Form 10-Q Seneca Foods Corp For: Dec 27

For the Quarter Ended December 27, 2014

Commission File Number� 0-01989

New York

160733425

(State or other jurisdiction of

(I. R. S. Employer

incorporation or organization)

Identification No.)

3736 South Main Street, Marion, New York

14505

(Address of principal executive offices)

(Zip Code)

Class

Shares Outstanding at January 23, 2015

Common Stock Class A, $.25 Par

8,717,440

Common Stock Class B, $.25 Par

2,015,673

Seneca Foods Corporation

Quarterly Report on Form 10-Q

Table of Contents

Page

PART 1

�FINANCIAL INFORMATION

��Item 1

Financial Statements:

Condensed Consolidated Balance Sheets-December 27, 2014, December 28, 2013 and

���1

��March 31, 2014

Condensed Consolidated Statements of Net Earnings-Three and Nine Months Ended

��December 27, 2014 and December 28, 2013

���2

Condensed Consolidated Statements of Comprehensive Income-Three and Nine Months Ended

��December 27, 2014 and December 28, 2013

���2

Condensed Consolidated Statements of Cash Flows-Nine Months Ended

��December 27, 2014 and December 28, 2013

���3

Condensed Consolidated Statements of Stockholders' Equity-Nine Months Ended

��December 27, 2014

���4

Notes to Condensed Consolidated Financial Statements

���5

��Item 2

Management's Discussion and Analysis of Financial Condition

��and Results of Operations

���11

��Item 3

Quantitative and Qualitative Disclosures about Market Risk

���17

��Item 4

Controls and Procedures

���18

PART II

�OTHER INFORMATION

��Item 1

Legal Proceedings

���19

��Item 1A

Risk Factors

���19

��Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

���19

��Item 3

Defaults Upon Senior Securities

���19

��Item 4

Mine Safety Disclosures

���19

��Item 5

Other Information

���19

��Item 6

Exhibits

���19

SIGNATURES

���21

SENECA FOODS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Per Share Data)

Unaudited

Unaudited

December 27,

December 28,

March 31,

2014

2013

2014

ASSETS

Current Assets:

Cash and Cash Equivalents

$

23,006

$

17,891

$

13,839

Accounts Receivable, Net

71,652

73,034

76,964

Inventories

��Finished Goods

405,598

444,627

304,955

��Work in Process

26,304

14,053

12,353

��Raw Materials and Supplies

115,247

92,043

133,942

����Total Inventories

547,149

550,723

451,250

Deferred Income Taxes, Net

9,549

7,507

8,412

Refundable Income Taxes

-

704

-

Other Current Assets

21,824

27,037

33,594

��Total Current Assets

673,180

676,896

584,059

Property, Plant and Equipment, Net

186,358

182,206

183,917

Deferred Income Tax Asset, Net

4,262

6,525

-

Other Assets

17,289

929

877

����Total Assets

$

881,089

$

866,556

$

768,853

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

��Notes Payable

$

5,989

$

4,392

$

12,255

��Accounts Payable

102,640

118,022

71,219

��Accrued Vacation

10,993

10,920

10,997

��Accrued Payroll

4,868

5,884

7,516

��Other Accrued Expenses

31,574

32,881

26,111

��Income Taxes Payable

4,881

-

913

��Current Portion of Long-Term Debt

2,484

2,136

2,277

Total Current Liabilities

163,429

174,235

131,288

Long-Term Debt, Less Current Portion

294,303

266,416

216,239

Deferred Income Taxes, Net

-

-

339

Other Long-Term Liabilities

31,672

44,561

27,355

����Total Liabilities

489,404

485,212

375,221

Commitments and Contingencies

Stockholders' Equity:

��Preferred Stock

2,119

5,410

5,332

��Common Stock, $.25 Par Value Per Share

3,010

2,955

2,958

��Additional Paid-in Capital

96,553

93,160

93,260

��Treasury Stock, at Cost

(39,095

)

(31,878

)

(29,894

)

��Accumulated Other Comprehensive Loss

(11,252

)

