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Item 1. Business

2023-07-31 compared with 2007-04-24 · 13 added, 215 removed, 0 unchanged (100% of the section changed)

Development of Business

FOODS CORPORATION (the “Company”) was organized in 1949 and incorporated under

the laws of the State of New York.

In the spring of 1995, the Company initiated

a 20-year Alliance Agreement with the Pillsbury Company, which was acquired

General Mills Operations, Inc.

(“GMOI”), that created the Company’s most

significant business relationship.

Under the Alliance Agreement, the Company

packed canned and frozen vegetables carrying GMOI’s Green Giant brand name.

onset of the Alliance Agreement, vegetable production has been the Company’s

dominant line of business.

In fiscal 1999, the Company sold its fruit juice

business and its applesauce and industrial flavors business.

As a result of

these fiscal 1999 divestitures, the Company’s only non-vegetable food products

are a line of fruit and chip products.

27, 2003, the Company completed the acquisition of the sole membership interest

in Chiquita Processed Foods, L.L.C.

from Chiquita Brands International, Inc.

Company’s Internet address is www.senecafoods.com .

Company’s annual report on Form 10-K, the Company’s quarterly reports on Form

10-Q, current reports on Form 8-K and any amendments to those reports filed

furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act

1934 are available on the Company’s web site, as soon as reasonably practicable

after they are electronically filed with or furnished to the SEC.

filings on the Company’s web site are available free of charge.

addition, the Company's website includes items related to corporate governance

matters, including charters of various committees of the Board of Directors

the Company's Code of Business Conduct and Ethics.

The Company intends to

disclose on its website any amendment to or waiver of any provision of the

of Business Conduct and Ethics that would otherwise be required to be disclosed

under the rules of the SEC and NASDAQ.

Information about Industry Segments

Company’s business activities are principally conducted in food processing

The food operation constitutes 99% of total sales, of which

approximately 99% is vegetable processing and 1% is fruit processing.

non-food operation is mostly trade sales of cans and ends, which represents

of the Company’s total sales.

Description of Business

Products and Markets

principal products include canned vegetables, frozen vegetables and fruit

The products are sold to retail and institutional markets.

has divided the United States into four major marketing sections:

Southern, Northwestern, and Southwestern.

Food processing operations are

primarily supported by plant locations in New York, Wisconsin, Washington,

Idaho, Illinois, and Minnesota.

following table summarizes net sales by major product category for the years

ended March 31, 2006, 2005, and 2004:

of similar products/services:

and chip products

and Availability of Raw Materials

Company’s food processing plants are located in major vegetable producing states

and in one fruit producing state.

Fruits and vegetables are primarily obtained

through contracts with growers.

The Company’s sources of supply are considered

equal or superior to its competition for all of its food products.

Company's most significant brand name, Libby's, is held pursuant to a trademark

license granted to the Company in March 1982 and renewable by the Company every

10 years for an aggregate period expiring in March 2081.

The original licensor

was Libby, McNeill & Libby, Inc., then an indirect subsidiary of Nestlé, S.

("Nestlé") and the license was granted in connection with the Company's

purchase of certain of the licensor's canned vegetable operations in the United

Corlib Brands Management, LTD, acquired the license from Nestlé during

The license is limited to vegetables which are shelf-stable and thermally

processed, and includes the Company's major vegetable varieties - corn, peas

green beans - as well as certain other thermally processed vegetable varieties

plus sauerkraut.

Company is required to pay an annual royalty, initially set at $25,000, and

adjustable up or down in subsequent years based upon changes in the "Employment

Cost Index-Private Non-farm Workers" published by the U.

Bureau of Labor

Statistics or an appropriate successor index as defined in the license

For the year which began in March 2006, the royalty was $58,584.

Corlib Brands may terminate the license for non-payment of royalty, use of

trademark in sales outside the licensed territory, failure to achieve a minimum

level of sales under the licensed trademark during any calendar year or a

material breach or default by the Company under the agreement (which is not

cured within the specified cure period).

individual fruits and vegetables have seasonal cycles of peak production and

sales, the different cycles are usually offsetting to some extent.

processing occurs in the Company's last fiscal quarter ending March 31, which

the optimal time for maintenance, repairs and equipment changes in its

processing plants.

The supply of commodities, current pricing, and expected

crop quantity and quality affect the timing of the Company’s sales and earnings.

When the seasonal harvesting periods of the Company's major vegetables are

completed, inventories for these processed vegetables are at their highest

For peas, the peak inventory time is mid-summer and for corn, the

Company's highest volume vegetable, the peak inventory is in mid-autumn.

Season Allowance is established during the year to minimize the effect of

seasonal production on earnings.

The Off Season Allowance is zero at each fiscal

food processing business, the end of year sales order backlog is not considered

Traditionally, larger customers provide tentative bookings for

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.

and Customers

in the food business is substantial with imaginative brand registration and

promotion, quality, service, and pricing being the major determinants in the

Company’s relative market position.

The Company is aware of approximately 18

competitors in the U.S.

processed vegetable industry, many of which are privately held companies.

