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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year-ended March 31, 1996 Commission File Number 0-1989
SENECA FOODS CORPORATION
(Exact name of registrant as specified in its charter)
New York 16-0733425
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1162 Pittsford-Victor Road, Pittsford, New York 14534
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 385-9500
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock Class A, $.25 Par
Common Stock Class B, $.25 Par
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained herein, and
will not be contained, to best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to the Form 10-K. X
Check mark indicates whether registrant has (1) 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 registrant was required to
file such reports), and (2) has been subject to the filing requirements for at
least the past 90 days.
Yes X No
The aggregate market value of the Registrant's voting securities held by
non-affiliates based on the closing sales price per market reports by the
National Market System on June 1, 1996 was approximately $98,704,000.
Common shares outstanding as of June 1, 1996 were Class A: 3,143,125,
Class B: 2,796,555.
Documents Incorporated by Reference:
(1) Proxy Statement to be issued prior to June 30, 1996 in connection with the
registrant's annual meeting of stockholders (the "Proxy Statement")
applicable to Part III, Items 10-13 of Form 10-K.
(2) Portions of the Annual Report to shareholders for fiscal year-ended
March 31, 1996 (the "Annual Report") applicable to
Part II, Items 5-8 and Part IV, Item 14 of Form 10-K.
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT - FISCAL 1996
SENECA FOODS CORPORATION
Pages
PART I.
Item 1. Business 1-3
Item 2. Properties 3
Item 3. Legal Proceedings 4
Item 4. Submission of Matters to a Vote of Equity Security Holders 4
PART II.
Item 5. Market for the Registrant's Common Stock and Related Security Holder Matters 4
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations 4
Item 8. Financial Statements and Supplementary Data 4
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure 4
PART III.
Item 10. Directors and Executive Officers of the Registrant 6
Item 11. Executive Compensation 6
Item 12. Security Ownership of Certain Beneficial Owners and Management 6
Item 13. Certain Relationships and Related Transactions 6
PART IV.
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K 6-10
SIGNATURES 11-12
PART I
Item 1
Business
General Development of Business
SENECA FOODS CORPORATION (herein referred to as the "Company") was organized in
1949 and incorporated under the laws of the State of New York. Seneca Foods
Corporation purchased six Green Giant(R) vegetable plants from The Pillsbury
Company effective February 1, 1995, resulting in vegetable products becoming
nearly 80% of Seneca's overall business. Consequently, Seneca has changed its
fiscal year-end from July 31 to March 31 to avoid overlapping pack seasons
between fiscal years. Therefore, Fiscal 1995 was an eight-month transition
period.
Financial Information About Industry Segments
The Company's business activities are conducted in food and non-food segments.
The food segment is food processing. The non-food segment is an air charter
service. The air charter service represents 1% of the Company's business and
therefore the financial information related to segments is not material.
Narrative Description of Business
Principal Products and Markets
Food Processing
The principal products of this segment include grape products, apple products,
and vegetables. The products are canned, bottled, and frozen and are sold to
retail and institutional markets. The Company has divided the United States into
four major marketing sections: Eastern, Southern, Northwestern, and
Southwestern. Plant locations in New York, Michigan, North Carolina, and
Washington provide ready access to the domestic sources of grapes and apples
necessary to support marketing efforts in their respective sections of the
country. Vegetable operations are primarily supported by plant locations in New
York, Wisconsin, Washington, Idaho, and Minnesota. In addition, the Company
operates a mushroom canning facility in Pennsylvania.
The following summarizes net sales by major category for the four years ended
March 31, 1996 and 1995 and July 31, 1994 and 1993:
(Eight Months)
1996 1995 1994 1993
---- ---- ---- ----
(In thousands)
Vegetable $ 330,654 $117,504 $145,010 $132,459
Apple 87,585 62,688 78,453 71,748
Grape 19,159 10,325 17,457 19,058
Other 66,453 40,809 45,334 30,205
------- ------- ------- -------
Total $503,851 $231,326 $286,254 $253,470
======= ======= ======= =======
Other
Seneca Flight Operations provides air charter service primarily to industries in
upstate New York.
Source and Availability of Raw Material
Food Processing
The Company's food processing plants are located in major vegetable, grape, and
apple producing states. Fruits and vegetables are primarily obtained through
contracts with growers. Apple concentrate is purchased domestically and abroad
to supplement raw fruit purchased under contract. The Company's sources of
supply are considered equal or superior to its competition for all of its food
products.
Seasonal Business
Food Processing
While individual fruits and vegetables have seasonal cycles of peak production
and sales, the different cycles are usually offsetting to some extent. The
supply of commodities, current pricing, and expected new crop quantity and
quality affect the timing of the Company's sales and earnings. An Off Season
Allowance is established during the year to minimize the effect of seasonal
production on earnings. This is zero at fiscal year-end.
Backlog
Food Processing
In the food processing business the end of year sales order backlog is not
considered meaningful. Traditionally, larger customers provide tentative
bookings for their expected purchases for the upcoming season. These bookings
are further developed as data on the expected size of the related national
harvests becomes available. In general these bookings serve as a yardstick,
rather than as a firm commitment, since actual harvest results can vary notably
from early estimates. In actual practice, the Company has substantially all of
its expected seasonal production identified to potential sales outlets before
the seasonal production is completed.
Competition and Customers
Food Processing
Competition in the food business is substantial with imaginative brand
registration, quality service, and pricing being the major determinants in the
Company's relative market position. Except for the Seneca apple and grape
products and Libby's vegetable products data mentioned below, no reliable
statistics are available to establish the exact market position of the Company's
own food products. During the past year approximately 26% of the Company's
processed foods were packed for retail customers under the Company branded
labels of Libby's(R), Nature's Favorite(R), TreeSweet(R), and Seneca(R). About
10% of the processed foods were packed for institutional food distributors and
31% of processed foods were retail packed under the private label of customers.
The remaining 33% is sold to Pillsbury under the Alliance Agreement (see Note 12
of Item 8, Financial Statements and Supplementary Data). The customers represent
a full cross section of the retail, institutional, distributor, and industrial
markets and the Company does not consider itself dependent on any single sales
source. In 1996 and in the future, The Pillsbury Company represents our largest
customer as a result of the 20-year Alliance Agreement entered into during 1995.
The principal branded products are Seneca Frozen Apple Juice Concentrate, rated
the number one seller nationally, Seneca Frozen Natural Grape Juice Concentrate,
Seneca applesauce, and Libby's canned vegetable products which rate among the
top five national brands. The information under the heading Liquidity and
Capital Resources in Management's Discussion and Analysis of Financial Condition
and Results of Operations in the 1996 Annual Report is incorporated by
reference.
Environmental Protection
Environmental protection is an area that has been worked on most diligently at
each food processing facility. In all locations the Company has cooperated with
federal, state, and local environmental protection authorities in developing and
maintaining suitable antipollution facilities. In general, pollution control
facilities are equal to or somewhat superior to those of our competitors and are
within environmental protection standards. The Company does not expect any
material capital expenditures to comply with environmental regulations in the
near future. The Company is a potentially responsible party with respect to two
sites but the Company does not believe the aggregate liability is material.
Employment
Food processing - Full time 2,049
- Seasonal 534
-----
2,583
Other 125
-----
2,708
Foreign Operations
Export sales for the Company are a relatively small portion (about 5%) of the
food processing sales, excluding the Pillsbury Alliance sales. Approximately 20%
of the Pillsbury Alliance sales are for eventual export.
Item 2
Properties
The Company has nine food processing, packaging, and warehousing facilities
located in New York State that provide approximately 1,819,000 square feet of
food packaging, freezing and freezer storage, and warehouse storage space. These
facilities process and package fruit and vegetable products. The Company is a
lessee under a number of operating and capital leases for equipment and real
property used for processing and warehousing.
Five other processing, packaging, and warehousing facilities are located in the
states of North Carolina (223,000 square feet), Pennsylvania (39,000 square
feet), and in Washington (three locations totaling 292,000 square feet).
Processing operations in North Carolina are primarily devoted to apple juice
products; in Washington, grape juice, apple juice, apple chips, and sauce; and
in Pennsylvania, mushroom canning and warehousing.
Four facilities in Minnesota, one facility in Michigan, one facility in
Washington, one facility in Idaho, and seven facilities in Wisconsin provide
approximately 4,456,000 square feet of food packaging, freezing and freezer
storage, and warehouse storage space. These facilities process and package
various vegetable and fruit products. The facilities are owned by the Company.
The Company owns two food distribution facilities in Massachusetts and New York
totaling approximately 206,000 square feet which are leased out to other
companies through 1996 and 2004. The Company has entered into an agreement to
sell the New York property in August 1996. Sublease income of $1,849,000 was
received on these facilities during the period. In addition the air charter
division has a 14,000 square foot facility.
All of the properties are well maintained and equipped with modern machinery.
All locations, although highly utilized, have the ability to expand as sales
requirements justify. Because of the seasonal production cycles the exact extent
of utilization is difficult to measure. In certain circumstances the theoretical
full efficiency levels are being reached; however, expansion of the number of
production days or hours could increase the output by up to 20% for a season.
Certain of the Company's facilities are mortgaged to financial institutions to
secure long-term debt and capital lease obligations. See Notes 4 and 5 of Item
8, Financial Statements and Supplementary Data, for additional information about
the Company's lease commitments.
Item 3
Legal Proceedings
The Company is not involved in any material legal proceedings.
Item 4
Submission of Matters to a Vote of Equity Security Holders
No matters were submitted to vote of shareholders during the last quarter of the
fiscal period covered by this report.
PART II
Item 5
Market for the Registrant's Common Stock and Related Security Holder Matters
Each class of preferred stock receives preference as to dividend payment and
declaration over any common stock. In addition, refer to the information in the
1996 Annual Report, "Shareholder Information", which is incorporated by
reference.
Item 6
Selected Financial Data
Refer to the information in the 1996 Annual Report, "Five Year Selected
Financial Data", which is incorporated by reference.
Item 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Refer to the information in the 1996 Annual Report, "Management's Discussion and
Analysis of Financial Condition and Results of Operations", which is
incorporated by reference.
Item 8
Financial Statements and Supplementary Data
Refer to the information in the 1996 Annual Report, "Consolidated Financial
Statements and Notes thereto including Independent Auditors' Report", which is
incorporated by reference.
Item 9
Changes in and Disagreements on Accounting and Financial Disclosure
None.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Seneca Foods Corporation
Pittsford, New York
We have audited the consolidated financial statements of Seneca Foods
Corporation and subsidiaries as of March 31, 1996, March 31, 1995 and July 31,
1994, and for the year ended March 31, 1996, the eight months ended March 31,
1995 and for each of the two years in the period ended July 31, 1994, and have
issued our report thereon dated May 31, 1996, which report includes an
explanatory paragraph as to changes in accounting for inventories in 1996 and
income taxes in 1994; such consolidated financial statements and report are
included in your 1996 Annual Report to Stockholders and are incorporated herein
by reference. Our audits also included the consolidated financial statement
schedule of Seneca Foods Corporation, listed in Item 14 (A)(2). This
consolidated financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/Deloitte & Touche LLP
Rochester, New York
May 31, 1996
PART III
Item 10
Directors and Executive Officers of the Registrant
Item 11
Executive Compensation
Item 12
Security Ownership of Certain Beneficial Owners and Management
Item 13
Certain Relationships and Related Transactions
Information required by Items 10 through 13 will be filed separately with the
Commission, pursuant to Regulation 14A, in a definitive proxy statement
involving the election of directors which is incorporated herein by reference.
PART IV
Item 14
Exhibits, Financial Statement Schedules, and Reports on Form 8-K
A. Exhibits and Financial Statement Schedules
1. (i) Financial Statement Schedules - the following consolidated financial
statements of the Registrant, included in the Annual Report for the year
ended March 31, 1996, are incorporated by reference in Item 8:
Consolidated Statements of Net Earnings - March 31, 1996 and 1995 and
July 31, 1994 and 1993
Consolidated Balance Sheets - March 31, 1996 and 1995 and July 31, 1994
Consolidated Statements of Cash Flows - March 31, 1996 and 1995 and
July 31, 1994 and 1993
Consolidated Statements of Stockholders' Equity - March 31, 1996 and
1995 and July 31, 1994 and 1993
Notes to Consolidated Financial Statements - March 31, 1996 and 1995
and July 31, 1994 and 1993
Independent Auditors' Report
(ii) As a result of the Company's change in 1995 in the fiscal year-end date
from July 31 to March 31 (see Note 1 of Item 8, Financial Statements and
Supplementary Data), the following is an unaudited comparison of eight
months ended March 31, 1995 and March 26, 1994:
March 31 March 26
Eight Months Ended (1994 Unaudited) 1995 1994
(In thousands, except share amounts)
Net sales $234,073 $195,048
------- -------
Costs and expenses:
Cost of product sold 202,068 162,356
Selling, general, and administrative expense 23,620 20,231
Interest expense, net of interest income 6,296 4,178
------- -------
231,984 186,765
Earnings from continuing operations before income
taxes, extraordinary item and cumulative effect of
accounting change 2,089 8,283
Income taxes 768 3,231
----- -----
Earnings from continuing operations $ 1,321 $ 5,052
===== =====
Earnings from continuing operations per share $ .23 $ 1.71
===== =====
Weighted average shares outstanding 5,593,110 5,899,284
========= =========
Pages
2. Supplemental Schedule:
Schedule II -- Valuation and Qualifying Accounts 8
Other schedules have not been filed because the conditions requiring the filing
do not exist or the required information is included in the consolidated
financial statements, including the notes thereto.
3. Exhibits:
No. 3 - Articles of Incorporation and By-Laws - Incorporated by reference
to the Company's 10-Q/A filed August, 1995 as amended by Exhibit
No. 3 filed herewith.
No. 4 - Articles defining the rights of security holders - Incorporated by
reference to the Company's 10-Q/A filed August, 1995 as amended by Exhibit
No. 3 filed herewith. Instrument defining the rights of any holder of
Long-Term Debt - Incorporated by reference to Exhibit 99 to the Company's
10-Q filed January 1995 as amended by Exhibit No. 4 filed herewith. The
Company will furnish, upon request to the SEC, a copy of any instrument
defining the rights of any holder of Long-Term Debt.
No. 10 - Material Contracts - Incorporated by reference to the Company's 8-K
dated February 24, 1995 for the First Amended and Restated Alliance
Agreement and the First Amended and Restated Asset Purchase
Agreement both with The Pillsbury Company.
No. 11 - Computation of Earnings per Share 9
No. 13 - The material contained in the 1996 Annual Report to Shareholders under
the following headings: "Five Year Selected Financial Data", "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Consolidated Financial Statements and Notes thereto including Independent
Auditors' Report", and "Shareholder Information".
No. 18 - Preferability Letter 10
No. 21 - List of Subsidiaries 10
No. 27 - Financial Data Schedules
B. Reports on Form 8-K
None.
Schedule II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Balance at Charged to Deductions Balance
beginning Charged to other from at end
of period income accounts reserve of period
---------- ---------- ---------- ---------- ---------
Year-ended March 31, 1996:
Allowance for doubtful accounts $ 227 $ 52 $ -- $ 114 (a) $ 165
====== ======= ===== ===== =======
Year-ended March 31, 1995:
Allowance for doubtful accounts $ 183 $ 166 $ -- $ 122 (a) $ 227
====== ======= ===== ===== ======
Year-ended July 31, 1994:
Allowance for doubtful accounts $ 435 $ (213) $ -- $ 39 (a) $ 183
====== ======= ===== ===== =======
Year-ended July 31, 1993:
Allowance for doubtful accounts $ 281 $ 182 $ -- $ 28 (a) $ 435
====== ======= ===== ===== =======
(a) Accounts written off, net of recoveries.