| 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 29, 2018 and 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, 2018
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 ninemonth 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. | The results of operations for the three and ninemonth periods ended December 29, 2018 are not necessarily indicative of the results to be expected for the full year.
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| During the nine months ended December 29, 2018, the Company sold on a gross basis including case and labeling and future warehousing of $65,741,000 of Green Giant finished goods inventory to B&G Foods, Inc. for cash, on a bill and hold basis, as compared to $112,768,000 for the nine months ended December 30, 2017. Under the terms of the bill and hold agreement, title to the specified inventory transferred to B&G. Under the new revenue recognition standard discussed in Note 4 below, 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.
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| The accounting policies followed by the Company are set forth in Note 1 to the Company's Consolidated Financial Statements in the Company’s 2018 Annual Report on Form 10-K.
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| 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 2018 Annual Report on Form 10-K.
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| All references to years are fiscal years ended or ending March 31 unless otherwise indicated. Certain percentage tables may not foot due to rounding.
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| Reclassifications—Certain previously reported amounts have been reclassified to conform to the current period classification.
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SENECA FOODS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) December 29, 201828, 2019 | As of December 29, 2018, the Company has certain operating units in the East that met the criteria to be classifed as held for sale, which requires the Company to present the related assets and liabilities as separate line items in our Condensed Consolidated Balance Sheet. The Company is required to record the assets held for sale at the lower of carrying value or fair value less costs to sell. The following table presents information related to the major classes of assets and liabilities that were held for sale in our Condensed Consolidated BalanceThe 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):
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Inventories | | $ | 10,539 | | Property, Plant and Equipment (net) | | | 9,800 | | | | | | | | Current Assets Held For Sale | | $ | 20,339 | | | | | | | | Capital Lease Obligations Current Portion | | $ | 142 | | Current Liabilities Held For Sale | | $ | 142 | | | | | | | | Capital Lease Obligations | | $ | 593 | | Noncurrent Liabilities Held For Sale | | $ | 593 | |
3.
| Discontinued Operations
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| 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. 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.
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SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 29, 2018
| 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):
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| | | December 29 | | | December 30 | | | March 31 | | | December 28 | | | December 29 | | | March 31 | | | | | 2018 | | | 2017 | | | 2018 | | | 2019 | | | 2018 | | | 2019 | | Accounts Receivable | | $ | 1,441 | | | $ | 7,490 | | | $ | 12,586 | | | $ | - | | | $ | 1,441 | | | $ | - | | Inventories | | | 4,645 | | | | 129,738 | | | | 96,996 | | | | - | | | | 4,645 | | | | - | | Other Current Assets | | | 5,977 | | | | - | | | | 288 | | | | 98 | | | | 5,977 | | | | 98 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current Assets Held For Sale-Discontinued Operations | | $ | 12,063 | | | $ | 137,228 | | | $ | 109,870 | | | $ | 98 | | | $ | 12,063 | | | $ | 98 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other Assets | | $ | 1,739 | | | $ | 1,574 | | | $ | 1,616 | | | $ | 1,054 | | | $ | 1,739 | | | $ | 1,143 | | Property, Plant and Equipment (net) | | | - | | | | 18,608 | | | | 18,482 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Noncurrent Assets Held For Sale-Discontinued Operations | | $ | 1,739 | | | $ | 20,182 | | | $ | 20,098 | | | $ | 1,054 | | | $ | 1,739 | | | $ | 1,143 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accounts Payable and Accrued Expenses | | $ | 8,697 | | | $ | 18,338 | | | $ | 26,226 | | | $ | 2,744 | | | $ | 8,697 | | | $ | 4,285 | | Long-Term Debt and Capital Leases Current Portion | | | - | | | | 2,309 | | | | 2,347 | | | | | | | | | | | | | | | | | | Current Liabilities Held For Sale-Discontinued Operations | | $ | 8,697 | | | $ | 20,647 | | | $ | 28,573 | | | $ | 2,744 | | | $ | 8,697 | | | $ | 4,285 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Debt and Capital Lease Obligations | | $ | - | | | $ | 8,565 | | | $ | 7,964 | | | Noncurrent Liabilities Held For Sale-Discontinued Operations | | $ | - | | | $ | 8,565 | | | $ | 7,964 | | |
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 | | | Three Months Ended | | | Nine Months Ended | | | | | December 29, | | | December 30, | | | December 29, | | | December 30, | | | December 28 | | | December 29 | | | December 28 | | | December 29 | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Sales | | $ | 1,644 | | | $ | 37,547 | | | $ | 111,693 | | | $ | 123,629 | | | $ | - | | | $ | 1,644 | | | $ | - | | | $ | 111,693 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Costs and Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost of Product Sold | | | 5,796 | | | | 36,280 | | | | 129,872 | | | | 124,297 | | | | 57 | | | | 5,796 | | | | 57 | | | | 129,872 | | Selling, General and Administrative | | | 137 | | | | 910 | | | | 1,135 | | | | 2,446 | | | | - | | | | 137 | | | | - | | | | 1,135 | | Plant Restructuring Charge (a) | | | 854 | | | | - | | | | 4,350 | | | | - | | | Interest (Income) Expense (b) | | | - | | | | 537 | | | | 1,077 | | | | 1,609 | | | Plant Restructuring (Credit) Charge (a) | | | | (902 | ) | | | 854 | | | | (902 | ) | | | 4,350 | | Interest Expense (b) | | | | - | | | | - | | | | - | | | | 1,077 | | | Total cost and expenses | | | 6,787 | | | | 37,727 | | | | 136,434 | | | | 128,352 | | | | (845 | ) | | | 6,787 | | | | (845 | ) | | | 136,434 | | Loss From Discontinued Operations Before Income Taxes | | | (5,143 | ) | | | (180 | ) | | | (24,741 | ) | | | (4,723 | ) | | | 845 | | | | (5,143 | ) | | | 845 | | | | (24,741 | ) | Gain on the Sale of Assets Before Income Taxes (c) (d) (e) | | | (50,411 | ) | | | - | | | | (80,677 | ) | | | - | | | Income Tax Expense (Benefit) | | | 11,212 | | | | 977 | | | | 13,725 | | | | (814 | ) | | Net Earnings (Loss) From Discontinued Operations, Net of Tax | | $ | 34,056 | | | $ | (1,157 | ) | | $ | 42,211 | | | $ | (3,909 | ) | | 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 $278,000$902,000 credit for pension termination in both the three and $3,579,000nine month periods of the current year. | | | Includes $278,000 and $3,579,000 of Modesto severance in the three and nine month periods of fiscal 2019,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 facility.facilty. | | (c) | Includes a $24,211,000$24,211,000 gain as a result offrom LIFO layer liquidations from the disposal of the inventory for both prior three and nine months. | (d) | Includes $50,411,000 and $51,491,000 gain on the sale of Modesto plant and equipment in the three and nine month periods of fiscal 2019, respectively.
| (e)(d) | Includes a $4,975,000$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 Supplemental Information on Discontinued Operations (in thousands):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 | |
Capital Expenditures *B&G includes both canned and frozen vegetable sales exclusively for B&G.
| | | - | | | | 621 | | | | 3,937 | | | | 1,889 | | Depreciation
| | | 7 | | | | 491 | | | | 1,302 | | | | 1,583 | |
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 29, 201828, 2019 4.5.
| Revenue RecognitionLeases
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| The Company adopted Accounting Standard Codification Topic 606,Revenue from Contracts with Customers (“ASC 606”) as of April 1, 2018, utilizing the full retrospective method of transition, which requires a restatement of each prior reporting period presented. The Company implemented new policies, processes and systems to enable both the preparation of financial information and internal controls over financial reporting in connection with its adoption of ASC 606. The updated accounting policy for revenue recognition follows:
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| We manufacture and sell the following:
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private label productsThe 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 retailers,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 supermarkets, mass merchandisers,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 specialty retailers,equipment. The Company also has finance leases for resalemachinery 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 retailers’ own or controlled labels;previous standard and were unchanged as a result of this standard implementation. private label and branded productsUpon adoption of ASU 2016-02, the Company determined its right-of-use assets related to the foodservice industry, including foodservice distributorsoperating leases for its plant equipment in Sunnyside, Washington were partially impaired and national restaurant operators;
branded products under our own proprietary brands, primarily ontherefore were reduced with a national basiscorresponding charge to retailers;
branded products under co-pack agreementsretained earnings of $2,019,000 (which is net of tax). The estimated lives of these assets will be shortened due to other major branded companies for their distribution; andthe planned closure of the facility after the year’s pack.
products to our industrial customer base for repackaging in portion control packages and for use as ingredients by other food manufacturers.
| Disaggregation of revenue
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| In the following table, segment revenue is disaggregated by product category groups (in millions).
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| | | Three Months Ended | | | Nine Months Ended | | | | | December 29, 2018 | | | December 30, 2017 | | | December 29, 2018 | | | December 30, 2017 | | Canned Vegetables | | $ | 259.5 | | | $ | 224.4 | | | $ | 631.1 | | | $ | 563.2 | | B&G* | | | 27.7 | | | | 42.1 | | | | 66.7 | | | | 121.9 | | Frozen | | | 29.7 | | | | 29.0 | | | | 87.5 | | | | 80.1 | | Fruit Products | | | 27.2 | | | | 24.9 | | | | 70.7 | | | | 69.5 | | Chip Products | | | 2.5 | | | | 2.4 | | | | 7.7 | | | | 7.9 | | Prepared Foods | | | 22.0 | | | | 28.2 | | | | 59.2 | | | | 69.4 | | Other | | | 3.6 | | | | 3.9 | | | | 14.1 | | | | 11.7 | | | | | $ | 372.2 | | | $ | 354.9 | | | $ | 937.0 | | | $ | 923.7 | |
*B&G includes both canned and frozen vegetable sales exclusively for B&G under the Green Giant label.
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SENECA FOODS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) December 29, 201828, 2019 | When Performance Obligations Are Satisfied
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| A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s primary performance obligation is the production of food products and secondarily case and labeling services and storage services for certain bill and hold sales.
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| Revenue recognition is completed primarily at a point in time basis when product control is transferred to the customer. In general, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can direct the use and obtain substantially all of the remaining benefits from the asset at this point in time.
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| Customer contracts generally do not include more than one performance obligation. When a contract does contain more than one performance obligation, we allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The standalone selling price for each distinct good is generally determined by directly observable data.
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| The performance obligations in our contracts are generally satisfied within one year. As such, we have not disclosed the transaction price allocated to remaining performance obligations for labeling and storage as of December 29, 2018 which is included in deferred revenue.
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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): | Significant Payment Terms
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| Our customer contracts identify the product, quantity, price, payment and final delivery terms. Payment terms usually include early pay discounts. We grant payment terms consistent with industry standards. Although some payment terms may be more extended, no terms beyond one year are granted at contract inception. As a result, we do not adjust the promised amount of consideration for the effects of a significant financing component because the period between our transfer of a promised good or service to a customer and the customer’s payment for that good or service will be generally 30 days or less.
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| All shipping and handling costs associated with outbound freight are accounted for as fulfillment costs and are included in the cost of sales; this includes shipping and handling costs after control over a product has transferred to a customer.
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| In addition to fixed contract consideration, some contracts include some form of variable consideration. Trade promotions are an important component of the sales and marketing of the Company’s branded products, and are critical to the support of the business. Trade promotion costs, which are recorded as a reduction of sales, include amounts paid to retailers for shelf space, to obtain favorable display positions and to offer temporary price reductions for the sale of our products to consumers. Accruals for trade promotions are recorded primarily at the time of sale to the retailer based on expected levels of performance. Settlement of these liabilities typically occurs in subsequent periods primarily through an authorized process for deductions taken by a retailer from amounts otherwise due to the Company. As a result, the ultimate cost of a trade promotion program is dependent on the relative success of the events and the actions and level of deductions taken by retailers. Final determination of the permissible deductions may take extended periods of time.
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| | | 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 29, 2018 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. | Contract balancesRevolving Credit Facility
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| Contract asset and liability balances as of December 29, 2018 are immaterial. The Company does not have significant deferred revenue or unbilled receivable balances because of transactions with customers. The Company does have deferred revenue for prepaid case and labeling and storage services which have been collected from B&G for Green Giant bill and hold sales.
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| We have identified certain incremental costs to obtain a contract, primarily sales commissions, requiring capitalization under the new standard. The Company continues to expense these costs as incurred because the amortization period for the costs would have been one year or less. The Company does not incur significant fulfillment costs requiring capitalization.
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| Due to the changes in ASC 606, the December 30, 2017 inventory decreased $3.9 million and deferred revenue decreased $4.2 million. There were no material impacts to the Condensed Consolidated Statement of Cash Flows. The following table summarizes the impact of our adoption of ASC 606 on a full retrospective basis on selected Condensed Consolidated Statement of Net Earnings items.
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Condensed Consolidated Statements of Net Earnings (Loss) (in thousands)
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| | | For the Three Months Ended | | | | | December 30, 2017 | | | | | As Reported (1) | | | 606 Adjustments | | | Less Discontinued Operations | | | As Adjusted | | Net sales | | $ | 387,689 | | | $ | 4,752 | | | $ | (37,547 | ) | | $ | 354,894 | | Cost of products sold | | | 357,188 | | | | 5,208 | | | | (36,280 | ) | | | 326,116 | | Gross profit (loss) | | | 30,501 | | | | (456 | ) | | | (1,267 | ) | | | 28,778 | | Operating income (loss) | | | 10,271 | | | | (456 | ) | | | (357 | ) | | | 9,458 | | Earnings before income taxes | | | 6,259 | | | | 1,202 | | | | 180 | | | | 7,641 | | Net earnings from continuing operations | | | 4,377 | | | | 3,352 | | | | 1,157 | | | | 8,886 | |
| | | For the Nine Months Ended | | | | | December 30, 2017 | | | | | As Reported (1) | | | 606 Adjustments | | | Less Discontinued Operations | | | As Adjusted | | Net sales | | $ | 1,015,086 | | | $ | 32,276 | | | $ | (123,629 | ) | | $ | 923,733 | | Cost of products sold | | | 951,639 | | | | 32,441 | | | | (124,297 | ) | | | 859,783 | | Gross profit (loss) | | | 63,447 | | | | (165 | ) | | | 668 | | | | 63,950 | | Operating income (loss) | | | 9,475 | | | | (165 | ) | | | 3,114 | | | | 12,424 | | (Earnings) loss before income taxes | | | (1,166 | ) | | | 4,429 | | | | 4,723 | | | | 7,986 | | Net earnings from continuing operations | | | 439 | | | | 5,348 | | | | 3,909 | | | | 9,696 | |
(1The Company has a five-year revolving credit facility (“Revolver”) These reported amounts for the threewith maximum borrowings totaling $400,000,000 from April through July and nine months ended December 30, 2017 are restated amounts. See the Company's Annual Report on Form 10-K for the year ended $500,000,000 from August through March 31, 2018 which was filed on June 29, 2018 and the amended 10-Q filed September 7, 2018 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 more informationgeneral 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 restatement.Revolver may fluctuate significantly throughout the year.
SENECA FOODS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) December 29, 201828, 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 | % |
57.
| InventoriesStockholders’ 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. | First-In, First-Out (“FIFO”) based inventory costs exceeded LIFO based inventory costs by $160,727,000 as of the end of the third quarter of fiscal 2019 as compared to $152,091,000 as of the end of the third quarter of fiscal 2018. The change in the LIFO Reserve for the three months ended December 29, 2018 was an increase of $25,776,000 as compared to an increase of $994,000 (including a decrease of $274,000 related to discontinued operations) for the three months ended December 30, 2017.
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| The change in the LIFO Reserve for the nine months ended December 29, 2018 was an increase of $15,722,000 as compared to an increase of $18,835,000 for the nine months ended December 30, 2017 (including a decrease of $928,000 related to discontinued operations). The year-to-date increase includes a decrease of $24,211,000 related to the LIFO impact for the gain on sale of Modesto Fruit which is included in Other Operating Income under Discontinued Operations and it 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 which was entirely offset by an overall cost increase expected for continuing operations in fiscal 2019 versus fiscal 2018.
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68.
| Revolving Credit FacilityRetirement Plans
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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. | 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 29, 2018 was $214,161,000 and is included in Current Portion of 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.
The Company also has a $100 million unsecured term loan with Farm Credit which was in violation of an interest ratio covenant requirement at the balance sheet date, but the Company obtained a waiver for the quarter ended December 29, 2018. A more restrictive covenant must be met at March 31, 2019 and it is probable that the Company will fail to meet that requirement at that date as well unless an additional waiver or amendment is obtained. Therefore, the Company concluded that the Farm Credit term loan, as of December 29, 2018, should be classified as a current liability. In addition, the Revolver agreement contains a cross-default provision. The Revolver agreement has triggered an event of default as of December 29, 2018, due to the Farm Credit loan default. A waiver was obtained from the lender to provide temporary relief of default as of this measurement date. However, the Company believes that it is probable that the Revolver will be in default as of March 31, 2019 given the likelihood of a Farm Credit default again thus triggering a cross-default. Therefore, the Company concluded that the Revolver should be classified as a current liability as of December 29, 2018.
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SENECA FOODS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) December 29, 201828, 2019 | The decrease in the reported end of period amount of Revolver borrowings during the firstnine months of fiscal 2019 compared to the firstnine months of fiscal 2018 was attributable to Working Capital which is $390,538,000 ($181,953,000 excluding the Revolver reclassification to current) lower than the same period last year due to the Modesto disposal, partially offset by a net loss in the last twelve months ended December 29, 2018.
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| General terms of the Revolver include payment of interest at LIBOR plus a defined spread.
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| The following table documents the quantitative data for Revolver borrowings during the third quarter and year-to-date of fiscal 2019 and fiscal 2018:
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| | | Third Quarter | | | Year-to-Date | | | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | | | | (In thousands) | | | (In thousands) | | Reported end of period: | | | | | | | | | | | | | | | | | Outstanding borrowings | | $ | 214,161 | | | $ | 290,196 | | | $ | 214,161 | | | $ | 290,196 | | Weighted average interest rate | | | 4.02 | % | | | 3.04 | % | | | 4.02 | % | | | 3.04 | % | Reported during the period: | | | | | | | | | | | | | | | | | Maximum amount of borrowings | | $ | 242,947 | | | $ | 296,088 | | | $ | 294,062 | | | $ | 296,088 | | Average outstanding borrowings | | $ | 192,323 | | | $ | 280,960 | | | $ | 225,345 | | | $ | 246,414 | | Weighted average interest rate | | | 3.86 | % | | | 2.82 | % | | | 3.64 | % | | | 2.59 | % |
79.
| Stockholders’ EquityPlant Restructuring
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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). | During the nine-month period ended December 29, 2018, the Company repurchased 160,179 shares of its Class A Common Stock and 9,290 of Class B Common Stock as Treasury Stock. As of December 29, 2018, there are 2,578,565 shares or $74,896,000 of repurchased stock. These shares are not considered outstanding.
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810.
| Retirement PlansOther Operating Income and Expense
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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. | The net periodic benefit cost for the Company’s pension plan consisted of:
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| | | Three Months Ended | | | Nine Months Ended | | | | | December 29, 2018 | | | December 30, 2017 | | | December 29, 2018 | | | December 30, 2017 | | | | | (In thousands) | | Service Cost | | $ | 1,831 | | | $ | 1,981 | | | $ | 6,716 | | | $ | 5,944 | | Interest Cost | | | 2,362 | | | | 1,985 | | | | 6,848 | | | | 5,956 | | Expected Return on Plan Assets | | | (3,593 | ) | | | (3,673 | ) | | | (10,785 | ) | | | (10,640 | ) | Amortization of Prior Service Cost | | | 30 | | | | 0 | | | | 90 | | | | 0 | | Amortization of Net Gain | | | 593 | | | | 30 | | | | 1,198 | | | | 90 | | Net Periodic Benefit Cost | | $ | 1,223 | | | $ | 323 | | | $ | 4,067 | | | $ | 1,350 | |
There was none and $2,500,000 in contributions toDuring the pension plan during the three and nine month periods months ended December 29, 2018, and December 30, 2017, respectively.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 29, 201828, 2019 911.
| Plant RestructuringRecently Issued Accounting Standards
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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. | The following table summarizes the rollforward of continuing restructuring charges and the accruals established:
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| | | Restructuring Payable | | | | | Severance | | | Other Costs | | | Total | | | | | (In thousands) | | | | | | | | | | | | | | | | Balance March 31, 2018 | | $ | - | | | $ | - | | | $ | - | | First quarter charge | | | 110 | | | | - | | | | 110 | | Second quarter charge | | | 841 | | | | - | | | | 841 | | Third quarter charge | | | 378 | | | | - | | | | 378 | | Cash payments/write offs | | | (976 | ) | | | - | | | | (976 | ) | Balance December 29, 2018 | | $ | 353 | | | $ | - | | | $ | 353 | |
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. | | | Severance | | | Other Costs | | | Total | | | | | (In thousands) | | | | | | | | | | | | | | | | Balance March 31, 2017 | | $ | 37 | | | $ | 305 | | | $ | 342 | | First quarter charge | | | 36 | | | | 36 | | | | 72 | | Second quarter credit | | | - | | | | (33 | ) | | | (33 | ) | Third quarter charge | | | 98 | | | | 3 | | | | 101 | | Cash payments/write offs | | | (73 | ) | | | (311 | ) | | | (384 | ) | Balance December 30, 2017 | | $ | 98 | | | $ | - | | | $ | 98 | |
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. | 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 $1,329,000 was related to severance cost, and $950,000 which was related to other costs (mostly equipment moves).
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| During the nine months ended December 30, 2017, the Company recorded a restructuring charge of $140,000 related to the previous closing of a Northwest plant and the Company also incurred a long-lived asset impairment charge of $17,000.
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10.
| Other Operating Income and Expense
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| During the nine months ended December 29, 2018, the Company sold unused fixed assets which resulted in a gain of $3,920,000 as compared to a gain of $1,590,000 during the nine months ended December 30, 2017. The current year gain was mostly related to the sale of a closed plant in the Midwest. $1,081,000 of the prior year gain was related to the sale of a closed plant in the Midwest. In addition, the Company recorded a bargain purchase gain of $1,078,000 during the nine months ended December 30, 2017. These items are included in other operating income (loss) in the Unaudited Condensed Consolidated Statements of Net Earnings.
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SENECA FOODS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) December 29, 201828, 2019 1112.
| Recently Issued Accounting StandardsEarnings per Common Share From Continuing Operations
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Earnings per share for the three and nine months ended December 28, 2019 and December 29, 2018 are as follows: | In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with customers, now commonly referred to as Accounting Standards Codification Topic 606 (“ASC 606”). The FASB issued ASC 606 to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. ASC 606 requires the recognition of revenue when control of performance obligations as stipulated in the contracts, is transferred to a customer for an amount that reflects the consideration the entity expects to receive in exchange for promised goods and services.
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| The Company adopted ASC 606 as of April 1, 2018, utilizing the full retrospective method of transition, which requires a restatement of each prior reporting period presented. In adopting ASC 606, the Company used the practical expedient where the transaction price allocated to the remaining performance obligations before the date of the initial application is not disclosed. The Company implemented new policies, processes and systems to enable both the preparation of financial information and internal controls over financial reporting in connection with its adoption of ASC 606. The primary impact of adopting ASC 606 on the Company’s 2019 and 2018 revenue was to report the product sales to B&G as bill and hold sales, but deferring a small portion of the sale for future case and labeling services along with storage services. See Note 4 for more information.
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| | | 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 | | $ | 24,322 | | | $ | (19,967 | ) | | $ | 30,027 | | | $ | (27,742 | ) | | | | | | | | | | | | | | | | | | | Weighted average common shares outstanding | | | 9,176 | | | | 9,625 | | | | 9,307 | | | | 9,694 | | | | | | | | | | | | | | | | | | | | Basic earnings (loss) per common share from continuing operations | | $ | 2.65 | | | $ | (2.07 | ) | | $ | 3.23 | | | $ | (2.86 | ) | | | | | | | | | | | | | | | | | | | Diluted | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Earnings (loss) from continuing operations attributable to common shareholders | | $ | 24,322 | | | $ | (19,967 | ) | | $ | 30,027 | | | $ | (27,742 | ) | Add dividends on convertible preferred stock | | | 5 | | | | - | | | | 15 | | | | - | | | | | | | | | | | | | | | | | | | | Earnings (loss) from continuing operations attributable to common stock on a diluted basis | | $ | 24,327 | | | $ | (19,967 | ) | | $ | 30,042 | | | $ | (27,742 | ) | | | | | | | | | | | | | | | | | | | Weighted average common shares outstanding-basic | | | 9,176 | | | | 9,625 | | | | 9,307 | | | | 9,694 | | Additional shares issued related to the equity compensation plan | | | 2 | | | | - | | | | 2 | | | | - | | Additional shares to be issued under full conversion of preferred stock | | | 67 | | | | - | | | | 67 | | | | - | | | | | | | | | | | | | | | | | | | | Total shares for diluted | | | 9,245 | | | | 9,625 | | | | 9,376 | | | | 9,694 | | | | | | | | | | | | | | | | | | | | Diluted earnings (loss) per common share from continuing operations | | $ | 2.63 | | | $ | (2.07 | ) | | $ | 3.20 | | | $ | (2.86 | ) |
Note: For fiscal 2019 addbacks for equity compensation and additional shares that were anti-dilutive were excluded. | 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 prospectively at its effective date, 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 currently expect to adopt ASU 2016-02 as of April 1, 2019, under the modified prospective method. Our evaluation of ASU 2016-02 is ongoing and not complete. Our estimated date of completion of FASB ASC 842 technical assessment of applying the new standard to the Company’s lease contracts is between Q4 of Fiscal Year 2019 and Q1 of Fiscal Year 2020. The estimated date of revised Internal Control of Financial Reporting (ICFR) is Q4 of Fiscal Year 2019. The estimated date of draft footnote disclosures is Q1 of Fiscal Year 2020. The Company believes that the new standard will have a material impact on its consolidated balance sheet due to the recognition of ROU assets and liabilities for the Company’s operating leases but it will not have a material impact on its statement of operations or liquidity. We expect our accounting for capital leases to remain substantially unchanged. The ASU also will require disclosures to help investors and other financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. Our leasing activity is primarily related to buildings and equipment. The Company is continuing to evaluate potential impacts to its consolidated financial statements.
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| In January 2017, the FASB issued ASU No.2017-01 ("ASU 2017-01"), which clarifies the definition of a business, with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and early adoption is permitted for transactions which occur before the issuance or effective date of the amendments, only when the transaction has not been reported in the financial statements that have been issued or made available for issuance. ASU 2017-01 is to be applied on a prospective basis. The Company adopted ASU 2017-01 in the first quarter of fiscal 2019 and it did not have a material impact on its consolidated financial statements.
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SENECA FOODS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) December 29, 201828, 2019 Earnings per Common Share From Discontinued Operations | In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU 2017-07 requires that the service cost component of net periodic benefit costs from defined benefit and other postretirement benefit plans be included in the same statement of earnings captions as other compensation costs arising from services rendered by the covered employees during the period. The other components of net benefit cost will be presented in the statement of earnings separately from service costs. ASU 2017-07 is effective for fiscal years beginning after December 31, 2017 (fiscal year 2019 for the Company). Following adoption, only service costs will be eligible for capitalization into manufactured inventories, which should reduce diversity in practice. The amendments of ASU 2017-07 should be applied retrospectively for the presentation of the service cost component and the other components of net periodic benefit costs from defined benefit and other postretirement benefit plans in the statement of earnings and prospectively, on and after the effective date, for the capitalization of the service cost component into manufactured inventories. The Company adopted the new guidance in first quarter of fiscal year 2019, and the changes to earnings before income taxes were immaterial in the year of adoption.
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| 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 29, 2018.
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SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 29, 2018
12.
| Earnings (Loss) per Common Share From Continuing Operations
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| Earnings (loss) per share for the three and nine months ended December 29, 2018 and December 30, 2017 are as follows:
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| | | Q U A R T E R | | | Y E A R T O D A T E | | | Q U A R T E R | | | Y E A R T O D A T E | | (Thousands, except share amounts) | | Fiscal 2019 | | | Fiscal 2018 | | | Fiscal 2019 | | | Fiscal 2018 | | | (Thousands, except per share amounts) | | | Fiscal 2020 | | | Fiscal 2019 | | | Fiscal 2020 | | | Fiscal 2019 | | Discontinued Operations | | | | | | | | | | | | | | | | | | Basic | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Loss) earnings from continuing operations | | $ | (20,040 | ) | | $ | 8,886 | | | $ | (27,834 | ) | | $ | 9,696 | | | Earnings from discontinued operations | | | $ | 955 | | | $ | 34,056 | | | $ | 955 | | | $ | 42,211 | | Deduct preferred stock dividends paid | | | 6 | | | | 6 | | | | 17 | | | | 17 | | | | 6 | | | | 6 | | | | 17 | | | | 17 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Undistributed (loss) earnings from continuing operations | | | (20,046 | ) | | | 8,880 | | | | (27,851 | ) | | | 9,679 | | | (Loss) earnings from continuing operations attributable to participating preferred | | | (78 | ) | | | 35 | | | | (109 | ) | | | 49 | | | Undistributed earnings from discontinued operations | | | | 949 | | | | 34,050 | | | | 938 | | | | 42,194 | | Earnings from discontinued operations attributable to participating preferred | | | | 4 | | | | 134 | | | | 4 | | | | 165 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Loss) earnings from continuing operations attributable to common shareholders | | $ | (19,968 | ) | | $ | 8,845 | | | $ | (27,742 | ) | | $ | 9,630 | | | Earnings from discontinued operations attributable to common shareholders | | | $ | 945 | | | $ | 33,916 | | | $ | 934 | | | $ | 42,029 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Weighted average common shares outstanding | | | 9,625 | | | | 9,740 | | | | 9,694 | | | | 9,782 | | | | 9,176 | | | | 9,625 | | | | 9,307 | | | | 9,694 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Basic (loss) earnings per common share from continuing operations | | $ | (2.07 | ) | | $ | 0.91 | | | $ | (2.86 | ) | | $ | 0.98 | | | Basic earnings per common share from discontinued operations | | | $ | 0.10 | | | $ | 3.52 | | | $ | 0.10 | | | $ | 4.34 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Diluted | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Loss) earnings from continuing operations attributable to common shareholders | | $ | (19,968 | ) | | $ | 8,845 | | | $ | (27,742 | ) | | $ | 9,630 | | | Earnings from discontinued operations attributable to common shareholders | | | $ | 945 | | | $ | 33,916 | | | $ | 934 | | | $ | 42,029 | | Add dividends on convertible preferred stock | | | - | | | | 5 | | | | - | | | | 15 | | | | 5 | | | | 5 | | | | 15 | | | | 15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Loss) earnings from continuing operations attributable to common stock on a diluted basis | | $ | (19,968 | ) | | $ | 8,850 | | | $ | (27,742 | ) | | $ | 9,645 | | | Earnings from discontinued operations attributable to common stock on a diluted basis | | | $ | 950 | | | $ | 33,921 | | | $ | 949 | | | $ | 42,044 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Weighted average common shares outstanding-basic | | | 9,625 | | | | 9,740 | | | | 9,694 | | | | 9,782 | | | | 9,176 | | | | 9,625 | | | | 9,307 | | | | 9,694 | | Additional shares issued related to the equity compensation plan | | | - | | | | 2 | | | | - | | | | 2 | | | | 2 | | | | 2 | | | | 2 | | | | 2 | | Additional shares to be issued under full conversion of preferred stock | | | - | | | | 67 | | | | - | | | | 67 | | | | 67 | | | | 67 | | | | 67 | | | | 67 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total shares for diluted | | | 9,625 | | | | 9,809 | | | | 9,694 | | | | 9,851 | | | | 9,245 | | | | 9,694 | | | | 9,376 | | | | 9,763 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Diluted (loss) earnings per common share from continuing operations | | $ | (2.07 | ) | | $ | 0.90 | | | $ | (2.86 | ) | | $ | 0.98 | | | Diluted earnings per common share from discontinued operations | | | $ | 0.10 | | | $ | 3.50 | | | $ | 0.10 | | | $ | 4.31 | |
Note: For fiscal 2019, addbacks add backs for equity compensation and additional shares that were anti-dilutive were excluded. SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 29, 2018
13.13.
| 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 $225,337,000 and an estimated fair value of $225,287,000 as of December 28, 2019. Long-term debt, including current portion had a carrying amount of $325,373,000 and an estimated fair value of $325,276,000 as of December 29, 2018. As of March 31, 2019, the carrying amount was $266,245,000 and the estimated fair value was $266,140,000. The fair values of all the other financial instruments approximate their carrying value due to their short-term nature. | 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 $325,373,000 and an estimated fair value of $325,276,000 as of December 29, 2018. As of March 31, 2018, the carrying amount was $409,396,000 and the estimated fair value was $408,942,000. Capital lease obligations, including current portion had a carrying amount of $36,387,000 and an estimated fair value of $32,994,000 as of December 29, 2018. As of March 31, 2018, the carrying amount was $40,137,000 and the estimated fair value was $37,287,000. The fair values of all the other financial instruments approximate their carrying value due to their short-term nature.
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The effective tax rate from continuing operations was 23.7% and 25.7% for the nine month periods ended December 28, 2019 and December 29, 2018, respectively. The 2.0 percentage point decrease in the effective tax rate is due primarily to federal income tax credits and incentives. The dollar amount of the federal credits and incentives did not change significantly from 2019 to 2020. The decrease is the result of having a pre-tax loss in 2018 and pre-tax income in 2019. The 2018 federal credits and incentives created a tax benefit which increased the tax rate because of the pre-tax loss. The 2019 federal credits and incentives also created a tax benefit. However, in 2019 the tax benefit decreased the tax rate because of the pre-tax income. | The effective tax rate from continuing operations was 25.7% and (21.4)% for the nine month periods ended December 29, 2018 and December 30, 2017, respectively. The 47.1 percentage point increase in the effective tax rate is the result of a 38.1% increase due to the Tax Cuts and Jobs Act and a 8.6% increase due to federal and state income tax credits. The amount of federal and state income tax credits has remained consistent with the prior year. However, the percentage of federal and state income tax credits in relation to the 2019 pre-tax loss versus the percentage of state credits in relation to the 2018 pre-tax income has resulted in a significant increase.
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| On January 23, 2019, the sale of the Marion Can plant (land and buildings) was completed for approximately $3.5 million. This was included in Assets Held For Sale on the Condensed Consolidated Balance Sheet as of December 29, 2018.
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ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) December 29, 201828, 2019 Seneca Foods Corporation (the “Company”) is a leading provider of packaged fruits and vegetables, with facilities located throughout the United States. The Company’s product offerings include canned, frozen and bottled produce and snack chips. Its products are sold under private label as well as national and regional brands that the Company owns or licenses, including Seneca®, Libby’s®, Aunt Nellie’s®, Cherryman®, Green Valley®, READ® and Seneca Farms®. The Company’s canned fruits and vegetables are sold nationwide by major grocery outlets, including supermarkets, mass merchandisers, limited assortment stores, club stores and dollar stores. The Company also sells its products to foodservice distributors, industrial markets, other food processors, export customers in over 90 countries and federal, state and local governments for school and other food programs. The Company packs Green Giant®, Le Sueur® and other brands of canned vegetables as well as select Green Giant® frozen vegetables for B&G Foods North America (“B&G”) under a contract packing agreement. In addition, Seneca provides contract packing services mostly through its wholly owned subsidiary Truitt Bros., Inc. On February 16, 2018,During April 2019, the Company announced production at its fruit (primarily peaches) processing plant in Modesto, CaliforniaSunnyside, Washington will cease prior toafter the 2018end of the 2019 production season. During the second fiscal quarter of 2019, the Company sold and transferred most of the remaining inventory in the facility and completed most of the labeling and casing required to PCP for the fruit inventory sold to them in the first quarter. The Company continuedwill continue to ready the buildingstore, case and equipmentlabel products at this facility until sometime later this year. The plant restructuring charge for sale during the second quarter and into the third quarter. The Modesto operations have met the requirements (approximately a 15% reduction in revenue and a strategic shift away from producing peaches) for discontinued operations and those operations have been presented as such in these financial statements. During October 2018, the building and the land was sold to an unrelated third party for net proceeds of $63,326,000 and the Company auctioned off the remaining equipment in the third quarter. See note 3 Discontinued Operations for more details.Sunnyside right-of-use assets is being amortized over seven months.
The Company’s raw product is harvested mainly between June through November. Results of Operations: Sales: The third fiscal quarter 20192020 results include net continuing sales of $372,238,000,$392,971,000, which represents a 4.9%5.6% increase, or $17,344,000,$20,733,000, from the third quarter of fiscal 2018.2019. The net increase in sales is higher selling prices/sales mix of $45,419,000$23,937,000 partially offset by a sales volume decrease of $28,075,000.$3,204,000. The increase in sales is primarily from a $35,019,000$20,980,000 increase in Canned VegetableB&G sales, a $2,375,000$4,924,000 increase in other Canned Fruit sales, a $3,506,000 increase in Prepared Food sales, an $877,000 increase in Other sales, and a $732,000$429,000 increase in FrozenSnack sales which was partially offset by a $14,377,000$8,050,000 decrease in B&G Foods, Inc. sales, a $242,000 decrease in OtherCanned Vegetable sales, and a $6,260,000$1,933,000 decrease in Prepared FoodFrozen sales. The nine months ended 20192020 results include net continuing sales of $936,991,000,$1,027,898,000, which represents a 1.4%9.7% increase, or $13,258,000,$90,907,000, from the third quarter of fiscal 2018.2019. The net increase in sales is higher selling prices/sales mix of $60,157,000 partially offset by$57,967,000 and a sales volume decreaseincrease of $46,899,000.$32,940,000. The increase in sales is primarily from a $67,966,000$50,875,000 increase in B&G sales, a $26,205,000 increase in Canned Vegetable sales, a $7,338,000$19,713,000 increase in FrozenPrepared Food sales, and a $2,325,000$11,012,000 increase in OtherCanned Fruit sales, a $1,224,000 increase in Snack sales which was partially offset by and a $55,278,000$15,273,000 decrease in B&G Foods, Inc.Frozen sales and a $10,154,000$2,849,000 decrease in Prepared FoodOther sales. ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) December 29, 201828, 2019 The following table presents continuing sales by product category (in millions): | | | Three Months Ended | | | Nine Months Ended | | | Three Months Ended | | | Nine Months Ended | | | | | December 29, 2018 | | | December 30, 2017 | | | December 29, 2018 | | | December 30, 2017 | | | December 28, 2019 | | | December 29, 2018 | | | December 28, 2019 | | | December 29, 2018 | | Canned Vegetables | | $ | 259.5 | | | $ | 224.4 | | | $ | 631.1 | | | $ | 563.2 | | | $ | 251.4 | | | $ | 259.5 | | | $ | 657.3 | | | $ | 631.1 | | B&G* | | | 27.7 | | | | 42.1 | | | | 66.7 | | | | 121.9 | | | | 48.7 | | | | 27.7 | | | | 117.5 | | | | 66.7 | | Frozen | | | 29.7 | | | | 29.0 | | | | 87.5 | | | | 80.1 | | | | 27.8 | | | | 29.7 | | | | 72.3 | | | | 87.5 | | Fruit Products | | | 27.2 | | | | 24.9 | | | | 70.7 | | | | 69.5 | | | | 32.2 | | | | 27.2 | | | | 81.8 | | | | 70.7 | | Chip Products | | | 2.5 | | | | 2.4 | | | | 7.7 | | | | 7.9 | | | | 2.9 | | | | 2.5 | | | | 8.9 | | | | 7.7 | �� | Prepared Foods | | | 22.0 | | | | 28.2 | | | | 59.2 | | | | 69.4 | | | | 25.5 | | | | 22.0 | | | | 78.9 | | | | 59.2 | | Other | | | 3.6 | | | | 3.9 | | | | 14.1 | | | | 11.7 | | | | 4.5 | | | | 3.6 | | | | 11.2 | | | | 14.1 | | | | | $ | 372.2 | | | $ | 354.9 | | | $ | 937.0 | | | $ | 923.7 | | | $ | 393.0 | | | $ | 372.2 | | | $ | 1,027.9 | | | $ | 937.0 | |
*B&G includes canned and frozen vegetable sales exclusively for B&G. |
Operating Income:
The following table presents components of continuing operating income as a percentage of net sales: | | | Three Months Ended | | | Nine Months Ended | | | Three Months Ended | | | Nine Months Ended | | | | | December 29, 2018 | | | December 30, 2017 | | | December 29, 2018 | | | December 30, 2017 | | | December 28, 2019 | | | December 29, 2018 | | | December 28, 2019 | | | December 29, 2018 | | Gross Margin | | | -0.4 | % | | | 8.1 | % | | | 2.8 | % | | | 6.9 | % | | | 13.3 | % | | | -0.6 | % | | | 9.3 | % | | | 2.7 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Selling | | | 2.6 | % | | | 2.9 | % | | | 2.9 | % | | | 3.0 | % | | | 2.4 | % | | | 2.6 | % | | | 2.5 | % | | | 2.8 | % | Administrative | | | 2.6 | % | | | 2.8 | % | | | 3.1 | % | | | 3.1 | % | | | 2.7 | % | | | 2.6 | % | | | 2.8 | % | | | 3.1 | % | Plant Restructuring | | | 0.4 | % | | | 0.0 | % | | | 0.2 | % | | | 0.0 | % | | | 0.2 | % | | | 0.4 | % | | | 0.7 | % | | | 0.2 | % | Other Operating Expense (Income) | | | 0.2 | % | | | 0.0 | % | | | -0.4 | % | | | -0.3 | % | | Other Operating Income | | | | -0.4 | % | | | 0.2 | % | | | -0.8 | % | | | -0.4 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating Income | | | -6.2 | % | | | 2.7 | % | | | -3.0 | % | | | 1.3 | % | | | 8.4 | % | | | -6.4 | % | | | 4.2 | % | | | -3.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest Expense, Net | | | 1.2 | % | | | 1.0 | % | | | 1.3 | % | | | 1.0 | % | | | 0.7 | % | | | 1.0 | % | | | 0.9 | % | | | 1.2 | % |
For the three month period ended December 29, 2018,28, 2019, the gross margin decreasedincreased from the prior year quarter from 8.1%(0.6)% to (0.4)%13.3% due primarily to a higherlower LIFO charge in the third quarter of 2019.2020. The LIFO chargecredit for continuing operations for the third quarter ended December 29, 201828, 2019 was $25,776,000$11,337,000 or 6.9%2.9% of sales as compared to a charge of $1,268,000$25,776,000 or 0.4%6.9% of sales for the third quarter ended December 30, 201729, 2018 and reflects the impact on the quarter of higherlower cost increases incurred for higher steel costs and lower yields for peas and corncertain commodities in fiscal 2019,2020, compared with smaller cost increases to fiscal 2018.2019. On an after-tax basis, LIFO net earnings increased by $8,503,000 for the quarter ended December 28, 2019 and LIFO net earnings decreased by $19,332,000 for the quarter ended December 29, 2018, and decreased LIFO net earnings by $951,000 for the quarter ended December 30, 2017, based on the historical statutory federal income tax rate. For the nine month period ended December 29, 2018,28, 2019, the gross margin decreasedincreased from the prior year period from 6.9%2.7% to 2.8%9.3% due primarily to a higherlower LIFO charge in the current year. The LIFO chargecredit for the first nine months ended December 29, 2018 which28, 2019 was $39,933,000$7,457,000 or 4.3%0.7% of sales as compared to a charge of $19,763,000$39,933,000 or 2.1%4.3% of sales for the nine months ended December 30, 201729, 2018 and reflects the impact on the quarternine months of higherlower cost increases incurred for higher steel costs and lower yields for peas and corncertain commodities in fiscal 2019,2020, compared with smaller cost increases to fiscal 2018.2019. On an after-tax basis, LIFO net earnings increased by $29,950,000$5,593,000 for the nine months ended December 29, 2018 and decreased LIFO net earnings decreased by $14,822,000$29,950,000 for the nine months ended December 30, 2017,29, 2018, based on the historical statutory federal income tax rate. ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) December 29, 201828, 2019 For the three month period ended December 29, 2018,28, 2019, selling costs as a percentage of sales remained the same atdecreased from 2.6% for each period.to 2.4%. For the nine month period ended December 29, 2018,28, 2019, selling costs as a percentage of sales remained the same atdecreased from 2.8% for each period.to 2.5%. For the three month period ended December 29, 2018,28, 2019, administrative expense as a percentage of sales increased from 2.6% to 2.7%. For the nine month period ended December 28, 2019, administrative expense as a percentage of sales decreased from 2.8%3.1% to 2.6%. For the nine month period ended December 29, 2018, administrative expense as a percentage of sales remained the same at 3.1%2.8%. This is primarily due to higher sales during the nine month period compared to same periodsperiod in the prior year and the fixed nature of these administrative costs. 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 as compared to a gain of $1,590,000 during the nine months ended December 30, 2017. The current year gain was mostly related to the sale of a closed plant in the Midwest. $1,081,000 of the prior year gain was related to the sale of a closed plant in the Midwest. In addition, the Company recorded a bargain purchase gain of $1,078,000 during the nine months ended December 30, 2017. These items are included in other operating income (loss) in the Unaudited Condensed Consolidated Statements of Net Earnings. |
Interest expense for the third quarter ended December 29, 2018,28, 2019, as a percentage of sales, increaseddecreased to 1.2%0.7% from 1.0% in third quarter ended December 30, 2017.29, 2018. Interest expense for the nine months ended December 29, 2018,28, 2019, as a percentage of sales, increaseddecreased to 1.3%0.9% from 1.0%1.2% in nine months ended December 30, 2017.29, 2018. During fiscal 2019,2020, overall borrowings and interest rates were higherlower than the previous year. Income Taxes: The effective tax rate from continuing operations was 25.7%23.7% and (21.4)%25.7% for the nine month periods ended December 28, 2019 and December 29, 2018, and December 30, 2017, respectively. The 47.12.0 percentage point increasedecrease in the effective tax rate is due primarily to federal income tax credits and incentives. The dollar amount of the federal credits and incentives did not change significantly from 2019 to 2020. The decrease is the result of having a 38.1% increase due to the Tax Cuts and Jobs Act and an 8.6% increase due to federal and state income tax credits. The amount of federal and state income tax credits has remained consistent with the prior year. However, the percentage of federal and state income tax credits in relation to the 2019 pre-tax loss versus the percentage of state credits in relation to the 2018 and pre-tax income has resulted in 2019. The 2018 federal credits and incentives created a significant increase.tax benefit which increased the tax rate because of the pre-tax loss. The 2019 federal credits and incentives also created a tax benefit. However, in 2019 the tax benefit decreased the tax rate because of the pre-tax income. Earnings (Loss) per Share: Continuing basic earnings (loss) per share were $(2.07)$2.65 and $0.91$(2.07) for the three months ended December 29, 201828, 2019 and December 30, 2017,29, 2018, respectively. Continuing diluted earnings (loss) per share were $(2.07)$2.63 and $0.90$(2.07) for the three months ended December 29, 201828, 2019 and December 30, 2017,29, 2018, respectively. Continuing basic earnings (loss) per share were $3.23 and $(2.86) for the nine months ended December 28, 2019 and December 29, 2018, respectively. Continuing diluted earnings (loss) per share were $(2.86)$3.20 and $0.98$(2.86) for the nine months ended December 29, 201828, 2019 and December 30, 2017,29, 2018, respectively. For details of the calculation of these amounts, refer to footnote 12 of the Notes to Condensed Consolidated Financial Statements. 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. 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. For the three months ended December 29, 208, the Company reported a loss from operations before taxes of $5,143,000 compared to a loss of $180,000 for the three months ended December 30, 2017. For the nine months ended December 29, 208, the Company reported a loss from operations before taxes of $24,741,000 compared to a loss of $4,723,000 for the nine months ended December 30, 2017.
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ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) December 29, 201828, 2019 Liquidity and Capital Resources: The financial condition of the Company is summarized in the following table and explanatory review: | | | December 29, | | | December 30, | | | March 31, | | | March 31, | | | December 28, | | | December 29, | | | March 31, | | | March 31, | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | Working Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance | | $ | 241,218 | | | $ | 631,756 | | | $ | 602,504 | | | $ | 555,993 | | | $ | 426,968 | | | $ | 241,218 | | | $ | 490,871 | | | $ | 602,504 | | Change in Quarter | | | (313,541 | ) | | | 22,461 | | | | | | | | | | | | (10,305 | ) | | | (313,541 | ) | | | | | | | | | Current Portion of Long-Term Debt and Capital Lease Obligations | | 320,579 | | | 7,394 | | | 7,468 | | | 8,334 | | | | - | | | | 314,657 | | | | 6,763 | | | | 7,468 | | Long-Term Debt, Less Current Portion | | | 10,715 | | | | 404,877 | | | | 407,733 | | | | 329,138 | | | | 225,337 | | | | 10,715 | | | | 265,900 | | | | 407,733 | | Operating Lease Obligations, Less Current Portion | | | | 47,965 | | | | - | | | | - | | | | - | | Financing Lease Obligations, Less Current Portion | | | | 27,007 | | | | - | | | | - | | | | - | | Capital Lease Obligations, Less Current Portion | | | 29,730 | | | | 35,804 | | | | 34,331 | | | | 34,194 | | | | - | | | | 29,730 | | | | 31,286 | | | | 34,331 | | Total Stockholders' Equity Per Equivalent | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Common Share (see Note below) | | | 43.39 | | | | 44.35 | | | | 41.66 | | | | 43.63 | | | | 47.01 | | | | 43.39 | | | | 43.27 | | | | 41.73 | | Stockholders' Equity Per Common Share | | | 43.79 | | | | 44.75 | | | | 42.05 | | | | 44.20 | | | | 47.47 | | | | 43.79 | | | | 43.67 | | | | 42.11 | | Current Ratio | | | 1.52 | | | | 4.79 | | | | 5.35 | | | | 5.20 | | | | 3.47 | | | | 1.52 | | | | 5.37 | | | | 5.35 | |
Note: Equivalent common shares are either common shares or, for convertible preferred shares, the number of common shares that the preferred shares are convertible into. See Note 109 of the Notes to Consolidated Financial Statements of the Company’s 20182019 Annual Report on Form 10-K for conversion details. As shown in the Condensed Consolidated Statements of Cash Flows, net cash provided by operating activities was $115,320,000 in the first nine months of fiscal 2020, compared to $46,430,000 in the first nine months of fiscal 2019, compared to net cash used by operating activities of $26,748,000 in the first nine months of fiscal 2018.2019. The $73,178,000$68,890,000 increase in cash provided is primarily attributable to a a considerable decrease in inventory ($152,675,000) due to the Modesto closure and to poor yields for peas and corn, which was partially offset by a $9,307,000 decreasefollowing items: an increase in cash provided by other current assets,net earnings from continuing operations of $58,000,000, a $520,000 decrease in cash provided by income taxes, and a $19,623,000 decrease$37,097,000 increase in cash provided by accounts payable, accrued expenses and other liabilities, a $17,428,000$7,043,000 increase in cash usedprovided by accounts receivable,income taxes, a $5,156,000 increase in cash provided by other current assets, and an increased net earnings of $8,590,000 which included a gain on the sale of assets totaling $55,863,000$2,999,000 increase in the nine months ended December 29, 2018.cash provided by account receivable. These increases were offset by a $44,217,000 decrease in cash provided by inventory. As compared to December 30, 2017,29, 2018, inventory decreased $8,298,000$82,870,000 to $575,935,000$493,065,000 at December 29, 2018 (including $55,800,000 decrease from the Pacific Coast Producers inventory sale).28, 2019. The components of the inventory increasedecrease (excluding LIFO) reflect a $28,066,000$92,346,000 decrease in finished goods, a $5,653,000$6,415,000 decrease in work in process and a $25,421,000$9,048,000 increase in raw materials and supplies. The finished goods increase reflects lower inventory quantities attributable to the higherlower calendar year 20182019 pack versus the calendar year 2017 pack partially offset by the $55,800,000 inventory sale to PCP.2018 pack. The raw materials and supplies increase is primarily due to an increase in cans and raw steel quantities compared to the prior year. FIFO based inventory costs exceeded LIFO based inventory costs by $153,884,000 as of the end of the third quarter of 2020 as compared to $160,727,000 as of the end of the third quarter of 2019 as compared to $152,091,000 as of the end of the third quarter of 2018.2019. Cash provided byused in investing activities was $25,506,000 in the first nine months of fiscal 2020 compared to cash provided in investing activities of $54,507,000 in the first nine months of fiscal 2019 compared2019. Additions to cash used in investing activities of $33,699,000property, plant and equipment were $47,681,000 in the first nine months of fiscal 2018. Additions to property, plant and equipment were $30,468,000 in the first nine months of fiscal 20192020 as compared to $21,120,000$30,468,000 in first nine months of fiscal 2018.2019. The Company received cash proceeds from the sale of various assets which totaled $22,175,000 during the nine months ended December 28, 2019. The Company received cash proceeds from the sale of various assets from Modesto and Buhldivested plants which totaled $84,975,000 during the nine months ended December 29, 2018. In April 2017, the Company acquired the other 50% of Truitt Bros., Inc. for $14,420,000 (net of cash acquired). Cash used in financing activities was $103,211,000$87,436,000 in the first nine months of fiscal 2019,2020, which included borrowings of $419,102,000$401,053,000 and the repayment of $517,187,000$465,099,000 of long-term debt, principally consisting of borrowings and repayments on the revolving credit facility (“Revolver”). The Company made additional repayments on the Revolver from cash proceeds received from the sale of Modesto and Buhlvarious assets. Other than borrowings under the Revolver, there was no new long-term debt during the first nine months of fiscal 2018 other than the $13,470,000 acquired via the acquisition of Truitt Bros., Inc. of which $3,515,000 was paid off immediately.2019 The Company repurchased $5,340,000$11,454,000 and $3,442,000$5,340,000 of stock during the first nine months of fiscal year 20192020 and 2018,2019, respectively. ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) December 29, 201828, 2019 The Company entered into a five-year revolving credit facility on July 5, 2016. Available borrowings on the Revolver total $400,000,000 from April through July and $500,000,000 from August through March with a maturity date of July 5, 2021. The interest rate on the Revolver is based on LIBOR plus an applicable margin based on excess availability and the Company's fixed charge coverage ratio. As of December 29, 2018,28, 2019, the interest rate was approximately 4.01%3.27% on a balance of $214,161,000.$114,689,000. We believe that cash flows from operations, availability under our Revolver and other financing sources will provide adequate funds for our working capital needs, planned capital expenditures, and debt obligations for at least the next 12 months. The Company’s credit facilities contain standard representations and warranties, events of default, and certain affirmative and negative covenants, including various financial covenants. The Company is in violation of a Farm Credit term loan covenant requirement at the balance sheet date, but obtained a waiver for the quarter ended December 29, 2018. A more restrictive covenant must be met at March 31, 2019, and it is probable that the Company will fail to meet that requirement at that date, unless an additional waiver or amendment is obtained. Therefore, the Company concluded that the Farm Credit term loan, as of December 29, 2019, should be classified as a current liability. However, the Company is looking to amend the Farm Credit covenants on a longer term basis during the fourth quarter. In addition, the Revolver agreement contains a cross-default provision. The Revolver agreement has triggered an event of default as of December 29, 2018, due to the Farm Credit loan default. A waiver was obtained from the lender to provide temporary relief of default as of this measurement date. The Company believes that it is probable that the Revolver will be in default as of March 31, 2019 given the likelihood of a Farm Credit default thus triggering a cross-default. Therefore, the Company concluded that the Revolver should be classified as a current liability as of December 29, 2018.
New Accounting Standards Refer to footnote 11 of the Notes to Condensed Consolidated Financial Statements. Seasonality The Company's revenues are typically higher in the second and third fiscal quarters. This is due in part because the Company sells, on a bill and hold basis, Green Giant canned and frozen vegetables to B&G either weekly during production for specialty items, or at the end of each pack cycle, which typically occurs during these quarters. B&G buys the product from the Company at cost plus a specified fee for each equivalent case. See the Critical Accounting Policies section below for further details. The Company’s non-Green Giant sales also exhibit seasonality with the third fiscal quarter generating the highest retail sales due to holidays that occur during that quarter. Forward-Looking Information The information contained in this report contains, or may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this report and include statements regarding the intent, belief or current expectations of the Company or its officers (including statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates” or similar expressions) with respect to various matters, including (i) the Company’s anticipated needs for, and the availability of, cash, (ii) the Company’s liquidity and financing plans, (iii) the Company’s ability to successfully integrate acquisitions into its operations, (iv) trends affecting the Company’s financial condition or results of operations, including anticipated sales price levels and anticipated expense levels, in particular higher production, fuel and transportation costs, (v) the Company’s plans for expansion of its business (including through acquisitions) and cost savings, and (vi) the impact of competition. ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
December 29, 2018
Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Investors are cautioned not to place undue reliance on such statements, which speak only to events as of the date the statements were made. Among the factors that could cause actual results to differ materially are: | | ● | general economic and business conditions; |
ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) December 28, 2019 | | ● | cost and availability of commodities and other raw materials such as vegetables, steel and packaging materials; |
| | ● | 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; |
| | ● | 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. |
Except for ongoing obligations to disclose material information as required by the federal securities laws, the Company does not undertake any obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of the filing of this report or to reflect the occurrence of unanticipated events. Critical Accounting Policies During the nine months ended December 29, 2018,28, 2019, the Company sold $65,741,000$116,515,000 of Green Giant finished goods inventory to B&G Foods North America (“B&G”) for cash, on a bill and hold basis, as compared to $112,768,000$65,741,000 for the nine months ended December 30, 2017.29, 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. Trade promotions are an important component of the sales and marketing of the Company’s branded products, and are critical to the support of the business. Trade promotion costs, which are recorded as a reduction of net sales, include amounts paid to encourage retailers to offer temporary price reductions for the sale of our products to consumers, amounts paid to obtain favorable display positions in retailers’ stores, and amounts paid to retailers for shelf space in retail stores. Accruals for trade promotions are recorded primarily at the time of sale of product to the retailer based on expected levels of performance. Settlement of these liabilities typically occurs in subsequent periods primarily through an authorized process for deductions taken by a retailer from amounts otherwise due to us. As a result, the ultimate cost of a trade promotion program is dependent on the relative success of the events and the actions and level of deductions taken by retailers for amounts they consider due to them. Final determination of the permissible deductions may take extended periods of time. ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
December 29, 2018
The Company uses the lower of cost, determined under the LIFO (last-in, first out) method, or market, to value substantially all of its inventories. In a high inflation environment that the Company was experiencing, the Company believes that the LIFO method was preferable over the FIFO method because it better compares the cost of current production to current revenue. The Company assesses its long-lived assets for impairment whenever there is an indicator of impairment. Property, plant, and equipment are depreciated over their assigned lives. The assigned lives and the projected cash flows used to test impairment are subjective. If actual lives are shorter than anticipated or if future cash flows are less than anticipated, a future impairment charge or a loss on disposal of the assets could be incurred. Impairment losses are evaluated if the estimated undiscounted value of the cash flows is less than the carrying value. If such is the case, a loss is recognized when the carrying value of an asset exceeds its fair value. ITEM 3 Quantitative and Qualitative Disclosures About Market Risk In the ordinary course of business, the Company is exposed to various market risk factors, including changes in general economic conditions, competition and raw material pricing and availability. In addition, the Company is exposed to fluctuations in interest rates, primarily related to its revolving credit facility and the $100,000,000 term loan. To manage interest rate risk, the Company uses both fixed and variable interest rate debt plus fixed interest rate capital lease obligations. There have been no material changes to the Company’s exposure to market risk since March 31, 2018.2019. ITEM 4 Controls and Procedures The Company maintains a system of internal and disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported on a timely basis. The Company’s Board of Directors, operating through its Audit Committee, which is composed entirely of independent outside directors, provides oversight to the financial reporting process. An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of December 29, 2018,28, 2019, our disclosure controls and procedures were effective. The Company continues to examine, refine and formalize its disclosure controls and procedures and to monitor ongoing developments in this area. There have been no changes during the period covered by this report to the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. PART II – OTHER INFORMATION Refer to footnote 15 to the Consolidated Financial Statements included in Part II Item 8 of the Annual Report on Form 10-K. | Refer to footnote 13 to the Consolidated Financial Statements included in Part II Item 8 of the Annual Report on Form 10-K.
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There have been no material changes to the risk factors disclosed in the Company’s Form 10-K for the period ended March 31, 2019 except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors. | There have been no material changes to the risk factors disclosed in the Company’s Form 10-K for the period ended March 31, 2018 except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors.
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
| | | Total Number of | | | Average Price Paid | | | Total Number | | | Maximum Number | | | | | Shares Purchased | | | per Share | | | of Shares | | | (or Approximate | | | | | | | | | | | | | | | | | | | | | Purchased as | | | Dollar Value) of | | | | | | | | | | | | | | | | | | | | | 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 | | 10/01/2018 – | | | | | | | | | | | | | | | | | | | | | | | | | 10/31/2018 (1) | | | 41,808 | | | | - | | | $ | 31.78 | | | $ | - | | | | 24,808 | | | | | | 11/01/2018 – | | | | | | | | | | | | | | | | | | | | | | | | | 11/30/2018 | | | 22,202 | | | | 9,290 | | | $ | 33.40 | | | $ | 33.88 | | | | 31,492 | | | | | | 12/01/2018 – | | | | | | | | | | | | | | | | | | | | | | | | | 12/31/2018 (2) | | | 48,302 | | | | - | | | $ | 30.82 | | | $ | - | | | | 27,202 | | | | | | Total | | | 112,312 | | | | 9,290 | | | $ | 31.69 | | | $ | 33.88 | | | | 83,502 | | | | 946,189 | |
| | | Total Number of | | | Average Price Paid | | | Total Number | | | Maximum Number | | | | | Shares Purchased | | | per Share | | | of Shares | | | (or Approximate | | | | | | | | | | | | | | | | | | | | | Purchased as | | | Dollar Value) of | | | | | | | | | | | | | | | | | | | | | 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 | | 10/01/2019 – | | | | | | | | | | | | | | | | | | | | | | | | | 10/31/2019 | | | 32,144 | | | | - | | | $ | 32.80 | | | $ | - | | | | 32,144 | | | | | | 11/01/2019 – | | | | | | | | | | | | | | | | | | | | | | | | | 11/30/2019 (1) | | | 20,700 | | | | 10,000 | | | $ | 34.79 | | | $ | 35.72 | | | | 13,800 | | | | | | 12/01/2019 – | | | | | | | | | | | | | | | | | | | | | | | | | 12/31/2019 (2) | | | 19,000 | | | | - | | | $ | 38.41 | | | $ | - | | | | - | | | | | | Total | | | 71,844 | | | | 10,000 | | | $ | 34.86 | | | $ | 35.72 | | | | 45,944 | | | | 539,063 | |
Note 1: 17,00016,900 of these shares were purchased in open market transactions by the trustees under the Seneca Foods Corporation Employees' Savings Plan 401(k) Retirement Savings Plan to provide employee matching contributions under the plan. Note 2: 21,100 of theseThese shares were purchased in open market transactions by the trustees under the Seneca Foods Corporation Employees' Savings Plan 401(k) Retirement Savings Plan to provide employee matching contributions under the plan. Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
101 | The following materials from Seneca Foods Corporation’s Quarterly Report on Form 10-Q for the threenine months ended December 29, 2018,28, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of net loss,earnings, (iii) condensed consolidated statements of comprehensive loss,income, (iv) condensed consolidated statements of cash flows, (v) condensed consolidated statement of stockholders’ equity and (vi) the notes to condensed consolidated financial statements. |
SIGNATURESSIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. | Seneca Foods Corporation | | | (Company) | | | | | | | | | | | | | /s/ Kraig H. Kayser | | February 1, 20195, 2020 | | | | Kraig H. Kayser | | President and | | Chief Executive Officer |
| | | | /s/ Timothy J. Benjamin | | February 5, 2020 | | | | Timothy J. Benjamin | | | | | | | /s/ Timothy J. Benjamin | February 1, 2019 | | | Timothy J. Benjamin
Chief Financial Officer |
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