UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q/A
(Amendment No. 1)10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended | 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
Name of Exchange on
Title of Each ClassTrading SymbolWhich Registered
Common Stock Class A, $.25 Par SENEA NASDAQ Global Market
Common Stock Class B, $.25 Par SENEB NASDAQ Global Market
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"emerging growth companycompany" in Rule 12b-2 of the Exchange Act. (Check one):Act:
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 ☐
Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
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 |
Common Stock Class A, $.25 Par |
|
Common Stock Class B, $.25 Par |
|
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.
Quarterly Report on Form 10-Q |
Table of Contents |
Page | |||
PART 1 | |||
Item 1 | |||
1 | |||
2 | |||
2 | |||
3 | |||
4 | |||
5 | |||
Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 3 | | ||
Item 4 | | ||
PART II | |||
Item 1 | | ||
Item 1A | | ||
Item 2 | | ||
Item 3 | | ||
Item 4 | | ||
Item 5 | | ||
Item 6 | | ||
|
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) | June 29, 2019 | June 30, 2018 | March 31, 2019 | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current Assets: | ||||||||||||||||||||||||
Cash and Cash Equivalents | $ | 14,940 | $ | 10,124 | $ | 11,992 | $ | 16,901 | $ | 12,626 | $ | 11,480 | ||||||||||||
Accounts Receivable, Net | 112,297 | 102,727 | 72,080 | 74,000 | 73,743 | 84,122 | ||||||||||||||||||
Assets Held For Sale | - | 5,025 | - | |||||||||||||||||||||
Inventories: | ||||||||||||||||||||||||
Finished Goods | 721,575 | 669,291 | 466,126 | |||||||||||||||||||||
Work in Process | 32,287 | 18,098 | 32,528 | |||||||||||||||||||||
Raw Materials and Supplies | 105,284 | 114,295 | 130,281 | |||||||||||||||||||||
Total Inventories | 859,146 | 801,684 | 628,935 | |||||||||||||||||||||
Contracts Receivable | 5,157 | - | - | |||||||||||||||||||||
Current Assets Held For Sale | - | 3,859 | 1,568 | |||||||||||||||||||||
Current Assets Held For Sale-Discontinued Operations | 98 | 16,696 | 98 | |||||||||||||||||||||
Inventories | 493,498 | 567,594 | 501,684 | |||||||||||||||||||||
Refundable Income Taxes | 336 | - | 2,471 | 441 | 1,505 | 1,221 | ||||||||||||||||||
Other Current Assets | 2,649 | 15,157 | 3,671 | 3,577 | 3,277 | 3,075 | ||||||||||||||||||
Total Current Assets | 989,368 | 934,717 | 719,149 | 593,672 | 679,300 | 603,248 | ||||||||||||||||||
Property, Plant and Equipment, Net | 272,176 | 207,474 | 237,476 | 206,188 | 252,045 | 239,273 | ||||||||||||||||||
Right-of-Use Assets Operating Net | 83,742 | - | - | |||||||||||||||||||||
Right-of-Use Assets Financing, Net | 34,294 | - | - | |||||||||||||||||||||
Deferred Income Taxes, Net | 5,217 | 22,165 | 1,370 | 3,722 | 7,805 | 2,417 | ||||||||||||||||||
Noncurrent Assets Held For Sale-Discontinued Operations | 1,143 | 21,632 | 1,143 | |||||||||||||||||||||
Other Assets | 5,183 | 20,847 | 20,273 | 2,547 | 3,394 | 2,801 | ||||||||||||||||||
Total Assets | $ | 1,271,944 | $ | 1,185,203 | $ | 978,268 | $ | 925,308 | $ | 964,176 | $ | 848,882 | ||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||||||
Notes Payable | $ | - | $ | - | $ | 166 | ||||||||||||||||||
Accounts Payable | 249,803 | 237,008 | 72,824 | $ | 77,571 | $ | 87,336 | $ | 61,024 | |||||||||||||||
Deferred Revenue | 75,150 | 47,716 | 46,100 | 1,936 | 3,080 | 4,098 | ||||||||||||||||||
Accrued Vacation | 12,656 | 11,936 | 11,867 | 11,843 | 12,696 | 11,678 | ||||||||||||||||||
Accrued Payroll | 12,178 | 10,120 | 6,593 | 6,002 | 7,748 | 5,105 | ||||||||||||||||||
Other Accrued Expenses | 38,340 | 38,639 | 31,880 | 17,550 | 25,072 | 19,363 | ||||||||||||||||||
Income Taxes Payable | - | 4,172 | - | |||||||||||||||||||||
Current Portion of Long-Term Debt and Capital Lease Obligations | 9,440 | 9,987 | 8,334 | |||||||||||||||||||||
Current Liabilities Held For Sale | - | - | 61 | |||||||||||||||||||||
Current Liabilities Held For Sale-Discontinued Operations | 3,653 | 33,656 | 4,285 | |||||||||||||||||||||
Current Portion of Operating Lease Obligations | 26,641 | - | - | |||||||||||||||||||||
Current Portion of Financing Lease Obligations | 6,573 | - | - | |||||||||||||||||||||
Current Portion of Capital Lease Obligations | - | 5,863 | 6,418 | |||||||||||||||||||||
Current Portion of Long-Term Debt | 88 | 4,873 | 345 | |||||||||||||||||||||
Total Current Liabilities | 397,567 | 359,578 | 177,764 | 151,857 | 180,324 | 112,377 | ||||||||||||||||||
Long-Term Debt, Less Current Portion | 395,128 | 354,905 | 329,138 | 246,645 | 318,282 | 265,900 | ||||||||||||||||||
Operating Lease Obligations, Less Current Portion | 60,979 | - | - | |||||||||||||||||||||
Financing Lease Obligations, Less Current Portion | 29,907 | - | - | |||||||||||||||||||||
Capital Lease Obligations, Less Current Portion | 37,879 | 18,425 | 34,194 | - | 32,835 | 31,286 | ||||||||||||||||||
Pension Liabilities | 9,220 | 41,119 | 8,193 | 18,005 | 24,761 | 17,349 | ||||||||||||||||||
Noncurrent Liabilities Held For Sale | - | - | 305 | |||||||||||||||||||||
Noncurrent Liabilities Held For Sale-Discontinued Operations | - | 624 | - | |||||||||||||||||||||
Other Long-Term Liabilities | 13,440 | 11,559 | 3,775 | 4,077 | 5,080 | 4,180 | ||||||||||||||||||
Total Liabilities | 853,234 | 785,586 | 553,064 | 511,470 | 561,906 | 431,397 | ||||||||||||||||||
Commitments and Contingencies | ||||||||||||||||||||||||
Stockholders' Equity: | ||||||||||||||||||||||||
Preferred Stock | 719 | 1,338 | 1,324 | 707 | 707 | 707 | ||||||||||||||||||
Common Stock, $.25 Par Value Per Share | 3,038 | 3,024 | 3,024 | 3,039 | 3,038 | 3,039 | ||||||||||||||||||
Additional Paid-in Capital | 98,099 | 97,395 | 97,458 | 98,285 | 98,186 | 98,260 | ||||||||||||||||||
Treasury Stock, at Cost | (69,195 | ) | (66,730 | ) | (66,499 | ) | (78,484 | ) | (69,556 | ) | (75,740 | ) | ||||||||||||
Accumulated Other Comprehensive Loss | (11,073 | ) | (28,396 | ) | (11,175 | ) | (18,285 | ) | (25,118 | ) | (18,285 | ) | ||||||||||||
Retained Earnings | 397,122 | 392,986 | 401,072 | 408,576 | 395,013 | 409,504 | ||||||||||||||||||
Total Stockholders' Equity | 418,710 | 399,617 | 425,204 | 413,838 | 402,270 | 417,485 | ||||||||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 1,271,944 | $ | 1,185,203 | $ | 978,268 | $ | 925,308 | $ | 964,176 | $ | 848,882 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) | ||
(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 | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
Net Sales | $ | 264,925 | $ | 244,093 | ||||
Costs and Expenses: | ||||||||
Cost of Product Sold | 245,751 | 227,305 | ||||||
Selling, General and Administrative | 16,258 | 17,688 | ||||||
Plant Restructuring Charge | 4,806 | 38 | ||||||
Other Operating Income | (4,827 | ) | (915 | ) | ||||
Total Costs and Expenses | 261,988 | 244,116 | ||||||
Operating Income (Loss) | 2,937 | (23 | ) | |||||
Other Income | (1,803 | ) | (1,020 | ) | ||||
Interest Expense, Net | 3,352 | 3,825 | ||||||
Earnings (Loss) From Continuing Operations Before Income Taxes | 1,388 | (2,828 | ) | |||||
Income Taxes (Benefit) From Continuing Operations | 285 | (668 | ) | |||||
Earnings (Loss) From Continuing Operations | 1,103 | (2,160 | ) | |||||
Earnings (Loss) From Discontinued Operations (net of income taxes) | - | (6,595 | ) | |||||
Net Earnings (Loss) | $ | 1,103 | $ | (8,755 | ) | |||
Basic Earnings (Loss) per Common Share: | ||||||||
Continuing Operations | $ | 0.12 | $ | (0.22 | ) | |||
Discontinued Operations | $ | - | $ | (0.67 | ) | |||
Net Basic Earnings (Loss) per Common Share | $ | 0.12 | $ | (0.90 | ) | |||
Diluted Earnings (Loss) per Common Share: | ||||||||
Continuing Operations | $ | 0.12 | $ | (0.22 | ) | |||
Discontinued Operations | $ | - | $ | (0.67 | ) | |||