(22,548

)

(11,252

)

��Retained Earnings

340,350

334,245

333,228

����Total Stockholders' Equity

391,685

381,344

393,632

������Total Liabilities and Stockholders' Equity

$

881,089

$

866,556

$

768,853

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SENECA FOODS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS

(Unaudited)

(In Thousands, Except Per Share Data)

Three Months Ended

Nine Months Ended

December 27,

December 28,

December 27,

December 28,

2014

2013

2014

2013

Net Sales

$

456,207

$

477,694

$

1,008,411

$

1,046,449

Costs and Expenses:

��Cost of Product Sold

430,123

446,516

948,527

973,212

��Selling and Administrative

18,759

20,271

50,681

52,046

��Restructuring

889

-

889

501

��Other Operating (Income) Loss

(5,033

)

365

(4,839

)

(423

)

��Total Costs and Expenses

444,738

467,152

995,258

1,025,336

����Operating Income

11,469

10,542

13,153

21,113

Loss (Earnings) From Equity Investment

55

-

(231

)

-

Interest Expense, Net

1,431

1,424

3,917

4,799

Earnings Before Income Taxes

9,983

9,118

9,467

16,314

Income Taxes

2,164

2,272

2,333

1,518

Net� Earnings

$

7,819

$

6,846

$

7,134

$

14,796

Earnings Attributable to Common Stock

$

7,711

$

6,622

$

6,995

$

14,307

��Basic Earnings per Common Share

$

0.72

$

0.62

$

0.65

$

1.33

��Diluted Earnings per Common Share

$

0.71

$

0.61

$

0.65

$

1.32

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SENECA FOODS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In Thousands)

Three Months Ended

Nine Months Ended

December 27,

December 28,

December 27,

December 28,

2014

2013

2014

2013

Comprehensive income:

��Net earnings

�

$

7,819

$

6,846

$

7,134

�

$

14,796

��Change in pension and post retirement benefits (net of tax)

-

-

-

-

����Total

�

$

7,819

$

6,846

$

7,134

�

$

14,796

�

SENECA FOODS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

Nine Months Ended

December 27, 2014

December 28, 2013

Cash Flows from Operating Activities:

��Net Earnings

$

7,134

$

14,796

��Adjustments to Reconcile Net Earnings to

����Net Cash (Used in) Provided by Operations:

������Depreciation & Amortization

16,495

17,543

������Gain on the Sale of Assets

(89

)

(348

)

������Impairment Provision

889

501

������Deferred Income Tax Benefit

(5,738

)

(2,535

)

������Changes in Operating Assets and Liabilities:

��������Accounts Receivable

5,312

9,899

��������Inventories

(95,899

)

(71,153

)

��������Other Current Assets

11,770

(1,738

)

��������Income Taxes

3,968

(4,804

)

��������Accounts Payable, Accrued Expenses

������������and Other Liabilities

37,653

50,409

��Net Cash (Used in) Provided by Operations

(18,505

)

12,570

Cash Flows from Investing Activities:

��Additions to Property, Plant and Equipment

(19,232

)

(12,058

)

��Proceeds from the Sale of Assets

326

996

��Purchase Equity Method Investment

(16,308

)

-

��Net Cash Used in Investing Activities

(35,214

)

(11,062

)

Cash Flow from Financing Activities:

��Long-Term Borrowing

326,381

362,048

��Payments on Long-Term Debt

(248,110

)

(363,682

)

��(Payment) Borrowings on Notes Payable

(6,266

)

4,392

��Other

94

207

��Purchase of Treasury Stock

(9,201

)

(674

)

��Dividends

(12

)

(12

)

��Net Cash Provided by Financing Activities

62,886

2,279

Net Increase in Cash and Cash Equivalents

9,167

3,787

Cash and Cash Equivalents, Beginning of the Period

13,839

14,104

�

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SENECA FOODS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS STOCKHOLDERS' EQUITY

(Unaudited)

(In Thousands)

