Back to GetFilings.com
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, 1998 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 _____ No X
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, 1998 was approximately $96,606,000.
Common shares outstanding as of June 1, 1998 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, 1998 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, 1998 (the "1998 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 1998
SENECA FOODS CORPORATION
PART I. Pages
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 6-9
SIGNATURES 10-11
3
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 during 1995, Seneca
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
operated a mushroom canning facility in Pennsylvania.
The following summarizes net sales by major category for the years ended March
31, 1998, 1997, and 1996:
1998 1997 1996
-------------------------------------------------
(In thousands)
Vegetable $544,646 $562,265 $330,654
Apple 68,108 93,047 87,585
Grape 18,303 19,605 19,159
Other 69,123 52,017 66,453
------------------------------------------------
Total $700,180 $726,934 $503,851
=================================================
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. Off Season Allowance 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 19% of the Company's
processed foods were packed for retail customers under the Company branded
labels of Libby's(R), TreeSweet(R), Blue Boy(R), Aunt Nellie's Farm Kitchen(R),
and Seneca(R). About 11% of the processed foods were packed for institutional
food distributors and 30% of processed foods were retail packed under the
private label of customers. The remaining 40% is sold under the Alliance
Agreement with Pillsbury (see note 13 of Item 8, Financial Statements and
Supplementary Data). Termination of the Alliance Agreement would have a material
adverse effect on the Company taken as a whole. 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
other than sales attributable to the Alliance Agreement.
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 1998 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 2,534
- Seasonal 420
---------
2,954
Other 108
---------
3,062
=========
Foreign Operations
Export sales for the Company are a relatively small portion (about 5%) of the
food processing sales.
Item 2
Properties
The Company has eleven food processing, packaging, and warehousing facilities
located in New York State that provide approximately 2,054,000 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), 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.
Five facilities in Minnesota, one facility in Michigan, one facility in
Washington, one facility in Idaho, one facility in Kentucky, and seven
facilities in Wisconsin provide approximately 5,459,000 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 one food distribution facility in Massachusetts totaling
approximately 59,000 square feet which is leased out to another company through
2004. Sublease income of $271,000 was received on this facility 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 long-term debt and lease commitments.
Item 3
Legal Proceedings
In the ordinary course of its business, the Company is made a party to certain
legal proceedings seeking monetary damages. The Company does not believe that an
adverse decision in any of these proceedings would have a material adverse
impact on the Company.
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
1998 Annual Report, "Shareholder Information and Quarterly Results", which is
incorporated by reference.
Item 6
Selected Financial Data
Refer to the information in the 1998 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 1998 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 1998 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, 1998 and 1997, and for each of the
three years in the period ended March 31, 1998, and have issued our report
thereon dated May 22, 1998 (June 12, 1998 as to Note 4); such consolidated
financial statements and report are included in your 1998 Annual Report to
Shareholders 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 22, 1998 (June 12, 1998 as to Note 4)
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. Financial Statement Schedules - the following consolidated financial
statements of the Registrant, included in the Annual Report for the
year ended March 31, 1998, are incorporated by reference in Item 8:
Consolidated Statements of Net Earnings - March 31, 1998, 1997 and
1996
Consolidated Balance Sheets - March 31, 1998 and 1997
Consolidated Statements of Cash Flows - March 31, 1998, 1997 and 1996
Consolidated Statements of Stockholders' Equity - March 31, 1998,
1997 and 1996
Notes to Consolidated Financial Statements - March 31, 1998, 1997
and 1996
Independent Auditors' Report
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 the Company's
10-K filed June 1996.
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 the
Company's 10-K filed June 1996. 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 of the Company's 10-K filed June, 1997, amended by Exhibit 4 of the
Company's 10-Q and 10-Q/A filed November, 1997. 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. 13 - The material contained in the 1998 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 and Quarterly Results".
No. 21 - List of Subsidiaries 9
No. 23 - Consents of Experts and Counsel 9
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, 1998:
Allowance for doubtful accounts $ 200 $ 140 $ -- $ 133 (a) $ 207
===================================================================
Year-ended March 31, 1997:
Allowance for doubtful accounts $ 165 $ 72 $ -- $ 37 (a) $ 200
===================================================================
Year-ended March 31, 1996:
Allowance for doubtful accounts $ 227 $ 52 $ -- $ 114 (a) $ 165
===================================================================
(a) Accounts written off, not of recoveries.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SENECA FOODS CORPORATION
By /s/ Jeffrey L. Van Riper June 12, 1998
Jeffrey L. Van Riper
Controller and Secretary
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
Signature Title Date
/s/Arthur S. Wolcott Chairman and Director June 12, 1998
- --------------------
Arthur S. Wolcott
/s/Kraig H. Kayser President, Chief Executive Officer, June 12, 1998
- ------------------
Kraig H. Kayser and Director
/s/Philip G. Paras Vice President, Finance June 12, 1998
- ------------------
Philip G. Paras
/s/Jeffrey L. Van Riper Controller and Secretary June 12, 1998
- -----------------------
Jeffrey L. Van Riper (Principal Accounting Officer)
/s/Robert T. Brady Director June 12, 1998
- ------------------
Robert T. Brady
/s/David L. Call Director June 12, 1998
- ----------------
David L. Call
Continued
Signature Title Date
/s/Edward O. Gaylord Director June 12, 1998
- --------------------
Edward O. Gaylord
/s/G. Brymer Humphreys Director June 12, 1998
- ----------------------
G. Brymer Humphreys
/s/Susan W. Stuart Director June 12, 1998
- ------------------
Susan W. Stuart