Net Diluted Earnings (Loss) per Common Share | $ | 0.12 | $ | (0.90 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
(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 | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
Comprehensive income (loss): | ||||||||
Net earnings (loss) | $ | 1,103 | $ | (8,755 | ) | |||
Change in pension, post retirement benefits and other (net of tax) | - | 51 | ||||||
Total | $ | 1,103 | $ | (8,704 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(Unaudited) | ||
(In Thousands) |
Six Months Ended | ||||||||||||||||
September 30, 2017 | October 1, 2016 | Three Months Ended | ||||||||||||||
(Restated) | (Restated) | June 29, 2019 | June 30, 2018 | |||||||||||||
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 Earnings (Loss) From Continuing Operations | $ | 1,103 | $ | (2,160 | ) | |||||||||||
Net Loss From Discontinued Operations (Net of Tax) | - | (6,595 | ) | |||||||||||||
Adjustments to Reconcile Net Earnings (Loss) to | ||||||||||||||||
Net Cash Used In Operations: | ||||||||||||||||
Depreciation & Amortization | 15,349 | 12,018 | 7,382 | 8,046 | ||||||||||||
(Gain) Loss on the Sale of Assets | (1,591 | ) | 48 | |||||||||||||
Bargain Purchase Gain | (1,096 | ) | - | |||||||||||||
Gain on the Sale of Assets | (4,663 | ) | (6,444 | ) | ||||||||||||
Provision for Restructuring and Impairment | 56 | 1,462 | 4,806 | 1,820 | ||||||||||||
Earnings From Equity Investment | (21 | ) | (167 | ) | ||||||||||||
Deferred Income Tax Benefit | (3,503 | ) | (1,378 | ) | (1,305 | ) | (2,229 | ) | ||||||||
Changes in Operating Assets and Liabilities: | ||||||||||||||||
Accounts Receivable | (34,173 | ) | (25,939 | ) | 4,965 | (9,827 | ) | |||||||||
Inventories | (214,135 | ) | (192,203 | ) | 8,186 | 74,622 | ||||||||||
Other Current Assets | 1,106 | 608 | (502 | ) | (1,210 | ) | ||||||||||
Income Taxes | 2,126 | 1,198 | 1,453 | (363 | ) | |||||||||||
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 | 16,418 | 31,290 | ||||||||||||||
Net Cash Provided By Operations | 37,843 | 86,950 | ||||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Additions to Property, Plant and Equipment | (13,743 | ) | (14,518 | ) | (9,776 | ) | (10,462 | ) | ||||||||
Cash Paid for Acquisition (Net of Cash Acquired) | (14,420 | ) | - | |||||||||||||
Proceeds from the Sale of Assets | 1,790 | 13 | 6,398 | 10,387 | ||||||||||||
Net Cash Used In Investing Activities | (26,373 | ) | (14,505 | ) | (3,378 | ) | (75 | ) | ||||||||
Cash Flow from Financing Activities: | ||||||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Long-Term Borrowing | 282,862 | 183,744 | 93,600 | 89,546 | ||||||||||||
Payments on Long-Term Debt and Capital Lease Obligations | (232,706 | ) | (136,613 | ) | ||||||||||||
Payments on Notes Payable | (166 | ) | (402 | ) | ||||||||||||
Payments on Long-Term Debt and Lease Obligations | (118,272 | ) | (178,845 | ) | ||||||||||||
Other Assets | (171 | ) | (1,248 | ) | - | (40 | ) | |||||||||
Payments on Financing Leases | (1,616 | ) | - | |||||||||||||
Purchase of Treasury Stock | (2,696 | ) | (1,021 | ) | (2,744 | ) | - | |||||||||
Dividends | (12 | ) | (12 | ) | (12 | ) | (12 | ) | ||||||||
Net Cash Provided by Financing Activities | 47,111 | 44,448 | ||||||||||||||
Net Cash Used In Financing Activities | (29,044 | ) | (89,351 | ) | ||||||||||||
Net Increase in Cash and Cash Equivalents | 2,948 | 1,522 | ||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 5,421 | (2,476 | ) | |||||||||||||
Cash and Cash Equivalents, Beginning of the Period | 11,992 | 8,602 | 11,480 | 15,102 | ||||||||||||
Cash and Cash Equivalents, End of the Period | $ | 14,940 | $ | 10,124 | $ | 16,901 | $ | 12,626 | ||||||||
Supplemental Disclosures of Cash Flow Information: | ||||||||||||||||
Noncash Transactions: | ||||||||||||||||
Property, Plant and Equipment Purchased Under Capital Lease Obligations | $ | 7,155 | $ | 15,416 | ||||||||||||
Property, Plant and Equipment Purchased Under Lease Obligations | $ | 4,775 | $ | - |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
CONDENSED CONSOLIDATED | ||||||
(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 | ||||||||||||||||||||||||||||||||||
First Quarter FY 2020: | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance March 31, 2019 | $ | 707 | $ | 3,039 | $ | 98,260 | $ | (75,740 | ) | $ | (18,285 | ) | $ | 409,504 | ||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings | - | - | - | - | - | 1,103 | ||||||||||||||||||||||||||||||||||||||||||
Cash dividends paid on preferred stock | - | - | - | - | - | (12 | ) | |||||||||||||||||||||||||||||||||||||||||
Equity incentive program | - | - | 25 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Purchase treasury stock | - | - | - | (2,744 | ) | - | - | |||||||||||||||||||||||||||||||||||||||||
Operating lease impairment adjustment upon the adoption of ASU 2016-02 "Leases" (net of tax) | - | - | - | - | - | (2,019 | ) | |||||||||||||||||||||||||||||||||||||||||
Balance June 29, 2019 | $ | 707 | $ | 3,039 | $ | 98,285 | $ | (78,484 | ) | $ | (18,285 | ) | $ | 408,576 | ||||||||||||||||||||||||||||||||||
First Quarter FY 2019: | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance March 31, 2018 | $ | 707 | $ | 3,038 | $ | 98,161 | $ | (69,556 | ) | $ | (25,067 | ) | $ | 403,780 | ||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (3,938 | ) | - | - | - | - | - | (8,755 | ) | ||||||||||||||||||||||||||||||||||
Cash dividends paid on preferred stock | - | - | - | - | - | (12 | ) | - | - | - | - | - | (12 | ) | ||||||||||||||||||||||||||||||||||
Equity incentive program | - | - | 50 | - | - | - | - | - | 25 | - | - | - | ||||||||||||||||||||||||||||||||||||
Preferred stock conversion | (605 | ) | 14 | 591 | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Purchase treasury stock | - | - | - | (2,696 | ) | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
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 (net of tax) | - | - | - | - | (51 | ) | - | |||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2018 | $ | 707 | $ | 3,038 | $ | 98,186 | $ | (69,556 | ) | $ | (25,118 | ) | $ | 395,013 |
Preferred Stock | Common Stock | Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||
6% | 10% | 6% | 10% | |||||||||||||||||||||||||||||||||||||||||||||
Cumulative Par | Cumulative Par | 2003 Series | Cumulative Par | Cumulative Par | 2003 Series | |||||||||||||||||||||||||||||||||||||||||||
Value $.25 | Value $.025 | Participating | Participating | Class A | Class B | Value $.25 | Value $.025 | Participating | Participating | Class A | Class B | |||||||||||||||||||||||||||||||||||||
Callable at Par | Convertible | Convertible Par | Convertible Par | Common Stock | Common Stock | Callable at Par | Convertible | Convertible Par | Convertible Par | Common Stock | Common Stock | |||||||||||||||||||||||||||||||||||||
Voting | Voting | Value $.025 | Value $.025 | Par Value $.25 | Par Value $.25 | Voting | Voting | Value $.025 | Value $.025 | Par Value $.25 | Par Value $.25 | |||||||||||||||||||||||||||||||||||||
Shares authorized and designated: | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2017 | 200,000 | 1,400,000 | 38,542 | 500 | 20,000,000 | 10,000,000 | ||||||||||||||||||||||||||||||||||||||||||
June 29, 2019 | 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 | ||||||||||||||||||||||||||||||||||||||||||
June 29, 2019 | 200,000 | 807,240 | 37,529 | 500 | 7,557,913 | 1,874,861 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
September 30, 2017(Unaudited)
June 29, 2019
1. | Unaudited Condensed Consolidated Financial Statements |
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly the financial position of Seneca Foods Corporation (the “Company”) as of September 30, 2017June 29, 2019 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, 20172019 balance sheet was derived from the audited consolidated financial statements.
