FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DecemberMarch 31, 19992000
Commission File Number 2-5916
CHASE GENERAL CORPORATION
(Exact name of registrant as specified in its Charter)
Missouri 36-2667734
State incorporation I.R.S. Employer
Identification Number
3600 Leonard Road, St. Joseph, Missouri 64503
(Address of principal executive offices) (Zip Code)
(816) 279-1625
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant(1)registrant (1) has filed all
reports, required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
As of February 1, 2000 indicate the numberNumber of shares outstanding of the issuer's Common Stock as of
the latest practicable date: 969,834 shares of the Company's
common stock ($1.00 par value) were outstanding.
CHASE GENERAL CORPORATION
IndexINDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - DecemberMarch 31, 19992000
(Unaudited) and June 30, 1999 .................. 3
Consolidated Condensed Statements of Operations Six-
Nine months ended DecemberMarch 31, 2000 and 1999
and
1998 (Unaudited)................................ 5
Consolidated Condensed Statements of Operations -
Three months ended DecemberMarch 31, 2000 and 1999
and
1998 (Unaudited)................................ 6
Consolidated Condensed Statements of Cash Flows Six-
Nine months ended DecemberMarch 31, 2000 and 1999
and
1998 (Unaudited)................................ 7
Notes to Consolidated Condensed Financial
Statements.Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.... 9Operations 10
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities .................1012
Item 6. Exhibits and Reports on Form 8-K ................1012
PART I -I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
DecemberMARCH 31, 1999 and June2000 AND JUNE 30, 1999
(Unaudited)
DecemberMARCH 31, JuneJUNE 30,
2000 1999
1999(Unaudited)
CURRENT ASSETS
Cash $ 311,786242,403 $ 206,609
Trade receivables, net of allowance 159,095205,859 138,959
Inventories:
Finished goods 34,9959,045 73,106
Goods in process 10,4848,240 3,243
Raw materials 80,63754,894 52,930
Packaging materials 96,402135,342 70,878
Prepaid expense 8,91421,317 35,469
Total current assets 702,313677,100 581,194
PROPERTY AND EQUIPMENT - AT COST 1,055,6891,076,644 1,036,457
Less accumulated depreciation 832,045843,753 818,690
Total property and equipment 223,644232,891 217,767
TOTAL ASSETS $ 925,957909,991 $ 798,961
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
DecemberMARCH 31, JuneJUNE 30,
2000 1999
1999(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 60,361115,122 $ 48,383
Accrued expense 21,05632,802 47,073
Notes payable, Series B,
current maturities 6,066 6,066
Estimated liability for
incomeIncome taxes 54,191payable 17,865 --
Total current liabilities 141,674171,855 101,522
LONG-TERM LIABILITIES
Notes payable, Series B, less
current maturities above 121,606 156,606
Total liabilities 263,280293,461 258,128
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred
stock, $5 par value:
Series A (liquidation preference
$1,230,000$1,237,500 and $1,215,000
respectively) 500,000 500,000
Series B (liquidation preference
$1,185,000$1,192,500 and
$1,170,000 respectively) 500,000 500,000
Cumulative preferred stock,
$20.00$20 par value:value
Series A (liquidation preference
$2,941,283$2,955,916 and $2,912,017
respectively) 1,170,660 1,170,660
Series B (liquidation preference
$479,335$481,720 and $474,565
respectively) 190,780 190,780
Common stock, $1 par value 969,834 969,834
Paid-in capital in excess of par 3,134,722 3,134,722
Retained earnings (deficit) (5,803,319)(5,849,466) (5,925,163)
Total stockholders' equity 662,677616,530 540,833
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 925,957909,991 $ 798,961
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
December(UNAUDITED)
NINE MONTHS ENDED
MARCH 31
2000 1999 1998
NET SALES $1,558,240 $1,481,011$1,881,294 $1,753,469
COST OF SALES 1,136,001 1,106,6891,441,195 1,351,032
Gross profit 422,239 374,322on sales 440,099 402,437
OPERATING EXPENSES
Selling expense 146,876 151,021196,414 194,045
General and administrative expense 89,574 77,155136,841 118,049
Total operating expenses 236,450 228,176
Income333,255 312,094
Net income from operations 185,789 146,146106,844 90,343
OTHER INCOME (EXPENSE) (3,700) (2,799)
Income(4,201) (4,235)
Net income before income taxes 182,089 143,347102,643 86,108
