Company Quick10K Filing
Seneca Foods
Price31.28 EPS1
Shares9 P/E27
MCap295 P/FCF3
Net Debt226 EBIT17
TEV522 TEV/EBIT31
TTM 2019-09-28, in MM, except price, ratios
10-Q 2019-12-28 Filed 2020-02-05
10-Q 2019-09-28 Filed 2019-11-06
10-Q 2019-06-29 Filed 2019-08-07
10-K 2019-03-31 Filed 2019-06-13
10-Q 2018-12-29 Filed 2019-02-01
10-Q 2018-09-29 Filed 2018-11-09
10-Q 2018-06-30 Filed 2018-07-31
10-K 2018-03-31 Filed 2018-06-29
10-Q 2017-12-30 Filed 2018-01-25
10-Q 2017-09-30 Filed 2017-10-26
10-Q 2017-07-01 Filed 2017-07-31
10-K 2017-03-31 Filed 2017-05-25
10-Q 2016-12-31 Filed 2017-01-25
10-Q 2016-10-01 Filed 2016-11-07
10-Q 2016-07-02 Filed 2016-07-29
10-K 2016-03-31 Filed 2016-06-08
10-Q 2015-12-26 Filed 2016-02-02
10-Q 2015-09-26 Filed 2015-11-02
10-Q 2015-06-27 Filed 2015-07-31
10-K 2015-03-31 Filed 2015-06-09
10-Q 2014-12-27 Filed 2015-02-02
10-Q 2014-09-27 Filed 2014-10-23
10-Q 2014-06-28 Filed 2014-08-06
10-K 2014-03-31 Filed 2014-05-22
10-Q 2013-12-28 Filed 2014-01-29
10-Q 2013-09-28 Filed 2013-10-23
10-Q 2013-06-29 Filed 2013-08-01
10-K 2013-03-31 Filed 2013-05-23
10-Q 2012-12-29 Filed 2013-01-31
10-Q 2012-09-29 Filed 2012-10-25
10-Q 2012-06-30 Filed 2012-08-03
10-K 2012-03-31 Filed 2012-06-08
10-Q 2011-12-31 Filed 2012-01-27
10-Q 2011-10-01 Filed 2011-10-27
10-Q 2011-07-02 Filed 2011-08-03
10-K 2011-03-31 Filed 2011-05-26
10-Q 2011-01-01 Filed 2011-01-27
10-Q 2010-10-02 Filed 2010-10-28
10-Q 2010-07-03 Filed 2010-08-04
10-K 2010-03-31 Filed 2010-05-26
10-Q 2009-12-26 Filed 2010-02-02
8-K 2020-02-05 Earnings, Officers, Exhibits
8-K 2019-11-06 Earnings, Exhibits
8-K 2019-08-22 Accountant, Exhibits
8-K 2019-08-07 Earnings, Exhibits
8-K 2019-08-07 Shareholder Vote
8-K 2019-06-13 Earnings, Exhibits
8-K 2019-05-09 Enter Agreement, Exhibits
8-K 2018-12-29 Earnings, Exhibits
8-K 2018-12-07 Officers
8-K 2018-11-09 Earnings, Exhibits
8-K 2018-08-10 Other Events
8-K 2018-07-31 Earnings, Exhibits
8-K 2018-07-27 Shareholder Vote
8-K 2018-06-29 Earnings, Exhibits
8-K 2018-06-28 Amendment
8-K 2018-02-16 Exit Costs, Impairments, Exhibits
8-K 2018-01-25 Earnings, Exhibits

SENEA 10Q Quarterly Report

Item 2 Managements Discussion and Analysis
Item 3 Quantitative and Qualitative Disclosures About Market Risk
Item 4 Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex_170362.htm
EX-31.2 ex_170363.htm
EX-32 ex_170364.htm

Seneca Foods Earnings 2019-12-28

Balance SheetIncome StatementCash Flow
1.31.00.80.50.30.02012201420172020
Assets, Equity
0.50.40.30.10.0-0.12012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22012201420172020
Ops, Inv, Fin

10-Q 1 senea20200124_10q.htm FORM 10-Q senea20200124_10q.htm
 

 

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D. C. 20549

 

Form 10-Q

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarter Ended December 28, 2019

Commission File Number 0-01989

 

Seneca Foods Corporation

(Exact name of Company as specified in its charter)

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)

 

Company's telephone number, including area code 315/926-8100

 

Not Applicable

Former name, former address and former fiscal year,

if changed since last report

 

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

 

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

 

Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and an emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☐ Accelerated filer ☑ Non-accelerated filer ☐ Smaller reporting company ☑
Emerging growth company ☐      

 

Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No  ☑

 

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

 

 

 

 

 

Name of Exchange on

Title of Each Class      Trading Symbol   Which Registered
Common Stock Class A, $.25 Par   SENEA   NASDAQ Global Market
Common Stock Class B, $.25 Par   SENEB   NASDAQ Global Market

