FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TOUNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000For the quarterly period ended March 31, 2001
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Commission File Number 2-5916
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CHASE GENERAL CORPORATION
(Exact name of registrant as specified in its Charter)
Missouri 36-2667734
(State of incorporation) (I.R.S.State incorporation I.R.S. Employer Identification Number)Number
3600 Leonard Road, St. Joseph, Missouri 64503
(Address of principal executive offices)
Telephone: (816) 279-1625
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 [ ]
At November 1, 2000[_]
As of April 30, 2001 there were 969,834 shares outstanding of the Registrant's
$1.00($1.00 par valuevalue) common stock.
1
CHASE GENERAL CORPORATION
INDEX TO FORM 10-Q
SEPTEMBER 30, 2000Index
PART I - FINANCIALI--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - September 30, 2000Sheets--March 31, 2001 (Unaudited)
and June 30, 2000 .............................................................................. 3
Consolidated Condensed Statements of Operations -
First quarterOperations--Nine months ended
September 30,March 31, 2001 and 2000 and 1999
(Unaudited) ......................................................................... 5
Consolidated Condensed Statements of Operations--Three months ended
March 31, 2001 and 2000 (Unaudited) ................................ 6
Consolidated Condensed Statements of Cash Flows -
First quarterFlows--Nine months ended
September 30,March 31, 2001 and 2000 and 1999
(Unaudited) ......................................... 6................................ 7
Notes to Consolidated Condensed Financial Statements ......... 7................. 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................Operations ..................................... 9
PART II - OTHERII--OTHER INFORMATION
Item 3. Defaults Upon Senior Securities ..................10............................... 11
Item 4. Submission of matters to a vote of security holders ........... 11
Item 6. Exhibits and Reports on Form 8-K ......................10
Signatures...................................................... 10
Exhibit No. 27 Financial Data Schedule .......................11.............................. 11
2
PART II. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 2000 AND JUNE 30, 2000
(UNAUDITED)
ASSETS
September 30,March 31, 2001 and June 30, 2000
2000
CURRENT ASSETS
Cash $ 62,900 $146,779
Trade receivables, net of allowance 290,899 129,018
Other receivables -- 3,239
Income tax receivable 470 --
Inventories:
Finished goods 271,109 85,147
Goods in process 11,918 4,872
Raw materials 97,581 53,232
Packaging materials 107,790 123,938
Prepaid expense 8,546 34,960
Prepaid income taxes 1,158 1,158
Total current assets 852,371 582,343
PROPERTY AND EQUIPMENT - AT COST 1,073,088 1,072,644
Less accumulated depreciation 867,348 854,296
Total property and equipment 205,740 218,348
TOTAL ASSETS $1,058,111 $800,691
March 31, June 30,
2001 2000
----------- ----------
(Unaudited)
CURRENT ASSETS
Cash $ 225,229 $ 146,779
Trade receivables, net of allowance 101,642 129,018
Other receivables -- 3,239
Inventories:
Finished goods 16,925 85,147
Goods in process 3,931 4,872
Raw materials 64,379 53,232
Packaging materials 91,842 123,938
Prepaid expense 24,459 34,960
Prepaid income taxes 2,615 1,158
---------- ----------
Total current assets 531,022 582,343
---------- ----------
PROPERTY AND EQUIPMENT--AT COST 1,119,113 1,072,644
Less accumulated depreciation 878,922 854,296
---------- ----------
Total property and equipment 240,191 218,348
---------- ----------
TOTAL ASSETS $ 771,213 $ 800,691
========== ==========
3
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, June 30,
2000 2000
CURRENT LIABILITIES
Accounts payable $304,256 $ 54,718
Accrued expenses 44,955 35,184
Notes payable, Series B, current maturities 4,321 4,321
Total current liabilities 353,532 94,223
LONG-TERM LIABILITIES
Notes payable, Series B, less current
maturities shown above 123,351 123,351
Total liabilities 476,883 217,574
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock,
$5 par value:
Series A (liquidation preference
$1,252,500 and $1,245,000
respectively) 500,000 500,000
Series B (liquidation preference
$1,207,500 and $1,200,000
respectively) 500,000 500,000
Cumulative preferred stock, $20 par
value:
Series A (liquidation preference
$2,985,183 and $2,970,550
respectively) 1,170,660 1,170,660
Series B (liquidation preference
$486,489
March 31, June 30,
2001 2000
----------- -----------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 56,339 $ 54,718
Accrued expense 29,721 35,184
Notes payable, Series B, current maturities 4,321 4,321
----------- -----------
Total current liabilities 90,381 94,223
LONG-TERM LIABILITIES
Notes payable, Series B, less current maturities above 73,351 123,351
----------- -----------
Total liabilities 163,732 217,574
----------- -----------
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock, $5 par value:
Series A (liquidation preference $1,267,500
and $1,245,000 respectively) 500,000 500,000
Series B (liquidation preference $1,222,500
and $1,200,000 respectively) 500,000 500,000
Cumulative preferred stock, $20 par value
Series A (liquidation preference $3,014,449
and $2,970,550 respectively) 1,170,660 1,170,660
Series B (liquidation preference $491,259
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) (5,858,515) (5,882,879)
----------- -----------
Total stockholders' equity 607,481 583,117
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 771,213 $ 800,691
========== ===========
The accompanying notes are an integral part of par 3,134,722 3,134,722
Retained earnings (deficit) (5,884,768) (5,882,879)
Total stockholders' equity 581,228 583,117
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,058,111 $800,691
See notes tothese
consolidated condensed financial statements.