Additional

Accumulated Other

Preferred

Common

Paid-In

Treasury

Comprehensive

Retained

Stock

Stock

Capital

Stock

Loss

Earnings

Balance March 31, 2014

$

5,332

$

2,958

$

93,260

$

(29,894

)

$

(11,252

)

$

333,228

Net earnings

-

-

-

-

-

7,134

Cash dividends paid

��on preferred stock

-

-

-

-

-

(12

)

Equity incentive program

-

-

75

-

-

-

Stock issued for profit sharing plan

-

1

56

-

-

-

Preferred stock conversion

(3,213

)

51

3,162

-

-

-

Purchase treasury stock

-

-

-

(9,201

)

-

-

Balance December 27, 2014

$

2,119

$

3,010

$

96,553

$

(39,095

)

$

(11,252

)

$

340,350

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly the financial position of Seneca Foods Corporation (the "Company") as of December 27, 2014 and results of its operations and its cash flows for the interim periods presented.� All significant intercompany transactions and accounts have been eliminated in consolidation.� The March 31, 2014 balance sheet was derived from the audited consolidated financial statements.

�

The results of operations for the three and nine�month periods ended December 27, 2014 are not necessarily indicative of the results to be expected for the full year.

In the nine months ended December 27, 2014, the Company sold $138,034,000 of Green Giant finished goods inventory to General Mills Operations, LLC ("GMOL") for cash, on a bill and hold basis, as compared to $150,345,000� for the nine months ended December 28, 2013.� Under the terms of the bill and hold agreement, title to the specified inventory transferred to GMOL.� The Company believes it has met the criteria required for bill and hold treatment.

The accounting policies followed by the Company are set forth in Note 1 to the Company's Consolidated Financial Statements in the Company's 2014 Annual Report on Form 10-K.

Other footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted.� These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company's 2014 Annual Report on Form 10-K.

All references to years are fiscal years ended or ending March 31 unless otherwise indicated.� Certain percentage tables may not foot due to rounding.

ReclassificationsCertain previously reported amounts have been reclassified to conform to the current period classification.

SENECA FOODS CORPORATION AND SUBSIDIARIES

�NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

December 27, 2014
�

The increase in average amount of Revolver borrowings during the first nine months of fiscal 2015 compared to the first nine months of fiscal 2014 was attributable to the Truitt investment of $16,308,000 made in the first quarter of fiscal 2015 and reduced operating results.

General terms of the Revolver include payment of interest at LIBOR plus a defined spread.

The following table documents the quantitative data for Revolver borrowings during the third quarter and year-to-date periods of fiscal 2015 and fiscal 2014:

Third Quarter

Year-to-Date

2015

2014

2015

2014

(In thousands)

(In thousands)

Reported end of period:

��Outstanding borrowings

$

255,000

$

226,000

$

255,000

$

226,000

��Weighted average interest rate

1.91

%

1.42

%

1.91

%

1.42

%

Reported during the period:

��Maximum amount of borrowings

$

323,646

$

318,601

$

323,646

$

318,601

��Average outstanding borrowings

239,585

259,683

228,730

214,884

��Weighted average interest rate

1.57

%

1.53

%

1.52

%

1.64

%

Three Months Ended

Nine Months Ended

December 27,

December 28,

December 27,

December 28,

2014

2013

2014

2013

(In thousands)

Service Cost

$

2,030

$

1,863

$

6,089

$

5,588

Interest Cost

2,059

1,890

6,177

5,670

Expected Return on Plan Assets

(2,739

)

(2,373

)

(8,217

)

(7,118

)

Amortization of Actuarial Loss

87

584

263

1,752

��Net Periodic Benefit Cost

$

1,437

$

1,964

$

4,312

$

5,892

A contribution of $350,000 was made to the Pension Plan during the three month period ended December 27, 2014 and a contribution of $2,000,000 was made during the three month period ended December 28, 2013.
�

Long-Lived

Severance

Asset Charges

Other Costs

Total

(In thousands)

Balance March 31, 2014

$

10

$

-

$

-

$

10

Third Quarter Charge

533

316

40

889

Cash payments/write offs

(8

)