 

The number of shares outstanding of each of the issuer's classes of common stock at the latest practical date are:

 

Class

Shares Outstanding at January 24, 2020

Common Stock Class A, $.25 Par

7,418,535

Common Stock Class B, $.25 Par

1,735,636

 

 

 

 

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 28, 2019, December 29, 2018 and March 31, 2019

   1

     
 

Condensed Consolidated Statements of Net Earnings-Three and Nine Months Ended December 28, 2019 and , December 29, 2018

2
     
 

Condensed Consolidated Statements of Comprehensive Income-Three and Nine Months Ended December 28, 2019 and , December 29, 2018

2
     
 

Condensed Consolidated Statements of Cash Flows-Nine Months Ended December 28, 2019 and , December 29, 2018

3
     
 

Condensed Consolidated Statement of Stockholders' Equity-Three and Nine Months Ended December 28, 2019

4
     
 

Notes to Condensed Consolidated Financial Statements

 6

     

Item 2 

Management's Discussion and Analysis of Financial Condition and Results of Operations

17
     

Item 3 

Quantitative and Qualitative Disclosures about Market Risk

   23

     

Item 4 

Controls and Procedures

   24

     

PART II

OTHER INFORMATION

 
     

Item 1

Legal Proceedings

   25

     

Item 1A

Risk Factors

   25

     

Item 2 

Unregistered Sales of Equity Securities and Use of Proceeds

   25

     

Item 3

Defaults Upon Senior Securities

   25

     

Item 4

Mine Safety Disclosures

   25

     

Item 5

Other Information

   25

 

   

Item 6 

Exhibits

   25

     

SIGNATURES

 26

 

 
 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Per Share Data)

 

   

Unaudited

   

Unaudited

         
   

December 28,

2019

   

December 29,

2018

   

March 31,

2019

 

ASSETS

                       
                         

Current Assets:

                       

Cash and Cash Equivalents

  $ 13,858     $ 12,828     $ 11,480  

Accounts Receivable, Net

    79,040       82,892       84,122  

Contracts Receivable

    7,620       -       -  

Current Assets Held For Sale

    -       20,339       1,568  

Current Assets Held For Sale-Discontinued Operations

    98       12,063       98  

Inventories

    493,065       575,935       501,684  

Refundable Income Taxes

    -       1,422       1,221  

Other Current Assets

    6,272       4,520       3,075  

Total Current Assets

    599,953       709,999       603,248  

Property, Plant and Equipment, Net

    219,311       246,014       239,273  

Right-of-Use Assets Operating Net

    67,915       -       -  

Right-of-Use Assets Financing, Net

    34,784       -       -  

Deferred Income Taxes, Net

    -       1,417       2,417  

Noncurrent Assets Held For Sale-Discontinued Operations

    1,054       1,739       1,143  

Other Assets

    9,643       2,890       2,801  

Total Assets

  $ 932,660     $ 962,059     $ 848,882  
                         

LIABILITIES AND STOCKHOLDERS' EQUITY

                       
                         

Current Liabilities:

                       

Accounts Payable

  $ 84,295     $ 93,586     $ 61,024  

Deferred Revenue

    12,105       6,829       4,098  

Accrued Vacation

    11,898       11,404       11,678  

Accrued Payroll

    6,157       5,350       5,105  

Other Accrued Expenses

    19,903       22,194       19,363  

Income Taxes Payable

    4,869       -       -  

Current Liabilities Held For Sale

    -       142       61  

Current Liabilities Held For Sale-Discontinued Operations

    2,744       8,697       4,285  

Current Portion of Operating Lease Obligations

    24,430       -       -  

Current Portion of Financing Lease Obligations

    6,584       -       -  

Current Portion of Capital Lease Obligations

    -       5,922       6,418  

Current Portion of Long-Term Debt

    -       314,657       345  

Total Current Liabilities

    172,985       468,781       112,377  

Long-Term Debt, Less Current Portion

    225,337       10,715       265,900  

Operating Lease Obligations, Less Current Portion

    47,965       -       -  

Financing Lease Obligations, Less Current Portion

    27,007       -       -  

Capital Lease Obligations, Less Current Portion

    -       29,730       31,286  

Pension Liabilities

    19,463       27,356       17,349  

Deferred Income Taxes, Net

    866       -       -  

Noncurrent Liabilities Held For Sale

    -       593       305  

Other Long-Term Liabilities

    3,852       4,851       4,180  

Total Liabilities

    497,475       542,026       431,397  

Commitments and Contingencies

                       

Stockholders' Equity:

                       

Preferred Stock

    703       707       707  

Common Stock, $.25 Par Value Per Share

    3,040       3,038       3,039  

Additional Paid-in Capital

    98,338       98,236       98,260  

Treasury Stock, at Cost

    (87,194 )     (74,896 )     (75,740 )

