87% 8.70% 8.46% 8.28% 8.23% 7.76% 8.39% -- Variable-rate L/T debt: Principal cash flows $ -- $ -- $ -- $ -- $ -- $22,630 $ 22,630 $ 22,630 Average interest rate 4.57% 4.57% 4.57% 4.57% 4.57% 4.57% 4.57% -- Variable-rate S/T debt: Principal cash flows $ 21,171 $ 21,171 Average interest rate 5.61% -- Short-Term investments: Average Balance $ 8,584 $ 8,584 Average interest rate 2.38% -- ------------------------------------------------------------------------------------------------------------------------------------
Consolidated Statements of Net Earnings Seneca Foods Corporation and Subsidiaries (In thousands of dollars, except share amounts)
Years ended March 31, 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------- Net sales $651,075 $674,300 $621,078 ------------------------------------------------------------------------------------------------------------------------- Costs and expenses: Cost of product sold 609,574 630,138 575,184 Selling, general, and administrative expense 21,095 23,367 21,605 Other expense, net 1,011 971 1,254 Interest expense, net of interest income of $ 301, $629 and $1,672, respectively 17,441 18,662 16,147 ------------------------------------------ 649,121 673,138 614,190 ------------------------------------------------------------------------------------------------------------------------- Earnings before income taxes 1,954 1,162 6,888 Income taxes 814 349 2,568 ------------------------------------------ Net earnings $ 1,140 $ 813 $ 4,320 ========================================================================================================================= Basic earnings per common share $ .17 $ .12 $ .66 ========================================================================================================================= Diluted earnings per common share $ .11 $ .08 $ .42 ========================================================================================================================= See notes to consolidated financial statements.
Consolidated Balance Sheets Seneca Foods Corporation and Subsidiaries (In thousands)
March 31, 2002 2001 ------------------------------------------------------------------------------------------------------------------------------------ Assets Current Assets: Cash and short-term investments $ 24,973 $ 5,391 Accounts receivable, less allowance for doubtful accounts of $605 and $632, respectively 32,035 31,510 Inventories: Finished products 135,727 178,415 In process 8,526 13,297 Raw materials and supplies 37,582 37,458 Deferred income tax asset 4,624 5,602 Refundable income taxes 1,657 - Prepaid expenses 362 1,308 ----------------------------- Total Current Assets 245,486 272,981 ------------------------------------------------------------------------------------------------------------------------------------ Other Assets 2,901 3,802 ------------------------------------------------------------------------------------------------------------------------------------ Property, Plant, and Equipment: Land 7,855 7,618 Building 98,850 94,822 Equipment 263,587 256,703 ----------------------------- 370,292 359,143 Less accumulated depreciation and amortization 215,103 191,693 ------------------------------ Net Property, Plant, and Equipment 155,189 167,450 ------------------------------------------------------------------------------------------------------------------------------------ Total Assets $403,576 $444,233 ==================================================================================================================================== Liabilities and Stockholders' Equity Current Liabilities: Notes payable $ - $ 24,500 Accounts payable 33,979 39,726 Accrued expenses 25,078 26,423 Current portion of long-term debt and capital lease obligations 22,823 18,622 Income taxes - 343 ------------------------------------------------------------------------------------------------------------------------------------ Total Current Liabilities 81,880 109,614 Long-Term Debt 149,430 164,251 Capital Lease Obligations 6,670 7,095 Deferred Gain and Other Liabilities 7,165 6,382 Deferred Income Taxes 7,308 7,132 ----------------------------- Total Liabilities 252,453 294,474 ------------------------------------------------------------------------------------------------------------------------------------ Commitments (Note 5) - - Stockholders' Equity: Preferred stock 42,675 42,741 Common stock 2,827 2,825 ----------------------------- Total Capital Stock 45,502 45,566 Additional paid-in capital 13,619 13,555 Accumulated other comprehensive income 1,208 961 Retained earnings 90,794 89,677 ----------------------------- Total Stockholders' Equity 151,123 149,759 ------------------------------------------------------------------------------------------------------------------------------------ Total Liabilities and Stockholders' Equity $ 403,576 $444,233 ==================================================================================================================================== See notes to consolidated financial statements.
