UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form ~~10-Q/A~~10-Q

~~(Amendment No. 1)~~

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September ~~30, 2017~~29, 2018

Commission File Number 0-01989

Seneca Foods Corporation

(Exact name of Company as specified in its charter)

New York	16-0733425
(State or other jurisdiction of	(I. R. S. Employer
incorporation or organization)	Identification No.)

3736 South Main Street, Marion, New York	14505
(Address of principal executive offices)	(Zip Code)

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

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

Not Applicable

Former name, former address and former fiscal year,

if changed since last report

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

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes ☑ No ☐

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

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

Emerging growth company ☐

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

Yes ☐ No ☑

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

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

Class	Shares Outstanding at ~~October 20, 2017~~November 2, 2018
Common Stock Class A, $.25 Par	~~7,875,188~~7,808,414
Common Stock Class B, $.25 Par	~~1,884,439~~1,884,191

Table of Contents

~~Explanatory Note~~

~~Restatement of Consolidated Condensed Financial Statements~~

Seneca Foods Corporation ("the "Company") is filing this Amendment No. 1 ("Form 10-Q/A") to our Form 10-Q for the quarterly period ended September 30, 2017, which was originally filed on October 26, 2017 ("Original Filing"), to restate our Consolidated Condensed Financial Statements and the related notes for the three and six months ended September 30, 2017 and October 1, 2016, including the financial information included in Management's Discussion and Analysis of Financial Condition and Results of Operations. We are also providing an update in our disclosures regarding the material weakness in Item 4 of this amended Form 10-Q/A.

As previously disclosed in the Form 10-K for March 31, 2018, on June 28, 2018, the Company’s Audit Committee, in consultation with the Board of Directors, concluded that the Company’s previously issued financial statements for the three and six months ended September 30, 2017 and October 1, 2016 (among other periods, see below) could no longer be relied upon. This decision was reached after discussions with the Company’s senior management and outside advisers.

In reviewing the accounting for certain transactions related to the Company’s contract packing agreement with Green Giant, our management identified a deficiency in the effectiveness of a control intended to properly document and review relevant facts in connection with our revenue recognition policy with respect to bill and hold transactions. The Company has determined that (1) the audited consolidated financial statements as of and for the years ended March 31, 2016 and 2017 and the independent registered public accounting firm’s reports thereon and (2) the unaudited condensed consolidated financial statements as of and for each of the interim periods within the years ended March 31, 2017 and 2018 should be restated to correct inadvertent errors in the application of generally accepted accounting principles dealing with complex and technical accounting issues relating to “bill and hold” revenue recognition. For more information, see footnote 2 of the Company’s March 31, 2018 10-K filed on June 29, 2018.

To correct this misstatement and to address matters related to the foregoing with respect to our disclosure controls and procedures and our internal control over financial reporting, we have restated our Consolidated Condensed Financial Statements and the related notes as of and for the three and six months ended September 30, 2017 and October 1, 2016, including the financial information included in Management's Discussion and Analysis of Financial Condition and Results of Operations.

~~See Note 2 - Restatement of Consolidated Condensed Financial Statements, which is included in the "Financial Statements" in Item 1 of this amended Form 10-Q/A for more detail.~~

~~Amended Items in this Form 10Q/A~~

~~The following items in the Original Filing have been amended:~~

~~Part I, Item 1. Financial Statements~~

~~Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations~~

~~Part I, Item 4. Controls and Procedures~~

~~Part II, Item 6. Exhibits~~

~~We are also filing currently dated certifications from our Chief Executive Officer and Chief Financial Officer as Exhibits 31.1, 31.2, 32, as well as various exhibits related to XBRL.~~

This amended Form 10-Q/A does not reflect events occurring after the Original Filing on October 26, 2017, or modify or update those disclosures affected by subsequent events, except for the effects of the restatement. Disclosures not affected by the restatement are unchanged and reflect the disclosures made at the time of the Original Filing.

~~Table of Contents~~

Seneca Foods Corporation

Quarterly Report on Form 10-Q

Table of Contents

		Page

PART 1	FINANCIAL INFORMATION

Item 1	Financial Statements:

	Condensed Consolidated Balance Sheets-September 29, 2018, September 30, 2017 ~~October 1, 2016~~ and March 31, ~~2017~~2018	1

	Condensed Consolidated Statements of Net Earnings (Loss) ~~Earnings-Three~~-Three and Six Months Ended September 29, 2018 and September 30, 2017 ~~and October 1, 2016~~	2

	Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income-Three~~-Three and Six Months Ended September 29, 2018 and September 30, 2017 ~~and October 1, 2016~~	23

	Condensed Consolidated Statements of Cash Flows-Six Months Ended September 29, 2018 and September 30, 2017 ~~and October 1, 2016~~	34

	Condensed Consolidated Statement of Stockholders' Equity-Six Months Ended September ~~30, 2017~~29, 2018	45

	Notes to Condensed Consolidated Financial Statements	56

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	1218

Item 3	Quantitative and Qualitative Disclosures about Market Risk	1824

Item 4	Controls and Procedures	1925

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	2026

Item 1A	Risk Factors	2026

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	2026

Item 3	Defaults Upon Senior Securities	2026

Item 4	Mine Safety Disclosures	2026

Item 5	Other Information	2026

Item 6	Exhibits	2026

SIGNATURES			2127

Table of Contents

SENECA FOODS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Per Share Data)

	Unaudited			Unaudited
	September 30, 2017			October 1, 2016			March 31, 2017			Unaudited			Unaudited
	(Restated)			(Restated)			(Restated)			September 29, 2018			September 30, 2017			March 31, 2018
ASSETS

Current Assets:
Cash and Cash Equivalents	$	14,940		$	10,124		$	11,992		$	12,795		$	14,940		$	15,102
Accounts Receivable, Net		112,297			102,727			72,080			99,799			97,484			66,210
Assets Held For Sale		-			5,025			-
Current Assets Held For Sale											23,148			-			-
Current Assets Held For Sale-Discontinued Operations											23,690			164,834			109,870
Inventories:
Finished Goods		721,575			669,291			466,126			537,050			527,358			388,905
Work in Process		32,287			18,098			32,528			40,355			32,284			41,663
Raw Materials and Supplies		105,284			114,295			130,281			106,492			96,620			116,391
Total Inventories		859,146			801,684			628,935			683,897			656,262			546,959
Refundable Income Taxes		336			-			2,471			1,466			336			1,142
Other Current Assets		2,649			15,157			3,671			5,443			2,649			1,856
Total Current Assets		989,368			934,717			719,149			850,238			936,505			741,139
Property, Plant and Equipment, Net		272,176			207,474			237,476			242,408			253,682			258,543
Deferred Income Taxes, Net		5,217			22,165			1,370			5,675			-			5,576
Noncurrent Assets Held For Sale-Discontinued Operations											20,641			20,011			20,098
Other Assets		5,183			20,847			20,273			2,938			3,666			3,489
Total Assets	$	1,271,944		$	1,185,203		$	978,268		$	1,121,900		$	1,213,864		$	1,028,845

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Notes Payable	$	-		$	-		$	166
Accounts Payable		249,803			237,008			72,824		$	212,111		$	224,128		$	56,752
Deferred Revenue		75,150			47,716			46,100			9,357			9,468			8,362
Accrued Vacation		12,656			11,936			11,867			11,605			11,239			11,691
Accrued Payroll		12,178			10,120			6,593			10,745			11,828			4,955
Other Accrued Expenses		38,340			38,639			31,880			28,587			29,950			20,834
Income Taxes Payable		-			4,172			-
Current Liabilities Held For Sale											141			-			-
Current Liabilities Held For Sale-Discontinued Operations											16,300			33,399			28,573
Current Portion of Long-Term Debt and Capital Lease Obligations		9,440			9,987			8,334			6,633			7,198			7,468
Total Current Liabilities		397,567			359,578			177,764			295,479			327,210			138,635
Long-Term Debt, Less Current Portion		395,128			354,905			329,138			353,549			387,693			407,733
Capital Lease Obligations, Less Current Portion		37,879			18,425			34,194			30,757			36,371			34,331
Pension Liabilities		9,220			41,119			8,193			26,233			9,220			23,290
Deferred Income Taxes, Net											-			1,480			-
Noncurrent Liabilities Held For Sale											616			-			-
Noncurrent Liabilities Held For Sale-Discontinued Operations											552			8,943			7,964
Other Long-Term Liabilities		13,440			11,559			3,775			4,933			13,440			5,829
Total Liabilities		853,234			785,586			553,064			712,119			784,357			617,782
Commitments and Contingencies
Stockholders' Equity:
Preferred Stock		719			1,338			1,324			707			719			707
Common Stock, $.25 Par Value Per Share		3,038			3,024			3,024			3,038			3,038			3,038
Additional Paid-in Capital		98,099			97,395			97,458			98,211			98,099			98,161
Treasury Stock, at Cost		(69,195	)		(66,730	)		(66,499	)		(71,135	)		(69,195	)		(69,556	)
Accumulated Other Comprehensive Loss		(11,073	)		(28,396	)		(11,175	)		(25,169	)		(11,073	)		(25,067	)
Retained Earnings		397,122			392,986			401,072			404,129			407,919			403,780
Total Stockholders' Equity		418,710			399,617			425,204			409,781			429,507			411,063
Total Liabilities and Stockholders’ Equity	$	1,271,944		$	1,185,203		$	978,268		$	1,121,900		$	1,213,864		$	1,028,845

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

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SENECA FOODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) ~~EARNINGS~~
(Unaudited)
(In Thousands, Except Per Share Data)

Three Months Ended

Six Months Ended

September 30,
2017

October 1,
2016

September 30,
2017

October 1,
2016

(Restated)

(Restated)

(Restated)

(Restated)

Net Sales
$ 338,470 $ 352,606 $ 627,397 $ 624,741

Costs and Expenses:

Cost of Product Sold
321,059 321,581 594,451 571,761
Selling, General and Administrative
18,865 18,702 36,318 35,907
Plant Restructuring (Credit) Charge
(25 ) 277 56 1,462
Other Operating (Income) Loss
(20 ) 31 (2,632 ) 19
Total Costs and Expenses
339,879 340,591 628,193 609,149
Operating Income
(1,409 ) 12,015 (796 ) 15,592
Loss (Earnings) From Equity Investment
- 270 (21 ) (167 )
Interest Expense, Net
3,433 2,151 6,650 4,295
(Loss) Earnings Before Income Taxes
(4,842 ) 9,594 (7,425 ) 11,464

Income Taxes (Benefit) Expense
(1,884 ) 2,773 (3,487 ) 3,678
Net (Loss) Earnings
$ (2,958 ) $ 6,821 $ (3,938 ) $ 7,786

(Loss) Earnings Applicable to Common Stock
$ (2,952 ) $ 6,753 $ (3,928 ) $ 7,703

Basic (Loss) Earnings per Common Share
$ (0.30 ) $ 0.69 $ (0.40 ) $ 0.79

Diluted (Loss) Earnings per Common Share
$ (0.30 ) $ 0.69 $ (0.40 ) $ 0.78

	Three Months Ended						Six Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017

Net Sales	$	320,660		$	327,664		$	564,753		$	568,839

Costs and Expenses:
Cost of Product Sold		309,652			305,993			536,957			533,667
Selling, General and Administrative		18,355			18,017			36,043			34,782
Plant Restructuring Charge (Income)		845			(25	)		883			56
Other Operating Income		(3,359	)		(20	)		(4,274	)		(2,632	)
Total Costs and Expenses		325,493			323,965			569,609			565,873
Operating (Loss) Income		(4,833	)		3,699			(4,856	)		2,966
Earnings From Equity Investment		-			-			-			(21	)
Other Income		(1,022	)		(1,469	)		(2,042	)		(2,936	)
Interest Expense, Net		3,898			2,900			7,723			5,578
(Loss) Earnings From Continuing Operations Before Income Taxes		(7,709	)		2,268			(10,537	)		345
Income Taxes (Benefit) Expense From Continuing Operations		(2,075	)		825			(2,743	)		(465	)
(Loss) Earnings From Continuing Operations		(5,634	)		1,443			(7,794	)		810
Earnings (Loss) From Discontinued Operations (net of income taxes)		14,750			(2,543	)		8,155			(2,752	)
Net Earnings (Loss)	$	9,116		$	(1,100	)	$	361		$	(1,942	)

Basic (Loss) Earnings per Common Share:
Continuing Operations	$	(0.58	)	$	0.15		$	(0.80	)	$	0.08
Discontinued Operations		1.51			(0.26	)		0.83			(0.28	)
Net Basic Earnings (Loss) per Common Share	$	0.93		$	(0.11	)	$	0.03		$	(0.20	)

Diluted (Loss) Earnings per Common Share:
Continuing Operations	$	(0.58	)	$	0.15		$	(0.80	)	$	0.08
Discontinued Operations		1.50			(0.26	)		0.83			(0.28	)
Net Diluted Earnings (Loss) per Common Share	$	0.92		$	(0.11	)	$	0.03		$	(0.20	)

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

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

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SENECA FOODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ~~INCOME~~
(Unaudited)
(In Thousands)

Three Months Ended

Six Months Ended

September 30,
2017

October 1,
2016

September 30,
2017

October 1,
2016

(Restated)

(Restated)

(Restated)

(Restated)

Comprehensive (loss) income:

Net (loss) earnings
$ (2,958 ) $ 6,821 $ (3,938 ) $ 7,786
Change in pension, post retirement benefits and other (net of tax of $26 and $63)
43 - 102 -
Total
$ (2,915 ) $ 6,821 $ (3,836 ) $ 7,786

	Three Months Ended					Six Months Ended
	September 29, 2018		September 30, 2017			September 29, 2018		September 30, 2017

Comprehensive income (loss):
Net earnings (loss)	$	9,116	$	(1,100	)	$	361	$	(1,942	)
Change in pension, post retirement benefits and other (net of tax)		51		43			102		102
Total comprehensive income (loss)	$	9,167	$	(1,057	)	$	463	$	(1,840	)

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

Table of Contents

SENECA FOODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)

	Six Months Ended
	September 30, 2017			October 1, 2016				Six Months Ended
	(Restated)			(Restated)				September 29, 2018			September 30, 2017
Cash Flows from Operating Activities:
Net (Loss) Earnings	$	(3,938	)	$	7,786
Adjustments to Reconcile Net Loss (Earnings) to Net Cash Used In Operations (Net of Acquisition):
Net (Loss) Earnings From Continuing Operations								$	(7,794	)	$	810
Net Earnings (Loss) From Discontinued Operations (Net of Tax)									8,155			(2,752	)

Adjustments to Reconcile Net Earnings (Loss) to Net Cash Used In Operations (Net of Acquisition):
Net Cash Used In Operations (Net of Acquisition):
Depreciation & Amortization		15,349			12,018				16,086			15,349
(Gain) Loss on the Sale of Assets		(1,591	)		48				(10,115	)		(1,591	)
Bargain Purchase Gain		(1,096	)		-				-			(1,096	)
Provision for Restructuring and Impairment		56			1,462				4,287			56
Earnings From Equity Investment		(21	)		(167	)	��		-			(21	)
Deferred Income Tax Benefit		(3,503	)		(1,378	)			(99	)		(2,357	)
Changes in Operating Assets and Liabilities:
Accounts Receivable		(34,173	)		(25,939	)			(25,797	)		(34,173	)
Inventories		(214,135	)		(192,203	)			(72,266	)		(192,151	)
Other Current Assets		1,106			608				(3,226	)		1,106
Income Taxes		2,126			1,198				(324	)		2,126
Accounts Payable, Deferred Revenue, Accrued Expenses and Other Liabilities		222,030			168,146
Net Cash Used in Operations		(17,790	)		(28,421	)
Accounts Payable, Accrued Expenses and Other Liabilities									157,812			196,904
Net Cash Provided By (Used In) Operations									66,719			(17,790	)
Cash Flows from Investing Activities:
Additions to Property, Plant and Equipment		(13,743	)		(14,518	)			(20,318	)		(13,743	)
Cash Paid for Acquisition (Net of Cash Acquired)		(14,420	)		-				-			(14,420	)
Proceeds from the Sale of Assets		1,790			13				20,055			1,790
Net Cash Used In Investing Activities		(26,373	)		(14,505	)			(263	)		(26,373	)
Cash Flow from Financing Activities:
Long-Term Borrowing		282,862			183,744				237,304			282,862
Payments on Long-Term Debt and Capital Lease Obligations		(232,706	)		(136,613	)			(304,777	)		(232,706	)
Payments on Notes Payable		(166	)		(402	)			-			(166	)
Other Assets		(171	)		(1,248	)			301			(171	)
Purchase of Treasury Stock		(2,696	)		(1,021	)			(1,579	)		(2,696	)
Dividends		(12	)		(12	)			(12	)		(12	)
Net Cash Provided by Financing Activities		47,111			44,448
Net Cash (Used In) Provided By Financing Activities									(68,763	)		47,111

Net Increase in Cash and Cash Equivalents		2,948			1,522
Net (Decrease) Increase in Cash and Cash Equivalents									(2,307	)		2,948
Cash and Cash Equivalents, Beginning of the Period		11,992			8,602				15,102			11,992
Cash and Cash Equivalents, End of the Period	$	14,940		$	10,124			$	12,795		$	14,940

Supplemental Disclosures of Cash Flow Information:
Noncash Transactions:
Property, Plant and Equipment Purchased Under Capital Lease Obligations	$	7,155		$	15,416			$	-		$	7,155

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

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SENECA FOODS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

(In Thousands)

											Accumulated															Accumulated
						Additional					Other										Additional					Other
	Preferred			Common		Paid-In		Treasury			Comprehensive			Retained			Preferred		Common		Paid-In		Treasury			Comprehensive			Retained
	Stock			Stock		Capital		Stock			Loss			Earnings			Stock		Stock		Capital		Stock			Loss			Earnings
Balance March 31, 2017 (Restated)	$	1,324		$	3,024	$	97,458	$	(66,499	)	$	(11,175	)	$	401,072
Balance March 31, 2018																	$	707	$	3,038	$	98,161	$	(69,556	)	$	(25,067	)	$	403,780
First Quarter FY 2019:
Net loss		-			-		-		-			-			(3,938	)		-		-		-		-			-			(8,755	)
Cash dividends paid on preferred stock		-			-		-		-			-			(12	)		-		-		-		-			-			(12	)
Equity incentive program		-			-		50		-			-			-			-		-		25		-			-			-
Change in pension, post retirement benefits, other adjustment (net of tax)																		-		-		-		-			(51	)		-
Second Quarter FY 2019:
Net earnings																		-		-		-		-			-			9,116
Equity incentive program																		-		-		25		-			-			-
Preferred stock conversion		(605	)		14		591		-			-			-			-		-		-		-			-			-
Purchase treasury stock		-			-		-		(2,696	)		-			-			-		-		-		(1,579	)		-			-
Change in pension, post retirement benefits, other adjustment (net of tax of $63)		-			-		-		-			102			-
Balance September 30, 2017 (Restated)	$	719		$	3,038	$	98,099	$	(69,195	)	$	(11,073	)	$	397,122
Change in pension, post retirement benefits, other adjustment (net of tax)																		-		-		-		-			(51	)		-
Balance September 29, 2018																	$	707	$	3,038	$	98,211	$	(71,135	)	$	(25,169	)	$	404,129

Preferred Stock

Common Stock

Preferred Stock

Common Stock

10%

Cumulative Par

2003 Series

Cumulative Par

2003 Series

Value $.25

Value $.025

Participating

Class A

Class B

Value $.25

Value $.025

Participating

Class A

Class B

Callable at Par

Convertible

Convertible Par

Common Stock

Callable at Par

Convertible

Convertible Par

Common Stock

Voting

Value $.025

Par Value $.25

Voting

Value $.025

Par Value $.25

Shares authorized and designated:

September 30, 2017

200,000

1,400,000

38,542

500

20,000,000

10,000,000

September 29, 2018

200,000

1,400,000

37,529

500

20,000,000

10,000,000

Shares outstanding:

September 30, 2017

200,000

807,240

38,542

500

7,875,188

1,884,439

September 29, 2018

200,000

807,240

37,529

500

7,808,414

1,884,191

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

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SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September ~~30, 2017~~

29, 2018

1.Unaudited Condensed Consolidated Financial Statements

~~Unaudited Condensed Consolidated Financial Statements~~

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly the financial position of Seneca Foods Corporation (the “Company”) as of September ~~30, 2017~~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, ~~2017~~2018 balance sheet was derived from the audited consolidated financial statements.

