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Seneca Foods Corp. Reports Operating Results (10-Q)

January 27, 2011 | About:
EconMatters

10qk

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Seneca Foods Corp. (SENEA) filed Quarterly Report for the period ended 2011-01-01.

Seneca Foods-a has a market cap of $242.1 million; its shares were traded at around $25.29 with a P/E ratio of 10.3 and P/S ratio of 0.2. Hedge Fund Gurus that owns SENEA: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns SENEA: Ron Baron of Baron Funds, Charles Brandes of Brandes Investment, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Third fiscal quarter 2011 results include net sales of $446.3 million, which represents a 0.2%, or $0.7 million, decrease from the third quarter of fiscal 2010. The decrease in sales is attributable to decreased selling prices and less favorable sales mix of $16.7 million partially offset by a sales volume increase of $16.0 million. The decrease in sales is primarily from a $11.9 million decrease in Green Giant Alliance sales primarily due to decreased corn volume, a $6.9 million decrease in Canned Vegetable sales primarily due to decreased net unit selling prices, and a $1.2 million decrease in Snack sales due to the loss of a co-pack customer, partially offset a $16.5 million increase in Frozen sales as a result of the Lebanon acquisition.

Nine months ended January 1, 2011 results include net sales of $941.6 million, which represents a 5.9%, or $59.2 million, decrease from the nine months ended December 26, 2009. The decrease in sales is attributable to decreased selling prices and less favorable sales mix of $48.1 million and a sales volume decrease of $11.1 million. The decrease in sales is primarily from a $39.7 million decrease in Green Giant Alliance sales primarily due to decreased corn and pea volume, $31.9 million decrease in Canned Vegetable sales primarily due to decreased net unit selling prices, and an $9.4 million decrease in Snack sales due to the loss of a co-pack customer partially offset by a $22.4 million increase in Frozen sales as a result of the Lebanon acquisition.

Basic earnings per share were $0.94 and $1.53 for the three months ended January 1, 2011 and December 26, 2009, respectively. Diluted earnings per share were $0.94 and $1.52 for the three months ended January 1, 2011 and December 26, 2009, respectively. Basic earnings per share were $1.61 and $3.47 for the nine months ended January 1, 2011 and December 26, 2009, respectively. Diluted earnings per share were $1.60 and $3.44 for the nine months ended January 1, 2011 and December 26, 2009, respectively. For details of the calculation of these amounts, refer to footnote 12 of the Notes to Condensed Consolidated Financial Statements.

As shown in the Condensed Consolidated Statements of Cash Flows, net cash used in operating activities was $33.5 million in the first nine months of fiscal 2011, compared to net cash used in operating activities of $55.9 million in the first nine months of fiscal 2010. The $22.4 million decrease in cash used is primarily attributable to, a $62.8 million decrease in cash used for inventory, and a $5.0 million increase in cash provided by accounts receivable as compared to the first nine months ended December 26, 2009, partially offset an $8.0 million increase in cash used for income taxes as compared to the first nine months ended December 26, 2009, by a $14.3 million decrease in cash provided by accounts payable, accrued expenses and other liabilities as compared to the first nine months ended December 26, 2009, and decreased net earnings of $22.6 million as previously discussed.

As compared to December 26, 2009, inventory decreased $9.9 million excluding the acquisition related increase of $10.3 million. Excluding this acquisition related increase, the components of the inventory decrease reflect a $33.1 million decrease in finished goods (net of off-season), an $8.6 million increase in work in process and a $24.9 million increase in raw materials and supplies. The finished goods decrease reflects lower inventory quantities attributable to decreased production during the last harvest season partially offset by decreased sales volume as compared to the prior year. The raw materials and supplies increase is primarily due to an increase in cans and raw steel quantities compared to the prior year. FIFO based inventory costs exceeded LIFO based inventory costs by $90.8 million as of the end of the third quarter of 2011 as compared to $99.9 million as of the end of the third quarter of 2010. The off-season balance increased by $0.5 million, as compared to December 26, 2009, due to the timing of certain expenses. Refer to the Critical Accounting Policies section of this Form 10-Q for further details on the off-season.

Cash used in investing activities was $34.7 million in the first nine months of fiscal 2011 compared to $14.6 million in the first nine months of fiscal 2010. The acquisition of Lebanon for $20.3 million in cash in the first nine months of fiscal 2011 was the major reason for this change. Additions to property, plant and equipment were $15.5 million in the first nine months of fiscal 2011 as compared to $14.6 million in first nine months of fiscal 2010.

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