Consolidated Statements of Cash Flows Seneca Foods Corporation and Subsidiaries (In thousands)
Years ended March 31, 2002 2001 2000 -------------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 1,140 $ 813 $ 4,320 Adjustments to reconcile net earnings to net cash provided by (used in) operations: Depreciation and amortization 24,546 23,733 23,554 Deferred income taxes 969 (2,071) (87) Gain on the sale of assets - (1,370) (965) Impairment provision and other expenses 1,011 2,341 2,219 Changes in operating assets and liabilities: Accounts receivable (525) 192 4,015 Inventories 47,335 (25,997) (6,961) Prepaid expenses 946 (780) 383 Accounts payable, accrued expenses, and other liabilities (6,630) (11,243) 22,770 Income taxes (2,000) (302) 336 -------------------------------------------- Net cash provided by (used in) operations 66,792 (14,684) 49,584 -------------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant, and equipment (13,423) (15,395) (19,875) Escrow fund 1,316 4,011 (5,326) Disposals of property, plant, and equipment 448 1,147 159 Proceeds from the sale of assets - 2,683 1,790 Acquisitions - - (43,481) ------------------------------------------- Net cash used in investing activities (11,659) (7,554) (66,733) -------------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net (payments) borrowings on notes payable (24,500) 24,500 -- Payments of long-term debt and capital lease obligations (19,124) (8,214) (8,511) Proceeds from issuance of long-term debt 8,079 - 6,000 Dividends paid (23) (23) (23) Other assets 17 18 28 -------------------------------------------- Net cash (used in) provided by financing activities (35,551) 16,281 (2,506) -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and short-term investments 19,582 (5,957) (19,655) Cash and short-term investments, beginning of year 5,391 11,348 31,003 -------------------------------------------- Cash and short-term investments, end of year $ 24,973 $ 5,391 $ 11,348 ================================================================================================================================ Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 17,973 $ 17,235 $ 16,264 Income taxes 1,844 1,994 2,171 Supplemental information of noncash investing and financing activities: In 2000, a $4,978 unsecured subordinated note was issued in conjunction with the acquisition of assets. =============================================================================================================================== See notes to consolidated financial statements.
Consolidated Statements of Stockholders' Equity Seneca Foods Corporation and Subsidiaries (In thousands, except share amounts)
Preferred Stock ------------------------------------------------- 6% 10% Participating Cumulative Par Cumulative Par Convertible Par Callable at Par Convertible Stated Value Common Stock Common Stock Voting Voting $11.93 Par Value $.25 Par Value $.25 --------------------------------------------------------------------------------------------------------- Shares authorized 200,000 1,400,000 4,166,667 20,000,000 10,000,000 ========================================================================================================= Shares issued and outstanding: March 31, 2000 200,000 807,240 3,593,140 3,797,388 2,767,357 ========================================================================================================= March 31, 2001 200,000 807,240 3,576,433 3,814,095 2,767,357 ========================================================================================================= March 31, 2002 200,000 807,240 3,570,861 3,823,115 2,764,005 ========================================================================================================= --------------------------------------------------------------------------------------------------------- Balance March 31, 1999 $50 $20 $46,363 $870 $1,878 Net earnings -- -- -- -- -- Cash dividends paid on preferred stock -- -- -- -- -- Preferred Stock Conversion -- -- (3,493) 74 -- Common Stock Conversion -- -- -- 6 (6) Net unrealized gain on investments -- -- -- -- -- --------------------------------------------------------------------------------------------------------- Balance March 31, 2000 50 20 42,870 950 1,872 Net earnings -- -- -- -- -- Cash dividends paid on preferred stock -- -- -- -- -- Preferred Stock Conversion -- -- (199) 3 -- Net unrealized loss on investments -- -- -- -- -- --------------------------------------------------------------------------------------------------------- Balance March 31, 2001 50 20 42,671 953 1,872 Net earnings - - - - - Cash dividends paid on preferred stock -- -- -- -- -- Preferred stock conversion -- -- (66) 2 -- Common stock conversion -- -- -- 1 (1) Net unrealized gain on investments -- -- -- -- -- --------------------------------------------------------------------------------------------------------- Balance March 31, 2002 $50 $20 $42,605 $956 $1,871 ========================================================================================================= See notes to consolidated financial statements. Consolidated Statements of Stockholders' Equity (continued) Seneca Foods Corporation and Subsidiaries (In thousands, except share amounts) Accumulated Additional Other Paid-In Comprehensive Retained Comprehensive Capital Income Earnings Income ------------------------------------------------------------------------------------- Shares authorized ===================== Shares issued and outstanding: March 31, 2000 ======================= March 31, 2001 ======================= March 31, 2002 ======================= ------------------------------------------------------------------------------------- Balance March 31, 1999 $ 9,940 $ 877 $84,590 Net earnings -- -- 4,320 $ 4,320 Cash dividends paid on preferred stock -- -- (23) -- Preferred Stock Conversion 3,419 -- -- -- Common Stock Conversion -- -- -- -- Net unrealized gain on investments -- 114 -- 114 ------------------------------------------------------------------------------------- Balance March 31, 2000 13,359 991 88,887 $ 4,434 ======== Net earnings -- -- 813 $ 813 Cash dividends paid on preferred stock -- -- (23) -- Preferred Stock Conversion 196 -- -- -- Net unrealized loss on investments - (30) -- (30) ------------------------------------------------------------------------------------- Balance March 31, 2001 13,555 961 89,677 $ 783 ======== Net earnings 1,140 $ 1,140 Cash dividends paid on preferred stock -- -- (23) -- Preferred stock conversion 64 -- -- -- Common stock conversion -- -- -- -- Net unrealized gain on investments -- 247 -- 247 ------------------------------------------------------------------------------------- Balance March 31, 2002 $13,619 $1,208 $90,794 $1,387 ===================================================================================== See notes to consolidated financial statements.
Notes to Consolidated Financial Statements Seneca Foods Corporation and Subsidiaries 1. Summary of Significant Accounting Policies Nature of Operations -The Company conducts its business almost entirely in food processing, operating 21 plants and warehouses in five states. The Company markets branded and private label processed foods to retailers and institutional food distributors. 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. When customers, under the terms of specific orders, request that the Company invoice goods and hold the goods for future shipment, the Company recognizes revenue when legal title to the finished goods inventory passes to the purchaser. Generally, the Company receives cash from the purchaser when legal title passes. 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 generally 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 in certain accounts exceed the federal insured limit, however, the Company has not experienced any losses in such accounts. Cash and Short-Term Investments - The Company considers all highly liquid instruments purchased with a maturity of three months or less as short-term investments. Inventories - Inventories are stated at lower of cost; first-in, first-out (FIFO); 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. Notes to Consolidated Financial Statements (continued) Earnings per Common Share A reconciliation of basic earnings per share with diluted earnings per share as follows:
Years ended March 31, 2002 2001 2000 --------------------------------------------------------------------------------------------- (In thousands, except share amounts) Basic Net earnings $ 1,140 $ 813 $ 4,320 Deduct preferred stock dividends paid 23 23 23 --------------------------------------- Basic earnings $ 1,117 $ 790 $ 4,297 ============================================================================================= Weighted average common shares outstanding 6,585 6,577 6,498 ============================================================================================= Basic earnings per share $ .17 $ .12 $ .66 ============================================================================================= Diluted Basic earnings $ 1,117 $ 790 $ 4,297 Add dividends on convertible preferred stock 20 20 20 --------------------------------------- Earnings applicable to common stock on a diluted basis $ 1,137 $ 810 $ 4,317 ============================================================================================= Shares used in calculating basic earnings per share above 6,585 6,577 6,498 Additional shares to be issued under full conversion of preferred stock 3,640 3,648 3,727 --------------------------------------- Total shares for diluted 10,225 10,225 10,225 ============================================================================================= Diluted earnings per share $ .11 $ .08 $ .42 =============================================================================================
