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 MarchDecember 31, 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. Employer Identification Number
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) 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[X] No Number[_]
As of February 1, 2001 there were 969,834 shares outstanding of the issuer's Common Stock as of
the latest practicable date: 969,834 shares of the Company's
common stockRegistrant's
($1.00 par value) were outstanding.common stock.
1
CHASE GENERAL CORPORATION
INDEXIndex to Form 10-Q
December 31, 2000
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - December 31, 2000
(Unaudited) and June 30, 2000..................................................................................... 3
Consolidated Condensed Statements of Operations
Six months ended December 31, 2000 and 1999 (Unaudited)........................................................... 5
Consolidated Condensed Statements of Operations
Three months ended December 31, 2000 and 1999 (Unaudited)......................................................... 6
Consolidated Condensed Statements of Cash Flows
Six months ended December 31, 2000 and 1999 (Unaudited)........................................................... 7
Notes to Consolidated Condensed Financial Statements.................................................................. 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................................... 9
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities.................................................................................. 10
Item 6. Exhibits and Reports on Form 8-K................................................................................. 10
Signatures................................................................................................................ 10
Exhibit No. 27 Financial Data Schedule.................................................................................... 11
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - March 31, 2000
(Unaudited) and June 30, 1999 3
Consolidated Condensed Statements of Operations -
Nine months ended March 31, 2000 and 1999
(Unaudited) 5
Consolidated Condensed Statements of Operations -
Three months ended March 31, 2000 and 1999
(Unaudited) 6
Consolidated Condensed Statements of Cash Flows -
Nine months ended March 31, 2000 and 1999
(Unaudited) 7
Notes to Consolidated Condensed Financial
Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities 12
Item 6. Exhibits and Reports on Form 8-K 12
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCHDecember 31, 2000 AND JUNE 30, 1999
MARCH 31, JUNEand June 30, 2000
1999
(Unaudited)
CURRENT ASSETS
Cash $ 242,403 $ 206,609
Trade receivables, net of allowance 205,859 138,959
Inventories:
Finished goods 9,045 73,106
Goods in process 8,240 3,243
Raw materials 54,894 52,930
Packaging materials 135,342 70,878
Prepaid expense 21,317 35,469
Total current assets 677,100 581,194
PROPERTY AND EQUIPMENT - AT COST 1,076,644 1,036,457
Less accumulated depreciation 843,753 818,690
Total property and equipment 232,891 217,767
TOTAL ASSETS $ 909,991 $ 798,961
December 31, June 30,
2000 2000
-------------- ------------
CURRENT ASSETS
Cash $ 317,364 $ 146,779
Trade receivables, net of allowance 192,109 129,018
Other receivables -- 3,239
Inventories:
Finished goods 11,758 85,147
Goods in process 5,159 4,872
Raw materials 39,625 53,232
Packaging materials 103,071 123,938
Prepaid expense 2,717 34,960
Prepaid income taxes -- 1,158
-------------- --------------
Total current assets 671,803 582,343
-------------- --------------
PROPERTY AND EQUIPMENT - AT COST 1,073,088 1,072,644
Less accumulated depreciation 876,863 854,296
-------------- --------------
Total property and equipment 196,225 218,348
-------------- --------------
TOTAL ASSETS $ 868,028 $ 800,691
============== ==============
3
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, JUNE 30,
2000 1999
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 115,122 $ 48,383
Accrued expense 32,802 47,073
Notes payable, Series B,
current maturities 6,066 6,066
Income taxes payable 17,865 --
Total current liabilities 171,855 101,522
LONG-TERM LIABILITIES
Notes payable, Series B, less
current maturities above 121,606 156,606
Total liabilities 293,461 258,128
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred
stock, $5 par value:
Series A (liquidation preference
$1,237,500 and $1,215,000
respectively) 500,000 500,000
Series B (liquidation preference
$1,192,500 and
$1,170,000 respectively) 500,000 500,000
Cumulative preferred stock,
$20 par value
Series A (liquidation preference
$2,955,916 and $2,912,017
respectively) 1,170,660 1,170,660
Series B (liquidation preference
$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) (5,849,466) (5,925,163)
Total stockholders' equity 616,530 540,833
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 909,991 $ 798,961
December 31, June 30,
2000 2000
------------------ --------------
CURRENT LIABILITIES
Accounts payable $ 40,330 $ 54,718
Accrued expense 19,756 35,184
Notes payable, Series B, current maturities 4,321 4,321
Income taxes payable 42,133 --
-------------- --------------
Total current liabilities 106,540 94,223
LONG-TERM LIABILITIES
Notes payable, Series B 73,351 123,351
-------------- --------------
Total liabilities 179,891 217,574
-------------- --------------
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock, $5 par value:
Series A (liquidation preference $1,260,000
and $1,245,000 respectively) 500,000 500,000
Series B (liquidation preference $1,215,000 and $1,200,000
respectively) 500,000 500,000
Cumulative preferred stock, $20 par value:
Series A (liquidation preference $2,999,816 and $2,970,550
respectively) 1,170,660 1,170,660
Series B (liquidation preference $488,874 and $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) (5,777,859) (5,882,879)
-------------- --------------
Total stockholders' equity 688,137 583,117
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 868,028 $ 800,691
============== ==============
See notes to consolidated condensed financial statements.