The results of operations for the three and six month periodsperiod ended September 30, 2017June 29, 2019 are not necessarily indicative of the results to be expected for the full year.
During the three months ended June 29, 2019, the Company sold $5,706,000 of Green Giant finished goods inventory to B&G Foods, Inc. for cash, on a bill and hold basis, as compared to $6,885,000 for the three months ended June 30, 2018. Under the terms of the bill and hold agreement, title to the specified inventory is 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 as the customer has the right to control the inventory (prior to physical delivery) and the Company has a right to payment, 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 20172019 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 20172019 Annual Report on Form 10-K.
All references to years are fiscal years ended or ending March 31 unless otherwise indicated. Certain percentage tables may not foot due to rounding.
Reclassifications—Certain previously reported amounts have been reclassified to conform to the current period classification.
2. |
|
The Consolidated StatementsOn July 13, 2018, the Company executed a nonbinding letter 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 sectionintent with a perspective buyer of the cash flow statementModesto facility. On October 9, 2018, the Company closed on the sale of the facility to this outside buyer with net proceeds of $63,326,000. During the second quarter of fiscal 2019, the Company ceased use of the Modesto facility. Based on its magnitude of revenue to the Company (approximately 15%) and because the Company was exiting the production of peaches, this sale represented a significant strategic shift that has a material effect on the Company’s operations and financial results. Accordingly, the Company has applied discontinued operations treatment for this sale as required by Accounting Standards Codification 210-05—Discontinued Operations. The business we exited is illustrated inpart of the balance sheet adjustmentsFruit and income statement corrections presented below.Vegetable segment.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
September 30, 2017(Unaudited)
June 29, 2019
The following tables present a summarytable presents information related to the major classes of assets and liabilities of Modesto that are classified as Held For Sale-Discontinued Operations in the effects of these restatements: Company's Condensed Consolidated Balance Sheets (in thousands):
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 |
June 29 | June 30 | |||||||
2019 | 2018 | |||||||
Accounts Receivable | $ | - | $ | 14,880 | ||||
Inventories | - | 1,739 | ||||||
Other Current Assets | 98 | 77 | ||||||
Current Assets Held For Sale-Discontinued Operations | $ | 98 | $ | 16,696 | ||||
Other Assets | $ | 1,143 | $ | 1,656 | ||||
Property, Plant and Equipment (net) | - | 19,976 | ||||||
Noncurrent Assets Held For Sale-Discontinued Operations | $ | 1,143 | $ | 21,632 | ||||
Accounts Payable and Accrued Expenses | $ | 3,653 | $ | 25,589 | ||||
Long-Term Debt and Capital Leases Current Portion | - | 8,067 | ||||||
Current Liabilities Held For Sale-Discontinued Operations | $ | 3,653 | $ | 33,656 | ||||
Long-Term Debt and Capital Lease Obligations | $ | - | $ | 624 | ||||
Noncurrent Liabilities Held For Sale Discontinued Operations | $ | - | $ | 624 |
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
September 30, 2017(Unaudited)
June 29, 2019
3. AcquisitionIn April 2014, the Company purchased a 50% equity interest in Truitt Bros. Inc. ("Truitt") for $16,242,000 which was accounted for as an equity investment. The purchase agreement granted the Company the right to acquire the remaining 50% ownership 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 to 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 related to the remeasurement 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 (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 |
The Company is continuing to evaluate the purchase price allocation and these preliminary estimates could change. Proformaoperating results of the discontinued operations forthat are reflected in the Truitt acquisitionUnaudited Condensed Consolidated Statements of Net Earnings (Loss) from discontinued operations are not presented because the effects are not material to the consolidated financial statements.as follows:
Three Months Ended | ||||||||
June 29 | June 30 | |||||||
2019 | 2018 | |||||||
Net Sales | $ | - | $ | 99,299 | ||||
Costs and Expenses: | ||||||||
Cost of Product Sold | - | 110,189 | ||||||
Selling, General and Administrative | - | 780 | ||||||
Plant Restructuring Charge (a) | - | 1,782 | ||||||
Interest (Income) Expense (b) | - | 624 | ||||||
Total cost and expenses | - | 113,375 | ||||||
Loss From Discontinued Operations Before Income Taxes | - | (14,076 | ) | |||||
Gain on the Sale of Assets Before Income Taxes (c) (d) | - | (5,638 | ) | |||||
Income Tax Benefit | - | (1,843 | ) | |||||
Net Loss From Discontinued Operations, Net of Tax | $ | - | $ | (6,595 | ) |
| ||||||||
| - | 4,260 | ||||||
Depreciation | - | 677 |
(a) | Includes $1,653,000 of |
(b) | Includes interest on debt directly related to |
(c) | Includes $663,000 gain on the |
(d) | Includes a $4,975,000 gain on the |
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
September 30, 2017(Unaudited)
June 29, 2019
3. | Revenue Recognition |
In the following table, revenue is disaggregated by product category groups (in millions):
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
Canned Vegetables | $ | 180.7 | $ | 161.9 | ||||
B&G* | 7.0 | 7.3 | ||||||
Frozen | 17.7 | 28.1 | ||||||
Fruit Products | 22.7 | 21.2 | ||||||
Chip Products | 2.9 | 2.0 | ||||||
Prepared Foods | 29.8 | 17.3 | ||||||
Other | 4.1 | 6.3 | ||||||
$ | 264.9 | $ | 244.1 |
*B&G includes canned and frozen vegetable sales exclusively for B&G.