PROVISION FOR INCOME TAXES 60,245 46,27326,946 20,750
NET INCOME $ 121,84475,697 $ 97,074
EARNINGS65,358
LOSS PER SHARE $ .06(.02) $ .03(.03)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
December(UNAUDITED)
THREE MONTHS ENDED
MARCH 31
2000 1999 1998
NET SALES $1,104,719 $1,089,310$ 323,054 $272,458
COST OF SALES 798,233 801,641305,194 244,343
Gross profit 306,486 287,669(loss) on sales 17,860 28,115
OPERATING EXPENSES
Selling expense 90,895 96,26249,538 43,024
General and administrative expense 48,486 38,96147,267 40,894
Total operating expenses 139,381 135,223
Income96,805 83,918
Net loss from operations 167,105 152,446(78,945) (55,803)
OTHER INCOME (EXPENSE) (2,129) (2,152)
Income(501) (1,436)
Net loss before income taxes 164,976 150,294
PROVISION(79,446) (57,239)
CREDIT FOR INCOME TAXES 56,833 47,659(33,299) (25,523)
NET INCOMELOSS $ 108,143 $ 102,635
EARNINGS(46,147) $(31,716)
LOSS PER SHARE $ .08(.08) $ .07(.07)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December(UNAUDITED)
NINE MONTHS ENDED
MARCH 31
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the six months $121,844 $ 97,07475,697 $ 65,358
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 24,068 26,77335,776 40,566
Provision for doubtful accounts 6,705 3,210bad debts 11,805 4,815
Effects of changes in
operating assets and
liabilities:
Trade accounts receivable (26,841) (19,149)Accounts receivables (78,705) 43,867
Accounts payable 66,739 (4,468)
Inventories (7,364) (36,265)
Prepaid expense 14,152 16,531
Accrued expense (14,271) (3,646)
Income taxes receivable -- 24,710
Inventory (22,361) 42,618
Prepaid expenses 26,555 34,725
Accounts payable 11,978 (33,530)
Accrued liabilities 28,174 26,91717,865 19,750
Net cash provided by
operating activities 170,122 203,348121,694 146,508
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (29,945)(50,900) (6,804)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (35,000) (22,633)
NET INCREASE IN CASH 105,177 173,91135,794 117,071
CASH, BEGINNING OF PERIOD 206,609 161,093
CASH, END OF PERIOD $311,786 $335,004$242,403 $278,164
SUPPLEMENTAL DISCLOSURES
Interest paid $ 10,571 $ 12,109
Income taxes paid (received) $ 9,081 $(24,710)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. Interim results are not necessarily indicative of
results for a full year.
A summary of the Company's significant accounting policies is
presented on pages 19page 9 and 20 (not shown) of its 1999 Annual Report
to Shareholders. Users of financial information produced for
interim periods are encouraged to refer to the footnotes
contained in the Annual Report to Shareholders when reviewing
interim financial results. There has been no material change in
the accounting policies followed by the Company during the
quarter and sixnine months ended DecemberMarch 31, 1999.2000.
In the opinion of management, the accompanying interim
consolidated condensed financial statements contain all
adjustments necessary to present fairly Chase General
Corporation's financial position as of DecemberMarch 31, 19992000 and June
30, 1999, and the results of its operations for the sixnine months and
three months ended DecemberMarch 31, 19992000 and 1998,1999, and its cash flows
for the sixnine months ended DecemberMarch 31, 19992000 and 1998.1999.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 - EARNINGSLOSS PER SHARE
The earningsloss per share was computed on the weighted average of
outstanding common shares during the years as follows:
Six Months Ended Three Months Ended
DecemberNINE MONTHS ENDED THREE MONTHS ENDED
MARCH 31 DecemberMARCH 31
1999 1998 1999 1998
Net income $121,844(loss) $ 97,074 $108,143 $102,63575,697 $ 65,358 $(46,147) $(31,716)
Preferred dividend requirements:
6% Prior Cumulative Preferred,
$5 par Value 30,000 30,000value 45,000 45,000 15,000 15,000
5% Convertible Cumulative
Preferred, $20 par value 34,036 34,03651,054 51,054 17,018 17,018
Total dividend requirements 64,036 64,03696,054 96,054 32,018 32,018
Net income
common shareholdersNET LOSS - COMMON
STOCKHOLDERS $ 57,808(20,357) $ 33,038 $ 76,125 $ 70,617
Weighted average of
outstanding common
shares(30,696) $(78,165) $(63,734)
WEIGHTED AVERAGE OF OUTSTANDING
COMMON SHARES 969,834 969,834 969,834 969,834
Earnings per shareLOSS PER SHARE $ .06(.02) $ .03(.03) $ .08(.08) $ .07(.07)
No computation was made on common stock equivalents outstanding
because earningsloss per share would be anti-dilutive.