Accumulated Other Comprehensive Loss

    (18,285 )     (25,186 )     (18,285 )

Retained Earnings

    438,583       418,134       409,504  

Total Stockholders' Equity

    435,185       420,033       417,485  

Total Liabilities and Stockholders’ Equity

  $ 932,660     $ 962,059     $ 848,882  

 

 

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 28,

2019

   

December 29,

2018

   

December 28,

2019

   

December 29,

2018

 
                                 

Net Sales

  $ 392,971     $ 372,238     $ 1,027,898     $ 936,991  
                                 

Costs and Expenses:

                               

Cost of Product Sold

    340,694       374,334       932,392       911,291  

Selling, General and Administrative

    19,986       19,389       53,936       55,432  

Plant Restructuring Charge

    793       1,396       6,745       2,279  

Other Operating (Income) Loss

    (1,617 )     776       (8,618 )     (3,498 )

Total Costs and Expenses

    359,856       395,895       984,455       965,504  

Operating Income (Loss)

    33,115       (23,657 )     43,443       (28,513 )

Other Income

    (1,656 )     (607 )     (5,263 )     (2,649 )

Interest Expense, Net

    2,690       3,864       9,183       11,587  

Earnings (Loss) From Continuing Operations Before Income Taxes

    32,081       (26,914 )     39,523       (37,451 )

Income Taxes (Benefit) From Continuing Operations

    7,653       (6,874 )     9,357       (9,617 )

Earnings (Loss) From Continuing Operations

    24,428       (20,040 )     30,166       (27,834 )

Earnings From Discontinued Operations (net of income taxes)

    955       34,056       955       42,211  

Net Earnings

  $ 25,383     $ 14,016     $ 31,121     $ 14,377  
                                 

Basic Earnings (Loss) per Common Share:

                               

Continuing Operations

  $ 2.65     $ (2.07 )   $ 3.23     $ (2.86 )

Discontinued Operations

  $ 0.10     $ 3.52     $ 0.10     $ 4.34  

Net Basic Earnings per Common Share

  $ 2.75     $ 1.45     $ 3.33     $ 1.48  
                                 

Diluted Earnings (Loss) per Common Share:

                               

Continuing Operations

  $ 2.63     $ (2.07 )   $ 3.20     $ (2.86 )

Discontinued Operations

  $ 0.10     $ 3.50     $ 0.10     $ 4.31  

Net Diluted Earnings per Common Share

  $ 2.73     $ 1.43     $ 3.31     $ 1.45  

 

 

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 28,

2019

   

December 29,

2018

   

December 28,

2019

   

December 29,

2018

 
                                 

Comprehensive income:

                               

Net earnings

  $ 25,383     $ 14,016     $ 31,121     $ 14,377  

Change in pension, post retirement benefits and other (net of tax)

    -       17       -       119  

Total

  $ 25,383     $ 14,033     $ 31,121     $ 14,496  

 

 

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 28,

2019

   

December 29,

2018

 

Cash Flows from Operating Activities:

               

Net Earnings (Loss) From Continuing Operations

  $ 30,166     $ (27,834 )

Net Earnings From Discontinued Operations (Net of Tax)

    955       42,211  
                 

Adjustments to Reconcile Net Earnings (Loss) to

               

Net Cash Provided By Operations:

               

Depreciation & Amortization

    22,644       23,550  

Gain on the Sale of Assets

    (9,049 )     (55,863 )

Provision for Restructuring and Impairment

    5,573       6,537  

Deferred Income Tax Benefit

    3,283       4,159  

Changes in Operating Assets and Liabilities:

               

Accounts Receivable

    (2,538 )     (5,537 )

Inventories

    8,619       52,836  

Other Current Assets

    (3,197 )     (8,353 )

Income Taxes

    6,763       (280 )

Accounts Payable, Accrued Expenses and Other Liabilities

    52,101       15,004  

Net Cash Provided By Operations

    115,320       46,430  

Cash Flows from Investing Activities:

               

Additions to Property, Plant and Equipment

    (47,681 )     (30,468 )

Proceeds from the Sale of Assets

    22,175       84,975  

Net Cash (Used In) Provided By Investing Activities

    (25,506 )     54,507  

Cash Flows from Financing Activities:

               

Long-Term Borrowing

    401,053       419,102  

Payments on Long-Term Debt and Lease Obligations

    (465,099 )     (517,187 )

Other Assets

    (7,125 )     226  

Payments on Financing Leases

    (4,799 )     -  

Purchase of Treasury Stock

    (11,454 )     (5,340 )

Dividends

    (12 )     (12 )

Net Cash Used In Financing Activities

    (87,436 )     (103,211 )
                 

Net Increase (Decrease) in Cash and Cash Equivalents

    2,378       (2,274 )

