For the Quarter Ended December 31, 2016
|
Commission File Number 0-01989
|
New York
|
16‑0733425
|
(State or other jurisdiction of
|
(I. R. S. Employer
|
incorporation or organization)
|
Identification No.)
|
3736 South Main Street, Marion, New York
|
14505
|
(Address of principal executive offices)
|
(Zip Code)
|
Class
|
Shares Outstanding at January 20, 2017
|
Common Stock Class A, $.25 Par
|
7,864,780
|
Common Stock Class B, $.25 Par
|
1,894,221
|
Seneca Foods Corporation
|
|||||
Quarterly Report on Form 10-Q
|
|||||
Table of Contents
|
|||||
Page
|
|||||
PART 1
|
FINANCIAL INFORMATION
|
||||
Item 1
|
Financial Statements:
|
||||
Condensed Consolidated Balance Sheets-December 31, 2016, December 26, 2015 and
|
1
|
||||
March 31, 2016
|
|||||
Condensed Consolidated Statements of Net Earnings-Three and Nine Months Ended
|
|||||
December 31, 2016 and December 26, 2015
|
2
|
||||
Condensed Consolidated Statements of Comprehensive Income-Three and Nine Months Ended
|
|||||
December 31, 2016 and December 26, 2015
|
2
|
||||
Condensed Consolidated Statements of Cash Flows-Nine Months Ended
|
|||||
December 31, 2016 and December 26, 2015
|
3
|
||||
Condensed Consolidated Statement of Stockholders' Equity-Nine Months Ended
|
|||||
December 31, 2016
|
4
|
||||
Notes to Condensed Consolidated Financial Statements
|
5
|
||||
Item 2
|
Management's Discussion and Analysis of Financial Condition
|
||||
and Results of Operations
|
12
|
||||
Item 3
|
Quantitative and Qualitative Disclosures about Market Risk
|
19
|
|||
Item 4
|
Controls and Procedures
|
20
|
|||
PART II
|
OTHER INFORMATION
|
||||
Item 1
|
Legal Proceedings
|
21
|
|||
Item 1A
|
Risk Factors
|
21
|
|||
Item 2
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
21
|
|||
Item 3
|
Defaults Upon Senior Securities
|
21
|
|||
Item 4
|
Mine Safety Disclosures
|
21
|
|||
Item 5
|
Other Information
|
21
|
|||
Item 6
|
Exhibits
|
21
|
|||
SIGNATURES
|
23
|
SENECA FOODS CORPORATION AND SUBSIDIARIES
|
||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||||||
(In Thousands, Except Per Share Data)
|
||||||||||||
Unaudited
|
Unaudited
|
|||||||||||
December 31,
|
December 26,
|
March 31,
|
||||||||||
2016
|
2015
|
2016
|
||||||||||
ASSETS
|
||||||||||||
Current Assets:
|
||||||||||||
Cash and Cash Equivalents
|
$
|
10,260
|
$
|
19,029
|
$
|
8,602
|
||||||
Accounts Receivable, Net
|
67,357
|
74,981
|
76,788
|
|||||||||
Assets Held For Sale
|
5,025
|
-
|
5,025
|
|||||||||
Inventories:
|
||||||||||||
Finished Goods
|
511,838
|
482,025
|
366,911
|
|||||||||
Work in Process
|
24,642
|
23,352
|
17,122
|
|||||||||
Raw Materials and Supplies
|
119,888
|
125,804
|
183,674
|
|||||||||
Total Inventories
|
656,368
|
631,181
|
567,707
|
|||||||||
Other Current Assets
|
11,146
|
12,387
|
15,765
|