Depreciation Property, plant, and equipment are 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. The estimated useful lives are as follows: buildings - 30 years; machinery and equipment - 10-15 years; vehicles - 3-7 years; and land improvements - 10-20 years. Impairment losses are recognized when the carrying value of an asset exceeds its fair value. The Company regularly assesses all of its long-lived assets for impairment. Impairment losses of $690,000, $898,000, and $518,000 were recognized in 2002, 2001, and 2000, respectively, and were included in Other Expense, net (see Other Income and Expense, note 11). Use of Estimates in the Preparation of Financial Statements - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the related revenues and expenses during the reporting period. Actual amounts could differ from those estimated. Recently Issued Accounting Standards - In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets. Since the Company does not have goodwill or other intangible assets on its consolidated balance sheet, this Statement is not expected to have an impact on its consolidated financial statements. In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective in fiscal year 2004. The Company is currently evaluating the impact on its consolidated financial statements of implementing SFAS No. 143. Notes to Consolidated Financial Statements (continued) In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment of Long-Lived Assets, which supersedes SFAS No. 121, Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and the accounting provisions of APB No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business. SFAS No. 144 is effective in fiscal year 2003. SFAS No. 144 retains many of the provisions of SFAS No. 121, but addresses certain implementation issues associated with the Statement. The Company is currently evaluating the impact on its consolidated financial statements of implementing this Statement. In 2001, the Emerging Issues Task Force ("EITF") issued EITF No. 01-09, "Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products)," which addresses the recognition, measurement and income statement classification of consideration given by a vendor to a customer (including both a reseller of the vendor's products and an entity that purchases the vendor's products from a reseller). EITF No. 01-09, among other things, requires that certain consideration given by a vendor to a customer be characterized as a reduction of revenue when recognized in the vendor's income statement. The Company is required to adopt EITF No. 01-09 in its financial statements beginning April 1, 2002. The Company's current accounting and classification of these amounts are in compliance with the consensus reached in this EITF. Notes to Consolidated Financial Statements (continued) 2. Common Stock of Moog Inc. Other assets include the Company's investment in the Class B Common Stock of Moog Inc. totaling $2,696,000, and $2,264,000 as of March 31, 2002 and 2001, respectively, which is classified as an available-for-sale security and is carried at fair value. There were no realized gains or losses in 2002, 2001, and 2000, and gross unrealized holding gains were $1,980,000, $1,548,000, and $1,548,000. Notes to Consolidated Financial Statements (continued) 3. Lines of Credit The Company obtains required short-term funds through bank borrowings. As of March 31, 2002, the Company had $2,356,268 outstanding for letters of credit, a committed revolving line of credit totaling $20,000,000, and uncommitted lines of credit totaling $76,000,000. The lines are renewable annually at various dates and provide for loans of varying maturities. There are no formal compensating balance arrangements with any of the banks. As of March 31, 2002 and 2001, the amounts borrowed under the line of credit were none and $24,500,000, respectively. The interest rates on the amounts borrowed at fiscal year-end 2002 and 2001 were none and 6.90%, respectively. Notes to Consolidated Financial Statements (continued) 4. Long-Term Debt
