senea20180628_8k.htm

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

__________________________

 

FORM 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (date of earliest event reported): June 28, 2018

 

 

SENECA FOODS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

 

New York

(State or Other Jurisdiction of Incorporation)

0-01989

(Commission File Number)

16-0733425

(IRS Employer Identification No.)

 

3736 South Main Street, Marion, New York 14505-9751

(Address of Principal Executive Offices, including zip code)

 

(315) 926-8100

(Registrant's telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 4.02              Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

On June 28, 2018, the Audit Committee, of Seneca Foods Corporation (the “Company”) determined that the following financial statements previously filed by the Company with the Securities and Exchange Commission (the “SEC”) should no longer be relied upon: (1) the audited consolidated financial statements as of and for the years ended March 31, 2016 and 2017, management’s report on the effectiveness of internal control over financial reporting as of March 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. Similarly, related press releases, earnings releases, and investor communications describing the Company’s financial statements for these periods should no longer be relied upon.

 

The Company has determined that the financial statements referred to above 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.  The Company intends to file with the SEC, as soon as practicable, a comprehensive Annual Report on Form 10-K for the year ended March 31, 2018 with expanded financial information and other disclosures in lieu of filing separate amended annual and quarterly reports for the affected periods.

 

The restatement dealing with revenue is the result of a correction in the timing of revenue recognition in connection with sales of Green Giant and other brands of canned vegetables under a contract packing agreement.  Under this agreement, title to product is transferred to the customer and the Company receives payment while continuing to maintain possession thereof. The Company had evaluated authoritative accounting guidance relating to revenue recognition for these sales and believed it had met the criteria required by the accounting standards for bill and hold treatment.

 

On May 21, 2018 the Company requested an interpretive guidance from the SEC’s Office of the Chief Accountant (“OCA”) regarding the application of bill and hold revenue recognition under SEC Staff Accounting Bulletin (“SAB”) Topic 13, Revenue Recognition, as well as under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.  On June 26, 2018 the OCA provided the Company with the guidance that it did not meet all of the criteria for bill and hold treatment for the contract in question for prior periods covered under SAB Topic 13. 

 

As a result, the Company will restate its prior financial statements to delay the recognition of revenue until the product is physically delivered rather than at the time title transfers.

 

The effect of the restatement on the Company’s annual income statement is as follows:

 

   

Year Ended

 
   

March 31, 2017

   

March 31, 2016

 
   

As

           

As

   

As

           

As

 
   

Reported

   

Correction

   

Restated

   

Reported

   

Correction

   

Restated

 

Net Sales

 

$

1,245,681

   

$

16,517

   

$

1,262,198

   

$

1,275,360

   

$

4,207

   

$

1,279,567

 

Cost of Products Sold

   

1,139,298

     

10,896

     

1,150,194

     

1,127,965

     

1,025

     

1,128,990

 

Gross Profit

   

106,383

     

5,621

     

112,004

     

147,395

     

3,182

     

150,577

 

Operating Income/(Loss)

   

29,121

     

5,621

     

34,742

     

88,549

     

3,182

     

91,731

 

Pre-Tax Earnings/(Loss)

   

20,027

     

5,621

     

25,648

     

80,457

     

3,182

     

83,639

 

Net Earnings

   

12,613

     

3,282

     

15,895

     

54,458

     

1,941

     

56,399

 

Earnings Per Common Share-Basic

 

$

1.27

   

$

0.34

   

$

1.61

   

$

5.46

   

$

0.20

   

$

5.65

 

Earnings Per Common Share-Diluted

 

$

1.27

   

$

0.33

   

$

1.60

   

$

5.42

   

$

0.20

   

$

5.61

 

 

 

 

The effect of the restatement on the Company’s balance sheet for the four previous quarters is as follows:

   

As of December 30, 2017

   

As of September 30, 2017

 
   

As

           

As

   

As

           

As

 
   

Reported

   

Correction

   

Restated

   

Reported

   

Correction

   

Restated

 

Assets

                                   

Inventory

 

$

710,118

   

$

60,584

   

$

770,702

   

$

802,387

   

$

56,759

   

$

859,146

 

Total Current Assets

   

794,510

     

60,584

     

855,094

     

932,609

     

56,759

     

989,368

 

Total Assets

   

1,072,003

     

62,234

     

1,134,237

     

1,209,968

     

61,976

     

1,271,944

 
                                                 

Liabilities and Stockholders' Equity

                                               

Deferred Revenue

 

$

545

   

$

79,606

   

$

80,151

   

$

542

   

$

74,608

   

$

75,150

 

Total Current Liabilites

   

162,423

     

79,576

     

241,999

     

322,982

     

74,551

     

397,533

 

Total Liabilities

   

635,204

     

76,594

     

711,798

     

780,214

     

72,986

     

853,200

 

Stockholders' Equity

   

436,799

     

(14,360

)

   

422,439

     

429,754

     

(11,010

)

   

418,744

 

Total Liabilities and Stockholders Equity

   

1,072,003

     

62,234

     

1,134,237

     

1,209,968

     

61,976

     

1,271,944

 

 

   

As of July 1, 2017

   

As of March 31, 2017

 
   

As

           

As

   

As

           

As

 
   

Reported

   

Correction

   

Restated

   

Reported

   

Correction

   

Restated

 

Assets

                                               

Inventory

 

$

633,505

   

$

21,914

   

$

655,419

   

$

598,056

   

$

30,879

   

$

628,935

 

Total Current Assets

   

731,857

     

21,914

     

753,771

     

688,270

     

30,879

     

719,149

 

Total Assets

   

1,006,943

     

25,038

     

1,031,981

     

946,019

     

32,249

     

978,268

 
                                                 

Liabilities and Stockholders' Equity

                                               

Deferred Revenue

 

$

472

   

$

36,865

   

$

37,337

   

$

545

   

$

45,555

   

$

46,100

 

Total Current Liabilites

   

164,200

     

36,713

     

200,913

     

132,277

     

45,487

     

177,764

 

Total Liabilities

   

573,449

     

34,202

     

607,651

     

511,758

     

41,306

     

553,064

 

Stockholders' Equity

   

433,494

     

(9,164

)

   

424,330

     

434,261

     

(9,057

)

   

425,204

 

Total Liabilities and Stockholders Equity

   

1,006,943

     

25,038

     

1,031,981

     

946,019

     

32,249

     

978,268

 

 

The Public Company Accounting Oversight Board Standards require that a restatement of financial statements be regarded as a significant deficiency in internal control over financial reporting and a strong indicator of a material weakness. Consistent with these standards, management has concluded that the restatements of its consolidated financial statements constitute a material weakness.

The Audit Committee has discussed the matters disclosed in this Item 4.02 with BDO USA, LLP, the Company’s independent registered public accounting firm.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:                    June 28, 2018

 

SENECA FOODS CORPORATION

 

By: /s/Timothy J. Benjamin

Timothy J. Benjamin

Chief Financial Officer