4
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED
MARCH(Unaudited)
Six Months Ended
December 31
----------------------------
2000 1999
----------- -------------
NET SALES $1,881,294 $1,753,469$ 1,493,783 $ 1,558,240
COST OF SALES 1,441,195 1,351,0321,095,964 1,136,001
----------- -------------
Gross profit on sales 440,099 402,437397,819 422,239
----------- -------------
OPERATING EXPENSES
Selling expense 196,414 194,045145,721 146,876
General and administrative expense 136,841 118,04996,471 89,574
----------- -------------
Total operating expenses 333,255 312,094
Net income242,192 236,450
----------- -------------
Income from operations 106,844 90,343155,627 185,789
OTHER INCOME (EXPENSE) (4,201) (4,235)
Net income(2,596) (3,700)
----------- -------------
Income before income taxes 102,643 86,108153,031 182,089
PROVISION FOR INCOME TAXES 26,946 20,75048,011 60,245
----------- -------------
NET INCOME $ 75,697105,020 $ 65,358
LOSS121,844
=========== =============
EARNINGS PER SHARE $ (.02).04 $ (.03).06
=========== =============
See notes to consolidated condensed financial statements.
5
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31
2000 1999
NET SALES $ 323,054 $272,458
COST OF SALES 305,194 244,343
Gross profit (loss) on sales 17,860 28,115
OPERATING EXPENSES
Selling expense 49,538 43,024
General and administrative expense 47,267 40,894
Total operating expenses 96,805 83,918
Net loss from operations (78,945) (55,803)
OTHER INCOME (EXPENSE) (501) (1,436)
Net loss before income taxes (79,446) (57,239)
CREDIT FOR INCOME TAXES (33,299) (25,523)
NET LOSS $ (46,147) $(31,716)
LOSS PER SHARE $ (.08) $ (.07)(Unaudited)
Three Months Ended
December 31
-------------------------------
2000 1999
-------------- -------------
NET SALES $ 1,040,830 $ 1,104,719
COST OF SALES 746,855 798,233
-------------- -------------
Gross profit 293,975 306,486
-------------- -------------
OPERATING EXPENSES
Selling expense 89,005 90,895
General and administrative expense 48,063 48,486
-------------- -------------
Total operating expenses 137,068 139,381
-------------- -------------
Income from operations 156,907 167,105
OTHER INCOME (EXPENSE) (1,517) (2,129)
-------------- -------------
Income before income taxes 155,390 164,976
PROVISION FOR INCOME TAXES 48,481 56,833
-------------- -------------
NET INCOME $ 106,909 $ 108,143
============== =============
EARNINGS PER SHARE $ .08 $ .08
============== =============
See notes to consolidated condensed financial statements.
6
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
MARCH 31
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 75,697 $ 65,358
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 35,776 40,566
Provision for bad debts 11,805 4,815
Effects of changes in
operating assets and
liabilities:
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 payable 17,865 19,750
Net cash provided by
operating activities 121,694 146,508
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (50,900) (6,804)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (35,000) (22,633)
NET INCREASE IN CASH 35,794 117,071
CASH, BEGINNING OF PERIOD 206,609 161,093
CASH, END OF PERIOD $242,403 $278,164
SUPPLEMENTAL DISCLOSURES
Interest paid $ 10,571 $ 12,109
Income taxes paid (received) $ 9,081 $(24,710)(Unaudited)
Six Months Ended
December 31
--------------------------
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the six months $ 105,020 $ 121,844
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 22,568 24,068
Provision for doubtful accounts 3,210 6,705
Effects of changes in operating assets and liabilities:
Trade and other accounts receivable (63,062) (26,841)
Inventories 107,576 (22,361)
Prepaid expenses 32,243 26,555
Prepaid income taxes 1,158 --
Accounts payable (14,388) 11,978
Accrued liabilities (15,428) 28,174
Income taxes payable 42,133 --
----------- -----------
Net cash provided by operating activities 221,030 170,122
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (445) (29,945)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (50,000) (35,000)
----------- -----------
NET INCREASE IN CASH 170,585 105,177
CASH, BEGINNING OF PERIOD 146,779 206,609
----------- -----------
CASH, END OF PERIOD $ 317,364 $ 311,786
=========== ===========
See notes to consolidated condensed financial statements.