|||||||||
Total Current Assets
|
750,156
|
737,578
|
673,887
|
|||||||||
Property, Plant and Equipment, Net
|
217,983
|
189,765
|
188,837
|
|||||||||
Deferred Income Tax Asset, Net
|
16,534
|
14,947
|
12,897
|
|||||||||
Other Assets
|
20,038
|
17,929
|
19,706
|
|||||||||
Total Assets
|
$
|
1,004,711
|
$
|
960,219
|
$
|
895,327
|
||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||
Current Liabilities:
|
||||||||||||
Notes Payable
|
$
|
1,255
|
$
|
402
|
$
|
402
|
||||||
Accounts Payable
|
98,170
|
99,256
|
67,410
|
|||||||||
Accrued Vacation
|
11,702
|
11,761
|
11,792
|
|||||||||
Accrued Payroll
|
5,843
|
6,181
|
9,438
|
|||||||||
Other Accrued Expenses
|
41,826
|
37,056
|
27,627
|
|||||||||
Income Taxes Payable
|
8,830
|
14,188
|
2,974
|
|||||||||
Current Portion of Long-Term Debt and Capital Lease Obligations
|
11,106
|
311,864
|
279,815
|
|||||||||
Total Current Liabilities
|
178,732
|
480,708
|
399,458
|
|||||||||
Long-Term Debt, Less Current Portion
|
343,634
|
36,650
|
35,967
|
|||||||||
Capital Lease Obligations, Less Current Portion
|
25,992
|
-
|
4,988
|
|||||||||
Pension Liabilities
|
35,230
|
40,622
|
37,798
|
|||||||||
Other Long-Term Liabilities
|
3,509
|
11,967
|
11,942
|
|||||||||
Total Liabilities
|
587,097
|
569,947
|
490,153
|
|||||||||
Commitments and Contingencies
|
||||||||||||
Stockholders' Equity:
|
||||||||||||
Preferred Stock
|
1,324
|
1,344
|
1,344
|
|||||||||
Common Stock, $.25 Par Value Per Share
|
3,024
|
3,023
|
3,023
|
|||||||||
Additional Paid-in Capital
|
97,433
|
97,373
|
97,373
|
|||||||||
Treasury Stock, at Cost
|
(67,550
|
)
|
(63,358
|
)
|
(65,709
|
)
|
||||||
Accumulated Other Comprehensive Loss
|
(28,396
|
)
|
(31,804
|
)
|
(28,396
|
)
|
||||||
Retained Earnings
|
411,779
|
383,694
|
397,539
|
|||||||||
Total Stockholders' Equity
|
417,614
|
390,272
|
405,174
|
|||||||||
Total Liabilities and Stockholders' Equity
|
$
|
1,004,711
|
$
|
960,219
|
$
|
895,327
|
||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
SENECA FOODS CORPORATION AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
(In Thousands, Except Per Share Data)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
December 31,
|
December 26,
|
December 31,
|
December 26,
|
|||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net Sales
|
$
|
369,705
|
$
|
432,198
|
$
|
979,566
|
$
|
971,658
|
||||||||
Costs and Expenses:
|
||||||||||||||||
Cost of Product Sold
|
332,230
|
378,816
|
891,904
|
868,304
|
||||||||||||
Selling and Administrative
|
21,116
|
19,505
|
57,023
|
51,955
|
||||||||||||
Restructuring
|
1,316
|
9,624
|
2,778
|
9,558
|
||||||||||||
Other Operating (Income) Expense
|
1,153
|
(24,197
|
)
|
1,172
|
(24,600
|
)
|
||||||||||
Total Costs and Expenses
|
355,815
|
383,748
|
952,877
|
905,217
|
||||||||||||