2002 2001 ---------------------------------------------------------------------------------------------------------------------------------- (In thousands) Secured nonrecourse subordinated promissory note, 8.00%, due through 2009 $ 57,458 $ 61,083 Note payable to insurance company, 10.81%, due through 2009 37,500 42,500 Note payable to insurance company, 10.78%, due through 2005 36,000 44,700 Industrial Revenue Development Bonds, 4.57% and 6.30%, due through 2028 22,630 22,630 Unsecured subordinated promissory note, 8.00%, due through 2009 4,978 4,978 Industrial Revenue Development Bond, 5.69%, due through 2009 4,845 5,342 Notes payable to utility company, 3.00%, due through 2007 2,971 - Industrial Revenue Development Bond, 5.61%, due through 2008 2,837 - Other 2,609 1,235 ----------------------- 171,828 182,468 Less current portion 22,398 18,217 ------------------------ $ 149,430 $ 164,251 ========================
Long-term debt agreements contain various restrictive financial covenants, the most restrictive of which requires the Company to maintain specific quarterly levels of interest coverage. In addition, these agreements include a provision that the Company may pay dividends on any class of stock only from consolidated net earnings available for distribution. There were no earnings available for distribution as of March 31, 2002. The Company has four Industrial Revenue Bonds ("IRB's") totaling $22,630,000, which are secured by direct pay letters of credit. The interest rates in the table above reflect the direct pay letters of credit costs and amortization of other related costs for those IRB's. Other than the four IRB's above, the carrying value of assets pledged for secured debt is $59,312,000. Debt repayment requirements for the next five fiscal years are: (In thousands) 2003 $22,398 2004 22,506 2005 22,621 2006 10,619 2007 10,010 Notes to Consolidated Financial Statements (continued) 5. Leases The Company leases a portion of its equipment and buildings. Capitalized leases consist primarily of limited obligation special revenue bonds, which bear interest rates from 3.55% to 4.75%. Other leases include non-cancelable operating leases expiring at various dates through 2024. Leased assets under capital leases consist of the following:
2002 2001 ---------------------------------------------------------------------------- (In thousands) Land $ 67 $ 67 Buildings 1,033 1,033 Equipment 9,711 9,711 --------------------------------- 10,811 10,811 Less accumulated amortization 7,270 6,325 --------------------------------- $ 3,541 $ 4,486 ============================================================================ The following is a schedule by year of minimum payments due under leases as of March 31, 2002: Operating Capital ---------------------------------------------------------------------------- (In thousands) Years ending March 31: 2003 $ 7,479 $ 721 2004 6,573 718 2005 5,598 720 2006 5,039 715 2007 4,256 716 2008-2017 7,716 5,745 ----------------------------- Total minimum payment required $36,661 $ 9,335 ============================================================ Less interest 2,240 -------------- Present value of minimum lease payments 7,095 Amount due within one year 425 -------------- Long-term capital lease obligations $ 6,670 ============================================================================
Rental expense in 2002, 2001, and 2000 was $12,545,000, $11,762,000, and $10,612,000, respectively. Notes to Consolidated Financial Statements (continued) 6. Income Taxes The Company files a consolidated income tax return. The provision for income taxes is as follows:
2002 2001 2000 --------------------------------------- (In thousands) Current: Federal $ 50 $ 1,286 $ 2,233 State 93 151 413 ---------------------------------------- 143 1,437 2,646 ---------------------------------------- Deferred: Federal 600 (973) (59) State 71 (115) (19) ---------------------------------------- 671 (1,088) (78) ---------------------------------------- Total income taxes $ 814 $ 349 $ 2,568 ========================================
As of March 31, 2002, the Company has Alternative Minimum Tax Credits in the amount of $5,089,000 to offset future years' regular tax expense. State net operating loss carry forwards of approximately $9,500,000, expiring March 31, 2003 through March 31, 2018, are available to offset future state tax expense. During fiscal year 2001, the Internal Revenue Service completed an audit of fiscal years 1997, 1998 and 1999. Audit adjustments related primarily to changes in the timing of deductions for income tax purposes. There was no negative effect on the Company's income statement for the year. A reconciliation of the expected U.S. statutory rate to the effective rate follows:
2002 2001 2000 ----------------------------------------------------------------------------- Computed (expected tax rate) 34.0% 34.0% 34.0% Tax-exempt income (5.9) (8.8) (0.9) Other permanent differences not deductible 2.1 (6.6) 0.7 State income taxes (net of federal tax benefit) 6.4 6.4 3.7 Other 5.0 5.0 (0.2) ------------------------------------- Effective tax rate 41.6% 30.0% 37.3% =============================================================================