4
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
FIRST QUARTER ENDED
SEPTEMBER 30
2000 1999
NET SALES $452,953 $453,521
COST OF SALES 349,109 337,768
Gross profit 103,844 115,753
OPERATING EXPENSES
Selling expense 56,716 55,981
General and administrative expense 48,408 41,088
Total operating expenses 105,124 97,069
Income (loss) from operations (1,280) 18,684
OTHER INCOME (EXPENSE) (1,079) (1,571)
Income (loss) before income taxes (2,359) 17,113
PROVISION (CREDIT) FOR INCOME TAXES (470) 3,412
NET INCOME (LOSS) $(1,889) $13,701
LOSS PER SHARE OF COMMON STOCK $(.03) $(.02)
See(Unaudited)
Nine Months Ended
March 31
--------------------------
2001 2000
---------- ----------
NET SALES $1,711,307 $1,881,294
COST OF SALES 1,333,944 1,441,195
---------- ----------
Gross profit on sales 377,363 440,099
---------- ----------
OPERATING EXPENSES
Selling expense 194,840 196,414
General and administrative expense 148,084 136,841
---------- ----------
Total operating expenses 342,924 333,255
---------- ----------
Net income from operations 34,439 106,844
OTHER INCOME (EXPENSE) (4,007) (4,201)
---------- ----------
Net income before income taxes 30,432 102,643
PROVISION FOR INCOME TAXES 6,068 26,946
---------- ----------
NET INCOME $ 24,364 $ 75,697
========== ==========
LOSS PER SHARE $ (.07) $ (.02)
========== ==========
The accompanying notes toare an integral part of these
consolidated condensed financial statements.
5
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31
----------------------
2001 2000
-------- --------
NET SALES $217,524 $323,054
COST OF SALES 237,980 305,194
-------- --------
Gross profit (loss) on sales (20,456) 17,860
-------- --------
OPERATING EXPENSES
Selling expense 49,119 49,538
General and administrative expense 51,613 47,267
-------- --------
Total operating expenses 100,732 96,805
-------- --------
Net loss from operations (121,188) (78,945)
OTHER EXPENSE (1,411) (501)
-------- --------
Net loss before income taxes (122,599) (79,446)
CREDIT FOR INCOME TAXES (41,943) (33,299)
-------- --------
NET LOSS $(80,656) $(46,147)
======== ========
LOSS PER SHARE $ (.12) $ (.08)
======== ========
The accompanying notes are an integral part of these
consolidated condensed financial statements.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FIRST QUARTER ENDED
SEPTEMBER 30
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the quarter $(1,889) $13,701
Adjustments to reconcile net income
(loss) to net cash used in operating activities:
Depreciation and amortization 13,052 12,994
Provision for doubtful accounts 1,605 1,605(Unaudited)
Nine Months Ended
March 31
----------------------
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 24,364 $ 75,697
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 32,082 35,776
Provision for bad debts 4,815 11,805
Effects of changes in operating assets and liabilities:
Accounts receivables 25,800 (78,705)
Accounts payable 1,621 66,739
Inventories 90,112 (7,364)
Prepaid expense 9,044 14,152
Accrued expense (5,463) (14,271)
Income taxes payable -- 17,865
-------- --------
Net cash provided by operating activities 182,375 121,694
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (53,925) (50,900)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (50,000) (35,000)
-------- --------
NET INCREASE IN CASH 78,450 35,794
CASH, BEGINNING OF PERIOD 146,779 206,609
-------- --------
CASH, END OF PERIOD $225,229 $242,403
======== ========
SUPPLEMENTAL DISCLOSURES
Interest paid $ 8,710 $ 10,571
======== ========
Income taxes paid $ 7,525 $ 9,081
======== ========
The accompanying notes are an integral part of changes in operating assets
and liabilities:
Trade accounts receivable (160,247) (120,291)
Income tax receivable (470) --
Inventories (221,209) (234,880)
Prepaid expenses 26,414 26,237
Accounts payable 249,538 160,363
Accrued liabilities 9,771 7,550
Net cash used in operating
activities (83,435) (132,721)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (444) (7,816)
NET DECREASE IN CASH (83,879) (140,537)
CASH, BEGINNING OF QUARTER 146,779 206,609
CASH, END OF QUARTER $62,900 $66,072
See notes tothese
consolidated condensed financial statements.
7
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)(Unaudited)
NOTE 1 - BASIS 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, 2000March 31, 2001 and June 30, 2000 and the
results of its operations for the nine months and three months ended March 31,
2001 and 2000, and its cash flows for the first
quarternine months ended September 30, 2000March 31, 2001 and
1999.2000.
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 fullfully year.
A summary of the Company's significant accounting policies is presented on pages
19 and 20 (not shown) of its 2000 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 quarternine months ended September 30, 2000.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)March 31, 2001.
NOTE 2 - LOSSEARNINGS PER SHARE
OF COMMON STOCK
LossThe earnings per share was computed on the weighted average of outstanding
common shares as follows:
FIRST QUARTER ENDED
SEPTEMBER 30
2000 1999
Net income (loss) $(1,889) $13,701
Preferred dividend requirements:
6% Prior Cumulative Preferred, $5 par value 15,000 15,000
5% Convertible Cumulative Preferred,
$20 par value 17,018 17,018
Total dividend requirements 32,018 32,018
Net loss - common shareholders $(33,907) $(18,317)
Weighted average of outstanding
common shares 969,834 969,834
Loss per share of common stock $(.03) $(.02)
Nine Months Ended Three Months Ended
March 31 March 31
---------------------- -----------------------
2001 2000 2001 2000
-------- -------- --------- --------
Net income (loss) $ 24,364 $ 75,697 $ (80,656) $(46,147)
-------- -------- --------- --------
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 shareholders $(71,690) $(20,357) $(112,674) $(78,165)
======== ======== ========= ========
Weighted average of outstanding
common shares 969,834 969,834 969,834 969,834
======== ======== ========= ========
Loss per share $ (.07) $ (.02) $ (.12) $ (.08)
======== ======== ========= ========
No computation was made on common stock equivalents outstanding because loss per
share would be anti-dilutive.
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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
FIRST QUARTER ENDED SEPTEMBER 30,Nine Months ended March 31, 2001 and 2000
and 1999
Sales - -----------------------------------------
Sales:
The Company had no unusual transactions for the first
quarternine months ended September 30, 2000.March 31,
2001. The Company realized a gross profit percentagemargin of 22.93% and 25.52%22.05% for the first quarternine months
ended September 30, 2000 and 1999, respectively.March 31, 2001 as compared to 23.39% for the same period ended a year ago.
Consolidated net sales for the quarternine months ended September 30, 2000March 31, 2001 of $452,953,$1,711,307,
were comparable9% below the $1,881,294 in 2000's first nine months. The decrease was due
to $453,521not repeating a "Cherry Mash" "mini mash" promotion for a major supplier that
was done in 1999's first quarter.2000. No major customers were lost during 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 -this nine month period.
Expenses:
Selling, general and administrative costsexpenses were 23.21%20% of sales in the quarternine month
period ended September 30, 2000March 31, 2001 compared to 21.4%17.7% in the first quarternine months of 1999.2000.
Additional costs for a computer consultant building and maintaining a website as
well as additional professional fees for updating securities filings caused the
increase in administrative costs for 2000.2001.
Inventories at September 30, 2000 are $221,000 higherMarch 31, 2001 were $90,000 lower than at June 30, 2000 sincedue to
the Company being in its slower business cycle.
Three Months Ended March 31, 2001 and 2000
- ------------------------------------------
Sales:
The Company's net sales of $217,524 for period ended March 31, 2001decreased 33%
over net sales of $323,054 for the three months ended March 31, 2000. This three
month period is presentlynormally the Company's slowest season. However, due to a sales
promotion for a major customer in their fall busy
season. In addition, accounts payable is $250,000 higher at
September 30,the quarter ending March 31, 2000, sales were
significantly lower for the March, 2001 quarter because this promotion was not
repeated. Due to the loss of sales in the Chase product line, the volume of net
sales realized was not enough to cover the direct cost of sales. As a result,
gross profit on sales for the three months ended March 31, 2001 was a negative
$20,456.
Selling expenses decreased 1% compared to June 30,selling expenses for the three months
ended March 31, 2000. General and administrative expenses increased 9% compared
to these expenses for the three months ended March 31, 2000, which also reflects
the entrance into the Company's fall busy season.as a result of
website maintenance costs.
9
ITEM 2
CHASE GENERAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000,March 31, 2001, the Company has no commitments for capitalized
expenditures. Cash decreased $83,879increased $78,450 during the current nine month period as a
result of completing the increased seasonal build-up of inventories. Working capital
increased approximately $10,700 for the first quarter ended
September 30, 2000.busy season and controlling overhead.
10
PART IIII. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEMItem 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividends in
arrearscontingency at September 30, 2000 are $5,931,672.
ITEMMarch
31, 2001 is $5,995,708.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The annual meeting of shareholders scheduled for January 19, 2001
was not held due to the lack of receipts of required proxies to
hold such meetings.
Item 6. EXHIBITS AND REPORTS ON FORM 8.K.8-K.
a. Exhibit Number and Description
27.Chase General Corporation and Subsidiary Financial
Data Schedule.Exhibits - None required
b. Reports on Form 8-K: There were no reports on Form 8-K filed during
July, August,January, February, and September,
2000.March, 2001.
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
November 14, 2000 /s/ Barry M. Yantis______________________ ___________________________________
Date Barry M. Yantis
President and Chief Financial Officer
11