4. | Inventories |
First-In, First-Out (“FIFO”) based inventory costs exceeded LIFO based inventory costs by $164,517,000 as of the end of the first quarter of fiscal 2020 as compared to $121,607,000 as of the end of the first quarter of fiscal 2019. The change in the LIFO Reserve for the three months ended June 29, 2019 was an increase of $3,176,000 as compared to a decrease of $710,000 for the three months ended June 30, 2018. The following table shows inventory by category and the related LIFO balance (in thousands):
June 29, 2019 | June 30, 2018 | |||||||
Finished products | $ | 405,372 | $ | 468,236 | ||||
In process | 33,568 | 41,943 | ||||||
Raw materials and supplies | 219,075 | 179,022 | ||||||
658,015 | 689,201 | |||||||
Less excess of FIFO cost over LIFO cost | 164,517 | 121,607 | ||||||
Total inventories | $ | 493,498 | $ | 567,594 |
5. | Leases |
The Company determines if an arrangement is a lease at inception of the agreement. Operating leases are included in right-of-use operating assets, and current and noncurrent operating lease obligations in the Company’s Condensed Consolidated Balance Sheets. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. If the lease does not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The right-of-use operating lease assets also include in its calculation any prepaid lease payments made and excludes any lease incentives received from the arrangement. The Company’s lease terms may include options to extend or terminate the lease, and the impact of these options are included in the lease liability and lease asset calculations when the exercise of the option is at the Company’s sole discretion and it is reasonably certain that the Company will exercise that option. The Company will not separate lease and nonlease components for its leases when it is impractical to separate the two, such as leases with variable payment arrangements. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 29, 2019
The Company has operating leases for land, machinery and equipment. The Company also has finance leases for machinery and equipment. The commencement date used for the calculation of the lease obligation is the latter of the commencement date of the new standard (April 1, 2019) or the lease start date. Certain of the leases have options to extend the life of the lease, which are included in the liability calculation when the option is at the sole discretion of the Company and it is reasonably certain that the Company will exercise the option. In addition, the Company has certain leases that have variable payments based solely on output or usage of the leased asset. These variable operating lease assets are excluded from the Company’s balance sheet presentation and expensed as incurred. Leases with an initial term of 12 months or less are not material. The Company currently has finance leases which were accounted for as capital leases under the previous standard and were unchanged as a result of this standard implementation.
Upon adoption of ASU 2016-02, the Company determined its right-of-use assets related to the operating leases for its plant equipment in Sunnyside, Washington were partially impaired and therefore were reduced with a corresponding charge to retained earnings of $2,019,000 (which is net of tax). Lastly, the estimated lives of these assets will be shortened due to the planned closure of the facility after the year’s pack.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 29, 2019
Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense were as follows:
Three Months | ||||
June 29, 2019 | ||||
(In thousands) | ||||
Lease cost: | ||||
Amortization of right of use asset | $ | 1,067 | ||
Interest on lease liabilities | 368 | |||
Finance lease cost | 1,435 | |||
Operating lease cost | 7,900 | |||
Total lease cost | $ | 9,335 | ||
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from finance leases | $ | 368 | ||
Operating cash flows from operating leases | 8,961 | |||
Financing cash flows from finance leases | 1,616 | |||
$ | 10,945 | |||
Right-of-use assets obtained in exchange for new finance lease liabilities for the three months ended June 29, 2019 | $ | 237 | ||
Right-of-use assets obtained in exchange for new operating lease liabilities for the three months ended June 29, 2019 | $ | 4,538 | ||
Weighted-average lease term (years): | ||||
Financing leases | 5.7 | |||
Operating leases | 4.1 | |||
Weighted-average discount rate (percentage): | ||||
Financing leases | 4.2 | |||
Operating leases | 4.6 |
Estimated undiscounted future lease payments under non-cancelable operating leases and financial leases, along with a reconciliation of undiscounted cash flows to operating and financing lease liabilities, respectively, as of June 29, 2019 (in thousands) were as follows:
Years ending March 31: | Operating | Financing | ||||||
Balance of 2020 | $ | 21,295 | $ | 5,916 | ||||
2021 | 27,507 | 7,888 | ||||||
2022 | 19,738 | 7,888 | ||||||
2023 | 13,623 | 7,888 | ||||||
2024 | 6,834 | 6,141 | ||||||
2025-2031 | 6,839 | 5,268 | ||||||
Total minimum payment required | $ | 95,836 | $ | 40,989 | ||||
Less interest | 8,216 | 4,509 | ||||||
Present value of minimum lease payments | 87,620 | 36,480 | ||||||
Amount due within one year | 26,641 | 6,573 | ||||||
Long-term lease obligations | $ | 60,979 | $ | 29,907 |
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 29, 2019
As the Company has not restated prior year information for its adoption of ASC Topic 842, the following presents its future minimum lease payments for operating and capital leases under ASC Topic 840 on March 31, 2019:
Years ending March 31: | Operating | Capital | ||||||
2020 | $ | 28,689 | $ | 7,827 | ||||
2021 | 24,938 | 7,827 | ||||||
2022 | 17,526 | 7,827 | ||||||
2023 | 12,062 | 7,827 | ||||||
2024 | 5,950 | 6,102 | ||||||
2025-2031 | 6,927 | 5,267 | ||||||
Total minimum payment required | $ | 96,092 | $ | 42,677 | ||||
Less interest | 4,973 | |||||||
Present value of minimum lease payments | 37,704 | |||||||
Amount due within one year | 6,418 | |||||||
Long-term capital lease obligation | $ | 31,286 |
6. | Revolving Credit Facility |
The Company entered into a 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 June 29, 2019 was $136,014,000 and is included in Long-Term Debt in the accompanying Condensed Consolidated Balance Sheets 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.
The decrease in average amount of Revolver borrowings during the first sixthree months of fiscal 20182020 compared to the first sixthree months of fiscal 20172019 was attributable to the $100,000,000 term loan from Farm Credit less the acquisitionsale of $14,420,000 madecertain Company facilities during the first six months of fiscal 2018, Accounts Receivables which are $3,526,000 higher than the same period last year (excluding 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.(mostly Modesto, California).
General terms of the Revolver include payment of interest at LIBOR plus a defined spread.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 29, 2019
The following table documents the quantitative data for Revolver borrowings during the secondfirst quarter and year-to-date periods of fiscal 20182020 and fiscal 2017:2019:
Second Quarter | Year-to-Date | First Quarter | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2020 | 2019 | |||||||||||||||||||
(In thousands) | (In thousands) | (In thousands) | ||||||||||||||||||||||
Reported end of period: | ||||||||||||||||||||||||
Outstanding borrowings | $ | 272,609 | $ | 342,935 | $ | 272,609 | $ | 342,935 | $ | 136,014 | $ | 207,610 | ||||||||||||
Weighted average interest rate | 2.75 | % | 1.88 | % | 2.75 | % | 1.88 | % | 4.00 | % | 3.62 | % | ||||||||||||
Reported during the period: | ||||||||||||||||||||||||
Maximum amount of borrowings | $ | 274,117 | $ | 361,800 | $ | 274,117 | $ | 361,800 | $ | 151,107 | $ | 294,062 | ||||||||||||
Average outstanding borrowings | $ | 244,160 | $ | 314,102 | $ | 229,235 | $ | 284,287 | $ | 134,135 | $ | 262,794 | ||||||||||||
Weighted average interest rate | 2.58 | % | 1.78 | % | 2.45 | % | 1.93 | % | 3.96 | % | 3.50 | % |
|
|
SENECA FOODS CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
September 30, 2017
7. |
|
During the three-month period ended June 29, 2019, the Company repurchased $2,744,000 of its Class A Common Stock as Treasury Stock. As of June 29, 2019, there are 2,864,133 shares or $78,484,000 of repurchased stock. These shares are not considered outstanding.