Company believes that it is a major producer of canned vegetables, but some

producers of canned, frozen and other modes of vegetable products have sales

which exceed the Company's sales.

the past year, approximately 10% of the Company’s processed foods sales were

packed for retail customers under the Company’s branded labels of

Nellie’s Farm Kitchen ® ,

17% of processed foods sales were packed for institutional food distributors

46% were retail packed under the private label of customers.

The remaining

is sold under the Alliance Agreement with GMOI (see note 12 of Item 8, Financial

Statements and Supplementary Data).

Termination of the Alliance Agreement would

substantially reduce the Company’s sales and profitability unless the Company

was to enter into a new substantial supply relationship with GMOI or another

major vegetable marketer.

The non-Alliance customers represent a full cross

section of the retail, institutional, distributor, and industrial markets;

the Company does not consider itself dependent on any single sales source other

than sales attributable to the Alliance Agreement.

Company's principal branded products are its Libby’s canned vegetable products,

which rate among the top five national brands.

information under the heading Results of Operations in Management’s Discussion

and Analysis of Financial Condition and Results of Operations in the 2006 Annual

Report is incorporated by reference.

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

within environmental protection standards.

The Company does not expect any

material capital expenditures to comply with environmental regulations in the

The Company is a potentially responsible party with respect to

waste disposal site owned and operated by a third party.

The Company believes

that any reasonably anticipated liabilities will not exceed $300,000 for the

waste disposal site.

Environmental

Litigation and Contingencies

Company is one of a number of business and local government entities which

contributed waste materials to a landfill in Yates County in upstate New York,

which was operated by a party unrelated to the Company primarily in the 1970’s

through the early 1980’s.

The Company’s wastes were primarily food and juice

The landfill contained some hazardous materials and was remediated

the State of New York.

The New York Attorney General has advised the Company

other known non-governmental waste contributors that New York has sustained

total remediation cost of $4.9 million and seeks recovery of half that cost

the non-governmental waste contributors.

The Company is one of four identified

contributors who cooperatively are investigating the history of the landfill

as to identify and seek out other potentially responsible parties who are not

defunct and are financially able to contribute to the non-governmental parties’

reimbursement liability.

Since the search is not expected to be completed until

November 1, 2006, the Company’s liability cannot be definitively estimated.

Company does not believe that any ultimate settlement in excess of the amount

accrued will have a material impact on its financial position or results of

1999, the Company sold to Tree Top, Inc.

its applesauce business, including

plant in Prosser, Benton County, Washington.

In the sale agreement governing

transaction, the Company represented to Tree Top that it was in compliance

all environmental laws.

In 2003, the Benton County Clean Air Authority (“BCAA”)

brought an enforcement action against Tree Top under Title V of the Clean Air

Act and related State of Washington statutes, alleging that Tree Top was

violating the Clean Air Act by failing to register the facility with BCAA

pursuant to Title V.

The BCAA also alleged that the facility failed to provide

BCAA with a required notice of construction when it replaced a fourth boiler

the Prosser plant in 1988 when the Company was the sole owner.

reached a settlement with the BCAA which, according to Tree Top, requires Tree

Top to pay penalties and make modifications to equipment at a total cost of

approximately $493,000.

Tree Top has made a formal demand on the Company for

reimbursement of the entire amount.

The Company disputes Tree Top’s assertion

that the Company is liable for the total cost.

The Company does not believe

any resolution of this demand will have a material impact on its financial

position or results of operations.

Company has 2,906 employees of which 2,407 full time and 423 seasonal employees

work in food processing and 76 full time employees work in other

Company has six collective bargaining agreements with three union locals

covering approximately 665 of its full time employees.

The terms of these

agreements result in wages and benefits which are substantially the same for

comparable positions for the Company's non-union employees.

Four collective

bargaining agreements expire in calendar 2008.

One agreement expires in calendar

2009, and one agreement expires in calendar 2010.

following table sets forth domestic and export sales:

thousands, except percentages)

a Percentage of Net Sales:

While individual vegetables have seasonal cycles of peak production and sales, the different cycles are somewhat offsetting.

Minimal food packaging occurs in the Company's last fiscal quarter ending March 31, which is the optimal time for maintenance, repairs and equipment changes in its packaging plants.

The supply of commodities, current pricing, and expected new crop quantity and quality affect the timing and amount of the Company’s sales and earnings.

When the seasonal harvesting periods of the Company's major vegetables are newly completed, inventories for these packaged vegetables are at their highest levels.

For peas, the peak inventory time is mid-summer and for corn and green beans, the Company's highest volume vegetables, the peak inventory is in mid-autumn.

The seasonal nature of the Company’s production cycle results in inventory and accounts payable reaching their lowest point late in the fourth quarter/early in the first quarter prior to the new seasonal pack commencing.

As the seasonal pack progresses, these components of working capital both increase until the pack is complete.

The Company’s revenues typically are highest in the second and third fiscal quarters.

This is due, in part, because the Company’s fruit and vegetable sales exhibit seasonal increases in the third fiscal quarter due to increased retail demand during the holiday season.

In addition, the Company sells canned and frozen vegetables to a co-pack customer on a bill and hold basis at the end of each pack cycle, which typically occurs during these quarters.

These seasonal fluctuations are illustrated in the following table, which presents certain unaudited quarterly financial information for the periods indicated (in thousands):

Fiscal Year 2023:

Fiscal Year 2022:

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K/A

Item 1. Business