7
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 December 31, 2000 and June 30, 2000 and the
results of its operations for the six months and three months ended December 31,
2000 and 1999, and its cash flows for the six months ended December 31, 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 page 9pages
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 ninesix months ended MarchDecember 31, 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 March 31, 2000 and June
30, 1999, the results of its operations for the nine months and
three months ended March 31, 2000 and 1999, and its cash flows
for the nine months ended March 31, 2000 and 1999.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 - LOSSEARNINGS PER SHARE
The lossearnings per share was computed on the weighted average of outstanding
common shares during the years as follows:
NINE MONTHS ENDED THREE MONTHS ENDED
MARCH 31 MARCH 31
1999 1998 1999 1998
Net income (loss) $ 75,697 $ 65,358 $(46,147) $(31,716)
Preferred dividend requirements:
6% Prior Cumulative Preferred,
$5 par value 45,000 45,000 15,000 15,000
5% Convertible Cumulative
Preferred, $20 par value 51,054 51,054 17,018 17,018
Total dividend requirements 96,054 96,054 32,018 32,018
NET LOSS - COMMON
STOCKHOLDERS $ (20,357) $ (30,696) $(78,165) $(63,734)
WEIGHTED AVERAGE OF OUTSTANDING
COMMON SHARES 969,834 969,834 969,834 969,834
LOSS PER SHARE $ (.02) $ (.03) $ (.08) $ (.07)
Six Months Ended Three Months Ended
December 31 December 31
-------------------------- ---------------------------
2000 1999 2000 1999
----------- ---------- ----------- ------------
Net income $ 105,020 $ 121,844 $ 106,909 $ 108,143
----------- ---------- ----------- -----------
Preferred dividend requirements:
6% Prior Cumulative Preferred, $5 par value 30,000 30,000 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 income common shareholders $ 40,984 $ 57,808 $ 74,891 $ 76,125
=========== ========== =========== ===========
Weighted average of outstanding
common shares 969,834 969,834 969,834 969,834
=========== ========== =========== ===========
Earnings per share $ .04 $ .06 $ .08 $ .08
=========== ========== =========== ===========
No computation was made on common stock equivalents outstanding because lossearnings
per share would be anti-dilutive.
8
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
NINE MONTHS ENDED MARCHSix Months ended December 31, 2000 ANDand 1999
- -------------------------------------------
Sales:
The Company had no unusual transactions for the ninesix months ended MarchDecember 31,
2000. The Company realized a gross profit marginpercentage of 23.39%26.63% and 27.10% for
the ninesix months ended MarchDecember 31, 2000 as compared to
22.95% for the same period ended a year ago.and 1999, respectively. Consolidated net
sales for the ninesix months ended MarchDecember 31, 2000 of $1,881,294,$1,493,783 were 7% above4% below the
$1,753,469$1,558,240 sales in fiscal year 1999's first ninesix months. The 2000 growthloss in net sales
was from the "Cherry Mash" product.additional allowances given to several customers as a result of
overbuying for the holiday season. No major customer was lost during this first
six months.
Expenses:
Selling, general and administrative expenses were 16.21% of sales in the six
months ended December 31, 2000 compared to 15.2% in the first six months of
1999. Additional costs for a computer consultant working on building a website
caused the increase in administrative costs for 2000.
Inventories at December 31, 2000 were $107,500 lower than at June 30, 2000 since
the Company is entering their slow season of the year. In addition, accounts
payable and accrued expenses are $30,000 lower at December 31, 2000 compared to
June 30, 2000, which also reflects the entrance into the Company's slower
business cycle.
Three Months ended December 31, 2000 and 1999
- ---------------------------------------------
Sales:
The Company realized a gross profit percentage of 28.2% and 27.7% for the three
months ended December 31, 2000 and 1999, respectively. Net sales decreased 6%
over the same period a year ago as a result of the allowances given to several
customers. No major customers were lost during this nine month period.
Expenses:
Selling general and administrative expenses were 17.7% of sales
in the nine month period ended March 31, 2000decreased 2% compared to 17.8%
in the first nine months of 1999. Interest expense continues to
decrease because of debt retirement.
Inventories at March 31, 1999 were $7,300 higher than at June 30,
1999 due to increased non-seasonal sales orders from a major
customer. Accounts payable are $37,000 higher than at June 30,
1999 due to better payment terms from vendors.
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Sales:
The Company's net sales increased 19% over net salesselling expenses for the three months
ended MarchDecember 31, 1999. 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, generalGeneral and administrative expenses were 30.0% of sales
indecreased 1%
compared to these expenses for the three month periodmonths ended MarchDecember 31, 2000 compared to 30.8%
in the same period a year ago. The improved percentage is a
result of increased sales for the current period.2000.
LIQUIDITY AND CAPITAL RESOURCES
As of MarchDecember 31, 2000, the Company has no commitments for capitalized
expenditures. Cash increased $36,000$170,500 during the current ninesix month period as a
result of completing the busy season and controlling overhead
costs.overhead. Working capital
also increased approximately $25,500$77,000 for the current ninesix month period.
9
PART II. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEMItem 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividends in arrearsdividend contingency at
MarchDecember 31, 2000 is $5,867,636.$5,963,690.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. ExhibitsExhibit - NoneNumber 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
by the Company during the quarter ended March 31,October, November, and December, 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
May 10, 2000February 9, 2001 /s/ Barry M. Yantis
- ---------------------------------- ------------------------------------
Date Barry M. Yantis
President and Chief Financial Officer
10