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