Operating Income
|
13,890
|
48,450
|
26,689
|
66,441
|
||||||||||||
(Earnings) Loss From Equity Investment
|
(333
|
)
|
46
|
(500
|
)
|
132
|
||||||||||
Interest Expense, Net
|
2,414
|
2,191
|
6,709
|
5,772
|
||||||||||||
Earnings Before Income Taxes
|
11,809
|
46,213
|
20,480
|
60,537
|
||||||||||||
Income Taxes
|
3,628
|
15,090
|
6,217
|
19,924
|
||||||||||||
Net Earnings
|
$
|
8,181
|
$
|
31,123
|
$
|
14,263
|
$
|
40,613
|
||||||||
Earnings Attributable to Common Stock
|
$
|
8,100
|
$
|
30,832
|
$
|
14,115
|
$
|
40,180
|
||||||||
Basic Earnings per Common Share
|
$
|
0.83
|
$
|
3.12
|
$
|
1.44
|
$
|
4.06
|
||||||||
Diluted Earnings per Common Share
|
$
|
0.82
|
$
|
3.10
|
$
|
1.43
|
$
|
4.04
|
||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
SENECA FOODS CORPORATION AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
(In Thousands)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
December 31,
|
December 26,
|
December 31,
|
December 26,
|
|||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Comprehensive income:
|
||||||||||||||||
Net earnings
|
$
|
8,181
|
$
|
31,123
|
$
|
14,263
|
$
|
40,613
|
||||||||
Change in pension and post retirement benefits (net of tax)
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
8,181
|
$
|
31,123
|
$
|
14,263
|
$
|
40,613
|
||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
SENECA FOODS CORPORATION AND SUBSIDIARIES
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
(In Thousands)
|
||||||||
Nine Months Ended
|
||||||||
December 31, 2016
|
December 26, 2015
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net Earnings
|
$
|
14,263
|
$
|
40,613
|
||||
Adjustments to Reconcile Net Earnings to
|
||||||||
Net Cash Used in Operations:
|
||||||||
Depreciation & Amortization
|
18,209
|
15,884
|
||||||
Loss (Gain) on the Sale of Assets
|
149
|
(43
|
)
|
|||||
Provision for Restructuring and Impairment
|
3,830
|
9,558
|
||||||
(Earnings) Loss From Equity Investment
|
(500
|
)
|
132
|
|||||
Deferred Income Tax Benefit
|
(3,637
|
)
|
(966
|
)
|
||||
Changes in Operating Assets and Liabilities (net of acquisition):
|
||||||||
Accounts Receivable
|
9,431
|
1,150
|
||||||
Inventories
|
(88,661
|
)
|
(130,398
|
)
|
||||
Other Current Assets
|
4,619
|
15,739
|
||||||
Income Taxes
|
5,856
|
12,401
|
||||||
Accounts Payable, Accrued Expenses
|
||||||||
and Other Liabilities
|
26,732
|
23,465
|
||||||
Net Cash Used in Operations
|
(9,709
|
)
|
(12,465
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Additions to Property, Plant and Equipment
|
(23,389
|
)
|
(6,396
|
)
|
||||
Proceeds from the Sale of Assets
|
123
|
156
|
||||||
Cash Paid for Acquisition (Net of Cash Acquired)
|
-
|
(23,784
|
)
|
|||||
Net Cash Used in Investing Activities
|
(23,266
|
)
|
(30,024
|