6. Income Taxes (continued) The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of March 31, 2002 and 2001:
2002 2001 --------------------------------------------------------------------------------- (In thousands) Deferred tax liabilities: Basis and depreciation difference $ 15,705 $ 15,231 Moog investment 772 588 ----------------------------------- 16,477 15,819 ----------------------------------- Deferred tax assets: Inventory valuation 625 2,202 Future tax credits 5,089 5,036 Net operating loss carryforwards 1,208 753 Employee benefits 1,772 1,816 Pension 1,629 1,763 Insurance 1,996 1,261 Deferred gain on sale/leaseback 1,054 1,136 Impairment - 82 Other 420 240 ----------------------------------- 13,793 14,289 ----------------------------------- Net deferred tax liability $ 2,684 $ 1,530 =================================================================================
Net current deferred tax assets of $4,624,000 and $5,602,000 as of March 31, 2002 and 2001, respectively, are recognized in the Consolidated Balance Sheets. Also recognized are net non-current deferred tax liabilities of $7,308,000 and $7,132,000 as of March 31, 2002 and 2001, respectively. Notes to Consolidated Financial Statements (continued) 7. Stockholders' Equity Preferred Stock - The Company has issued a class of preferred stock ("Participating Preferred Stock") which is convertible, participating, and has an $11.93 stated value. These shares are convertible immediately on a share-for-share basis into shares of Class A Common Stock. There were no dividends on this class of stock. The outstanding 10% cumulative, convertible, voting preferred stock consists of 407,240 Series A shares, convertible at the rate of one common share of Class A and Class B for every twenty preferred shares, and 400,000 Series B shares, which carry a one common share of Class A and Class B for thirty conversion rate. The Series A and B shares have a $.025 stated value and a $.025 par value. There are 2,633,333 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 The Class A Common Stock and the Class B Common Stock have substantially identical rights with respect to any dividends or distributions of cash or property declared on shares of common stock and rank equally as to the right to receive proceeds on liquidation or dissolution of the Company after payment of the Company's indebtedness and liquidation right to the holders of preferred shares. However, holders of Class B Common Stock retain a full vote per share whereas the holders of Class A Common Stock have voting rights of 1/20th of one vote per share on all matters as to which shareholders of the Company are entitled to vote. Unissued shares of common stock reserved for conversion privileges were 33,695 of Class A and Class B as of March 31, 2002 and 2001. Additionally, there were 3,570,861 and 3,576,433 shares of Class A reserved for conversion of the Participating Preferred Stock as of March 31, 2002 and 2001, respectively. Notes to Consolidated Financial Statements (continued) 8. Retirement Plans 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. The following tables provide a reconciliation of the changes in the plan's benefit obligation and fair value of plan assets over the two-year period ended March 31, 2002 and a statement of the funded status as of March 31 of both years: 2002 2001 ----------------------------- Change in Benefit Obligation (In thousands) Benefit obligation at beginning of year $ 31,150 $ 26,655 Service cost 2,150 2,017 Interest cost 2,232 2,080 Actuarial gain 669 2,045 Benefit payments and expenses (1,833) (1,647) ------------------------------------------------------------------------------ Benefit obligation at end of year $ 34,368 $ 31,150 ============================================================================== Change in Plan Assets Fair value of plan assets at beginning of year $ 29,153 $ 23,373 Actual return on plan assets 4,483 3,832 Employer contributions 1,547 3,595 Benefit payments and expenses (1,833) (1,647) ------------------------------------------------------------------------------ Fair value of plan assets at end of year $ 33,350 $ 29,153 ============================================================================== Funded Status Funded status at end of year $(1,018) $ (1,997) Unrecognized transition asset (2,714) (2,990) Unrecognized prior service cost 31 125 Unrecognized gain (1,430) (255) ----------------------------------------------------------------------------- Accrued benefit cost $(5,131) $ (5,117) ============================================================================= The Plan holds the Company's common stock with a fair market value of $2,961,000. Notes to Consolidated Financial Statements (continued) 8. Retirement Plan (continued) The following table provides the components of net periodic benefit cost for the plan for fiscal years 2002, 2001, and 2000:
2002 2001 2000 ------------------------------------------------------------------------------------------------------- (In thousands) Service cost $ 2,150 $ 2,017 $ 1,781 Interest cost 2,232 2,080 1,843 Expected return on plan assets (2,639) (2,288) (2,013) Amortization of transition assets (276) (276) (276) Amortization of prior service cost 94 94 94 ------------------------------------------------------------------------------------------------------- Net periodic benefit cost $ 1,561 $ 1,627 $ 1,429 =======================================================================================================
The prior service costs are amortized on a straight-line basis over the average remaining service period of active participants. Gains and losses in excess of 10% of the greater of the benefit obligation and the market-related value of assets are amortized over the average remaining service period of active participants. The assumptions used to measure the Company's benefit obligation are shown in the following table: 2002 2001 ---------------------------------------------------------------------------- Discount rate 7.25% 7.50% Expected return on plan assets 9.00% 9.50% Rate of compensation increase 4.00% 5.00% The Company has an Employees' Savings Plan (401(k)) covering all employees who meet certain age entry requirements and work a stated minimum number of hours per year. Participants may make contributions up to the legal limit. The Company's matching contributions are discretionary. Costs charged to operations for the Company's matching contributions amounted to $846,000, $875,000, and $761,000, in 2002, 2001, and 2000, respectively. 9. Fair Value of Financial Instruments The carrying amounts and the estimated fair values of the Company's financial instruments are summarized as follows:
2002 2001 ----------------------------------------------- Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value ------------------------------------------------------------------------------------------------------------------------------------ (In thousands) Long-term debt, including current portion $171,828 $163,885 $182,468 $179,603 Notes payable - - 24,500 24,500 Class B Common Stock of Moog Inc. 2,696 2,696 2,264 2,264 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. Notes payable - The carrying amount approximates fair value due to the short-term maturity of the notes. Class B Common Stock of Moog Inc. - Based on quoted market prices.
Notes to Consolidated Financial Statements (continued) 10. Acquisition In 2000, the Company acquired certain assets of the Midwest private label canned vegetable business from Agrilink Foods, Inc., a wholly-owned subsidiary of Pro-Fac Cooperative, for approximately $48 million. The Company purchased a plant and related equipment for $5 million in Arlington, Minnesota and inventories of the acquired business for $43 million. The annual sales of this business are approximately $73 million. The purchase price was partially funded by a subordinated note for $5 million while the balance was paid in cash. This acquisition was accounted for under the purchase method, and accordingly, the operating results of the acquired business have been included in the consolidated operating results since the acquisition date. Notes to Consolidated Financial Statements (continued) 11. Other Income and Expense Other expense in 2002 consisted of the following: 1) an impairment loss of $690,000; and 2) a severance accrual of $321,000. Other expense in 2001 consisted of the following: 1) a gain on the sale of the Othello, Washington facility of $1,151,000; 2) a loss of $1,443,000 which is related primarily to exiting a line of business; 3) an impairment loss of $898,000; and 4) a gain on the sale of the Buckley, Michigan facility of $219,000. Other expense in 2000 consisted of the following: 1) a loss of $2,219,000 which is related primarily to exiting a line of business; and 2) a gain on the sale of the Chicopee, Massachusetts warehouse of $965,000. 12. Sales Information The Company sold $228,556,000, $241,492,000 and $209,872,000, representing 35%, 36% and 34% of net sales, to one customer in 2002, 2001 and 2000, respectively. 13. Segment Information The Company manages its business on the basis of one reportable segment - the processing and sale of vegetables. The Company markets its product almost entirely in the United States. The Company has an Alliance Agreement with Pillsbury whereby the Company processes canned and frozen vegetables for Pillsbury under the Green Giant brand name. Pillsbury continues to be responsible for all of the sales, marketing, and customer service functions for the Green Giant products. In 2002, 2001, and 2000, the sale of Green Giant vegetables account for 40%, 43%, and 42% of net sales. The following information is presented in accordance with SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information":