Three Months Ended | Six Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 |
| ||||||||||||
(In thousands) | ||||||||||||||||
Service Cost | $ | 1,981 | $ | 2,164 | $ | 3,963 | $ | 4,328 | ||||||||
Interest Cost | 1,985 | 1,919 | 3,971 | 3,838 | ||||||||||||
Expected Return on Plan Assets | (3,482 | ) | (2,978 | ) | (6,967 | ) | (5,957 | ) | ||||||||
Amortization of Actuarial Loss | - | 679 | - | 1,358 | ||||||||||||
Amortization of Transition Asset | 30 | 27 | 60 | 55 | ||||||||||||
Net Periodic Benefit Cost | $ | 514 | $ | 1,811 | $ | 1,027 | $ | 3,622 |
8. | Retirement Plans |
The net periodic benefit cost for the Company’s pension plan consisted of:
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(In thousands) | ||||||||
Service Cost | $ | 2,288 | $ | 2,442 | ||||
Interest Cost | 2,296 | 2,243 | ||||||
Expected Return on Plan Assets | (3,958 | ) | (3,596 | ) | ||||
Amortization of Prior Service Cost | 30 | 30 | ||||||
Amortization of Net Loss | - | 303 | ||||||
Net Periodic Benefit Cost | $ | 656 | $ | 1,422 |
There was no contribution to the pension plan in the sixthree month periodperiods ended SeptemberJune 29, 2019 or June 30, 2017. There was a contribution2018.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 29, 2019
| Plant Restructuring |
The following table summarizes the rollforward of restructuring charges and accelerated amortization of operating leases 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, 2019 | $ | 225 | $ | 1 | $ | 226 | ||||||
First quarter charge | 586 | 4,220 | 4,806 | |||||||||
Cash payments/write offs | (170 | ) | (4,220 | ) | (4,390 | ) | ||||||
Balance June 29, 2019 | $ | 641 | $ | 1 | $ | 642 |
Severance | Other Costs | Total | ||||||||||
(In thousands) | ||||||||||||
Balance March 31, 2018 | $ | - | $ | - | $ | - | ||||||
First quarter charge | 110 | (72 | ) | 38 | ||||||||
Cash payments/write offs | - | 72 | 72 | |||||||||
Balance June 30, 2018 | $ | 110 | $ | - | $ | 110 |
During fiscal 2016,the quarter ended June 29, 2019, the Company recorded a restructuring charge of $10,302,000$4,806,000 related to the closing of plants in the Midwest and Northwest, of which $1,975,000 was mostly related to equipment moves and $586,000 was related to severance. In addition, the Company recorded $2,245,000 for accelerated amortization of right-of-use operating lease assets due to the planned closure of Sunnyside this Fall.
During the quarter ended June 30, 2018, the Company recorded a restructuring charge of $38,000 related to the closing of a plant in the Northwest of which $162,000 was related to severance cost, $5,065,000 was related to asset impairments (contra fixed assets), and $5,075,000 was related to other costs (mostly operating lease costs). During fiscal 2017, the Company adjusted this restructuring charge by $1,829,000 related to the closing of this Northwest plant of which a charge of $1,578,000 was related to severance cost, a credit of $384,000 was related to asset impairments (contra fixed assets), and charge of $635,000 was related to other costs (mostly operating lease costs).
During the six months ended September 30, 2017, the Company recorded an additional restructuring charge of $57,000 related to the previous closing of this Northwest plant.
|
|
SENECA FOODS CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
September 30, 2017
Northwest.
10. |
|
During the three months ended June 29, 2019, the Company recorded a gain on the partial sale of a plant in the Midwest of $4,075,000. The Company also recorded a gain of on the sale of unused fixed assets of $752,000. During the three months ended June 30, 2018, the Company sold unused fixed assets which resulted in a gain of $806,000. These items are included in other operating income in the Unaudited Condensed Consolidated Statements of Net Earnings (Loss).
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 29, 2019
11. | Recently Issued Accounting Standards |
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 retrospectively at the beginning of the period of adoption, versus recasting the prior periods presented. If elected, an entity would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standardThis guidance is effective for fiscal yearsannual periods beginning after December 15, 2018 (beginning fiscal 2020 for2018. We adopted ASU 2016-02 as of April 1, 2019, using the Company), including interim periods within those fiscal years. A modified retrospectiveoptional transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presentedmethod provided by ASU 2018-11. The standard resulted in the financial statements, with certain practical expedients available. While we are still evaluating the impactinitial recognition of our pending adoption$88,333,000 of the new standard on our consolidated financial statements, we expect that upon adoption we will recognize ROUtotal operating lease assets and $91,025,000 of net operating lease liabilities and a net adjustment to retained earnings totaling $2,019,000 ($2,692,000 less tax effect of $673,000 on the Condensed Consolidated Balance Sheet on April 1, 2019. The standard did not materially impact the Condensed Consolidated Statement of Income or Condensed Consolidated Statement of Cash Flows. The Company adjustment to retained earnings of $2,019,000, was due to an impairment loss that was related to a Northwest plant impairment which was incurred in March 2019 just prior to adoption of this standard. The disclosures required by the amounts could be material.recently adopted accounting standard are included in Note 5 of the Notes to the Condensed Consolidated Financial Statements.
In January 2017,August 2018, the FASB issued Accounting Standards UpdateASU No. 2017-01 ("ASU 2017-01")2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which clarifiesmodifies the definition of a business, with the objective of adding guidance to assist entities with evaluating whether transactions should be accounteddisclosure requirements for as acquisitions (or disposals) of assets or businesses.defined benefit pension plans and other postretirement plans. ASU 2017-012018-14 is effective for fiscal yearsannual periods beginning after December 15, 2017 and interim periods within those fiscal years, and2020, with early adoption is permitted for transactions which occur before the issuance or effective date of thepermitted. The amendments only when the transaction has not been reported in the financial statements that have been issued or made available for issuance.this ASU 2017-01 is toshould be applied on a prospective basis. The Company does not expectretrospective basis to all periods presented. We are currently evaluating the adoption ofeffect that ASU 2017-01 to2018-14 will have a material impact on itsour condensed consolidated financial statements.statements and related disclosures.
There were no other recently issued accounting pronouncements that impacted the Company’s condensed consolidated financial statements. In addition, the Company did not adopt any other new accounting pronouncements during the quarter ended September 30, 2017.June 29, 2019.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
September 30, 2017(Unaudited)
|
|
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 | ||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||||
Basic | ||||||||||||||||
Net (loss) earnings | $ | (2,958 | ) | $ | 6,821 | $ | (3,938 | ) | $ | 7,786 | ||||||
Deduct preferred stock dividends paid | 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 | ||||||||||
(Loss) earnings attributable to common shareholders | $ | (2,952 | ) | $ | 6,753 | $ | (3,928 | ) | $ | 7,703 | ||||||
Weighted average common shares outstanding | 9,792 | 9,792 | 9,803 | 9,800 | ||||||||||||
Basic (loss) earnings per common share | $ | (0.30 | ) | $ | 0.69 | $ | (0.40 | ) | $ | 0.79 | ||||||
Diluted | ||||||||||||||||
(Loss) earnings attributable to common shareholders | $ | (2,952 | ) | $ | 6,753 | $ | (3,928 | ) | $ | 7,703 | ||||||
Add dividends on convertible preferred stock | 5 | 5 | 10 | 10 | ||||||||||||
(Loss) earnings attributable to common stock on a diluted basis | $ | (2,947 | ) | $ | 6,758 | $ | (3,918 | ) | $ | 7,713 | ||||||
Weighted average common shares outstanding-basic | 9,792 | 9,792 | 9,803 | 9,800 | ||||||||||||
Additional shares issued related to the equity compensation plan | - | 3 | - | 3 | ||||||||||||
Additional shares to be issued under full conversion of preferred stock | - | 67 | - | 67 | ||||||||||||
Total shares for diluted | 9,792 | 9,862 | 9,803 | 9,870 | ||||||||||||
Diluted (loss) earnings per common share | $ | (0.30 | ) | $ | 0.69 | $ | (0.40 | ) | $ | 0.78 |
Note: For fiscal 2018, add backs for equity compenstion and additional shares that were dilutive were excluded.June 29, 2019
12. |
|
Earnings per share from continuing and discontinued operations for the quarters ended June 29, 2019 and June 30, 2018 are as follows:
Q U A R T E R | ||||||||
(Thousands, except per share amounts) | Fiscal 2020 | Fiscal 2019 | ||||||
Continuing Operations | ||||||||
Basic | ||||||||
Earnings (loss) from continuing operations | $ | 1,103 | $ | (2,160 | ) | |||
Deduct preferred stock dividends paid | 6 | 6 | ||||||
Undistributed earnings (loss) from continuing operations | 1,097 | (2,166 | ) | |||||
Earnings (loss) from continuing operations attributable to participating preferred | 4 | (8 | ) | |||||
Earnings (loss) from continuing operations attributable to common shareholders | $ | 1,093 | $ | (2,158 | ) | |||
Weighted average common shares outstanding | 9,477 | 9,744 | ||||||
Basic earnings (loss) per common share from continuing operations | $ | 0.12 | $ | (0.22 | ) | |||
Diluted | ||||||||
Earnings (loss) from continuing operations attributable to common shareholders | $ | 1,093 | $ | (2,158 | ) | |||
Add dividends on convertible preferred stock | 5 | - | ||||||
Earnings (loss) from continuing operations attributable to common stock on a diluted basis | $ | 1,098 | $ | (2,158 | ) | |||
Weighted average common shares outstanding-basic | 9,477 | 9,744 | ||||||
Additional shares issued related to the equity compensation plan | 2 | - | ||||||
Additional shares to be issued under full conversion of preferred stock | 67 | - | ||||||
Total shares for diluted | 9,546 | 9,744 | ||||||
Diluted earnings (loss) per common share from continuing operations | $ | 0.12 | $ | (0.22 | ) |
Note: For fiscal 2019, add backs for equity compensation and additional shares that were anti-dilutive were excluded.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 29, 2019
Q U A R T E R | ||||||||
(Thousands, except per share amounts) | Fiscal 2020 | Fiscal 2019 | ||||||
Discontinued Operations | ||||||||
Basic | ||||||||
Loss from discontinued operations | $ | - | $ | (6,595 | ) | |||
Deduct preferred stock dividends paid | - | 6 | ||||||
Undistributed loss from continuing operations | - | (6,601 | ) | |||||
Loss from continuing operations attributable to participating preferred | - | (26 | ) | |||||
Loss from continuing operations attributable to common shareholders | $ | - | $ | (6,575 | ) | |||
Weighted average common shares outstanding | 9,477 | 9,744 | ||||||
Basic loss per common share from continuing operations | $ | - | $ | (0.67 | ) | |||
Diluted | ||||||||
Loss from continuing operations attributable to common shareholders | $ | - | $ | (6,575 | ) | |||
Add dividends on convertible preferred stock | - | - | ||||||
Loss from continuing operations attributable to common stock on a diluted basis | $ | - | $ | (6,575 | ) | |||
Weighted average common shares outstanding-basic | 9,477 | 9,744 | ||||||
Additional shares issued related to the equity compensation plan | 2 | - | ||||||
Additional shares to be issued under full conversion of preferred stock | 67 | - | ||||||
Total shares for diluted | 9,546 | 9,744 | ||||||
Diluted loss per common share from continuing operations | $ | - | $ | (0.67 | ) | |||
|
Note: For fiscal 2019, add backs for equity compensation and additional shares that were anti-dilutive were excluded.
13. | Fair Value of Financial Instruments |
As required by Accounting Standards Codification ("ASC") 825, “Financial Instruments,” the Company estimates the fair values of financial instruments on a quarterly basis. The estimated fair value for long-term debt (classified as Level 2 in the fair value hierarchy) is determined by the quoted market prices for similar debt (comparable to the Company’s financial strength) or current rates offered to the Company for debt with the same maturities. Long-term debt, including current portion had a carrying amount of $246,733,000 and an estimated fair value of $246,639,000 as of June 29, 2019. As of March 31, 2019, the carrying amount was $266,245,000 and the estimated fair value was $266,140,000. The fair values of all the other financial instruments approximate their carrying value due to their short-term nature.
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 29, 2019
14. | Income Taxes |
The effective tax rate for continuing operations was 20.5% and 23.6% for the three month periods ended June 29, 2019 and June 30, 2018, respectively. The change in tax rate resulting from federal credits and incentives is a 4.0 percentage point decrease. This change is a majority of the 3.1 percentage point decrease in the effective tax rate. The dollar amount of these credits and incentives did not change significantly from 2019 to 2020. The decrease is the result of the change in projected pre-tax income from 2019 to 2020. This resulted in the federal credits and incentives having a larger impact on the tax rate in 2020.
15\. | Legal Proceedings and Other Contingencies |
In the ordinary course of its business, the Company is made a party to certain legal proceedings seeking monetary damages, including proceedings involving product liability claims, workers’ compensation along with other employee claims, tort and other general liability claims, for which it carries insurance, as well as patent infringement and related litigation. The Company is in a highly regulated industry and is also periodically involved in government actions for regulatory violations and other matters surrounding the manufacturing of its products, including, but not limited to, environmental, employee, and product safety issues. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company does not believe that an adverse decision in any of these legal proceedings would have a material adverse impact on its financial position, results of operations, or cash flows.
ITEM 2 MANAGEMENT'SMANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 2017June 29, 2019
Seneca Foods Corporation (the “Company”) is a leading provider of packaged fruits and vegetables, with facilities located throughout the United States. The Company’s product offerings include canned, frozen and bottled produce and snack chips. Its products are sold under private label as well as national and regional brands that the Company owns or licenses, including Seneca®, Libby’s®, Aunt Nellie’s®, Cherryman®, Green Valley® and READ®. The Company’s canned fruits and vegetables are sold nationwide by major grocery outlets, including supermarkets, mass merchandisers, limited assortment stores, club stores and dollar stores. The Company also sells its products to foodservice distributors, industrial markets, other food processors, export customers in over 90 countries and federal, state and local governments for school and other food programs. The |
During April 2019, the Company announced production at its fruit processing plant in Sunnyside, Washington will cease after the end of the 2019 production season. The Company will continue to store, case and label products at this facility until sometime later this year. Therefore, this facility will not be available for immediate sale until sometime later this year.
The Company’s raw product is harvested mainly between June through November.
Results of Operations:
Sales:
SecondThe first fiscal quarter 20182020 results include net sales of $338,470,000,$264,925,000, which represents a 4.0% decrease,an 8.5% increase, or $14,136,000,$20,832,000, from the secondfirst quarter of fiscal 2017.2019. The decreasenet increase in sales is salesdue to volume decreaseincreases of $13,266,000$10,414,000 and to lowerhigher selling prices/sales mix of $870,000. The decrease in sales is primarily a $19,587,000 decrease in B&G Foods, Inc. sales, a $13,527,000 decrease in Canned Fruit sales, a $2,945,000 decrease in Other sales, and a $461,000 decrease in Snack sales, 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 lower selling prices/sales mix of $344,000.$10,418,000. The increase in sales is primarily from the acquisition of Truitt during the current year with sales of $41,138,000, a $13,286,000$18,758,000 increase in Canned Vegetable sales, $5,927,000a $12,449,000 increase in FrozenPrepared Food sales, a $1,527,000 increase in other Canned Fruit sales, partially offset by a $22,794,000$10,444,000 decrease in Canned FruitFrozen sales a $29,905,000 decrease in B&G Foods, Inc. sales, a $2,846,000$2,140,000 decrease in Other sales and a $2,150,000$227,000 decrease in SnackB&G Foods, Inc. sales.
ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OPERATIONS
June 29, 2019
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 | Three Months Ended | ||||||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | June 29, 2019 | June 30, 2018 | |||||||||||||||||||
Canned Vegetables | $ | 184.9 | $ | 184.1 | $ | 338.7 | $ | 325.4 | $ | 180.7 | $ | 161.9 | ||||||||||||
B&G* | 33.0 | 52.6 | 52.3 | 82.2 | 7.0 | 7.3 | ||||||||||||||||||
Frozen | 24.2 | 22.0 | 51.2 | 45.2 | 17.7 | 28.1 | ||||||||||||||||||
Fruit Products | 70.7 | 84.3 | 130.7 | 153.5 | 22.7 | 21.2 | ||||||||||||||||||
Chip Products | 3.3 | 3.7 | 5.5 | 7.7 | 2.9 | 2.0 | ||||||||||||||||||
Truitt | 19.4 | 0.0 | 41.1 | 0.0 | ||||||||||||||||||||
Prepared Foods | 29.8 | 17.3 | ||||||||||||||||||||||
Other | 3.0 | 5.9 | 7.9 | 10.7 | 4.1 | 6.3 | ||||||||||||||||||
$ | 338.5 | $ | 352.6 | $ | 627.4 | $ | 624.7 | $ | 264.9 | $ | 244.1 |
*B&G includes canned and frozen vegetable sales exclusively for B&G.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 2017
Operating Income:
The following table presents components of 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 | ||||||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | June 29, 2019 | June 30, 2018 | |||||||||||||||||||
Gross Margin | 5.1 | % | 8.8 | % | 5.3 | % | 8.5 | % | 7.2 | % | 6.9 | % | ||||||||||||
Selling | 2.7 | % | 2.6 | % | 2.8 | % | 2.8 | % | 2.8 | % | 3.2 | % | ||||||||||||
Administrative | 2.8 | % | 2.7 | % | 2.9 | % | 2.9 | % | 3.3 | % | 4.0 | % | ||||||||||||
Plant Restructuring | 0.0 | % | 0.1 | % | 0.0 | % | 0.2 | % | 1.8 | % | 0.0 | % | ||||||||||||
Other Operating Income | 0.0 | % | 0.0 | % | -0.4 | % | 0.0 | % | -1.8 | % | -0.4 | % | ||||||||||||
Operating Income | -0.4 | % | 3.4 | % | -0.1 | % | 2.5 | % | 1.1 | % | 0.0 | % | ||||||||||||
Interest Expense, Net | 1.0 | % | 0.6 | % | 1.1 | % | 0.7 | % | 1.3 | % | 1.6 | % |
For the three month period ended September 30, 2017,June 29, 2019, the gross margin decreasedincreased from the prior year quarter from 8.8%6.9% to 5.1%7.2% due primarily to higher prices in the first quarter of 2020. The Company’s LIFO charge for the secondfirst quarter ended September 30, 2017 whichJune 29, 2019 was $12,053,000$3,176,000 as compared to a chargecredit of $1,361,000$710,000 for the secondfirst quarter ended October 1, 2016 andJune 30, 2018. This reflects the impact on the quarter of higher cost increases expectedincurred in fiscal 2018,2020, compared with smaller cost increases to fiscal 2017. On an after-tax basis, LIFO net earnings decreased by $7,834,000 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 statutory federal income tax rate.
For the six month period ended September 30, 2017, the gross margin decreased from the prior year period from 8.5% to 5.3% due primarily to a higher LIFO charge in the current year. The LIFO charge for the six months ended September 30, 2017 was $19,354,000 as compared to a charge of $2,413,000 for the six months ended October 1, 2016 and reflects the impact on the six months of cost increases expected in fiscal 2018, compared to cost decreases in fiscal 2017.2019. On an after-tax basis, LIFO decreased net earnings by $12,580,000$2,382,000 for the six monthsquarter ended September 30, 2017June 29, 2019 and decreasedLIFO increased net earnings by $1,568,000$533,000 for the six monthsquarter ended October 1, 2016,June 30, 2018, based on the historical statutory federal income tax rate.rates.
For the three month period ended September 30, 2017,June 29, 2019, selling costs as a percentage of sales increaseddecreased to 2.8% from 2.6% to 2.7%3.2% for the same period in the prior year. For the six month period ended September 30, 2017, selling costs as a percentage of sales remained unchanged at 2.8% from the same period in the prior year. The three month increaseThis decrease is primarily as a result of the Green Gianthigher sales decrease,of product which don'tdon’t incur selling costs.
For the three month period ended September 30, 2017,June 29, 2019, administrative expense as a percentage of sales increaseddecreased from 2.7%4.0% to 2.8%. For3.3% primarily due to higher sales during the six month period ended September 30, 2017,quarter and the fixed nature of these administrative expense as a percentagecosts.
ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OPERATIONS
June 29, 2019
During the sixthree months ended September 30, 2017,June 29, 2019, the Company recorded a gain on the partial sale of a plant in the Midwest of $4,075,000. The Company also recorded a gain of on the sale of unused fixed assets of $752,000. During the three months ended June 30, 2018, the Company sold some unused fixed assets which resulted in a gain of $1,591,000. $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 to the Condensed Consolidated Financial Statements. During the six months ended October 1, 2016, the Company sold some unused fixed assets which resulted in a loss of $48,000.$806,000. These items are included in other operating income in the Unaudited Condensed Consolidated Statements of Net Earnings.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 2017
Earnings (Loss).
Interest expense for the secondfirst quarter ended September 30, 2017,June 29, 2019, as a percentage of sales, increaseddecreased to 1.3% from 0.6% to 1.0%1.6% in secondfirst quarter ended October 1, 2016. For the six month period ended SeptemberJune 30, 2017, interest expense as a percentage of sales increased from 0.7% to 1.1% compared to six months ended October 1, 2016.2018. During fiscal 2018,2020, overall borrowings and interest rates were higherlower than the previous year.year along with higher sales for the current period.
Income Taxes:
The effective tax rate for continuing operations was 47.0%20.5% and 32.1%23.6% for the sixthree month periods ended SeptemberJune 29, 2019 and June 30, 2017 and October 1, 2016,2018, respectively. The 14.9%change in tax rate resulting from federal credits and incentives is a 4.0 percentage point increasedecrease. This change is a majority of the 3.1 percentage point decrease in the effective tax rate represents an increase in tax benefit as a percentagerate. The dollar amount of book loss when comparedthese credits and incentives did not change significantly from 2019 to the same period last year.2020. The major contributors to this increase are adecrease is the result of the Truitt acquisition. The bargain purchase gain is non-taxable and the deferred tax liability relatedchange in projected pre-tax income from 2019 to the outside basis difference2020. This resulted in the Truitt investment was written off becausefederal credits and incentives having a larger impact on the investment can now be recoveredtax rate in a tax-free manner.2020.
Earnings (Loss)per Share:
Basic and diluted continuing earnings (loss) earnings per share were $(0.30)$0.12 and $0.69$(0.22) for the three months ended SeptemberJune 29, 2019 and June 30, 2017 and October 1, 2016, respectively. Diluted (loss) earnings per share were $(0.30) 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 for the six months ended September 30, 2017 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, 2016,2018, respectively. For details of the calculation of these amounts, refer to footnote 1112 of the Notes to Condensed Consolidated Financial Statements.
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 | June 29, | June 30, | March 31, | March 31, | |||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||
Working Capital: | ||||||||||||||||||||||||||||||||
Balance | $ | 591,801 | $ | 575,139 | $ | 541,385 | $ | 254,200 | $ | 441,815 | $ | 498,976 | $ | 490,871 | $ | 602,504 | ||||||||||||||||
Change in Quarter | $ | 38,965 | 79,306 | (49,056 | ) | (103,528 | ) | |||||||||||||||||||||||||
Long-Term Debt, Less Current Portion | 395,128 | 354,905 | 329,138 | 35,967 | 246,645 | 318,282 | 265,900 | 407,733 | ||||||||||||||||||||||||
Operating Lease Obligations, Less Current Portion | 60,979 | - | - | - | ||||||||||||||||||||||||||||
Financing Lease Obligations, Less Current Portion | 29,907 | - | - | - | ||||||||||||||||||||||||||||
Capital Lease Obligations, Less Current Portion | 37,879 | 18,425 | 34,194 | 4,988 | - | 32,835 | 31,286 | 34,331 | ||||||||||||||||||||||||
Total Stockholders' Equity Per Equivalent | ||||||||||||||||||||||||||||||||
Common Share (see Note below) | 42.44 | 40.21 | 42.72 | 39.40 | ||||||||||||||||||||||||||||
Total Stockholders' Equity Per Equivalent Common Share (see Note below) | 43.39 | 40.84 | 43.27 | 41.73 | ||||||||||||||||||||||||||||
Stockholders' Equity Per Common Share | 42.83 | 40.72 | 43.27 | 39.90 | 43.80 | 41.21 | 43.67 | 42.11 | ||||||||||||||||||||||||
Current Ratio | 2.49 | 2.60 | 4.05 | 1.55 | 3.91 | 3.77 | 5.37 | 5.35 |
Note: Equivalent common shares are either common shares or, for convertible preferred shares, the number of common shares that the preferred shares are convertible into. See Note 79 of the Notes to Consolidated Financial Statements of the Company’s 20172019 Annual Report on Form 10-K for conversion details.
ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OPERATIONS
June 29, 2019
As shown in the Condensed Consolidated Statements of Cash Flows, net cash used inprovided by operating activities was $17,790,000$37,843,000 in the first sixthree months of fiscal 2018,2020, compared to $28,421,000$86,950,000 in the first sixthree months of fiscal 2017.2019. The $10,631,000$49,107,000 decrease in cash usedprovided is primarily attributable to an $214,135,000 increasea $66,436,000 decrease in cash provided for inventory in the first sixthree months of fiscal 20182020 as compared to $192,203,000 increase in inventory in the first sixthree months of fiscal 2017,2019, a $53,884,000$14,792,000 increase in cash provided by accounts payable, deferred revenue, accrued expenses and other liabilities,receivable, a $928,000$1,816,000 increase in cash provided by income taxes, a $708,000 increase in cash provided by other current assets partially offset by decreaseda $14,872,000 decrease in cash provided by accounts payable, accrued expenses and other liabilities and an increased net earnings of $11,724,000 as previously discussed and an $8,234,000 increase in cash used by accounts receivable.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 2017
$9,858,000.
As compared to October 1, 2016,June 30, 2018, inventory increased $57,462,000decreased $74,096,000 to $859,146,000$493,498,000 at September 30, 2017 (including $16,076,000 increase from the Truitt Bros. Inc. acquisition).June 29, 2019. The components of the inventory increasedecrease (excluding LIFO) reflect a $52,284,000 increase$62,864,000 decrease in finished goods, a $14,189,000 increasean $8,375,000 decrease in work in process and a $9,011,000 decrease$40,053,000 increase in raw materials and supplies. The finished goods decrease primarily reflects lower inventory quantities attributable to the lower calendar year 2018 pack versus the calendar year 2017 pack. The raw materials and supplies increase is primarily due to the Truitt acquisition and reflects higher inventory quantities due to the magnitude and timing of the fiscal year 2018 pack versus fiscal year 2017 pack partially offset by increased sales volume as compared to the prior year. The raw materials and supplies decrease is primarily due to a decreasean 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$164,517,000 as of the end of the secondfirst quarter of 20182020 as compared to $156,351,000$121,607,000 as of the end of the secondfirst quarter of 2017.2019.
Cash used in investing activities was $26,373,000$3,378,000 in the first sixthree months of fiscal 20182020 compared to cash used in investing activities of $14,505,000$75,000 in the first sixthree months of fiscal 2017.2019. Additions to property, plant and equipment were $13,743,000$9,776,000 in the first sixthree months of fiscal 20182020 as compared to $14,518,000$10,462,000 in first sixthree months of fiscal 2017. The prior year purchases include $4,767,0002019. Proceeds from the sale of fixed assets purchased from Monsantowere $6,398,000 for the first three months of fiscal 2020 as compared to $10,387,000 in connection with our seed processing in August 2016. In April 2017, the Company acquired the other 50%first three months of Truitt Bros., Inc. for $14,420,000 (net of cash acquired).fiscal 2019.
Cash provided byused in financing activities was $47,111,000$29,044,000 in the first sixthree months of fiscal 2018,2020, which included borrowings of $282,862,000$93,600,000 and the repayment of $232,706,000$118,272,000 of long-term debt, principally consisting of borrowingborrowings and repaymentrepayments 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 sixthree months of fiscal 2018. During the six months ended October 1, 2016, the Company paid off $22,596,000 of Industrial Revenue Bonds. During the six months ended September 30, 2017, the2019. The Company repurchased $2,696,000 of its Class A and Class B Common Stock as treasury stock compared to $1,021,000of $2,744,000 in the prior period.
Duringfirst three months of fiscal 2020 but did not repurchase any stock during the six months ended September 30, 2017, the Company entered into $7,155,000first quarter of equipment capital leases compared to $15,416,000 in the same period in the prior year.fiscal year 2019.
The Company completed the closing ofentered 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 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,June 29, 2019, the interest rate was approximately 2.75%4.00% on a balance of $272,609,000.$136,014,000. 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,June 29, 2019, the Company was in compliance with all such financial covenants.
New Accounting Standards
Refer to footnote 11 of the Notes to Condensed Consolidated Financial Statements.
ITEM 2 MANAGEMENT'SMANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 2017
New Accounting Standards
Refer to footnote 10 of the Notes to Condensed Consolidated Financial Statements.June 29, 2019
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 the months of June to October. 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.
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. |
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.
ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OPERATIONS
June 29, 2019
Critical Accounting Policies
During the three months ended June 29, 2019, the Company sold $5,706,000 of Green Giant finished goods inventory to B&G Foods, Inc. for cash, on a bill and hold basis, as compared to $6,885,000 for the three months ended June 30, 2018. Under the terms of the bill and hold agreement, title to the specified inventory transferred to B&G. Under the new revenue recognition standard, this contract qualifies for bill and hold accounting treatment as the Company has concluded that control of the unlabeled products transfers to the customer at the time title transfers as the customer has the right to control the inventory (prior to physical delivery) and the Company has a right to payment, 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 wasis experiencing, the Company believes that the LIFO method was preferable over the FIFO method because it better compares the cost of current production to current revenue.
The Company assesses its long-lived assets for impairment whenever there is an indicator of impairment. Property, plant, and equipment are depreciated over their assigned lives. The assigned lives and the projected cash flows used to test impairment are subjective. If actual lives are shorter than anticipated or if future cash flows are less than anticipated, a future impairment charge or a loss on disposal of the assets could be incurred. Impairment losses are evaluated if the estimated undiscounted value of the cash flows is less than the carrying value. If such is the case, a loss is recognized when the carrying value of an asset exceeds its fair value.
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk
In the ordinary course of business, the Company is exposed to various market risk factors, including changes in general economic conditions, competition and raw material pricing and availability. In addition, the Company is exposed to fluctuations in interest rates, primarily related to its revolving credit facility and the $100,000,000 term loan. To manage interest rate risk, the Company uses both fixed and variable interest rate debt plus fixed interest rate capital lease obligations. There have been no material changes to the Company’s exposure to market risk since March 31, 2017.2019.
ITEM 4 Controls and Procedures
The Company maintains a system of internal and disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported on a timely basis. The Company’s Board of
Directors, operating through its Audit Committee, which is composed entirely of independent outside directors, provides oversight to the financial reporting process.
An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of September 30, 2017,June 29, 2019, our disclosure controls and procedures were not effective dueeffective. The Company continues to the material weaknessexamine, refine and formalize its disclosure controls and procedures and to monitor ongoing developments in the 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.this area.
As a result ofThere have been no changes during the control deficiencies identified in 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 fiscal quarters ended September 30, 2017 and October 1, 2016. During the fiscal quarter ended September 30, 2017, there were no changesperiod covered by this report to the Company's internal control over financial reporting that has materially affected, or areis reasonably likely to materially affect, the Company’s internal control over financial reportingreporting.
Legal Proceedings |
Refer to footnote 1315 to the Consolidated Financial Statements included in Part II Item 8 of the Annual Report on Form 10-K.
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, 20172019 except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors.
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 | ||||||||||||||||||
7/01/2017 – 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 |
Total Number of | Average Price Paid | Total Number | Maximum Number | |||||||||||||||||||||
Shares Purchased | per Share | of Shares | (or Approximate | |||||||||||||||||||||
Purchased as | Dollar Value) of | |||||||||||||||||||||||
Part of Publicly | Shares that May | |||||||||||||||||||||||
Announced | Yet Be Purchased | |||||||||||||||||||||||
Class A | Class B | Class A | Class B | Plans or | Under the Plans or | |||||||||||||||||||
Period | Common | Common | Common | Common | Programs | Programs | ||||||||||||||||||
4/01/2019 – 4/30/2019 (1) | 31,326 | - | $ | 24.39 | $ | - | 31,326 | |||||||||||||||||
5/01/2019 – 5/31/2019 | 37,173 | - | $ | 24.12 | $ | - | 37,173 | |||||||||||||||||
6/01/2019 – 6/30/2019 (2) | 41,501 | - | $ | 26.12 | $ | - | 41,501 | |||||||||||||||||
Total | 110,000 | - | $ | 24.95 | $ | - | 110,000 | 770,304 |
Defaults Upon Senior Securities |
None.
Mine Safety Disclosures |
None.
Other Information |
None.
Exhibits |
31.1 |
31.2 |
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 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Seneca Foods Corporation | | |
(Company) | ||
/s/Kraig H. Kayser | ||
August 7, 2019 | ||
Kraig H. Kayser | ||
President and | ||
Chief Executive Officer | ||
/s/ | ||
| ||
August 7, 2019 | ||
Timothy J. Benjamin | ||
Chief Financial Officer |
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