-

-

(8

)

Balance December 27, 2014

$

535

$

316

$

40

$

891

Balance March 31, 2013

$

20

$

1,174

$

307

$

1,501

First Quarter Charge

-

-

154

154

Second Quarter Charge

-

341

6

347

Cash payments/write offs

(8

)

-

(400

)

(408

)

Balance December 28, 2013

$

12

$

1,515

$

67

$

1,594

During the third quarter of fiscal 2015, the Company recorded a restructuring charge of $889,000 related to the closing of a plant in the Midwest of which $533,000 was related to severance cost, $316,000 was related to equipment costs (contra fixed assets), and $40,000 was related to estimated equipment relocation costs.

9.������������In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2017 (beginning of fiscal 2018). Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.� There were no other recently issued accounting pronouncements that impacted the Company's condensed consolidated financial statements. In addition, the Company did not adopt any new accounting pronouncements during the quarter ended December 27, 2014.
�

10.������������Earnings per share for the Quarters Ended December 27, 2014 and December 28, 2013 are as follows:
�

Q U A R T E R

YEAR TO DATE

Fiscal

Fiscal

Fiscal

Fiscal

2015

2014

2015

2014

(In thousands, except per share amounts)

Basic

Net earnings

$

7,819

$

6,846

$

7,134

$

14,796

Deduct preferred stock dividends paid

6

6

17

17

Undistributed earnings

7,813

6,840

7,117

14,779

Earnings attributable to participating preferred

102

218

122

472

Earnings attributable to common shareholders

$

7,711

$

6,622

$

6,995

$

14,307

Weighted average common shares outstanding

10,733

10,743

10,769

10,748

Basic earnings per common share

$

0.72

$

0.62

$

0.65

$

1.33

Diluted

Earnings attributable to common shareholders

$

7,711

$

6,622

$

6,995

$

14,307

Add dividends on convertible preferred stock

5

5

15

15

Earnings attributable to common stock on a diluted basis

$

7,716

$

6,627

$

7,010

$

14,322

Weighted average common shares outstanding-basic

10,733

10,743

10,769

10,748

Additional shares issuable related to the

��equity compensation plan

4

5

4

5

Additional shares to be issued under full

��conversion of preferred stock

67

67

67

67

Total shares for diluted

10,804

10,815

10,840

10,820

Diluted earnings per common share

$

0.71

$

0.61

$

0.65

$

1.32

11.������������As required by Accounting Standards Codification ("ASC") 825, "Financial Instruments," the Company estimates the fair values of financial instruments on a quarterly basis.� The estimated fair value for long-term debt (classified as Level 2 in the fair value hierarchy) is determined by the quoted market prices for similar debt (comparable to the Company's financial strength) or current rates offered to the Company for debt with the same maturities.� Long-term debt, including current portion had a carrying amount of $296,787,000 and an estimated fair value of $297,556,000 as of December 27, 2014.� As of March 31, 2014, the carrying amount was $218,516,000 and the estimated fair value was $219,981,000. The fair values of all the other financial instruments approximate their carrying value due to their short-term nature.
�

�

�

�

�

Seneca Foods Corporation (the "Company") is a leading provider of packaged fruits and vegetables, with facilities located throughout the United States.� The Company's product offerings include canned, frozen and bottled produce and snack chips.� Its products are sold under private label as well as national and regional brands that the Company owns or licenses, including Seneca�, Libby's�, Aunt Nellie's�, READ�, and Seneca Farms�.� The Company's canned fruits and vegetables are sold nationwide by major grocery outlets, including supermarkets, mass merchandisers, limited assortment stores, club stores and dollar stores.� The Company also sells its products to foodservice distributors, industrial markets, other food processors, export customers in over 80 countries and federal, state and local governments for school and other food programs.� In addition, the Company packs Green Giant�, Le Sueur� and other brands of canned vegetables as well as select Green Giant� frozen vegetables for General Mills Operations, LLC ("GMOL") under a long-term Alliance Agreement.