)
|
||||
Cash Flow from Financing Activities:
|
||||||||
Long-Term Borrowing
|
411,483
|
301,232
|
||||||
Payments on Long-Term Debt and Capital Lease Obligations
|
(374,577
|
)
|
(238,871
|
)
|
||||
Borrowings (Payments) on Notes Payable
|
853
|
(9,501
|
)
|
|||||
Other
|
(1,273
|
)
|
143
|
|||||
Purchase of Treasury Stock
|
(1,841
|
)
|
(2,081
|
)
|
||||
Dividends
|
(12
|
)
|
(12
|
)
|
||||
Net Cash Provided by Financing Activities
|
34,633
|
50,910
|
||||||
Net Increase in Cash and Cash Equivalents
|
1,658
|
8,421
|
||||||
Cash and Cash Equivalents, Beginning of the Period
|
8,602
|
10,608
|
||||||
Cash and Cash Equivalents, End of the Period
|
$
|
10,260
|
$
|
19,029
|
||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||
Noncash Transactions:
|
||||||||
Property, Plant and Equipment Purchased Under Capital Lease Obligations
|
$
|
23,056
|
$
|
-
|
||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
SENECA FOODS CORPORATION AND SUBSIDIARIES
|
||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||
Additional
|
Accumulated Other
|
|||||||||||||||||||||||
Preferred
|
Common
|
Paid-In
|
Treasury
|
Comprehensive
|
Retained
|
|||||||||||||||||||
Stock
|
Stock
|
Capital
|
Stock
|
Loss
|
Earnings
|
|||||||||||||||||||
Balance March 31, 2016
|
$
|
1,344
|
$
|
3,023
|
$
|
97,373
|
$
|
(65,709
|
)
|
$
|
(28,396
|
)
|
$
|
397,539
|
||||||||||
Net earnings
|
-
|
-
|
-
|
-
|
-
|
14,263
|
||||||||||||||||||
Cash dividends paid
|
||||||||||||||||||||||||
on preferred stock
|
-
|
-
|
-
|
-
|
-
|
(23
|
)
|
|||||||||||||||||
Equity incentive program
|
-
|
-
|
41
|
-
|
-
|
-
|
||||||||||||||||||
Preferred stock conversion
|
(20
|
)
|
1
|
19
|
-
|
-
|
-
|
|||||||||||||||||
Purchase treasury stock
|
-
|
-
|
-
|
(1,841
|
)
|
-
|
-
|
|||||||||||||||||
Balance December 31, 2016
|
$
|
1,324
|
$
|
3,024
|
$
|
97,433
|
$
|
(67,550
|
)
|
$
|
(28,396
|
)
|
$
|
411,779
|
||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
Preferred Stock
|
Common Stock
|
|||||||||||||||||||||||
6
|
%
|
10
|
%
|
|||||||||||||||||||||
Cumulative Par
|
Cumulative Par
|
2003 Series
|
||||||||||||||||||||||
Value $.25
|
Value $.025
|
Participating
|
Participating
|
Class A
|
Class B
|
|||||||||||||||||||
Callable at Par
|
Convertible
|
Convertible Par
|
Convertible Par
|
Common Stock
|
Common Stock
|
|||||||||||||||||||
Voting
|
Voting
|
Value $.025
|
Value $.025
|
Par Value $.25
|
Par Value $.25
|
|||||||||||||||||||
Shares authorized and designated:
|
||||||||||||||||||||||||
December 31, 2016
|
200,000
|
1,400,000
|
89,751
|
500
|
20,000,000
|
10,000,000
|
||||||||||||||||||
Shares outstanding:
|
||||||||||||||||||||||||
December 31, 2016
|
200,000
|
807,240
|
89,751
|
500
|
7,864,780
|
1,894,221
|
||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
1.