The results of operations for the three and six month periods ended September ~~30, 2017~~29, 2018 are not necessarily indicative of the results to be expected for the full year.

During the six months ended September 29, 2018, the Company sold $38,302,000 of Green Giant finished goods inventory to B&G Foods, Inc. for cash, on a bill and hold basis, as compared to $73,096,000 for the six months ended September 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.

The accounting policies followed by the Company are set forth in Note 1 to the Company's Consolidated Financial Statements in the Company’s ~~2017~~2018 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 ~~2017~~2018 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.

~~Restatement of Previously Issued Financial Statements—~~On June 28, 2018, the Company concluded that it did not meet all of the criteria for bill and hold treatment under Staff Accounting Bulletin Topic 13 for the Green Giant contract. In particular, the Company determined that performance obligations were not complete at the time title transferred to the customer as the unlabeled products under this contract were not ready for shipment. The Company has determined that the audited consolidated financial statements as of and for the years ended March 31, 2016 and 2017 and the unaudited condensed consolidated financial statements as of and for each of the interim periods within the years ended March 31, 2017 and 2018 should be restated to correct these inadvertent errors in the application of generally accepted accounting principles dealing with complex and technical accounting issues relating to “bill and hold” revenue recognition. For more information, see footnote 2 of the Company’s March 31, 2018 10-K filed on June 29, 2018.

The Consolidated Statements of Cash Flows are not presented in the following tables because there is no impact on total cash flows from operating activities, investing activities and financing activities. The impact from the restatements for the three and six month periods ended September 30, 2017 and October 1, 2016 within the operating activities section of the cash flow statement is illustrated in the balance sheet adjustments and income statement corrections presented below.

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~~SENECA FOODS CORPORATION AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Unaudited)~~

~~September 30, 2017~~

~~The following tables present a summary of the effects of these restatements:~~

Consolidated Statements of Earnings (Loss)
Three Months Ended

September 30, 2017 (Unaudited)

October 1, 2016 (Unaudited)

As

As

As

As

Reported

Correction

Restated

Reported

Correction

Restated

Net Sales
$ 376,308 $ (37,838 ) $ 338,470 $ 357,247 $ (4,641 ) $ 352,606
Cost of Products Sold
355,904 (34,845 ) 321,059 327,035 (5,454 ) 321,581
Gross Profit
20,404 (2,993 ) 17,411 30,212 813 31,025
Operating Income/(Loss)
1,584 (2,993 ) (1,409 ) 11,202 813 12,015
Earnings/(Loss) Before Income Taxes
(1,849 ) (2,993 ) (4,842 ) 8,781 813 9,594
Income Tax (Benefit) Expense
(737 ) (1,147 ) (1,884 ) 2,637 136 2,773
Net Earnings (Loss)
(1,112 ) (1,846 ) (2,958 ) 6,144 677 6,821
Earnings Per Common Share-Basic
$ (0.11 ) $ (0.19 ) $ (0.30 ) $ 0.62 $ 0.07 $ 0.69
Earnings Per Common Share-Diluted
$ (0.11 ) $ (0.19 ) $ (0.30 ) $ 0.62 $ 0.07 $ 0.69

Six Months Ended

September 30, 2017 (Unaudited)

October 1, 2016 (Unaudited)

As

As

As

As

Reported

Correction

Restated

Reported

Correction

Restated

Net Sales
$ 656,495 $ (29,098 ) $ 627,397 $ 609,861 $ 14,880 $ 624,741
Cost of Products Sold
620,331 (25,880 ) 594,451 559,674 12,087 571,761
Gross Profit
36,164 (3,218 ) 32,946 50,187 2,793 52,980
Operating Income/(Loss)
2,422 (3,218 ) (796 ) 12,799 2,793 15,592
Earnings/(Loss) Before Income Taxes
(4,207 ) (3,218 ) (7,425 ) 8,671 2,793 11,464
Income Tax (Benefit) Expense
(2,256 ) (1,231 ) (3,487 ) 2,589 1,089 3,678
Net Earnings (Loss)
(1,951 ) (1,987 ) (3,938 ) 6,082 1,704 7,786
Earnings Per Common Share-Basic
$ (0.20 ) $ (0.20 ) $ (0.40 ) $ 0.61 $ 0.18 $ 0.79
Earnings Per Common Share-Diluted
$ (0.20 ) $ (0.20 ) $ (0.40 ) $ 0.61 $ 0.17 $ 0.78

Consolidated Balance Sheets

As of September 30, 2017 (Unaudited)

As of March 31, 2017 (Audited)

As

As

As

As

Reported

Correction

Restated

Reported

Correction

Restated

Assets
Inventory
$ 802,387 $ 56,759 $ 859,146 $ 598,056 $ 30,879 $ 628,935
Total Current Assets
932,609 56,759 989,368 688,270 30,879 719,149
Total Assets
1,209,968 61,976 1,271,944 946,019 32,249 978,268

Liabilities and Stockholders' Equity

Deferred Revenue
$ 542 $ 74,608 $ 75,150 $ 545 $ 45,555 $ 46,100
Total Current Liabilities
322,982 74,585 397,567 132,277 45,487 177,764
Total Liabilities
780,214 73,020 853,234 511,758 41,306 553,064
Stockholders' Equity
429,754 (11,044 ) 418,710 434,261 (9,057 ) 425,204
Total Liabilities and Stockholders' Equity
1,209,968 61,976 1,271,944 946,019 32,249 978,268

As of October 1, 2016 (Unaudited)

As

As

Reported

Correction

Restated

Assets          ��
Inventory
$ 771,996 $ 29,688 $ 801,684
Total Current Assets
905,029 29,688 934,717
Total Assets
1,148,714 36,489 1,185,203

Liabilities and Stockholders' Equity

Deferred Revenue
$ 550 $ 47,166 $ 47,716
Total Current Liabilities
312,466 47,112 359,578
Total Liabilities
738,474 47,112 785,586
Stockholders' Equity
410,240 (10,623 ) 399,617
Total Liabilities and Stockholders' Equity
1,148,714 36,489 1,185,203

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SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September ~~30, 2017~~

29, 2018

3. ~~Acquisition~~

~~In April 2014,~~2. Assets Held For Sale

As of September 29, 2018, the Company ~~purchased a 50% equity interest~~has certain operating units in ~~Truitt Bros. Inc. ("Truitt")~~the East that met the criteria to be classifed as held for ~~$16,242,000~~sale, which ~~was accounted for as an equity investment. The purchase agreement granted~~requires the Company to present the ~~right~~related assets and liabilities as separate line items in our Condensed Consolidated Balance Sheet. The Company is required to ~~acquire~~record the ~~remaining 50% ownership~~assets held for sale at the lower of Truitt in the future under certain conditions. On April 3, 2017, the Company purchased the remaining 50% equity interest in Truitt. This was considered a step acquisition, whereby the Company remeasured the previously held investment tocarrying value or fair value ~~during the first quarter of 2018. As a result, the Company’s first quarter 2018 net loss includes a non-taxable bargain purchase gain of $1,096,000 of which $562,000 was~~less costs to sell. The following table presents information related to the ~~remeasurement~~major classes of the previously held investment. Gross profit in the first quarter of fiscal 2018 included a charge of $542,000 related to the recognition of the Truitt inventory step-up through cost of sales for the portion of acquired inventory that was sold during the period. The business, based in Salem, Oregon, has two state-of-the-art plants located in Oregon and Kentucky. The purchase price for the more recent 50% was $14,420,000 (net of cash acquired of $3,030,000) plus the assumption of certain liabilities. The Company had an equity method investment of $17,422,000, so the total investment was $34,872,000. In conjunction with the closing, the Company paid off $3,608,000 of liabilities acquired. The rationale for the acquisition was twofold: (1) the business is a complementary fit with our existing business and (2) Truitt is known for its industry innovation related to packing shelf stable foods in trays, pouches and bowls. This acquisition was financed with proceeds from the Company's revolving credit facility. The purchase price to acquire Truitt Bros., Inc. was allocated based on the internally developed fair value of the assets ~~acquired~~ and liabilities ~~assumed and the independent valuation of inventory, intangibles, and property, plant, and equipment. The total purchase price of $31,842,000 has been allocated as follows~~that were held for sale in our Condensed Consolidated Balance sheets (in thousands):

Purchase Price (net of cash received)
$ 31,842

Approximate fair values of assets acquired and liabilities assumed:

Current assets
$ 22,823
Other long-term assets
1,744
Property, plant and equipment
28,696
Current liabilities
(5,068 )
Deferred taxes
407
Other long-term liabilities
(15,664 )
Bargain purchase gain
(1,096 )
Total
$ 31,842

Inventories	$	13,619
Property, Plant and Equipment (net)		9,529

Current Assets Held For Sale	$	23,148

Capital Lease Obligations Current Portion	$	141
Current Liabilities Held For Sale	$	141

Capital Lease Obligations	$	616
Noncurrent Liabilities Held For Sale	$	616

The Company is continuing to evaluate the purchase price allocation and these preliminary estimates could change. Proforma results of operations for the Truitt acquisition are not presented because the effects are not material to the consolidated financial statements.

3. Assets and Liabilities Held For Sale 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 (buildings and land only) 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 canned 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.

~~Inventories~~

First-In, First-Out (“FIFO”) based inventory costs exceeded LIFO based inventory costs by $163,193,000 as of the end of the second quarter of fiscal 2018 as compared to $156,351,000 as of the end of the second quarter of fiscal 2017. The change in the LIFO Reserve for the three months ended September 30, 2017 was an increase of $12,053,000 as compared to an increase of $1,361,000 for the three months ended October 1, 2016. The LIFO Reserve increased by $19,354,000 in the first six months of fiscal 2018 compared to an increase of $2,413,000 in the first six months of fiscal 2017. This reflects the projected impact of an overall cost increase expected in fiscal 2018 versus fiscal 2017.

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SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September ~~30, 2017~~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):

	September 29,		September 30,		March 31,
	2018		2017		2018
Accounts Receivable	$	5,058	$	14,813	$	12,586
Inventories		18,632		150,021		96,996
Other Current Assets		-		-		288

Current Assets Held For Sale-Discontinued Operations	$	23,690	$	164,834	$	109,870

Other Assets	$	1,674	$	1,517	$	1,616
Property, Plant and Equipment (net)		18,967		18,494		18,482

Noncurrent Assets Held For Sale-Discontinued Operations	$	20,641	$	20,011	$	20,098

Accounts Payable and Accrued Expenses	$	16,178	$	31,157	$	26,226
Long-Term Debt and Capital Leases Current Portion		122		2,242		2,347
Current Liabilities Held For Sale-Discontinued Operations	$	16,300	$	33,399	$	28,573

Long-Term Debt and Capital Lease Obligations	$	552	$	8,943	$	7,964
Noncurrent Liabilities Held For Sale-Discontinued Operations	$	552	$	8,943	$	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:

	Three Months Ended						Six Months Ended
	September 29,			September 30,			September 29,			September 30,
	2018			2017			2018			2017

Net Sales	$	10,750		$	46,595		$	110,049		$	86,082

Costs and Expenses:

Cost of Product Sold		13,887			49,319			124,076			88,017
Selling, General and Administrative		218			848			998			1,536
Plant Restructuring Charge (a)		1,714			-			3,496			-
Interest Expense (b)		453			533			1,077			1,072
Total cost and expenses		16,272			50,700			129,647			90,625
Loss From Discontinued Operations Before Income Taxes		(5,522	)		(4,105	)		(19,598	)		(4,543	)
Gain on the Sale of Assets and Other Income Before Income Taxes (c) (d)		(24,628	)		-			(30,266	)		-
Income Tax Expense (Benefit)		4,356			(1,562	)		2,513			(1,791	)
Net Earnings (Loss) From Discontinued Operations, Net of Tax	$	14,750		$	(2,543	)	$	8,155		$	(2,752	)

(a) Includes $1,653,000 and $1,648,000 of Modesto severance in the three and six month periods of fiscal 2019, 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.

(c) Includes a $24,211,000 gain as a result of LIFO layer liquidations from the disposal of the remaining inventory in the second quarter of 2019.

(d) Includes $4,975,000 gain on the sale of bins for the six months period.


Supplemental Information on Discontinued Operations:
Capital Expenditures	-	542	3,937	1,268
Depreciation	618	499	1,295	1,092

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SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 29, 2018

5.4.

~~Revolving Credit Facility~~

The Company completed the closing of a new five-year revolving credit facility (“Revolver”) on July 5, 2016. Maximum borrowings under the Revolver total $400,000,000 from April through July and $500,000,000 from August through March. The Revolver balance as of September 30, 2017 was $272,609,000 and is included in Long-Term Debt in the accompanying Condensed Consolidated Balance Sheet since the Revolver matures on July 5, 2021. 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.Revenue Recognition

The Company adopted Accounting Standard Codification Topic 606, Revenue from Contracts with Customer (“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:

Nature of products

We manufacture and sell the following:

private label products to retailers, such as supermarkets, mass merchandisers, and specialty retailers, for resale under the retailers’ own or controlled labels;

private label and branded products to the foodservice industry, including foodservice distributors and national restaurant operators;

branded products under our own proprietary brands, primarily on a national basis to retailers;

branded products under co-pack agreements to other major branded companies for their distribution; and

products to our industrial customer base for repackaging in portion control packages and for use as ingredients by other food manufacturers.

Disaggregation of revenue

In the following table, segment revenue is disaggregated by product category groups.

	Three Months Ended				Six Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Canned Vegetables	$	209.7	$	184.9	$	371.6	$	338.7
B&G*		31.7		68.8		39.0		79.9
Frozen		29.7		24.2		57.8		51.2
Fruit Products		22.3		24.1		43.5		44.5
Chip Products		3.2		3.3		5.2		5.5
Prepared Foods	19.9		19.4			37.3		41.1
Other		4.2		3.0		10.4		7.9
	$	320.7	$	327.7	$	564.8	$	568.8

*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)

September 29, 2018

When Performance Obligations Are Satisfied

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.

Revenue recognition is completed primarily on 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.

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.

The performance obligations in our contracts are satisfied within one year. As such, we have not disclosed the transaction price allocated to remaining performance obligations as of September 29, 2018.

Significant Payment Terms

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 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.

Shipping

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.

Variable Consideration

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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SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 29, 2018

Contract balances

Contract asset and liability balances as of September 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.

Contract Costs

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.

Impact of Adoption

Due to the changes in ASC 606, the September 30, 2017 inventory increased $3.9 million and deferred revenue increased $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 (Loss) items.

Condensed Consolidated Statements of Net Earnings (Loss) (in thousands)

	For the Three Months Ended
				September 30, 2017
	As Reported (1)			606 Adjustments		Less Discontinued Operations				As Adjusted
Net sales	$	338,470		$	35,789	$	(	46,595	)	$	327,664
Cost of products sold		321,059			34,253		(	49,319	)		305,993
Gross profit (loss)		17,411			1,536			2,724			21,671
Operating (loss) income		(1,409	)		1,536			3,572			3,699
Loss (earnings) before income taxes		(4,842	)		3,005			4,105			2,268
Net loss (earnings) from continuing operations		(2,958	)		1,858			2,543			1,443

	For the Six Months Ended
				September 30, 2017
	As Reported (1)			606 Adjustments		Less Discontinued Operations				As Adjusted
Net sales	$	627,397		$	27,524	$	(	86,082	)	$	568,839
Cost of products sold		594,451			27,233		(	88,017	)		533,667
Gross profit (loss)		32,946			291			1,935			35,172
Operating (loss) income		(796	)		291			3,471			2,966
Loss (earnings) before income taxes		(7,425	)		3,227			4,543			345
Net loss (earnings) from continuing operations		(3,938	)		1,996			2,752			810

(1) These reported amounts for the three and six months ended September 30, 2017 are restated amounts. See the Company's Annual Report on Form 10-K for the year ended March 31, 2018 which was filed on June 29, 2018 and the amended 10-Q filed September 7, 2018 for more information on the restatement.

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SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 29, 2018

5.	Inventories

First-In, First-Out (“FIFO”) based inventory costs exceeded LIFO based inventory costs by $134,953,000 as of the end of the second quarter of fiscal 2019 as compared to $151,096,000 as of the end of the second quarter of fiscal 2018. The change in the LIFO Reserve for the three months ended September 29, 2018 was a net decrease of $9,550,000 as compared to an increase of $10,398,000 (including a decrease of $361,000 related to Discontinued Operations) for the three months ended September 30, 2017. The current quarter net decrease includes a decrease of $24,211,000 related to the LIFO impact of a gain related to the disposition of Modesto Fruit (reduction in inventory units) which is included in Earnings from Discontinued Operations and is partially offset by an increase of $14,661,000 related to Continuing Operations included in Cost of Product Sold which is primarily due to higher steel costs for the Company's cans and higher pack costs for peas due to reduced yields in the fields.

The change in the LIFO Reserve for the six months ended September 29, 2018 was a net decrease of $10,054,000 as compared to an increase of $17,841,000 (including a decrease of $654,000 related to Discontinued Operations) for the six months ended September 30, 2017. The year-to-date net decrease includes a decrease of $24,211,000 related to the LIFO impact of gain on sale of Modesto Fruit which is included in Earnings From Discontinued Operations and includes an increase of $14,157,000 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 2019 versus fiscal 2018.

6.	Revolving Credit Facility

The Company completed the closing of a new five-year revolving credit facility (“Revolver”) on July 5, 2016. Maximum borrowings under the Revolver total $400,000,000 from April through July and $500,000,000 from August through March. The Revolver balance as of September 29, 2018 was $242,947,000 and is included in Long-Term Debt in the accompanying Condensed Consolidated Balance Sheet since the Revolver matures on July 5, 2021. The total unused credit availability was $243,500,000 as of September 29, 2018. 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 decrease in ~~average~~the reported end of period amount of Revolver borrowings during the first six months of fiscal ~~2018~~2019 compared to the first six months of fiscal ~~2017~~2018 was attributable to ~~the $100,000,000 term loan from Farm Credit less the acquisition of $14,420,000 made during the first six months of fiscal 2018, Accounts Receivables~~Working Capital which ~~are $3,526,000 higher~~is $54,536,000 lower than the same period last year ~~(excluding~~primarily due to the amount from the acquisition), and total Inventories, excluding the inventories of the acquisition, which are $41,386,000 higher than the same period last year, partially offset by net earnings in the last twelve months ended September 30, 2017 of $4,171,000.Modesto disposal.

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

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SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 29, 2018

The following table documents the quantitative data for Revolver borrowings during the second quarter and year-to-date ~~periods~~ of fiscal ~~2018~~2019 and fiscal ~~2017:~~2018:

	Second Quarter						Year-to-Date						Second Quarter						Year-to-Date
	2018			2017			2018			2017			2019			2018			2019			2018
	(In thousands)						(In thousands)						(In thousands)						(In thousands)
Reported end of period:
Outstanding borrowings	$	272,609		$	342,935		$	272,609		$	342,935		$	242,947		$	272,609		$	242,947		$	272,609
Weighted average interest rate		2.75	%		1.88	%		2.75	%		1.88	%		3.73	%		2.75	%		3.73	%		2.75	%
Reported during the period:
Maximum amount of borrowings	$	274,117		$	361,800		$	274,117		$	361,800		$	242,947		$	274,117		$	294,062		$	274,117
Average outstanding borrowings	$	244,160		$	314,102		$	229,235		$	284,287		$	220,917		$	244,160		$	241,855		$	229,235
Weighted average interest rate		2.58	%		1.78	%		2.45	%		1.93	%		3.64	%		2.58	%		3.56	%		2.45	%

6.7.	Stockholders’ Equity

	During the six-month period ended September ~~30, 2017~~29, 2018, the Company repurchased ~~92,582~~51,867 shares ~~or $2,689,000~~ of its Class A Common Stock as Treasury ~~Stock and 200 shares or $7,000 of its Class B Common Stock also as Treasury~~ Stock. As of September ~~30, 2017,~~29, 2018, there are ~~2,392,928~~2,460,963 shares or ~~$69,195,000~~$71,135,000 of repurchased stock. These shares are not considered outstanding.

~~Table of Contents~~

~~SENECA FOODS CORPORATION AND SUBSIDIARIES~~
~~NOTES TO CONDENSED~~ ~~CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Unaudited)~~

~~September 30, 2017~~

7.8.	Retirement Plans

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

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	September 30, 2017			October 1, 2016			September 30, 2017			October 1, 2016			September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
	(In thousands)												(In thousands)
Service Cost	$	1,981		$	2,164		$	3,963		$	4,328		$	2,442		$	1,981		$	4,885		$	3,963
Interest Cost		1,985			1,919			3,971			3,838			2,243			1,985			4,486			3,971
Expected Return on Plan Assets		(3,482	)		(2,978	)		(6,967	)		(5,957	)		(3,596	)		(3,482	)		(7,192	)		(6,967	)
Amortization of Actuarial Loss		-			679			-			1,358
Amortization of Transition Asset		30			27			60			55
Amortization of Prior Service Cost														30			0			60			0
Amortization of Net Gain														303			30			605			60
Net Periodic Benefit Cost	$	514		$	1,811		$	1,027		$	3,622		$	1,422		$	514		$	2,844		$	1,027

There was no contribution to the pension plan in the three or six month ~~period~~periods ended September 29, 2018 or September 30, 2017. ~~There was a contribution~~

Table of ~~$300,000 made in the six month period ended October 1, 2016.~~Contents

SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 29, 2018

8.9.	Plant Restructuring ~~The following table summarizes the rollforward of restructuring charges and related asset impairment charges recorded and the accruals established:~~

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

Long-Lived

Severance
��
Asset Charges

Other Costs

Total

(In thousands)

Balance March 31, 2017
$ 37 $ 4,773 $ 305 $ 5,115
First quarter charge
36 9 36 81
Second quarter charge (credit)
- 8 (33 ) (25 )
Cash payments/write offs
(73 ) (3,888 ) (308 ) (4,269 )
Balance September 30, 2017
$ - $ 902 $ - $ 902

Balance March 31, 2016
$ - $ 4,975 $ 3,897 $ 8,872
First quarter charge (credit)
127 (6 ) 1,064 1,185
Second quarter charge (credit)
112 (286 ) 451 277
Cash payments/write offs
(123 ) 240 (3,242 ) (3,125 )
Balance October 1, 2016
$ 116 $ 4,923 $ 2,170 $ 7,209

	Restructuring Payable
	Severance			Other Costs		Total
	(In thousands)

Balance March 31, 2018	$	-		$	-	$	-
First quarter charge		110			-		110
Second quarter charge		841			-		841
Cash payments/write offs		(173	)		-		(173	)
Balance September 29, 2018	$	778		$	-	$	778

	Severance			Other Costs			Total
	(In thousands)

Balance March 31, 2017	$	37		$	305		$	342
First quarter charge		36			36			72
Second quarter credit		-			(33	)		(33	)
Cash payments/write offs		(73	)		(308	)		(381	)
Balance September 30, 2017	$	-		$	-		$	-

During ~~fiscal 2016,~~the quarter ended September 29, 2018, the Company recorded a restructuring charge of ~~$10,302,000~~$845,000 related to the closing and sale of ~~a plant~~plants in the East and Northwest of which ~~$162,000~~$841,000 was related to severance cost, ~~$5,065,000 was related to asset impairments (contra fixed assets),~~ and ~~$5,075,000~~$4,000 which was related to other costs (mostly ~~operating lease costs)~~equipment moves). During ~~fiscal 2017,~~the quarter ended June 30, 2018, the Company ~~adjusted this~~recorded a restructuring charge ~~by $1,829,000~~of $38,000, related to the closing of ~~this~~plants in the Northwest ~~plant~~ of which ~~a charge of $1,578,000~~$110,000 was related to severance cost ~~a credit of $384,000 was related to asset impairments (contra fixed assets),~~ and ~~charge of $635,000~~$20,000 was related to other costs (mostly ~~operating lease costs)~~equipment moves), which was partially offset by an asset impairment correction of $(92,000).

During the six months ended September 30, 2017, the Company recorded ~~an additional~~a restructuring charge of ~~$57,000~~$56,000 related to the previous closing of ~~this~~a Northwest ~~plant.~~plant of which $36,000 was related to severance costs..

9.10.

Other Operating Income and Expense

During the six months ended September 30, 2017, the Company sold unused fixed assets which resulted in a gain of $1,591,000 as compared to a loss of $48,000 during the six months ended October 1, 2016. $1,081,000 of the current year gain was related to the sale of a closed plant in the Midwest. In addition, the Company recorded a bargain purchase gain of $1,096,000 as discussed in the Acquisition footnote. These items are included in other operating income in the Unaudited Condensed Consolidated Statements of Net Earnings.

During the six months ended September 29, 2018, the Company sold unused fixed assets which resulted in a gain of $4,060,000 as compared to a gain of $1,591,000 during the six months ended September 30, 2017. The current year gain was related to the sale of a closed plant in the Midwest. The Company also recorded a bargain purchase gain of $1,096,000 during the six months ended September 30, 2017. These items are included in other operating income in the Unaudited Condensed Consolidated Statements of Net Earnings.

11.	Recently Issued Accounting Standard

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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SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September ~~30, 2017~~29, 2018

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.

~~10.~~

~~Recently Issued Accounting Standards~~

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will be effective for the Company on April 1, 2018 (beginning of fiscal 2019). Early adoption is permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has selected the modified retrospective approach for its transition method and applied the five-step model of the new standard to a selection of contracts within each of the revenue streams and has compared the results to our current accounting practices. The Company has evaluated the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has substantially completed its evaluation of significant contracts and is currently assessing the impact of adopting the standards update on our consolidated financial statements. The Company will continue its evaluation of the standards update through the date of adoption.

In February 2016, the FASB issued ~~Accounting Standards Update No.~~ASU 2016-02, ~~Leases~~. ~~The new standard~~“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. ~~The new standard~~This guidance is effective for ~~fiscal years~~annual periods beginning after December 15, ~~2018 (beginning fiscal 2020~~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. 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), including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees~~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 ~~operating leases existing at, or entered into after,~~other financial statement users to better understand the ~~beginning~~amount, timing and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the ~~earliest comparative period presented~~amounts recorded in the financial ~~statements, with certain practical expedients available. While we are still evaluating the impact of our pending adoption of the new standard on our~~statements. Our leasing activity is primarily related to buildings and equipment. The Company is continuing to evaluate potential impacts to its consolidated financial statements ~~we expect that upon adoption we will recognize ROU assets and lease liabilities and that the amounts could be material.~~

In January 2017, the FASB issued ~~Accounting Standards Update~~ASU No. 2017-01 ("ASU 2017-01"), Business Combinations (Topic 805): Clarifying the Definition of a Business 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 does not expect the adoption of ASU 2017-01 to have a material impact on its consolidated financial statements.

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.

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 September ~~30, 2017.~~29, 2018.

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SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September ~~30, 2017~~

29, 2018

~~11.~~12.

(Loss) Earnings per Common Share

~~(Loss) earnings per share for the quarters ended September 30, 2017 and October 1, 2016 are as follows:~~From Continuing Operations

(Loss) earnings per share for the quarters ended September 29, 2018 and September 30, 2017 are as follows:

	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 2018			Fiscal 2017		Fiscal 2018			Fiscal 2017		Fiscal 2019			Fiscal 2018		Fiscal 2019			Fiscal 2018
	(Restated)			(Restated)		(Restated)			(Restated)
Basic

Net (loss) earnings	$	(2,958	)	$	6,821	$	(3,938	)	$	7,786
(Loss) earnings from continuing operations											$	(5,634	)	$	1,443	$	(7,794	)	$	810
Deduct preferred stock dividends paid		6			6		12			12		6			6		12			12

Undistributed (loss) earnings		(2,964	)		6,815		(3,950	)		7,774
(Loss) earnings attributable to participating preferred		(12	)		62		(22	)		71
Undistributed (loss) earnings from continuing operations												(5,640	)		1,437		(7,806	)		798
(Loss) earnings from continuing operations attributable to participating preferred												(22	)		6		(30	)		4

(Loss) earnings attributable to common shareholders	$	(2,952	)	$	6,753	$	(3,928	)	$	7,703
(Loss) earnings from continuing operations attributable to common shareholders											$	(5,618	)	$	1,431	$	(7,776	)	$	794

Weighted average common shares outstanding		9,792			9,792		9,803			9,800		9,729			9,803		9,729			9,803

Basic (loss) earnings per common share	$	(0.30	)	$	0.69	$	(0.40	)	$	0.79
Basic (loss) earnings per common share from continuing operations											$	(0.58	)	$	0.15	$	(0.80	)	$	0.08

Diluted

(Loss) earnings attributable to common shareholders	$	(2,952	)	$	6,753	$	(3,928	)	$	7,703
(Loss) earnings from continuing operations attributable to common shareholders											$	(5,618	)	$	1,431	$	(7,776	)	$	794
Add dividends on convertible preferred stock		5			5		10			10		-			5		-			10

(Loss) earnings attributable to common stock on a diluted basis	$	(2,947	)	$	6,758	$	(3,918	)	$	7,713
(Loss) earnings from continuing operations attributable to common stock on a diluted basis											$	(5,618	)	$	1,436	$	(7,776	)	$	804

Weighted average common shares outstanding-basic		9,792			9,792		9,803			9,800		9,729			9,803		9,729			9,803
Additional shares issued related to the equity compensation plan		-			3		-			3		-			2		-			2
Additional shares to be issued under full conversion of preferred stock		-			67		-			67		-			67		-			67

Total shares for diluted		9,792			9,862		9,803			9,870		9,729			9,872		9,729			9,872

Diluted (loss) earnings per common share	$	(0.30	)	$	0.69	$	(0.40	)	$	0.78
Diluted (loss) earnings per common share from continuing operations											$	(0.58	)	$	0.15	$	(0.80	)	$	0.08

Table of Contents

~~Note: For fiscal~~SENECA FOODS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 29, 2018 ~~add backs for equity compenstion and additional shares that were dilutive were excluded.~~

~~12.~~

~~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 $398,725,000 and an estimated fair value of $398,597,000 as of September 30, 2017. As of March 31, 2017, the carrying amount was $332,633,000 and the estimated fair value was $332,926,000. Capital lease obligations, including current portion had a carrying amount of $43,722,000 and an estimated fair value of $41,164,000 as of September 30, 2017. As of March 31, 2017, the carrying amount was $39,033,000 and the estimated fair value was $37,505,000. The fair values of all the other financial instruments approximate their carrying value due to their short-term nature.

13.

~~Income Taxes~~

The effective tax rate was 47.0% and 32.1% for the six month periods ended September 30, 2017 and October 1, 2016, respectively. The 14.9% percentage point increase in the effective tax rate represents an increase in tax benefit as a percentageFair Value of book loss when compared to the same period last year. The major contributors to this increase are a result of the Truitt acquisition. The bargain purchase gain is non-taxable and the deferred tax liability related to the outside basis difference in the Truitt investment was written off because the investment can now be recovered in a tax-free manner. 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 $354,397,000 and an estimated fair value of $354,304,000 as of September 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 $37,300,000 and an estimated fair value of $34,095,000 as of September 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.

14.	Income Taxes

The effective tax rate from continuing operations was 26.0% and (134.8)% for the six month periods ended September 29, 2018 and September 30, 2017, respectively. Of the 160.8 percentage point increase in the effective tax rate, the change in the income tax rate resulting from the Tax Cuts and Jobs Act accounts for a 14% decrease. The significant increases in the effective tax rate for 2018 include the following. The effect of the bargain purchase gain and the outside basis difference write-off for the purchase of Truitt Brothers. These items account for a 167.1% increase in the tax rate in 2019 compared to 2018.

15.	Subsequent Events

On October 9, 2018, the Company completed the sale of its Modesto facility with net proceeds of $63,326,000 and is expecting a gain on the transaction of approximately $53,864,000 before income taxes.

On November 5, 2018, the Company amended the Farm Credit term loan. The amendment lowered the variable interest rate for this loan by 0.10%.

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ITEM 2 ~~MANAGEMENT'S~~MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Unaudited)

September ~~30, 2017~~

29, 2018

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. ~~In addition, the~~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, the Company announced production at its fruit (primarily peaches) processing plant in Modesto, California will cease prior to the 2018 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 continued to ready the building and equipment for sale. 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. Subsequent to the date of these financial statements, the building and the land was sold to an unrelated third party for net proceeds of $63,326,000 and the Company is expecting to auction off the equipment in the third quarter. See note 3 Discontinued Operations for more details.

The Company’s raw product is harvested mainly between June through November.

Results of ~~Operations:~~Operations

Sales:

~~Second~~The second fiscal quarter ~~2018~~2019 results include net continuing sales of ~~$338,470,000,~~$320,660,000, which represents a ~~4.0%~~2.1% decrease, or ~~$14,136,000,~~$7,004,000, from the second quarter of fiscal 2017. The net decrease in sales is a sales volume decrease of ~~$13,266,000 and to lower~~$9,950,000 partially offset by higher selling prices/sales mix of ~~$870,000.~~$2,946,000. The decrease in sales is primarily from a ~~$19,587,000~~$37,088,000 decrease in B&G Foods, Inc. sales, a ~~$13,527,000~~$1,844,000 decrease in other Canned Fruit sales partially offset by a ~~$2,945,000 decrease~~$24,797,000 increase in Canned Vegetable sales, a $5,548,000 increase in Frozen sales a $1,214,000 increase in Other sales and a ~~$461,000~~$433,000 increase in Prepared Food sales.

The first half of fiscal 2019 results include net continuing sales of $564,753,000, which represents a 0.7% decrease, or $4,086,000, from the first half of fiscal 2018. The net decrease in ~~Snack~~ sales is a sales volume decrease of $18,824,000 partially offset by ~~from acquisition of Truitt during the current year with sales of $19,446,000, a $2,141,000 increase in Frozen sales, a $797,000 increase in Canned Vegetable sales,~~

Six months ended September 30, 2017 include net sales of $627,397,000, which represents a 0.4% increase, or $2,656,000, from the first six months of fiscal 2017. The increase in sales is sales volume increase of $3,000,000 partially offset by lowerhigher selling prices/sales mix of ~~$344,000.~~$14,738,000. The ~~increase~~decrease in sales is primarily from ~~the acquisition of Truitt during the current year with sales of $41,138,000,~~ a ~~$13,286,000 increase in Canned Vegetable sales, $5,927,000 increase in Frozen sales, partially offset by a $22,794,000 decrease in Canned Fruit sales, a $29,905,000~~$40,901,000 decrease in B&G Foods, Inc. sales, a ~~$2,846,000~~$3,894,000 decrease in ~~Other~~Prepared Food sales, a $1,136,000 decrease in other Canned Fruit sales, partially offset by a $32,947,000 increase in Canned Vegetable sales, a $6,656,000 increase in Frozen sales and a ~~$2,150,000 decrease~~$2,567,000 increase in ~~Snack~~Other sales.

~~The following table presents sales by product category (in millions):~~

Three Months Ended

Six Months Ended

September 30,
2017

October 1,
2016

September 30,
2017

October 1,
2016

(Restated) (Restated) (Restated) (Restated)
Canned Vegetables
$ 184.9 $ 184.1 $ 338.7 $ 325.4
B&G*
33.0 52.6 52.3 82.2
Frozen
24.2 22.0 51.2 45.2
Fruit Products
70.7 84.3 130.7 153.5
Chip Products
3.3 3.7 5.5 7.7
Truitt

19.4
0.0 41.1 0.0
Other
3.0 5.9 7.9 10.7
$ 338.5 $ 352.6 $ 627.4 $ 624.7

*B&G includes frozen vegetable sales exclusively for B&G.

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ITEM 2 ~~MANAGEMENT'S~~MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Unaudited)

September ~~30, 2017~~29, 2018

The following table presents continuing sales by product category (in millions):

	Three Months Ended				Six Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Canned Vegetables	$	209.7	$	184.9	$	371.6	$	338.7
B&G*		31.7		68.8		39.0		79.9
Frozen		29.7		24.2		57.8		51.2
Fruit Products		22.3		24.1		43.5		44.6
Chip Products		3.2		3.3		5.2		5.4
Prepared Foods	19.9		19.4			37.3		41.1
Other		4.2		3.0		10.4		7.9
	$	320.7	$	327.7	$	564.8	$	568.8

*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						Six Months Ended
	September 30, 2017			October 1, 2016			September 30, 2017			October 1, 2016			Three Months Ended						Six Months Ended
		(Restated)			(Restated)			(Restated)			(Restated)		September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Gross Margin		5.1	%		8.8	%		5.3	%		8.5	%		3.4	%		6.6	%		4.9	%		6.2	%

Selling		2.7	%		2.6	%		2.8	%		2.8	%		2.7	%		2.6	%		2.9	%		2.9	%
Administrative		2.8	%		2.7	%		2.9	%		2.9	%		3.0	%		2.9	%		3.4	%		3.2	%
Plant Restructuring		0.0	%		0.1	%		0.0	%		0.2	%		0.3	%		0.0	%		0.2	%		0.0	%
Other Operating Income		0.0	%		0.0	%		-0.4	%		0.0	%
Other Operating (Income) Expense														-1.0	%		0.0	%		-0.8	%		-0.5	%

Operating Income		-0.4	%		3.4	%		-0.1	%		2.5	%
Operating (Loss) Income														-1.5	%		1.1	%		-0.9	%		0.5	%

Interest Expense, Net		1.0	%		0.6	%		1.1	%		0.7	%		1.2	%		0.9	%		1.4	%		1.0	%

For the three month period ended September ~~30, 2017,~~29, 2018, the gross margin decreased from the prior year quarter from ~~8.8%~~6.6% to ~~5.1%~~3.4% due primarily to lower volume and cost increases in the second quarter of 2019 and a higher LIFO charge. The LIFO charge for continuing operations for the second quarter ended September 29, 2018 was $14,661,000 as compared to a charge of $10,759,000 for the second quarter ended September 30, 2017 ~~which was $12,053,000 as compared to a charge of $1,361,000 for the second quarter ended October 1, 2016~~ and reflects the impact on the quarter of higher cost increases ~~expected~~for steel and lower yields with peas incurred in fiscal ~~2018,~~2019, compared with smaller cost increases to fiscal ~~2017.~~2018. On an after-tax basis, LIFO net earnings decreased by ~~$7,834,000~~$10,996,000 for the quarter ended September 29, 2018 and decreased LIFO net earnings by $6,993,000 for the quarter ended September 30, 2017, ~~and decreased LIFO net earnings by $885,000 for the quarter ended October 1, 2016,~~ based on the historical statutory federal income tax rate.

For the six month period ended September ~~30, 2017,~~29, 2018, the gross margin decreased from the prior year period from ~~8.5%~~6.2% to ~~5.3%~~4.9% due primarily to lower volume and cost increases, partially offset by a ~~higher~~lower LIFO charge in the current year. The LIFO charge for from continuing operations for the ~~six months~~first half ended September ~~30, 2017~~29, 2018 which was ~~$19,354,000~~$14,157,000 as compared to a charge of ~~$2,413,000~~$18,495,000 for the ~~six months~~first half ended ~~October 1, 2016~~September 30, 2017 and reflects the impact on the ~~six months~~quarter of lower cost increases ~~expected~~incurred in fiscal ~~2018,~~2019, compared with smaller cost increases to ~~cost decreases in~~ fiscal ~~2017.~~2018. On an after-tax basis, LIFO net earnings increased by $10,618,000 for the first half ended September 29, 2018 and decreased LIFO net earnings by ~~$12,580,000~~$12,022,000 for the ~~six months~~first half ended September 30, 2017, ~~and decreased net earnings by $1,568,000 for the six months ended October 1, 2016,~~ based on the historical statutory federal income tax rate.

Table of Contents

ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Unaudited)

September 29, 2018

For the three month period ended September ~~30, 2017,~~29, 2018, selling costs as a percentage of sales increased from 2.6% to 2.7% ~~for the same period in~~compared to the prior year. For the six month period ended September ~~30, 2017,~~29, 2018, selling costs as a percentage of sales remained ~~unchanged at 2.8% from~~ the same ~~period in~~at 2.9% compared to the prior year. ~~The three month increase is primarily as a result of the Green Giant sales decrease, which don't incur selling costs.~~

For the three month period ended September ~~30, 2017,~~29, 2018, administrative expense as a percentage of sales increased from ~~2.7%~~2.9% to ~~2.8%~~3.0%. For the six month period ended September ~~30, 2017,~~29, 2018, administrative expense as a percentage of sales ~~was unchanged at 2.9%~~increased from 3.2% to 3.4%. This is primarily due to lower sales during the quarter and six months compared to same periods in the prior year and the fixed nature of these administrative costs.

During the six months ended September ~~30, 2017,~~29, 2018, the Company sold ~~some~~ unused fixed assets which resulted in a gain of ~~$1,591,000. $1,081,000~~$4,060,000 as compared to a gain of $1,591,000 during the six months ended September 30, 2017. The current year gain was related to the sale of a closed plant in the Midwest. ~~In addition, the~~The Company recorded a bargain purchase gain of $1,096,000 ~~as discussed in the Acquisition footnote to the Condensed Consolidated Financial Statements. During~~during the six months ended ~~October 1, 2016, the Company sold some unused fixed assets which resulted in a loss of $48,000.~~September 30, 2017. These items are included in other operating income in the Unaudited Condensed Consolidated Statements of Net Earnings.

~~Table of Contents~~

~~ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS~~

~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~September 30, 2017~~

Interest expense for the ~~second~~first quarter ended September ~~30, 2017,~~29, 2018, as a percentage of sales, increased to 1.2% from ~~0.6% to 1.0%~~0.9% in second quarter ended ~~October 1, 2016. For~~September 30, 2017. Interest expense for the six ~~month period~~months ended September ~~30, 2017, interest expense~~29, 2018, as a percentage of sales, increased to 1.4% from ~~0.7% to 1.1% compared to six months~~1.0% in second quarter ended ~~October 1, 2016.~~September 30, 2017. During fiscal ~~2018,~~2019, overall borrowings and interest rates were higher than the previous year.

Income Taxes:

The effective tax rate from continuing operations was ~~47.0%~~26.0% and ~~32.1%~~(134.8)% for the six month periods ended September 29, 2018 and September 30, 2017, ~~and October 1, 2016,~~ respectively. ~~The 14.9%~~Of the 160.8 percentage point increase in the effective tax rate, ~~represents an increase~~the change in the income tax ~~benefit as~~rate resulting from the Tax Cuts and Jobs Act accounts for a ~~percentage of book loss when compared to~~14% decrease. The significant increases in the ~~same period last year.~~effective tax rate for 2018 include the following. The ~~major contributors to this increase are a result~~effect of the ~~Truitt acquisition. The~~ bargain purchase gain ~~is non-taxable~~ and ~~the deferred tax liability related to~~ the outside basis difference write-off for the purchase of Truitt Brothers. These items account for a 167.1% increase in the ~~Truitt investment was written off because the investment can now be recovered~~tax rate in ~~a tax-free manner.~~2019 compared to 2018.

~~Earnings~~(Loss) per Share:

~~Basic~~Continuing basic and diluted (loss) earnings per share were ~~$(0.30)~~$(0.58) and ~~$0.69~~$0.15 for the three months ended September 29, 2018 and September 30, 2017, respectively. Continuing basic and ~~October 1, 2016, respectively. Diluted~~diluted (loss) earnings per share were ~~$(0.30)~~$(0.80) and ~~$0.69 for the three months ended September 30, 2017 and October 1, 2016, respectively. Basic (loss) earnings per share were $(0.40) and $0.79~~$0.08 for the six months ended September ~~30, 2017~~29, 2018 and ~~October 1, 2016, respectively. Diluted earnings per share were $(0.40) and $0.78 for the six months ended~~ September 30, 2017, ~~and October 1, 2016,~~ respectively. For details of the calculation of these amounts, refer to footnote 1112 of the Notes to Condensed Consolidated Financial Statements.

Table of Contents

ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Unaudited)

September 29, 2018

Liquidity and Capital Resources:

The financial condition of the Company is summarized in the following table and explanatory review:

	September 30,		October 1,		March 31,		March 31,
	2017		2016		2017		2016		September 29,		September 30,		March 31,		March 31,
		(Restated)		(Restated)		(Restated)		(Restated)	2018		2017		2018		2017
Working Capital:
Balance	$	591,801	$	575,139	$	541,385	$	254,200	$	554,759	$	609,295	$	602,504	$	555,993
Change in Quarter	$	38,965		79,306						55,783		41,981
Long-Term Debt, Less Current Portion		395,128		354,905		329,138		35,967		353,549		387,693		407,733		329,138
Capital Lease Obligations, Less Current Portion		37,879		18,425		34,194		4,988		30,757		36,371		34,331		34,194
Total Stockholders' Equity Per Equivalent
Common Share (see Note below)		42.44		40.21		42.72		39.40		41.82		43.53		41.66		43.63
Stockholders' Equity Per Common Share		42.83		40.72		43.27		39.90		42.20		43.94		42.05		44.20
Current Ratio		2.49		2.60		4.05		1.55		2.88		2.86		5.35		5.20

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 78 of the Notes to Consolidated Financial Statements of the Company’s ~~2017~~2018 Annual Report on Form 10-K for conversion details.

As shown in the Condensed Consolidated Statements of Cash Flows, net cash ~~used in~~provided by operating activities was $66,719,000 in the first six months of fiscal 2019, compared to net cash used by operating activities of $17,790,000 in the first six months of fiscal ~~2018, compared~~2018. The $84,509,000 increase in cash provided is primarily attributable to ~~$28,421,000 in the first six months of fiscal 2017. The $10,631,000~~a $119,885,000 decrease in cash used ~~is primarily attributable to an $214,135,000 increase in~~for inventory in the first six months of fiscal ~~2018~~2019 as compared to ~~$192,203,000 increase in inventory in~~ the first six months of fiscal ~~2017,~~2018, which includes a ~~$53,884,000 increase~~$55,800,000 sale of Fruit inventory to PCP, in the first quarter partially offset by a $4,332,000 decrease in cash provided by other current assets, a $2,450,000 decrease in cash provided by income taxes, and a $39,092,000 decrease in cash provided by accounts payable, ~~deferred revenue,~~ accrued expenses and other liabilities a ~~$928,000 increase in cash provided by income taxes partially offset by decreased net earnings of $11,724,000 as previously discussed and an $8,234,000 increase~~$8,376,000 decrease in cash used by accounts ~~receivable.~~

~~Table~~receivable, and an increased net earnings of ~~Contents~~

~~ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS~~

~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~September 30, 2017~~

$2,303,000.

As compared to ~~October 1, 2016, inventory increased $57,462,000 to $859,146,000 at~~ September 30, 2017, inventory increased $27,635,000 to $683,897,000 at September 29, 2018 (including ~~$16,076,000 increase~~a $55,800,000 decrease from the ~~Truitt Bros. Inc. acquisition)~~Pacific Coast Producers inventory sale). The components of the inventory increase reflect a ~~$52,284,000~~$9,692,000 increase in finished goods, a ~~$14,189,000~~$8,071,000 increase in work in process and a ~~$9,011,000 decrease~~$9,872,000 increase in raw materials and supplies. The finished goods increase ~~is primarily due to the Truitt acquisition and~~ reflects higher inventory quantities ~~due~~attributable to the ~~magnitude and timing of the fiscal~~higher calendar year 2018 pack versus ~~fiscal~~the calendar year 2017 pack partially offset by ~~increased sales volume as compared~~the $55,800,000 inventory sale to ~~the prior year.~~PCP. The raw materials and supplies ~~decrease~~increase is primarily due to ~~a decrease~~an increase in cans and raw steel quantities compared to the prior year. FIFO based inventory costs exceeded LIFO based inventory costs by ~~$163,193,000~~$134,953,000 as of the end of the second quarter of ~~2018~~2019 as compared to ~~$156,351,000~~$151,096,000 as of the end of the second quarter of ~~2017.~~2018.

Cash used in investing activities was $263,000 in the first six months of fiscal 2019 compared to cash used in investing activities of $26,373,000 in the first six months of fiscal ~~2018 compared~~2018. Additions to ~~cash used in investing activities of $14,505,000~~property, plant and equipment were $20,318,000 in the first six months of fiscal ~~2017. Additions~~2019 as compared to ~~property, plant and equipment were~~ $13,743,000 in first six months of fiscal 2018. The Company received proceeds from the sale of assets of $20,055,000 in the first six months of fiscal ~~2018~~2019 as compared to ~~$14,518,000~~$1,790,000 in the first six months of fiscal ~~2017. The prior year purchases include $4,767,000 of fixed assets purchased from Monsanto in connection with our seed processing in August 2016.~~2018. In April 2017, the Company acquired the other 50% of Truitt Bros., Inc. for $14,420,000 (net of cash acquired).

Cash provided byused in financing activities was ~~$47,111,000~~$68,763,000 in the first six months of fiscal ~~2018,~~2019, which included borrowings of ~~$282,862,000~~$237,304,000 and the repayment of ~~$232,706,000~~$304,777,000 of long-term debt, principally consisting of ~~borrowing~~borrowings and ~~repayment~~repayments on the revolving credit facility (“Revolver”). Cash provided by financing activities was $44,448,000 in the first six months of fiscal 2017, which included borrowings of $183,744,000 and the repayment of $136,613,000 of long-term debt, principally consisting of borrowing and repayment on the Revolver. Other than borrowings under the Revolver, there was no new long-term debt during the first six months of fiscal ~~2018. During~~2018 other than the ~~six months ended October 1, 2016,~~$13,470,000 acquired via the ~~Company~~acquisition of Truitt Bros., Inc. of which $3,515,000 was paid off ~~$22,596,000 of Industrial Revenue Bonds. During the six months ended September 30, 2017, the~~immediately. The Company repurchased $1,579,000 and $2,696,000 of ~~its Class A~~stock during the second quarter of fiscal year 2019 and ~~Class B Common Stock as treasury stock compared to $1,021,000 in the prior period.~~2018, respectively.

Table of Contents

~~During the six months ended~~

ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Unaudited)

September ~~30, 2017, the Company entered into $7,155,000 of equipment capital leases compared to $15,416,000 in the same period in the prior year.~~29, 2018

The Company ~~completed the closing of~~entered into a ~~new~~ 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 total unused credit availability was $243,500,000 as of September 29, 2018. 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 September ~~30, 2017,~~29, 2018, the interest rate was approximately ~~2.75%~~3.73% on a balance of ~~$272,609,000.~~$242,947,000. 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. At September ~~30, 2017,~~29, 2018, the Company was in compliance with all such financial covenants.

~~Table of Contents~~

~~ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS~~

~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~September 30, 2017~~

New Accounting Standards

Refer to footnote 1011 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.

Table of Contents

ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Unaudited)

September 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;

●

cost and availability of commodities and other raw materials such as vegetables, steel and packaging materials;

●

transportation costs;

●

climate and weather affecting growing conditions and crop yields;

●

the availability of financing;

●

leverage and the Company’s ability to service and reduce its debt;

●

foreign currency exchange and interest rate fluctuations;

●

effectiveness of the Company’s marketing and trade promotion programs;

●

changing consumer preferences;

●

competition;

●

product liability claims;

●

the loss of significant customers or a substantial reduction in orders from these customers;

●

changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including environmental and health and safety regulations; and

●

other risks detailed from time to time in the reports filed by the Company with the SEC.

~~Table of Contents~~

~~ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS~~

~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~September 30, 2017~~

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 six months ended September 29, 2018, the Company sold $38,302,000 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 $73,096,000 for the six months ended September 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, 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.

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.

1723

Table of Contents

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, ~~2017.~~2018.

1824

Table of Contents

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 September ~~30, 2017,~~29, 2018, our disclosure controls and procedures were ~~not effective due~~effective. The Company continues to examine, refine and formalize its disclosure controls and procedures and to monitor ongoing developments in this area.

During the three months ended September 29, 2018, management completed it remediation plan related to the previously reported material weakness in the ~~Company’s~~Company's internal control over financial reporting ~~reported in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018 that the Company determined was also present as of September 30, 2017.~~

~~As a result~~related to revenue recognition with respect to bill and hold transactions. Management completed its testing of the ~~control deficiencies identified in~~additional controls instituted during the ~~Company’s Annual Report on Form 10-K for the year ended March 31, 2018, the Company restated its unaudited quarterly financial information for the~~second fiscal ~~quarters ended September 30, 2017 and October 1, 2016. During the fiscal quarter ended September 30, 2017, there~~quarter. There were no other changes during the period covered by this report to the Company's internal control over financial reporting that has materially affected, or ~~are~~is reasonably likely to materially affect, the Company’s internal control over financial ~~reporting~~reporting.

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Table of Contents

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings

	Refer to footnote 14 to the Consolidated Financial Statements included in Part II Item 8 of the Annual Report on Form 10-K.

Item 1A.	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.

~~Refer to footnote 13 to the Consolidated Financial Statements included in Part II Item 8 of the Annual Report on Form 10-K.~~

~~Item 1A.~~

~~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, 2017 except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors.

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) or
										Part of Publicly		Shares that May
										Announced		Yet Be Purchased
	Class A			Class B		Class A		Class B		Plans or		Under the Plans or
Period	Common			Common		Common		Common		Programs		Programs
7/01/2018 –
7/31/2018		15,400	(1)		-	$	28.93	$	-		-
8/01/2018 –
8/31/2018		13,501			-	$	29.28	$	-		13,501
9/01/2018 –
9/30/2018		22,966			-	$	32.17	$	-		22,966
Total		51,867			-	$	30.45	$	-		36,467		1,029,691

Total Number of

Average Price Paid

Total Number

Maximum Number

Shares Purchased

per Share

of Shares

(or Approximate

Purchased as

Dollar Value) or

Part of Publicly

Shares that May

Announced

Yet Be Purchased

Class A

Class B

Class A

Class B

Plans or

Under the Plans or

Period

Common

Common

Common

Common

Programs

Programs

7/01/2017 – 7/31/2017
- - $ - $ -
8/01/2017 – 8/31/2017
89,532 200 $ 29.02 $ 32.53 89,732
9/01/2017 – 9/30/2017
3,050 - $ 29.92 $ - 3,050
Total
92,582 200 $ 29.06 $ 32.53 92,782 1,088,579

Note 1: These shares were purchased by the Company in open market transactions for the intended use by the trustees of 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

~~None.~~


	None.

Item 4.	Mine Safety Disclosures

	None.

Item 5.	Other Information

	None.

~~None.~~

Table of Contents

~~Item 5.~~

~~Other Information~~

~~None.~~

Item 6.

Exhibits

31.1	Certification of Kraig H. Kayser pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)


31.2	Certification of Timothy J. Benjamin pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)


32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

101

The following materials from Seneca Foods Corporation’s Quarterly Report on Form 10-Q for the ~~six~~three months ended September ~~30, 2017,~~29, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of net loss, (iii) condensed consolidated statements of comprehensive loss, (iv) condensed consolidated statements of cash flows, (v) condensed consolidated statement of stockholders’ equity and (vi) the notes to condensed consolidated financial statements.

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Table of Contents

SIGNATURES

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)~~
		(Company)





		/s/Kraig H. Kayser
~~September 7,~~ November 9, 2018
		Kraig H. Kayser
		President and
	~~Kraig H. Kayser~~ ~~President and~~	Chief Executive Officer


	~~/s/Timothy J. Benjamin~~
~~September 7, 2018~~
		/s/Timothy J. Benjamin
November 9, 2018
		Timothy J. Benjamin
		Chief Financial Officer

2128

	Consolidated Statements of Earnings (Loss) Three Months Ended
	September 30, 2017 (Unaudited)									October 1, 2016 (Unaudited)
	As						As			As					As
	Reported			Correction			Restated			Reported		Correction			Restated
Net Sales	$	376,308		$	(37,838	)	$	338,470		$	357,247	$	(4,641	)	$	352,606
Cost of Products Sold		355,904			(34,845	)		321,059			327,035		(5,454	)		321,581
Gross Profit		20,404			(2,993	)		17,411			30,212		813			31,025
Operating Income/(Loss)		1,584			(2,993	)		(1,409	)		11,202		813			12,015
Earnings/(Loss) Before Income Taxes		(1,849	)		(2,993	)		(4,842	)		8,781		813			9,594
Income Tax (Benefit) Expense		(737	)		(1,147	)		(1,884	)		2,637		136			2,773
Net Earnings (Loss)		(1,112	)		(1,846	)		(2,958	)		6,144		677			6,821
Earnings Per Common Share-Basic	$	(0.11	)	$	(0.19	)	$	(0.30	)	$	0.62	$	0.07		$	0.69
Earnings Per Common Share-Diluted	$	(0.11	)	$	(0.19	)	$	(0.30	)	$	0.62	$	0.07		$	0.69

	Consolidated Balance Sheets
	As of September 30, 2017 (Unaudited)							As of March 31, 2017 (Audited)
	As					As		As					As
	Reported		Correction			Restated		Reported		Correction			Restated
Assets
Inventory	$	802,387	$	56,759		$	859,146	$	598,056	$	30,879		$	628,935
Total Current Assets		932,609		56,759			989,368		688,270		30,879			719,149
Total Assets		1,209,968		61,976			1,271,944		946,019		32,249			978,268

Liabilities and Stockholders' Equity
Deferred Revenue	$	542	$	74,608		$	75,150	$	545	$	45,555		$	46,100
Total Current Liabilities		322,982		74,585			397,567		132,277		45,487			177,764
Total Liabilities		780,214		73,020			853,234		511,758		41,306			553,064
Stockholders' Equity		429,754		(11,044	)		418,710		434,261		(9,057	)		425,204
Total Liabilities and Stockholders' Equity		1,209,968		61,976			1,271,944		946,019		32,249			978,268

	As of October 1, 2016 (Unaudited)
	As					As
	Reported		Correction			Restated
Assets								��
Inventory	$	771,996	$	29,688		$	801,684
Total Current Assets		905,029		29,688			934,717
Total Assets		1,148,714		36,489			1,185,203

Liabilities and Stockholders' Equity
Deferred Revenue	$	550	$	47,166		$	47,716
Total Current Liabilities		312,466		47,112			359,578
Total Liabilities		738,474		47,112			785,586
Stockholders' Equity		410,240		(10,623	)		399,617
Total Liabilities and Stockholders' Equity		1,148,714		36,489			1,185,203

Purchase Price (net of cash received)	$	31,842

Approximate fair values of assets acquired and liabilities assumed:
Current assets	$	22,823
Other long-term assets		1,744
Property, plant and equipment		28,696
Current liabilities		(5,068	)
Deferred taxes		407
Other long-term liabilities		(15,664	)
Bargain purchase gain		(1,096	)
Total	$	31,842

					Long-Lived
	Severance			��	Asset Charges			Other Costs			Total
	(In thousands)

Balance March 31, 2017	$	37			$	4,773		$	305		$	5,115
First quarter charge		36				9			36			81
Second quarter charge (credit)		-				8			(33	)		(25	)
Cash payments/write offs		(73	)			(3,888	)		(308	)		(4,269	)
Balance September 30, 2017	$	-			$	902		$	-		$	902


Balance March 31, 2016	$	-			$	4,975		$	3,897		$	8,872
First quarter charge (credit)		127				(6	)		1,064			1,185
Second quarter charge (credit)		112				(286	)		451			277
Cash payments/write offs		(123	)			240			(3,242	)		(3,125	)
Balance October 1, 2016	$	116			$	4,923		$	2,170		$	7,209