The Company's raw product is harvested mainly between June through November. The Company experienced unfavorable growing conditions related to our pea and green bean harvest this summer reflecting a combination of high temperatures and uneven moisture.� These difficult growing conditions unfavorably impacted pea and green bean crop yields and plant recovery rates which resulted in unfavorable manufacturing variances.

InvestmentIn April 2014, the Company purchased a 50% equity interest in Truitt Bros. Inc. ("Truitt") for $16,308,000.� The purchase agreement grants the Company the right to acquire the remaining 50% ownership of Truitt in the future under certain conditions.� Truitt is known for its industry innovation related to packing shelf stable foods in trays, pouches and bowls.� Truitt has two state-of-the-art plants located in Oregon and Kentucky.

Results of Operations:

Third fiscal quarter 2015 results include net sales of $456,207,000, which represents a 4.5% decrease, or $21,487,000, from the third quarter of fiscal 2014. �The decrease in sales is attributable to a sales volume decrease of $32,317,000 partially offset by higher selling prices/sales mix of $10,830,000.� The decrease in sales is primarily from a $12,377,000 decrease in Canned Fruit sales, an $8,326,000 decrease in Canned Vegetable sales, and a $4,965,000 decrease in Frozen sales, partially offset by $3,417,000 increase in GMOL sales and a $751,000 increase in Other sales. The Canned Fruit sales decrease is primarily as a result of the second short pack in a row.

Nine months ended December 27, 2014 include net sales of $1,008,411,000, which represents a 3.6% decrease, or $38,038,000, from the first nine months of fiscal 2014. �The decrease in sales is attributable to a sales volume decrease of $70,494,000 partially offset by higher selling prices/sales mix of $32,456,000. The decrease in sales is primarily from a $23,200,000 decrease in Canned Fruit sales, a $16,267,000 decrease in GMOL sales and a $6,968,000 decrease in Frozen sales partially offset by $4,057,000 increase in Canned Vegetable sales and a $3,778,000 increase in Other sales.

The following table presents sales by product category (in millions):

Three Months Ended

Nine Months Ended

December 27,

December 28,

December 27,

December 28,

2014

2013

2014

2013

Canned Vegetables

$

245.1

$

253.5

$

575.8

$

571.8

Green Giant Alliance

105.5

102.0

160.1

176.4

Frozen

23.4

28.4

70.7

77.6

Fruit Products

71.9

84.3

172.5

195.7

Snack

2.7

2.7

9.0

8.5

Other

7.6

6.8

20.3

16.4

$

456.2

$

477.7

$

1,008.4

$

1,046.4

Operating Income:

The following table presents components of operating income as a percentage of net sales:

Three Months Ended

Nine Months Ended

December 27,

December 28,

December 27,

December 28,

2014

2013

2014

2013

��Gross Margin

5.7

%

6.5

%

5.9

%

7.0

%

��Selling

2.3

%

2.4

%

2.7

%

2.7

%

��Administrative

1.8

%

1.8

%

2.3

%

2.2

%

��Restructuring

0.2

%

-

%

0.1

%

-

%

��Other Operating Income

-1.1

%

0.1

%

-0.5

%

-

%

��Operating Income

2.5

%

2.2

%

1.3

%

2.1

%

��Interest Expense, Net

0.3

%

0.3

%

0.4

%

0.5

%

For the three month period ended December 27, 2014, the gross margin decreased from the prior year quarter from 6.5% to 5.7% due primarily to lower net selling prices in the current year as compared to the prior year.� The LIFO charge for the third quarter ended December 27, 2014 was $5,315,000 as compared to $7,676,000 for the third quarter ended December 28, 2013 and reflects the impact on the current quarter of the current reduced inflationary cost increases expected in fiscal 2015, compared to fiscal 2014.� On an after-tax basis, LIFO reduced net earnings by $3,455,000 for the quarter ended December 27, 2014 and $4,989,000 for the quarter ended December 28, 2013, based on the statutory federal income tax rate.