|
Unaudited Condensed Consolidated Financial Statements
|
Purchase Price (net of cash received)
|
$
|
23,784
|
||
Allocated as follows:
|
||||
Current assets
|
$
|
36,647
|
||
Other long-term assets
|
1,395
|
|||
Property, plant and equipment
|
13,654
|
|||
Deferred taxes
|
(7,710
|
)
|
||
Other long-term liabilities
|
(4,120
|
)
|
||
Current liabilities
|
(16,082
|
)
|
||
Total
|
$
|
23,784
|
Purchase Price (net of cash received)
|
$
|
15,011
|
||
|
||||
Allocated as follows:
|
||||
Current assets
|
$
|
16,834
|
||
Other long-term assets
|
509
|
|||
Property, plant and equipment
|
872
|
|||
Deferred taxes
|
428
|
|||
Current liabilities
|
(3,632
|
)
|
||
Total
|
$
|
15,011
|
3. | Inventories First-In, First-Out ("FIFO") based inventory costs exceeded LIFO based inventory costs by $139,709,000 as of the end of the third quarter of fiscal 2017 as compared to $150,818,000 as of the end of the third quarter of fiscal 2016. The change in the LIFO Reserve for the three months ended December 31, 2016 was a decrease of $3,941,000 as compared to a decrease of $11,662,000 for the three months ended December 26, 2015. The change in the LIFO Reserve for the nine months ended December 31, 2016 was an increase of $434,000 as compared to a decrease of $13,249,000 for the nine months ended December 26, 2015. This reflects the projected impact of an overall cost increase expected in fiscal 2017 versus an overall cost decrease in fiscal 2016. |
Third Quarter
|
Year-to-Date
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
(In thousands)
|
(In thousands)
|
|||||||||||||||
Reported end of period:
|
||||||||||||||||
Outstanding borrowings
|
$
|
232,586
|
$
|
309,211
|
$
|
232,586
|
$
|
309,211
|
||||||||
Weighted average interest rate
|
2.00
|
%
|
1.82
|
%
|
2.00
|
%
|
1.82
|
%
|
||||||||
Reported during the period:
|
||||||||||||||||
Maximum amount of borrowings
|
$
|
349,710
|
$
|
323,980
|
$
|
361,800
|
$
|
323,980
|
||||||||
Average outstanding borrowings
|
$
|
301,395
|
$
|
285,576
|
$
|
289,949
|
$
|
245,520
|
||||||||
Weighted average interest rate
|
1.89
|
%
|
1.90
|
%
|
1.88
|
%
|
1.93
|
%
|
||||||||
During the nine-month period ended December 31, 2016, the Company repurchased 46,200 shares or $1,518,000 of its Class A Common Stock as Treasury Stock and 9,042 shares or $324,000 of its Class B Common Stock also as Treasury Stock. As of December 31, 2016, there are 2,336,792 shares or $67,550,000 of repurchased stock. These shares are not considered outstanding. |
6. | Retirement Plans The net periodic benefit cost for the Company's pension plan consisted of: |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
December 31,
|
December 26,
|
December 31,
|
December 26,
|
|||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Service Cost
|
$
|
2,164
|
$
|
2,519
|
$
|
6,491
|
$
|
7,558
|
||||||||
Interest Cost
|
1,919
|
2,177
|
5,756
|
6,532
|
||||||||||||
Expected Return on Plan Assets
|
(2,978
|
)
|
(2,625
|
)
|
(8,934
|
)
|
(7,877
|
)
|
||||||||
Amortization of Actuarial Loss
|
679
|
844
|
2,037
|
2,531
|
||||||||||||
Amortization of Transition Asset
|
27
|
27
|
82
|
82
|
||||||||||||
Net Periodic Benefit Cost
|
$
|
1,811
|
$
|
2,942
|
$
|
5,432
|
$
|
8,826
|
7. | Plant Restructuring The following table summarizes the restructuring charges and related asset impairment charges recorded and the accruals established: |
Long-Lived
|
||||||||||||||||
Severance
|
Asset Charges
|
Other Costs
|
Total
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Balance March 31, 2016
|
$
|
-
|
$
|
4,975
|
$
|
3,897
|
$
|
8,872
|
||||||||
First quarter charge (credit)
|
127
|
(6
|
)
|
1,064
|
1,185