Cash and Cash Equivalents, Beginning of the Period

    11,480       15,102  

Cash and Cash Equivalents, End of the Period

  $ 13,858     $ 12,828  
                 

Supplemental Disclosures of Cash Flow Information:

               

Noncash Transactions:

               

Property, Plant and Equipment Purchased Under Lease Obligations

  $ 9,782     $ 258  

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

(In Thousands)

 

                                   

Accumulated

         
                   

Additional

           

Other

         
   

Preferred

   

Common

   

Paid-In

   

Treasury

   

Comprehensive

   

Retained

 
   

Stock

   

Stock

   

Capital

   

Stock

   

Loss

   

Earnings

 

First Quarter FY 2020:

                                               

Balance March 31, 2019

  $ 707     $ 3,039     $ 98,260     $ (75,740 )   $ (18,285 )   $ 409,504  

Net earnings

    -       -       -       -       -       1,103  

Cash dividends paid on preferred stock

    -       -       -       -       -       (12 )

Equity incentive program

    -       -       25       -       -       -  

Purchase treasury stock

    -       -       -       (2,744 )     -       -  

Operating lease impairment adjustment upon the adoption of ASU 2016-02 "Leases" (net of tax)

    -       -       -       -       -       (2,019 )

Balance June 29, 2019

  $ 707     $ 3,039     $ 98,285     $ (78,484 )   $ (18,285 )   $ 408,576  

Second Quarter FY 2020:

                                               

Net earnings

    -       -       -       -       -       4,635  

Equity incentive program

    -       -       25       -       -       -  

Preferred stock conversion

    (4 )     1       3       -       -       -  

Purchase treasury stock

    -       -       -       (5,836 )     -       -  

Balance September 28, 2019

  $ 703     $ 3,040     $ 98,313     $ (84,320 )   $ (18,285 )   $ 413,211  

Third Quarter FY 2020:

                                               

Net earnings

    -       -       -       -       -       25,383  

Cash dividends paid on preferred stock

    -       -       -       -       -       (11 )

Equity incentive program

    -       -       25       -       -       -  

Purchase treasury stock

    -       -       -       (2,874 )     -       -  

Balance December 28, 2019

  $ 703     $ 3,040     $ 98,338     $ (87,194 )   $ (18,285 )   $ 438,583  
                                                 

First Quarter FY 2019:

                                               

Balance March 31, 2018

  $ 707     $ 3,038     $ 98,161     $ (69,556 )   $ (25,067 )   $ 403,780  

Net loss

    -       -       -       -       -       (8,755 )

Cash dividends paid on preferred stock

    -       -       -       -       -       (12 )

Equity incentive program

    -       -       25       -       -       -  

Change in pension, post retirement benefits, other (net of tax)

    -       -       -       -       (51 )     -  

Balance June 30, 2018

  $ 707     $ 3,038     $ 98,186     $ (69,556 )   $ (25,118 )   $ 395,013  

Second Quarter FY 2019:

                                               

Net earnings

    -       -       -       -       -       9,116  

Equity incentive program

    -       -       25       -       -       -  

Purchase treasury stock

    -       -       -       (1,579 )     -       -  

Change in pension, post retirement benefits, other (net of tax)

    -       -       -       -       (51 )     -  

Balance September 29, 2018

  $ 707     $ 3,038     $ 98,211     $ (71,135 )   $ (25,169 )   $ 404,129  

Third Quarter FY 2019:

                                               

Net earnings

    -       -       -       -       -       14,016  

Cash dividends paid on preferred stock

    -       -       -       -       -       (11 )

Equity incentive program

    -       -       25       -       -       -  

Purchase treasury stock

    -       -       -       (3,761 )     -       -  

Change in pension, post retirement benefits, other (net of tax)

    -       -       -       -       (17 )     -  

Balance December 29, 2018

  $ 707     $ 3,038     $ 98,236     $ (74,896 )   $ (25,186 )   $ 418,134  

 

 

             
   

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 28, 2019

    200,000       1,400,000       37,155       500       20,000,000       10,000,000  

Shares outstanding:

                                               

December 28, 2019

    200,000       807,240       37,155       500       7,416,735       1,735,636  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

 

1.

Unaudited Condensed Consolidated Financial Statements

 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly the financial position of Seneca Foods Corporation (the “Company”) as of December 28, 2019 and December 29, 2018 results of its operations and its cash flows for the interim periods presented. All significant intercompany transactions and accounts have been eliminated in consolidation. The March 31, 2019 balance sheet was derived from the audited consolidated financial statements.

 

The results of operations for the three and nine month periods ended December 28, 2019 are not necessarily indicative of the results to be expected for the full year.


