FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDERPURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
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.(State of incorporation) (I.R.S. Employer Identification NumberNumber)
3600 Leonard Road, St. Joseph, Missouri 64503
(Address of principal executive offices)
(Zip Code)Telephone: (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[ ]
At November 1, 2000 indicate the number ofthere were 969,834 shares outstanding of the
issuer's Common Stock, as of the latest practicable date:
969,834 shares of the Company'sRegistrant's $1.00 par value common stock ($1.00 par value)
were outstanding.stock.
CHASE GENERAL CORPORATION
IndexINDEX TO FORM 10-Q
SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - December 31,
1999September 30, 2000
(Unaudited) and June 30, 1999 ..................2000 ............................ 3
Consolidated Condensed Statements of Operations Six months-
First quarter ended December 31,September 30, 2000 and 1999
and
1998 (Unaudited)................................ ......................................... 5
Consolidated Condensed Statements of Operations
Three months ended December 31, 1999 and
1998 (Unaudited)................................ 6
Consolidated Condensed Statements of Cash Flows Six months-
First quarter ended December 31,September 30, 2000 and 1999
and
1998 (Unaudited)................................ 7 ......................................... 6
Notes to Consolidated Condensed Financial Statements. 8Statements ......... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....Operations........................ 9
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities .................10..................10
Item 6. Exhibits and Reports on Form 8-K ................10......................10
Signatures...................................................... 10
Exhibit No. 27 Financial Data Schedule .......................11
PART I - FINANCIAL INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
December 31, 1999 andSEPTEMBER 30, 2000 AND JUNE 30, 2000
(UNAUDITED)
ASSETS
September 30, June 30,
1999
(Unaudited)
December 31 June 30,
1999 19992000 2000
CURRENT ASSETS
Cash $ 311,786 $ 206,60962,900 $146,779
Trade receivables, net of allowance 159,095 138,959290,899 129,018
Other receivables -- 3,239
Income tax receivable 470 --
Inventories:
Finished goods 34,995 73,106271,109 85,147
Goods in process 10,484 3,24311,918 4,872
Raw materials 80,637 52,93097,581 53,232
Packaging materials 96,402 70,878107,790 123,938
Prepaid expense 8,914 35,4698,546 34,960
Prepaid income taxes 1,158 1,158
Total current assets 702,313 581,194852,371 582,343
PROPERTY AND EQUIPMENT - AT COST 1,055,689 1,036,4571,073,088 1,072,644
Less accumulated depreciation 832,045 818,690867,348 854,296
Total property and equipment 223,644 217,767205,740 218,348
TOTAL ASSETS $ 925,957 $ 798,961$1,058,111 $800,691
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
December 31September 30, June 30,
1999 19992000 2000
CURRENT LIABILITIES
Accounts payable $304,256 $ 60,361 48,38354,718
Accrued expense 21,056 47,073expenses 44,955 35,184
Notes payable, Series B, current maturities 6,066 6,066
Estimated liability for
income taxes 54,191 --4,321 4,321
Total current liabilities 141,674 101,522353,532 94,223
LONG-TERM LIABILITIES
Notes payable, Series B, 121,606 156,606less current
maturities shown above 123,351 123,351
Total liabilities 263,280 258,128476,883 217,574
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock,
$5 par value:
Series A (liquidation preference
$1,230,000$1,252,500 and $1,215,000$1,245,000
respectively) 500,000 500,000
Series B (liquidation preference
$1,185,000$1,207,500 and $1,170,000$1,200,000
respectively) 500,000 500,000
Cumulative preferred stock, $20.00$20 par
value:
Series A (liquidation preference
$2,941,283$2,985,183 and $2,912,017$2,970,550
respectively) 1,170,660 1,170,660
Series B (liquidation preference
$479,335$486,489 and $474,565$484,104 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) (5,925,163)(5,884,768) (5,882,879)
Total stockholders' equity 662,677 540,833581,228 583,117
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 925,957 $ 798,961$1,058,111 $800,691
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
December 31(UNAUDITED)
FIRST QUARTER ENDED
SEPTEMBER 30
2000 1999 1998
NET SALES $1,558,240 $1,481,011$452,953 $453,521
COST OF SALES 1,136,001 1,106,689349,109 337,768
Gross profit 422,239 374,322103,844 115,753
OPERATING EXPENSES
Selling expense 146,876 151,02156,716 55,981
General and administrative expense 89,574 77,15548,408 41,088
Total operating expenses 236,450 228,176105,124 97,069
Income (loss) from operations 185,789 146,146(1,280) 18,684
OTHER INCOME (EXPENSE) (3,700) (2,799)(1,079) (1,571)
Income (loss) before income taxes 182,089 143,347(2,359) 17,113
PROVISION (CREDIT) FOR INCOME TAXES 60,245 46,273(470) 3,412
NET INCOME $ 121,844 $ 97,074
EARNINGS(LOSS) $(1,889) $13,701
LOSS PER SHARE $ .06 $ .03
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
December 31
1999 1998
NET SALES $1,104,719 $1,089,310
COST OF SALES 798,233 801,641
Gross profit 306,486 287,669
OPERATING EXPENSES
Selling expense 90,895 96,262
General and administrative
expense 48,486 38,961
Total operating expenses 139,381 135,223
Income from operations 167,105 152,446
OTHER INCOME (EXPENSE) (2,129) (2,152)
Income before income
taxes 164,976 150,294
PROVISION FOR INCOME TAXES 56,833 47,659
NET INCOME $ 108,143 $ 102,635
EARNINGS PER SHARE $ .08 $ .07COMMON STOCK $(.03) $(.02)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31(UNAUDITED)
FIRST QUARTER ENDED
SEPTEMBER 30
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the six months $121,844 $ 97,074quarter $(1,889) $13,701
Adjustments to reconcile net income
(loss) to net cash provided byused in operating activities:
Depreciation and amortization 24,068 26,77313,052 12,994
Provision for doubtful accounts 6,705 3,2101,605 1,605
Effects of changes in operating assets
and liabilities:
Trade accounts receivable (26,841) (19,149)(160,247) (120,291)
Income taxestax receivable (470) --
24,710
Inventory (22,361) 42,618Inventories (221,209) (234,880)
Prepaid expenses 26,555 34,72526,414 26,237
Accounts payable 11,978 (33,530)249,538 160,363
Accrued liabilities 28,174 26,9179,771 7,550
Net cash provided
byused in operating
activities 170,122 203,348(83,435) (132,721)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (29,945) (6,804)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term
debt (35,000) (22,633)(444) (7,816)
NET INCREASEDECREASE IN CASH 105,177 173,911(83,879) (140,537)
CASH, BEGINNING OF PERIODQUARTER 146,779 206,609 161,093
CASH, END OF PERIOD $311,786 $335,004QUARTER $62,900 $66,072
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIESBASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim
consolidated condensed financial statements include all
adjustments (consisting only of normal adjustments) necessary for
a fair presentation of the financial position of Chase General
Corporation as of September 30, 2000 and June 30, 2000 and the
results of its operations and its cash flows for the first
quarter ended September 30, 2000 and 1999.