|
|||||||||||
Second quarter charge (credit)
|
112
|
(286
|
)
|
451
|
277
|
|||||||||||
Third quarter charge (credit)
|
1,261
|
62
|
(7
|
)
|
1,316
|
|||||||||||
Cash payments/write offs
|
(1,480
|
)
|
164
|
(3,588
|
)
|
(4,904
|
)
|
|||||||||
Balance December 31, 2016
|
$
|
20
|
$
|
4,909
|
$
|
1,817
|
$
|
6,746
|
||||||||
Balance March 31, 2015
|
$
|
715
|
$
|
264
|
$
|
270
|
$
|
1,249
|
||||||||
First quarter credit
|
(81
|
)
|
-
|
-
|
(81
|
)
|
||||||||||
Second quarter charge
|
15
|
-
|
-
|
15
|
||||||||||||
Third quarter charge
|
104
|
1,706
|
7,814
|
9,624
|
||||||||||||
Cash payments/write offs
|
(649
|
)
|
-
|
(503
|
)
|
(1,152
|
)
|
|||||||||
Balance December 26, 2015
|
$
|
104
|
$
|
1,970
|
$
|
7,581
|
$
|
9,655
|
8. | Other Operating Income and Expense During the nine months ended December 31, 2016 and December 26, 2015, the Company sold some unused fixed assets which resulted in a gain of $149,000 and $43,000, respectively. During the quarter ended December 31, 2016, the Company recorded a charge for impairment of a long-term asset of $1,052,000. During the quarter ended December 26, 2015, the Company recorded a gain of $24,275,000 related to a contractual payment received in conjunction with a relationship transfer agreement with General Mills. During the quarter ended June 27, 2015, the Company reversed a provision for the Prop 65 litigation of $200,000 and reduced an environmental accrual by $82,000. These gains are included in other operating income in the Unaudited Condensed Consolidated Statements of Net Earnings. |
9. | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2018 (beginning of fiscal 2019). Early adoption is permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting but is currently evaluating this. |
10. | Earnings per Common Share Earnings per share for the quarters ended December 31, 2016 and December 26, 2015 are as follows: |
Q U A R T E R
|
YEAR TO DATE
|
|||||||||||||||
Fiscal
|
Fiscal
|
Fiscal
|
Fiscal
|
|||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||
Basic
|
||||||||||||||||
Net earnings
|
$
|
8,181
|
$
|
31,123
|
$
|
14,263
|
$
|
40,613
|
||||||||
Deduct preferred stock dividends paid
|
6
|
6
|
17
|
17
|
||||||||||||
Undistributed earnings
|
8,175
|
31,117
|
14,246
|
40,596
|
||||||||||||
Earnings attributable to participating preferred
|
75
|
285
|
131
|
416
|
||||||||||||
Earnings attributable to common shareholders
|
$
|
8,100
|
$
|
30,832
|
$
|
14,115
|
$
|
40,180
|
||||||||
Weighted average common shares outstanding
|
9,770
|
9,884
|
9,790
|
9,891
|
||||||||||||
Basic earnings per common share
|
$
|
0.83
|
$
|
3.12
|
$
|
1.44
|
$
|
4.06
|
||||||||
Diluted
|
||||||||||||||||
Earnings attributable to common shareholders
|
$
|
8,100
|
$
|
30,832
|
$
|
14,115
|
$
|
40,180
|
||||||||
Add dividends on convertible preferred stock
|
5
|
5
|
15
|
15
|
||||||||||||
Earnings attributable to common stock on a diluted basis
|
$
|
8,105
|
$
|
30,837
|
$
|
14,130
|
$
|
40,195
|
||||||||
Weighted average common shares outstanding-basic
|
9,770
|
9,884
|
9,790
|
9,891
|
||||||||||||
Additional shares issuable related to the
|
||||||||||||||||
equity compensation plan
|
2
|
2
|
2
|
2
|
||||||||||||
Additional shares to be issued under full
|
||||||||||||||||
conversion of preferred stock
|
67
|
67
|
67
|
67
|
||||||||||||
Total shares for diluted
|
9,839
|
9,953
|
9,859
|
9,960
|
||||||||||||
Diluted earnings per common share
|
$
|
0.82
|
$
|
3.10
|
$
|
1.43
|
$
|
4.04
|