During the nine months ended December 28, 2019, the Company sold on a gross basis including casing and labeling and future warehousing $116,515,000 of Green Giant finished goods inventory to B&G Foods, Inc. for cash, on a bill and hold basis, as compared to $65,741,000 for the nine months ended December 29, 2018. Under the terms of the bill and hold agreement, title to the specified inventory transferred to B&G. Under the new revenue recognition standard, this contract qualifies for bill and hold accounting treatment as the Company has concluded that control of the unlabeled products transfers to the customer at the time title transfers and the Company has the right to payment (prior to physical delivery), which results in earlier revenue recognition. Labeling and storage services that are provided after control of the goods has transferred to the customer are accounted for as separate performance obligations for which revenue is deferred until the services are performed.

 

The accounting policies followed by the Company are set forth in Note 1 to the Company's Consolidated Financial Statements in the Company’s 2019 Annual Report on Form 10-K.

 

Other footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company's 2019 Annual Report on Form 10-K.

 

All references to years are fiscal years ended or ending March 31 unless otherwise indicated. Certain percentage tables may not foot due to rounding.

 

Reclassifications—Certain previously reported amounts have been reclassified to conform to the current period classification.

 

 

2.

Discontinued Operations

 

On July 13, 2018, the Company executed a nonbinding letter of intent with a perspective buyer of the Modesto facility. On October 9, 2018, the Company closed on the sale of the facility to this outside buyer with net proceeds of $63,326,000. During the second quarter of fiscal 2019, the Company ceased use of the Modesto facility. Based on its magnitude of revenue to the Company (approximately 15%) and because the Company was exiting the production of peaches, this sale represented a significant strategic shift that has a material effect on the Company’s operations and financial results. Accordingly, the Company has applied discontinued operations treatment for this sale as required by Accounting Standards Codification 210-05—Discontinued Operations. This business we are exiting is part of the Fruit and Vegetable segment.

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

The following table presents information related to the major classes of assets and liabilities of Modesto that are classified as Held For Sale-Discontinued Operations in the Company's Consolidated Condensed balance sheets (in thousands):

 

   

December 28

   

December 29

   

March 31

 
   

2019

   

2018

   

2019

 

Accounts Receivable

  $ -     $ 1,441     $ -  

Inventories

    -       4,645       -  

Other Current Assets

    98       5,977       98  
                         

Current Assets Held For Sale-Discontinued Operations

  $ 98     $ 12,063     $ 98  
                         

Other Assets

  $ 1,054     $ 1,739     $ 1,143  
                         

Noncurrent Assets Held For Sale-Discontinued Operations

  $ 1,054     $ 1,739     $ 1,143  
                         

Accounts Payable and Accrued Expenses

  $ 2,744     $ 8,697     $ 4,285  
                         
   Current Liabilities Held For Sale-Discontinued Operations   $ 2,744     $ 8,697     $ 4,285  
                         

 

The operating results of the discontinued operations that are reflected in the Unaudited Condensed Consolidated Statements of Net Earnings (Loss) from discontinued operations are as follows (in thousands):

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 28

   

December 29

   

December 28

   

December 29

 
   

2019

   

2018

   

2019

   

2018

 
                                 

Net Sales

  $ -     $ 1,644     $ -     $ 111,693  
                                 

Costs and Expenses:

                               
                                 

Cost of Product Sold

    57       5,796       57       129,872  

Selling, General and Administrative

    -       137       -       1,135  

Plant Restructuring (Credit) Charge (a)

    (902 )     854       (902 )     4,350  

Interest Expense (b)

    -       -       -       1,077  

Total cost and expenses

    (845 )     6,787       (845 )     136,434  

Loss From Discontinued Operations Before Income Taxes

    845       (5,143 )     845       (24,741 )

Gain on the Sale of Assets Before Income Taxes (c) (d)

    (430 )     (50,411 )     (430 )     (80,677 )

Income Tax Expense

    320       11,212       320       13,725  

Net Earnings From Discontinued Operations, Net of Tax

  $ 955     $ 34,056     $ 955     $ 42,211  
                                 

Supplemental Information on Discontinued Operations:

                               

Capital Expenditures

    -       -       -       3,937  

Depreciation

    -       7       -       1,302  

 

  (a) 

Includes $902,000 credit for pension termination in both the three and nine month periods of the current year.

   

Includes $278,000 and $3,579,000 of Modesto severance in the three and nine month periods of prior year, respectively.

  (b) 

Includes interest on debt directly related to Modesto including the building mortgage and equipment capital leases and an allocation of the Company's line of credit facilty.

  (c) 

Includes a $24,211,000 gain from LIFO layer liquidations from the disposal of the inventory for both prior three and nine months.

  (d) 

Includes a $4,975,000 gain on the sale of bins for the prior nine months period.

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

 

3.

Revenue Recognition

 

In the following table, segment revenue is disaggregated by product category groups (in millions).

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 28,

2019

   

December 29,

2018

   

December 28,

2019

   

December 29,

2018

 

Canned Vegetables

  $ 251.4     $ 259.5     $ 657.3     $ 631.1  

B&G*

    48.7       27.7       117.5       66.7  

Frozen

    27.8       29.7       72.3       87.5  

Fruit Products

    32.2       27.2       81.8       70.7  

Chip Products

    2.9       2.5       8.9       7.7  

Prepared Foods

    25.5       22.0       78.9       59.2  

Other

    4.5       3.6       11.2       14.1  
    $ 393.0     $ 372.2     $ 1,027.9     $ 937.0  

 

 *B&G includes both canned and frozen vegetable sales exclusively for B&G.

 

 

 

4.

Inventories

 

First-In, First-Out (“FIFO”) based inventory costs exceeded LIFO based inventory costs by $153,884,000 as of the end of the third quarter of fiscal 2020 as compared to $160,727,000 as of the end of the third quarter of fiscal 2019. The change in the LIFO Reserve for the three months ended December 28, 2019 was a decrease of $11,337,000 as compared to an increase of $25,776,000 for the three months ended December 29, 2018.

 

The change in the LIFO Reserve for the nine months ended December 28, 2019 was a decrease of $7,457,000 as compared to an increase of $15,722,000 for the nine months ended December 29, 2018. The prior year-to-date decrease includes a decrease of $24,211,000 related to the LIFO impact of gain on sale of Modesto Fruit which is included in Other Operating Income under Discontinued Operations. The $15,722,000 also includes an increase of $39,933,000 related to Continuing Operations included in Cost of Product Sold. This reflects the projected impact of the disposal of Modesto Fruit partially offset by an overall cost increase expected in fiscal 2020 versus fiscal 2019.

 

   

December 28,

2019

   

December 29,

2018

   

March 31,

2019

 
In Thousands                        
                         

Finished products

  $ 465,306     $ 557,652     $ 454,920  

In process

    34,685       41,100       42,045  

Raw materials and supplies

    146,958       137,910       166,060  
      646,949       736,662       663,025  

Less excess of FIFO cost over LIFO cost

    153,884       160,727       161,341  

Total inventories

  $ 493,065     $ 575,935     $ 501,684  

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

 

5.

Leases

 

The Company determines if an arrangement is a lease at inception of the agreement. Operating leases are included in right-of-use operating assets, and current and noncurrent operating lease obligations in the Company’s Condensed Consolidated Balance Sheets. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. If the lease does not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The right-of-use operating lease assets also include in its calculation any prepaid lease payments made and excludes any lease incentives received from the arrangement. The Company’s lease terms may include options to extend or terminate the lease, and the impact of these options are included in the lease liability and lease asset calculations when the exercise of the option is at the Company’s sole discretion and it is reasonably certain that the Company will exercise that option. The Company will not separate lease and nonlease components for its leases when it is impractical to separate the two, such as leases with variable payment arrangements. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

 

The Company has operating leases for land, machinery and equipment. The Company also has finance leases for machinery and equipment. The commencement date used for the calculation of the lease obligation is the latter of the commencement date of the new standard (April 1, 2019) or the lease start date. Certain of the leases have options to extend the life of the lease, which are included in the liability calculation when the option is at the sole discretion of the Company and it is reasonably certain that the Company will exercise the option. In addition, the Company has certain leases that have variable payments based solely on output or usage of the leased asset. These variable operating lease assets are excluded from the Company’s balance sheet presentation and expensed as incurred. Leases with an initial term of 12 months or less are not material. The Company currently has finance leases which were accounted for as capital leases under the previous standard and were unchanged as a result of this standard implementation.

 

Upon adoption of ASU 2016-02, the Company determined its right-of-use assets related to the operating leases for its plant equipment in Sunnyside, Washington were partially impaired and therefore were reduced with a corresponding charge to retained earnings of $2,019,000 (which is net of tax). The estimated lives of these assets will be shortened due to the planned closure of the facility after the year’s pack.

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense were as follows (In thousands):

 

   

Three Months

   

Nine Months

 
   

December 28, 2019

   

December 28, 2019

 
                 

Lease cost:

               
                 

Amortization of right of use asset

  $ 1,084     $ 3,191  

Interest on lease liabilities

    321       1,033  

Finance lease cost

    1,405       4,224  

Operating lease cost

    7,545       23,234  

Total lease cost

  $ 8,950     $ 27,458  
                 

Cash paid for amounts included in the measurement of lease liabilities

               

Operating cash flows from finance leases

          $ 1,033  

Operating cash flows from operating leases

            24,531  

Financing cash flows from finance leases

            4,799  

Total

          $ 30,363  
                 

Right-of-use assets obtained in exchange for new finance lease liabilities

          $ 3,697  

Right-of-use assets obtained in exchange for new operating lease liabilities

          $ 6,085  

Weighted-average lease term (years):

               

Financing leases

            5.4  

Operating leases

            3.9  

Weighted-average discount rate (percentage):

               