For the nine month period ended December 27, 2014, the gross margin decreased from the prior year period from 7.0% to 5.9% due primarily to lower net selling prices (after considering promotions) compared to the prior year, partially offset by a lower LIFO charge in the current year as compared to prior year.� The LIFO charge for the nine months ended December 27, 2014 was $10,885,000 as compared to a charge of $22,111,000 for the nine months ended December 28, 2013 and reflects the impact on the nine months of decreased inflationary cost increases expected in fiscal 2015, compared to fiscal 2014.� On an after-tax basis, LIFO decreased net earnings by $7,075,000 for the nine months ended December 27, 2014 and decreased net earnings by $14,372,000 for the nine months ended December 28, 2013, based on the statutory federal income tax rate.

For the three month period ended December 27, 2014, selling costs as a percentage of sales decreased slightly from 2.4% to 2.3% from the same period in the prior year.� For the nine month period ended December 27, 2014, selling costs as a percentage of sales remained unchanged at 2.7% from the same period in the prior year.

For the three month period ended December 27, 2014, administrative expense as a percentage of sales was unchanged at 1.8% compared to the same period in the prior year.� For the nine month period ended December 27, 2014, administrative expense as a percentage of sales increased from 2.2% for the third quarter ended December 28, 2013 to 2.3%.� Administrative expense increased for the nine month period ended December 27, 2014 as a percentage of sales due primarily to lower net sales in the current year as compared to the same period in the prior year.

During the third quarter of fiscal 2015, the Company recorded a restructuring charge of $889,000 related to the closing of a plant in the Midwest of which $533,000 was related to severance cost, $316,000 was related to equipment costs (contra fixed assets), and $40,000 was related to estimated equipment relocation costs.� This charge is included in restructuring in the Unaudited Condensed Consolidated Statements of Net Earnings.

During the quarter ended December 27, 2014, the Company recorded a gain of $5,000,000 related to a contractual payment received in connection with the closing of a Midwest plant (see Note 8 above).� During the nine months ended December 27, 2014, the Company recorded a charge of $250,000 for environmental costs related to a Company-owned plant in New York State.� During the nine months ended December 27, 2014, the Company sold some unused fixed assets which resulted in a gain of $89,000.� During the nine months ended December 28, 2013, the Company sold some unused fixed assets which resulted in a gain of $423,000.� These gains are included in other operating income in the Unaudited Condensed Consolidated Statements of Net Earnings.

Interest expense for the three months ended December 27, 2014, as a percentage of sales, remained unchanged at 0.3% from the three months ended December 28, 2013.� Interest expense for the nine months ended December 27, 2014, as a percentage of sales, decreased from 0.5% to 0.4% from the third quarter ended December 28, 2013. This decrease was due to lower interest expense related to the Company's Revolver and decreased long-term debt interest attributable to scheduled debt payments.

Income Taxes:
�

The effective tax rate was 24.6% and 9.3% for the nine month periods ended December 27, 2014 and December 28, 2013, respectively.� The 15.3 percentage point increase in the effective tax rate represents an increase in tax expense as a percentage of book income when compared to the same period last year.� The major contributors to this increase�are first�the re-establishment of the valuation allowance related to the New York State Investment Tax Credit (5.9 percentage points).� The valuation allowance was re-established due to a change in the law. This is a discrete item and therefore was required to be booked in the quarter ended June 28, 2014. �Secondly, the expiration of the California enterprise zone credit and the California hiring credit (4.9 percentage points).

Earnings per Share:
�

Basic earnings per share was $0.72 and $0.62 for the three months ended December 27, 2014 and December 28, 2013, respectively.� Diluted earnings per share was $0.71 and $0.61 for the three months ended December 27, 2014 and December 28, 2013, respectively.� Basic earnings per share was $0.65 and $1.33 for the nine months ended December 27, 2014 and December 28, 2013, respectively.� Diluted earnings per share was $0.65 and $1.32 for the nine months ended December 27, 2014 and December 28, 2013, respectively.� For details of the calculation of these amounts, refer to footnote 10 of the Notes to Condensed Consolidated Financial Statements.
�

Liquidity and Capital Resources:

The financial condition of the Company is summarized in the following table and explanatory review:

December 27,

December 28,

March 31,

March 31,

2014

2013

2014

2013

Working capital:

��Balance

$

509,751

$

502,661

$

452,771

$

446,899

��Change during quarter

(39,999

)

(48,688

)

Long-term debt, less current portion

294,303

266,416

216,239

230,016

Total stockholders' equity per equivalent

������common share (see Note)

35.80

34.16

35.25

32.83

Stockholders' equity per common share

36.30

35.00

36.12

33.62

Current ratio

4.12

3.88

4.45

3.80

Note: Equivalent common shares are either common shares or, for convertible preferred shares, the number of common shares that the preferred shares are convertible into.� See Note 8 of the Notes to Consolidated Financial Statements of the Company's 2014 Annual Report on Form 10-K for conversion details.

As shown in the Condensed Consolidated Statements of Cash Flows, net cash used in operating activities was $18,505,000 in the first nine months of fiscal 2015, compared to net cash provided by operating activities of $12,570,000 in the first nine months of fiscal 2014.� The $31,075,000 decrease in cash provided is primarily attributable to a $24,746,000 higher increase in inventory in the first nine months of fiscal 2015 as compared to the first nine months of fiscal 2014, a $12,821,000 decrease in the cash provided by Accounts Payable, Accrued Expenses and Other Liabilities, a $4,587,000 decrease in cash provided by accounts receivable, decreased net earnings of $7,662,000 as previously discussed, partially offset by a $13,508,000 decrease in cash used by other current assets, and a $5,569,000 decrease in cash used by income taxes.

As compared to December 28, 2013, inventory decreased $3,574,000 to $547,149,000 at December 27, 2014.� The components of the inventory decrease reflect a $39,029,000 decrease in finished goods, a $12,251,000 increase in work in process and a $23,204,000 increase in raw materials and supplies.� The finished goods decrease reflects lower inventory quantities and 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 $164,269,000 as of the end of the third quarter of 2015 as compared to $155,126,000 as of the end of the third quarter of 2014.

Cash used in investing activities was $35,214,000 in the first nine months of fiscal 2015 compared to cash used in investing activities of $11,062,000 in the first nine months of fiscal 2014.� Additions to property, plant and equipment were $19,232,000 in the first nine months of fiscal 2015 as compared to $12,058,000 in the first nine months of fiscal 2014.� In April 2014, the Company purchased a 50% equity interest in Truitt Bros. Inc. for $16,308,000.

Cash provided by financing activities was $62,886,000 in the first nine months of fiscal 2015, which included borrowings of $326,381,000 and the repayment of $248,110,000 of long-term debt, principally consisting of borrowing and repayment on the revolving credit facility ("Revolver").� Other than borrowings under the Revolver, there was no new long-term debt during the first nine months of fiscal 2015.� During the nine months ended December 27, 2014, the Company repurchased $9,201,000 of its Class A Common Stock as treasury stock.� In addition, the Company paid down Notes Payable of $6,266,000 during the nine month period ended December 27, 2014 related to some interim notes which became operating leases.

Available borrowings on the Revolver total $300,000,000 from April through July and $400,000,000 from August through March with a maturity date of July 20, 2016.��� The interest rate on the Revolver is based on LIBOR plus an applicable margin based on excess availability and the Company's fixed charge coverage ratio.� As of December 27, 2014, the interest rate was approximately 1.91% on a balance of $255,000,000.� We believe that cash flows from operations, availability under our Revolver and other financing sources will provide adequate funds for our working capital needs, planned capital expenditures, and debt obligations for at least the next 12 months.

The Company's credit facilities contain standard representations and warranties, events of default, and certain affirmative and negative covenants, including various financial covenants.� At December 27, 2014, the Company was in compliance with all such financial covenants.

New Accounting Standards

Refer to footnote 9 of the Notes to Condensed Consolidated Financial Statements.