11. | Fair Value of Financial Instruments As required by Accounting Standards Codification ("ASC") 825, "Financial Instruments," the Company estimates the fair values of financial instruments on a quarterly basis. The estimated fair value for long-term debt (classified as Level 2 in the fair value hierarchy) is determined by the quoted market prices for similar debt (comparable to the Company's financial strength) or current rates offered to the Company for debt with the same maturities. Long-term debt, including current portion had a carrying amount of $351,272,000 and an estimated fair value of $351,544,000 as of December 31, 2016. As of March 31, 2016, the carrying amount was $315,539,000 and the estimated fair value was $315,478,000. Capital lease obligations, including current portion had a carrying amount of $29,461,000 and an estimated fair value of $27,303,000 as of December 31, 2016. As of March 31, 2016, the carrying amount was $5,231,000 and the estimated fair value was $5,076,000. The fair values of all the other financial instruments approximate their carrying value due to their short-term nature. |
12. | Income Taxes The effective tax rate was 30.4% and 32.9% for the nine month periods ended December 31, 2016 and December 26, 2015, respectively. The 2.5 percentage point decrease in the effective tax rate represents a decrease in tax expense as a percentage of book income when compared to the same period last year. The major contributor to this decrease is with the federal credits for R & D, WOTC and fuel. These credits are largely fixed and with the significant decrease in pre-tax earnings for the nine months ended December 31, 2016, these credits are a larger percentage of pre-tax earnings in comparison to the nine months ended December 26, 2015. |
13. | Interim Notes During fiscal 2017 and 2016, the Company entered into some interim lease notes which financed down payments for various equipment orders at market rates. As of December 31, 2016, some of these interim notes had not been converted into capital leases since the equipment was not placed in service. These notes, which total $1,255,000 and $402,000 as of December 31, 2016 and December 26, 2015, respectively, are included in Notes Payable in the accompanying Condensed Consolidated Balance Sheets. These notes are expected to be converted into capital leases within the next twelve months. |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||
December 31,
|
December 26,
|
December 31,
|
December 26,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||||
Canned Vegetables
|
$
|
227.2
|
$
|
239.3
|
$
|
552.6
|
$
|
574.5
|
||||||||||
B&G* |
|
|
46.1
|
94.7
|
113.5
|
142.3
|
||||||||||||
Frozen
|
25.3
|
26.2
|
70.5
|
70.3
|
||||||||||||||
Fruit Products
|
63.7
|
63.9
|
217.2
|
158.5
|
||||||||||||||
Snack
|
2.4
|
2.6
|
10.0
|
9.3
|
||||||||||||||
Other
|
5.0
|
5.5
|
15.8
|
16.8
|
||||||||||||||
$
|
369.7
|
$
|
432.2
|
$
|
979.6
|
$
|
971.7
|
|||||||||||
*B&G includes frozen vegetable sales exclusively for B&G.
|
Three Months Ended
|
Nine Months Ended
|
|||||||
December 31,
|
December 26,
|
December 31,
|
December 26,
|
|||||
2016
|
2015
|
2016
|
2015
|
|||||
Gross Margin
|
10.1
|
%
|
12.4
|
%
|
8.9
|
%
|
10.6
|
%
|
Selling
|
3.0
|
%
|
2.4
|
%
|
2.9
|
%
|
2.8
|
%
|
Administrative
|
2.7
|
%
|
2.2
|
%
|
2.9
|
%
|
2.6
|
%
|
Restructuring
|
0.4
|
%
|
2.2
|
%
|
0.3
|
%
|
1.0
|
%
|
Other Operating Expense (Income)
|
0.3
|
%
|
-5.6
|
%
|
0.1
|
%
|
-2.5
|
%
|
Operating Income
|
3.7
|
%
|
11.2
|
%
|
2.7
|
%
|
6.7
|
%
|
Interest Expense, Net
|
0.7
|
%
|
0.5
|
%
|
0.7
|
%
|
0.6
|
%
|
December 31,
|
December 26,
|
March 31,
|
March 31,
|
|||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Working capital:
|
||||||||||||||||
Balance
|
$
|
571,424
|
$
|
256,870
|
$
|
274,429