ITEM 2
CHASE GENERAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Chase General and its wholly-owned subsidiary are engaged in the
manufacture of confectionery products which are sold primarily to
wholesale houses, grocery accounts, vendors, and repackers.
RESULTS OF OPERATIONS
Six Months ended DecemberNINE MONTHS ENDED MARCH 31, 2000 AND 1999 and 1998
Sales:
The Company had no unusual transactions for the sixnine months ended
DecemberMarch 31, 1999.2000. The Company realized a gross profit margin of
27.10%23.39% for the sixnine months ended DecemberMarch 31, 19992000 as compared to
25.27%22.95% for the same period ended a year ago. Consolidated net
sales for the sixnine months ended DecemberMarch 31, 19992000 of $1,558,240,$1,881,294,
were 5% over7% above the $1,481,011$1,753,469 in fiscal year 1999's first sixnine months. The
2000 growth in sales was from the "Cherry Mash" product. No
major customer wascustomers were lost during this first six months.nine month period.
Expenses:
Selling, general and administrative expenses were 15.2%17.7% of sales
in the six monthsnine month period ended DecemberMarch 31, 19992000 compared to 15.4%17.8%
in the first sixnine months of 1998.1999. Interest expense continues to
decrease because of debt retirement.
Inventories at DecemberMarch 31, 1999 were $22,000 lower$7,300 higher than at June 30,
1999 since the Company is entering their slow season of the
year. In addition, accountsdue to increased non-seasonal sales orders from a major
customer. Accounts payable and accrued expenses is
$40,000 lowerare $37,000 higher than at December 31, 1999 compared to June 30,
1999 which also reflects the entrance into the Company's slower
business cycle.
Three Months ended Decemberdue to better payment terms from vendors.
THREE MONTHS ENDED MARCH 31, 2000 AND 1999 and 1998
Sales:
The Company realized a gross profit margin of 27.7% and 26.4%Company's net sales increased 19% over net sales for the
three months ended DecemberMarch 31, 19991999. This three month period is
normally the Company's slowest season. However, due to new sales
from a major customer, sales were significantly higher for the
March 2000 quarter.
(Continued)
ITEM 2
CHASE GENERAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Expenses:
Selling, general and 1998, respectively.
Netadministrative expenses were 30.0% of sales
increased 1% overin the three month period ended March 31, 2000 compared to 30.8%
in the same period a year ago. No major
customers were lost during this period.
Expenses:
Reduced brokerage activity for three months ended December 31,
1999 resulted in selling expenses decreasing 6% compared to
selling expenses for the three months ended December 31, 1998.
General and administrative expenses increased 24% asThe improved percentage is a
result of higher insurance costs and bad debt expense.increased sales for the current period.
LIQUIDITY AND CAPITAL RESOURCES
As of DecemberMarch 31, 1999,2000, the Company has no commitments for
capitalized expenditures. Cash increased $105,177$36,000 during the
current sixnine month period as a result of completing the busy
season and controlling overhead.overhead
costs. Working capital also increased approximately $81,000$25,500 for
the sixcurrent nine month period.
PART II. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
ItemITEM 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividend
contingencydividends in arrears at
DecemberMarch 31, 19992000 is $5,835,618.$5,867,636.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits - None
b. Reports on Form 8-K: There were no reports on Form 8-K
filed by the Company during October, November, and December,
1999.the quarter ended March 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CHASE GENERAL CORPORATION
Registrant
FebruaryMay 10, 2000 /s/ Barry M. Yantis
Date Barry M. Yantis
President and
Chief Financial Officer