Financing leases

            4.2  

Operating leases

            4.6  

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

Undiscounted future lease payments under non-cancelable operating leases and financial leases, along with a reconciliation of undiscounted cash flows to operating and financing lease liabilities, respectively, as of December 28, 2019 (in thousands) were as follows:

 

Years ending March 31:

   

Operating

   

Financing

 

Balance of 2020

    $ 5,435     $ 1,945  

2021

      26,301       7,782  

2022

      19,683       7,782  

2023

      13,446       7,782  

2024

      6,496       6,064  
 2025-2031       7,516       6,161  

Total minimum payment required

    $ 78,877     $ 37,516  

Less interest

      6,481       3,926  

Present value of minimum lease payments

      72,396       33,590  

Amount due within one year

      24,430       6,584  

Long-term capital lease obligation

    $ 47,966     $ 27,006  

 

As the Company has not restated prior year information for its adoption of ASC Topic 842, the following presents its future minimum lease payments for operating and capital leases under ASC Topic 840 on March 31, 2019:

 

Years ending March 31:

   

Operating

   

Capital

 

2020

    $ 28,689     $ 7,827  

2021

      24,938       7,827  

2022

      17,526       7,827  

2023

      12,062       7,827  

2024

      5,950       6,102  
2025-2031       6,927       5,267  

Total minimum payment required

    $ 96,092     $ 42,677  

Less interest

              4,973  

Present value of minimum lease payments

              37,704  

Amount due within one year

              6,418  

Long-term capital lease obligation

            $ 31,286  

 

 

6.

Revolving Credit Facility

 

The Company has a five-year revolving credit facility (“Revolver”) with maximum borrowings totaling $400,000,000 from April through July and $500,000,000 from August through March and the Revolver matures on July 5, 2021. The Revolver balance as of December 28, 2019 was $114,689,000 and is included in Long-Term Debt in the accompanying Condensed Consolidated Balance Sheet. The Company utilizes its Revolver for general corporate purposes, including seasonal working capital needs, to pay debt principal and interest obligations, and to fund capital expenditures and acquisitions. Seasonal working capital needs are affected by the growing cycles of the vegetables and fruits the Company processes. The majority of vegetable and fruit inventories are produced during the months of June through November and are then sold over the following year. Payment terms for vegetable and fruit produce are generally three months but can vary from a few days to seven months. Accordingly, the Company’s need to draw on the Revolver may fluctuate significantly throughout the year.

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

The decrease in the reported average outstanding Revolver borrowings during the first nine months of fiscal 2020 compared to the first nine months of fiscal 2019 was attributable to the sale of various Company facilities during the period.

 

General terms of the Revolver include payment of interest at LIBOR plus a defined spread.

 

The following table documents the quantitative data for Revolver borrowings during the third quarter and year-to-date of fiscal 2020 and fiscal 2019:

 

   

Third Quarter

   

Year-to-Date

 
   

2020

   

2019

   

2020

   

2019

 
   

(In thousands)

   

(In thousands)

 

Reported end of period:

                               

Outstanding borrowings

  $ 114,689     $ 214,161     $ 114,689     $ 214,161  

Weighted average interest rate

    3.27

%

    4.02

%

    3.27

%

    4.02

%

Reported during the period:

                               

Maximum amount of borrowings

  $ 137,418     $ 242,947     $ 151,477     $ 294,062  

Average outstanding borrowings

  $ 115,626     $ 192,323     $ 127,078     $ 225,345  

Weighted average interest rate

    3.40

%

    3.86

%

    3.75

%

    3.64

%

 

 

7.

Stockholders’ Equity

 

During the nine-month period ended December 28, 2019 the Company repurchased $7,571,000 of its Class A Common Stock and $3,883,000 of Class B Common Stock as Treasury Stock. As of December 28, 2019, there are 3,008,762 shares or $87,194,000 of repurchased stock. These shares are not considered outstanding.

 

 

8.

Retirement Plans

 

The net periodic benefit cost for the Company’s pension plan consisted of:

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 28,

2019

   

December 29,

2018

   

December 28,

2019

   

December 29,

2018

 
   

(In thousands)

 

Service Cost

  $ 2,283     $ 1,831     $ 6,848     $ 6,716  

Interest Cost

    2,316       2,362       6,947       6,848  

Expected Return on Plan Assets

    (3,957 )     (3,593 )     (11,870 )     (10,785 )

Amortization of Prior Service Cost

    30       30       90       90  

Amortization of Net Loss

    29       593       87       1,198  

Net Periodic Benefit Cost

  $ 701     $ 1,223     $ 2,102     $ 4,067  

 

There were no contributions to the pension plan in the three and nine month periods ended December 28, 2019 and December 29, 2018, respectively.

 

Effective January 1, 2020, the Company closed its defined benefit pension plan to new participants. Employees excluded from the pension plan have a 3% match opportunity in the 401(k) plan.

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

 

9.

Plant Restructuring

 

The following table summarizes the rollforward of continuing restructuring charges and related asset impairment charges recorded and the accruals established:

 

    Restructuring Payable  
   

Severance

   

Other Costs

   

Total

 
   

(In thousands)

 
                         

Balance March 31, 2019

  $ 225     $ 1     $ 226  

First quarter charge

    586       4,220       4,806  

Second quarter charge

    386       760       1,146  

Third quarter charge

    28       765       793  

Cash payments/write offs

    (1,145 )     (5,746 )     (6,891 )

Balance December 28, 2019

  $ 80     $ -     $ 80  

 

   

Severance

   

Other Costs

   

Total

 
   

(In thousands)

 
                         

Balance March 31, 2018

  $ -     $ -     $ -  

First quarter charge

    110       (72 )     38  

Second quarter charge

    845       -       845  

Third quarter charge

    378       1,018       1,396  

Cash payments/write offs

    (976 )     72       (904 )

Balance December 29, 2018

  $ 357     $ 1,018     $ 1,375  

 

During the nine months ended December 28, 2019 the Company recorded a restructuring charge of $6,745,000 related to the closing of plants in the Midwest and Northwest of which $5,266,000 was for accelerated amortization of right-of-use operating lease assets, $2,354,000 was mostly related to equipment moves and $1,000,000 was related to severance. The Company also recorded a credit of $1,875,000 for the reduced lease liability of previously impaired leases.

 

During the nine months ended December 29, 2018, the Company recorded a restructuring charge of $2,279,000 related to the closing and sale of plants in the East and Northwest of which $1,333,000 was related to severance cost, and $946,000 which was related to other costs (mostly equipment moves).

 

 

10.

Other Operating Income and Expense

 

During the nine months ended December 28, 2019 the Company recorded a gain on the partial sale of a plant in the Midwest of $3,742,000 and a gain on the partial sale of a plant in the Northwest of $1,737,000. The Company also recorded a gain of on the sale of unused fixed assets of $3,139,000.

 

During the nine months ended December 29, 2018, the Company sold unused fixed assets which resulted in a gain of $3,920,000 mostly related to the sale of a closed plant in the Midwest. These items are included in other operating income (loss) in the Unaudited Condensed Consolidated Statements of Net Earnings.

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

 

11.

Recently Issued Accounting Standards

 

In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. In July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements – Leases (Topic 842)." This update provides an optional transition method that allows entities to elect to apply the standard retrospectively at the beginning of the period of adoption, versus recasting the prior periods presented. If elected, an entity would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This guidance is effective for annual periods beginning after December 15, 2018. We adopted ASU 2016-02 as of April 1, 2019, using the optional transition method provided by ASU 2018-11.  The standard resulted in the initial recognition of $88,333,000 of total operating lease assets and $91,025,000 of net operating lease liabilities and a net adjustment to retained earnings totaling $2,019,000 ($2,692,000 less tax effect of $673,000) on the Condensed Consolidated Balance Sheet on April 1, 2019. The standard did not materially impact the Condensed Consolidated Statement of Income or Condensed Consolidated Statement of Cash Flows. At adoption, the Company recorded an adjustment to retained earnings of $2,019,000, which includes an impairment loss that was related to a Northwest plant impairment which was incurred in March 2019 just prior to adoption of this standard. The disclosures required by the recently adopted accounting standard are included in Note 5 of the Notes to the Condensed Consolidated Financial Statements.

 

In August 2018, the FASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for defined benefit pension plans and other postretirement plans. ASU 2018-14 is effective for annual periods beginning after December 15, 2020, with early adoption permitted. The amendments in this ASU should be applied on a retrospective basis to all periods presented. We are currently evaluating the effect that ASU 2018-14 will have on our condensed consolidated financial statements and related disclosures.

 

There were no other recently issued accounting pronouncements that impacted the Company’s condensed consolidated financial statements. In addition, the Company did not adopt any other new accounting pronouncements during the quarter ended December 28, 2019.

 

 

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 28, 2019

 

 

12.

Earnings per Common Share From Continuing Operations

 

Earnings per share for the three and nine months ended December 28, 2019 and December 29, 2018 are as follows:

 

   

Q U A R T E R

   

Y E A R  T O  D A T E

 

(Thousands, except per share amounts)

 

Fiscal 2020

   

Fiscal 2019

   

Fiscal 2020

   

Fiscal 2019

 

Continuing Operations

                               

Basic

                               
                                 

Earnings (loss) from continuing operations

  $ 24,428     $ (20,040 )   $ 30,166     $ (27,834 )

Deduct preferred stock dividends paid

    6       6       17       17  
                                 

Undistributed earnings (loss) from continuing operations

    24,422       (20,046 )     30,149       (27,851 )

Earnings (loss) from continuing operations attributable to participating preferred

    100       (79 )     122       (109 )
                                 

Earnings (loss) from continuing operations attributable to common shareholders

  $