Classes of similar products/services: 2002 2001 2000 ------------------------------------------------------------------------------------------------------- (In thousands) Net Sales: Green Giant vegetables $258,412 $ 290,346 $ 263,279 Canned vegetables 333,048 326,224 291,436 Frozen vegetables 25,165 22,052 27,889 Fruit and chip products 19,982 20,092 21,075 Flight operations 5,588 5,905 5,105 Other 8,880 9,681 12,294 ------------------------------------------------------------------------------------------------------- $651,075 $ 674,300 $ 621,078 =======================================================================================================
Independent Auditors' Report To the Board of Directors and Stockholders of Seneca Foods Corporation Marion, New York We have audited the accompanying consolidated balance sheets of Seneca Foods Corporation and subsidiaries as of March 31, 2002 and 2001, and the related consolidated statements of net earnings, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 2002. 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 auditing standards generally accepted in the United States of America. 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, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2002 in conformity with accounting principles generally accepted in the United States of America. /s/DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Rochester, New York May 24, 2002 Notice of Annual Meeting The 2002 Annual Meeting of Shareholders will be held on Friday, August 2, 2002, beginning at 1:00 P.M. at the Company's facilities at 3732 South Main Street, Marion, 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 14, 2002. Additional Information A copy of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2002, 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 Philip G. Paras, Seneca Foods Corporation, 3736 South Main Street, Marion, New York 14505, or contact us via our web site at http://www.senecafoods.com, or e-mail us at senecafoods@senecafoods.com. Forward-Looking Statements Except for the historical information contained herein, the matters discussed in this annual report are forward-looking statements as defined in the Private Securities Litigation Reform Act (PSLRA) of 1995. The Company wishes to take advantage of the "safe harbor" provisions of the PSLRA by cautioning that numerous important factors which involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices, and other factors discussed in the Company's filings with the Securities and Exchange Commission, in the future, could affect the Company's actual results and could cause its actual consolidated results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company. Shareholder Information and Quarterly Results The Company's common stock is traded on The NASDAQ National Stock Market. The 3.8 million of Class A outstanding shares and 2.8 million Class B outstanding shares are owned by 327 and 321 shareholders of record, respectively. The high and low prices of the Company's common stock during each quarter of the past two years are shown below:
Class A: 2002 2001 ------------------------------------------------ Quarter High Low High Low --------------------------------------------------------------- First $13.90 $12.62 $12.75 $11.00 Second 13.75 11.50 14.00 11.25 Third 14.39 12.10 15.25 12.75 Fourth 14.75 13.45 14.13 12.38 Class B: 2002 2001 ------------------------------------------------ Quarter High Low High Low --------------------------------------------------------------- First $13.70 $12.63 $12.25 $10.75 Second 13.75 12.00 14.88 11.50 Third 14.00 12.11 14.75 12.75 Fourth 14.77 13.20 14.25 12.75
The Company may pay dividends on common stock only from consolidated net earnings available for distribution, which were none as of March 31, 2002. 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. 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, 2002: Net sales $132,693 $176,800 $236,932 $104,650 Gross margin 7,973 9,372 12,968 11,188 Net earnings (loss) (1,286) (416) 2,290 552 Basic earnings (loss) per common share (.20) (.06) .35 .08 Diluted earnings (loss) per common share (.20) (.06) .22 .05 Year ended March 31, 2001: Net sales $131,159 $187,774 $248,109 $107,258 Gross margin 11,468 13,630 10,821 8,243 Net earnings (loss) 1,290 2,053 (1,116) (1.414) Basic earnings per common share (loss) .20 .31 (.17) (.22) Diluted earnings per common share (loss) .13 .20 (.17) (.22)
Earnings for the fourth quarter 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.