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 19 and 20 (not shown) of its 19992000 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 six months ended December 31, 1999.
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 December 31, 1999 and JuneSeptember 30, 1999 and the results of its operations for the six months and
three months ended December 31, 1999 and 1998, and its cash flows
for the six months ended December 31, 1999 and 1998.2000.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 - EARNINGSLOSS PER SHARE The earningsOF COMMON STOCK
Loss per share was computed on the weighted average of
outstanding common shares as follows:
Six Months Ended Three Months Ended
December 31 December 31FIRST QUARTER ENDED
SEPTEMBER 30
2000 1999 1998 1999 1998
Net income $121,844 $ 97,074 $108,143 $102,635(loss) $(1,889) $13,701
Preferred dividend requirements:
6% Prior Cumulative Preferred, $5 par Value 30,000 30,000value 15,000 15,000
5% Convertible Cumulative Preferred,
$20 par value 34,036 34,036 17,018 17,018
Total dividend requirements 64,036 64,036 32,018 32,018
Net incomeloss - common shareholders $ 57,808 $ 33,038 $ 76,125 $ 70,617$(33,907) $(18,317)
Weighted average of outstanding
common shares 969,834 969,834
969,834 969,834
EarningsLoss per share $ .06 $ .03 $ .08 $ .07of common stock $(.03) $(.02)
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 December 31,FIRST QUARTER ENDED SEPTEMBER 30, 2000 and 1999
and 1998
Sales:Sales - The Company had no unusual transactions for the six monthsfirst
quarter ended December 31, 1999.September 30, 2000. The Company realized a gross
profit marginpercentage of 27.10%22.93% and 25.52% for the six monthsfirst quarter
ended December 31,September 30, 2000 and 1999, as compared to
25.27% for the same period ended a year ago.respectively. Consolidated
net sales for the six monthsquarter ended December 31, 1999September 30, 2000 of $1,558,240,$452,953,
were 5% over the $1,481,011comparable to $453,521 in fiscal year 1999's first six
months. The growth in sales was from the "Cherry Mash" product.quarter. No major
customer wascustomers were lost during this first six months.
Expenses:the current quarter. The loss of
gross margin for 2000 came from a different product mix sold with
a lower margin than the product mix sold for in 1999.
Expenses - Selling, general and administrative expensescosts were 15.2%23.21%
of sales in the six monthsquarter ended December 31, 1999September 30, 2000 compared to
15.4%21.4% in the first six monthsquarter of 1998. Interest expense continues to
decrease because of debt retirement.1999. Additional costs for a
computer consultant caused the increase in administrative costs
for 2000.
Inventories at December 31, 1999 were $22,000 lowerSeptember 30, 2000 are $221,000 higher than at
June 30, 19992000 since the Company is enteringpresently in their slow season of the
year.fall busy
season. In addition, accounts payable and accrued expenses is $40,000 lower$250,000 higher at
December 31, 1999September 30, 2000 compared to June 30, 1999,2000, which also reflects
the entrance into the Company's slower
business cycle.
Three Months ended December 31, 1999 and 1998
Sales:
The Company realized a gross profit margin of 27.7% and 26.4% for
the three months ended December 31, 1999 and 1998, respectively.
Net sales increased 1% over 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% as a result of
higher insurance costs and bad debt expense.fall busy season.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999,September 30, 2000, the Company has no commitments for
capitalized expenditures. Cash increased $105,177 during the
current six month perioddecreased $83,879 as a result of
completing the busy
season and controlling overhead.increased seasonal build-up of inventories. Working capital
increased approximately $81,000$10,700 for the six month period.first quarter ended
September 30, 2000.
PART II.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 December 31, 1999 is $5,835,618.
ItemSeptember 30, 2000 are $5,931,672.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.8.K.
a. Exhibits - NoneExhibit Number and Description
27.Chase General Corporation and Subsidiary Financial
Data Schedule.
b. Reports on Form 8-K: There were no reports on Form
8-K filed during October, November,July, August, and December,
1999.September,
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
February 10,November 14, 2000 /s/ Barry M. Yantis
Date Barry M. Yantis
President and Chief Financial
Officer