Seasonality

The Company's revenues are typically higher in the second and third fiscal quarters. This is due in part because the Company sells, on a bill and hold basis, Green Giant canned and frozen vegetables to GMOL at the end of each pack cycle, which typically occurs during these quarters.� GMOL buys the product from the Company at cost plus a specified fee for each equivalent case.� See the Critical Accounting Policies section below for further details.� The Company's non-Green Giant sales also exhibit seasonality with the third fiscal quarter generating the highest retail sales due to holidays that occur during that quarter.

Critical Accounting Policies

During the nine months ended December 27, 2014, the Company sold $138,034,000 of Green Giant finished goods inventory to General Mills Operations, LLC ("GMOL") for cash, on a bill and hold basis, as compared to $150,345,000 for the nine months ended December 28, 2013.� Under the terms of the bill and hold agreement, title to the specified inventory transferred to GMOL.� The Company believes it has met the revenue recognition criteria required for bill and hold treatment.

Trade promotions are an important component of the sales and marketing of the Company's branded products, and are critical to the support of the business. Trade promotion costs, which are recorded as a reduction of net sales, include amounts paid to encourage retailers to offer temporary price reductions for the sale of our products to consumers, amounts paid to obtain favorable display positions in retailers' stores, and amounts paid to retailers for shelf space in retail stores. Accruals for trade promotions are recorded primarily at the time of sale of product to the retailer based on expected levels of performance. Settlement of these liabilities typically occurs in subsequent periods primarily through an authorized process for deductions taken by a retailer from amounts otherwise due to us. As a result, the ultimate cost of a trade promotion program is dependent on the relative success of the events and the actions and level of deductions taken by retailers for amounts they consider due to them. Final determination of the permissible deductions may take extended periods of time.

The Company assesses its long-lived assets for impairment whenever there is an indicator of impairment. Property, plant, and equipment are depreciated over their assigned lives. The assigned lives and the projected cash flows used to test impairment are subjective. If actual lives are shorter than anticipated or if future cash flows are less than anticipated, a future impairment charge or a loss on disposal of the assets could be incurred. Impairment losses are evaluated if the estimated undiscounted value of the cash flows is less than the carrying value. If such is the case, a loss is recognized when the carrying value of an asset exceeds its fair value.

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, the Company is exposed to various market risk factors, including changes in general economic conditions, competition and raw material pricing and availability.� In addition, the Company is exposed to fluctuations in interest rates, primarily related to its revolving credit facility.� To manage interest rate risk, the Company uses both fixed and variable interest rate debt.� There have been no material changes to the Company's exposure to market risk since March 31, 2014.

ITEM 4 Controls and Procedures

The Company maintains a system of internal and disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported on a timely basis. The Company's Board of Directors, operating through its Audit Committee, which is composed entirely of independent outside directors, provides oversight to the financial reporting process.

An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report.� Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of December 27, 2014, our disclosure controls and procedures were effective.� The Company continues to examine, refine and formalize its disclosure controls and procedures and to monitor ongoing developments in this area.

There have been no changes during the period covered by this report to the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Refer to footnote 12 to the Condensed Consolidated Financial Statements included in Part I Item 1 of this Form 10-Q.

There have been no material changes to the risk factors disclosed in the Company's Form 10-K for the period ended March 31, 2014.

In May 2014, Board of Directors approved an expanded share repurchase program that authorized the Company to buy up to a total of 1,000,000 common shares (less the 153,879 shares repurchased under the Company's prior share repurchase authorization), whether Class A or Class B shares, in open market or privately negotiated transactions at the discretion of management.

None.

None.

None.

SIGNATURES

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

������(Company)

January 28, 2015
��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� ��Kraig H. Kayser

President and

Chief Executive Officer

EXHIBIT 32

CERTIFICATION PURSUANT TO

18. U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Seneca Foods Corporation (the "Registrant") on Form 10-Q for the period ended December 27, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Kraig H. Kayser, Chief Executive Officer and Timothy J. Benjamin, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to our knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Kraig H. Kayser
�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� ��Chief Executive Officer

January 28, 2015

Timothy J. Benjamin
����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� Chief Financial Officer

January 28, 2015