|
$
|
463,545
|
||||||||
Change during quarter
|
(21,139
|
)
|
9,764
|
|||||||||||||
Long-term debt, less current portion
|
343,634
|
36,650
|
35,967
|
271,634
|
||||||||||||
Total stockholders' equity per equivalent
|
||||||||||||||||
common share (see Note)
|
42.11
|
38.90
|
40.63
|
34.81
|
||||||||||||
Stockholders' equity per common share
|
42.66
|
39.39
|
41.15
|
35.33
|
||||||||||||
Current ratio
|
4.20
|
1.53
|
1.69
|
4.72
|
·
|
general economic and business conditions;
|
·
|
cost and availability of commodities and other raw materials such as vegetables, steel and packaging materials;
|
·
|
transportation costs;
|
·
|
climate and weather affecting growing conditions and crop yields;
|
·
|
the availability of financing;
|
·
|
leverage and the Company's ability to service and reduce its debt;
|
·
|
foreign currency exchange and interest rate fluctuations;
|
·
|
effectiveness of the Company's marketing and trade promotion programs;
|
·
|
changing consumer preferences;
|
·
|
competition;
|
·
|
product liability claims;
|
·
|
the loss of significant customers or a substantial reduction in orders from these customers;
|
·
|
changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including environmental and health and safety regulations; and
|
·
|
other risks detailed from time to time in the reports filed by the Company with the SEC.
|
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Total Number of
|
Average Price Paid
|
Total Number
|
Maximum Number
|
||||||||||||||||||||||
Shares Purchased (1)
|
per Share
|
of Shares
|
(or Approximate
|
||||||||||||||||||||||
Purchased as
|
Dollar Value) or
|
||||||||||||||||||||||||
Part of Publicly
|
Shares that May
|
||||||||||||||||||||||||
Announced
|
Yet Be Purchased
|
||||||||||||||||||||||||
Class A
|
Class B
|
Class A
|
Class B
|
Plans or
|
Under the Plans or
|
||||||||||||||||||||
Period
|
Common
|
Common
|
|
Common |
Common
|
Programs
|
Programs
|
||||||||||||||||||
10/01/16 –
|
-
|
674
|
|
$
|
-
|
$
|
36.03
|
674
|
-
|
||||||||||||||||
10/31/16
|
|||||||||||||||||||||||||
11/01/16 –
|
-
|
6,531
|
|
$
|
-
|
$
|
35.74
|
6,531
|
-
|
||||||||||||||||
11/30/16
|
|||||||||||||||||||||||||
12/01/16 –
|
14,700
|
(1)
|
-
|
|
$
|
38.28
|
$
|
-
|
-
|
-
|
|||||||||||||||
12/31/16
|
|||||||||||||||||||||||||
Total
|
14,700
|
7,205
|
|
$
|
38.28
|
$
|
35.77
|
7,205
|
1,185,161
|
10.1 | Loan Agreement dated as of December 9, 2016 by and among Seneca Foods Corporation, Seneca Foods, LLC, Seneca Snack Company, Green Valley Foods, LLC and certain other subsidiaries of Seneca Foods Corporation, Farm Credit East, ACA (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 9, 2016). |
31.1 | Certification of Kraig H. Kayser pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
31.2 | Certification of Timothy J. Benjamin pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
32 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
101 | The following materials from Seneca Foods Corporation's Quarterly Report on Form 10-Q for the three and nine months ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of net earnings, (iii) condensed consolidated statements of comprehensive income, (iv) condensed consolidated statements of cash flows, (v) condensed consolidated statement of stockholders' equity and (vi) the notes to condensed consolidated financial statements. |
1.
|
I have reviewed this quarterly report on Form 10-Q of Seneca Foods Corporation;
|
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
1.
|
I have reviewed this quarterly report on Form 10-Q of Seneca Foods Corporation;
|
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |