Seneca Foods Reports Earnings of $8.1 Million or $0.66 per Diluted Share for the First Half of 2011

Oct 28, 2010, 16:15 ET from Seneca Foods Corporation

MARION, N.Y., Oct. 28 /PRNewswire-FirstCall/ -- Seneca Foods Corporation (Nasdaq: SENEA, SENEB) reported that net sales for the six months ended October 2, 2010 decreased from last year by $58.3 million, or 10.5%, to $495.4 million.  The decrease is attributable to decreased selling prices and a less favorable sales mix of $30.2 million and decreased sales volume of $28.1 million attributable to lower alliance and co-pack sales.  Net earnings decreased to $8.1 million, or $0.66 per diluted share, compared to $23.5 million, or $1.92 per diluted share, in the prior year.

For the second quarter ended October 2, 2010, sales decreased $47.8 million, or 14.8%, to $275.4 million compared to the second quarter of last year.  The decrease in sales is attributable to decreased selling prices and a less favorable sales mix of $19.1 million and a sales volume reduction of $28.7 million due to decreased alliance and co-pack sales.  Net earnings were $2.8 million, or $0.23 per diluted share, versus $12.4 million or $1.02 per diluted share, in the quarter ended September 26, 2009. 

During the second quarter of fiscal 2011, the Company implemented workforce reductions, at its plants in Buhl, Idaho and Mayville, Wisconsin and certain other locations that resulted in a restructuring charge of $1.2 million for severance costs.

Pre-tax results for six months ended October 2, 2010 included a $0.1 million gain on the sale of unused equipment.  

"The first half results reflect the continuing inventory overhang in the market from last year's bumper crops which has required us to continue aggressive promotional activity," said Kraig H. Kayser, President and CEO.

On August 6, 2010, the Company completed its acquisition of 100% of the partnership interest of Lebanon Valley Cold Storage, LP and the assets of Unilink, LLC (collectively "Lebanon") from Pennsylvania Food Group, LLC and related entities.

Earnings Conference Call and Webcast

The Company will host a conference call to discuss second quarter fiscal year 2011 financial results tomorrow at 8:00 AM EDT.  The conference call can be accessed live over the phone by dialing (866) 244-4635 (conference ID 1490652). If you are unable to listen to the live conference call, a replay will be available on Monday, November 1, 2010, please visit www.senecafoods.com and click on "Company Profile" and then "Investor Information". This replay will be available for two weeks.

About Seneca Foods Corporation

Seneca Foods is one of the country's largest processors of canned fruits and vegetables with manufacturing facilities located throughout the United States. Its products are sold under the Libby's, Aunt Nellie's Farm Kitchen, Stokely's, READ, and Seneca labels as well as through the private label and industrial markets. In addition, under an alliance with General Mills Operations, LLC, a successor to the Pillsbury Company and a subsidiary of General Mills, Inc., Seneca produces canned and frozen vegetables, which are sold by General Mills Operations, LLC under the Green Giant label. Seneca's common stock is traded on the Nasdaq Global Stock Market under the symbols "SENEA" and "SENEB".  SENEA was added to the S&P SmallCap 600 index on October 22, 2010 and is also included in the Russell 2000 and 3000 indices.

Non-GAAP Financial Measures -- Net Earnings Excluding LIFO Impact, EBITDA and FIFO EBITDA

Net Earnings excluding LIFO, EBITDA and FIFO EBITDA are non-GAAP financial measures. The Company believes these non-GAAP financial measures provide a basis for comparison to companies that do not use LIFO and to periods prior to 2008 when the company did not use LIFO and enhance the understanding of the company's operating performance.  The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.

Set forth below is a reconciliation of reported net earnings and reported diluted earnings per share to net earnings excluding LIFO and diluted earnings per share excluding LIFO.

Quarter Ended

October 2, 2010

September 26, 2009

Income

Diluted

Income

Diluted

(in millions)

EPS

(in millions)

EPS

Net earnings, as reported:

$

2.8

$

0.23

$

12.4

$

1.02

LIFO (credit) charge, after tax at statutory federal rate

$

(0.4)

$

(0.03)

$

3.1

$

0.25

Net earnings, excluding LIFO impact

$

2.4

$

0.20

$

15.5

$

1.27

Diluted weighted average common shares outstanding (in thousands)

11,807

10,708

Six Months Ended

October 2, 2010

September 26, 2009

Income

Diluted

Income

Diluted

(in millions)

EPS

(in millions)

EPS

Net earnings, as reported:

$

8.1

$

0.66

$

23.5

$

1.92

LIFO (credit) charge, after tax at statutory federal rate

$

(3.1)

$

(0.25)

$

6.1

$

0.50

Net earnings, excluding LIFO impact

$

5.0

$

0.41

$

29.6

$

2.42

Diluted weighted average common shares outstanding (in thousands)

11,463

9,180

Set forth below is a reconciliation of reported net earnings to EBITDA and FIFO EBITDA (earnings before interest, income taxes, depreciation, amortization, non-cash charges and credits related to the LIFO inventory valuation method). The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.

Six Months Ended

EBITDA and FIFO EBITDA:

October 2, 2010

September 26, 2009

(In thousands)

Net earnings

$  8,086

$  23,511

Income taxes

1,929

12,921

Interest expense, net of interest income

4,176

5,183

Depreciation and amortization

11,050

10,883

Interest amortization

(243)

(300)

EBITDA

24,998

52,198

LIFO (credit) charge

(4,777)

9,429

FIFO EBITDA

$20,221

$61,627

Forward-Looking Information

The information contained in this release 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 release 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.

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 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;
  • 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, United States, foreign and local governmental regulations, including environmental and health and safety regulations; and
  • other risks detailed from time to time in the reports filed by the Company with the SEC.

Except for ongoing obligations to disclose material information as required by the federal securities laws, the Company does not undertake any obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of the filing of this report or to reflect the occurrence of unanticipated events.

Seneca Foods Corporation

Unaudited Condensed Consolidated Statements of Net Earnings

For the Periods Ended October 2, 2010 and September 26, 2009

(In thousands of dollars, except share data)

Quarter

Year-to-Date

2010

2009

2010

2009

Net sales

$        275,448

$      323,205

$    495,390

$         553,733

Plant restructuring expense (note 3)

$            1,211

$                  -

$        1,211

$                    -

Other operating income, net (note 4)

$                (8)

$              (31)

$          (84)

$               (31)

Operating income (notes 1 and 2)

$            4,070

$          22,458

$      14,191

$           41,615

Interest expense, net

2,240

2,546

4,176

5,183

Earnings before income taxes

$            1,830

$          19,912

$      10,015

$           36,432

Income taxes (benefit) expense (note 5)

(981)

7,487

1,929

12,921

Net earnings

$            2,811

$          12,425

$        8,086

$           23,511

Earnings attributable to common stock (note 6)

$            2,709

$          10,879

$        7,571

$           17,631

Basic earnings per share

$              0.23

$              1.02

$          0.66

$               1.94

Diluted earnings per share

$              0.23

$              1.02

$          0.66

$               1.92

Weighted average shares outstanding basic

11,735,631

10,639,848

11,392,281

9,111,845

Weighted average shares outstanding diluted

11,806,707

10,707,639

11,463,357

9,179,636

Note 1: The effect of  the LIFO inventory valuation method on second quarter pre-tax results was to increase operating earnings by $645,000

for the three month period ended October 2, 2010 and reduce operating earnings by $4,728,000, for the three month period ended September 26, 2009.

Note 2: The effect of  the LIFO inventory valuation method on year-to-date pre-tax results was to increase operating earnings by $4,777,000

for the six month period ended October 2, 2010 and reduce operating earnings by $9,429,000, for the six month period ended September 26, 2009.

Note 3: The three and six month periods ended October 2, 2010 include a restructuring charge for severance costs of $1,211,000.

Note 4: Other income for the current year period of $84,000 principally represents a net gain on the sale of unused fixed assets.

Other income for the prior year periods of $31,000 principally represents a net gain on the sale of unused fixed assets.

Note 5: The three and six month periods ended October 2, 2010 include a tax benefit of $1,519,000 mostly related to the settlement of an

audit of fiscal years 2006, 2007, and 2008 with the Internal Revenue Service.

Note 6: The Company uses the "two-class" method for basic earnings per share by dividing the earnings allocated to  common shareholders

by the weighted average of common shares outstanding during the period.  The diluted earnings per share includes the effect

of convertible shares for the each period presented.  Average common and participating shares totaled 12,149,372 as of October 2, 2010.

SOURCE Seneca Foods Corporation



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