FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MarchDecember 31, 1999
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
_____
NumberAs of February 1, 2000 indicate the number 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 - MarchDecember 31,
1999 (Unaudited) and June 30, 1998 ........................1999 .................. 3
Consolidated Condensed Statements of Operations
-
NineSix months ended MarchDecember 31, 1999 and
1998 (Unaudited)........................................................................... 5
Consolidated Condensed Statements of Operations
-
Three months ended MarchDecember 31, 1999 and
1998 (Unaudited)........................................................................... 6
Consolidated Condensed Statements of Cash Flows
-
NineSix months ended MarchDecember 31, 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 ............. 10Operations.... 9
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities ................. 12.................10
Item 6. Exhibits and Reports on Form 8-K ................ 12................10
PART I.I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCHDecember 31, 1999 AND JUNE 30, 1998
MARCH 31, JUNEand June 30, 1999
1998
(Unaudited)
December 31 June 30,
1999 1999
CURRENT ASSETS
Cash $ 278,164311,786 $ 161,093206,609
Trade receivables, net of
allowance 70,542 94,514
Income tax receivables -- 24,710159,095 138,959
Inventories:
Finished goods 65,874 47,39734,995 73,106
Goods in process 4,628 3,63310,484 3,243
Raw materials 72,544 81,37780,637 52,930
Packaging materials 104,632 79,00696,402 70,878
Prepaid expense 20,018 35,549
Prepaid income taxes -- 1,0008,914 35,469
Total current assets 616,402 528,279702,313 581,194
PROPERTY AND EQUIPMENT - AT COST 1,023,603 1,016,7991,055,689 1,036,457
Less accumulated depreciation 814,646 774,080832,045 818,690
Total property and equipment 208,957 242,719223,644 217,767
TOTAL ASSETS $ 825,359925,957 $ 770,998798,961
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH(Unaudited)
December 31 JUNEJune 30,
1999 1998
(Unaudited)1999
CURRENT LIABILITIES
Accounts payable $ 54,726 $ 59,19460,361 48,383
Accrued expense 31,282 34,928
Income21,056 47,073
Notes payable, Series B,
current maturities 6,066 6,066
Estimated liability for
income taxes payable 19,75054,191 --
Total current liabilities 105,758 94,122141,674 101,522
LONG-TERM LIABILITIES
Notes payable, Series B less current
maturities above 162,672 185,305121,606 156,606
Total liabilities 268,430 279,427263,280 258,128
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred
stock, $5 par value:
Series A (liquidation
preference $1,207,500$1,230,000
and $1,185,000$1,215,000
respectively) 500,000 500,000
Series B (liquidation
preference $1,162,500$1,185,000
and $1,140,000$1,170,000
respectively) 500,000 500,000
Cumulative preferred stock,
$20$20.00 par value:
Series A (liquidation
preference $2,897,383$2,941,283
and $2,853,484$2,912,017
respectively) 1,170,660 1,170,660
Series B (liquidation
preference $472,181$479,335
and $465,026$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) (5,909,067) (5,974,425)(5,803,319) (5,925,163)
Total stockholders' equity 556,929 491,571662,677 540,833
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 825,359925,957 $ 770,998798,961
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED
MARCH(Unaudited)
Six Months Ended
December 31
1999 1998
NET SALES $ 1,753,469 $ 1,773,026$1,558,240 $1,481,011
COST OF SALES 1,351,032 1,389,7441,136,001 1,106,689
Gross profit on sales 402,437 383,282422,239 374,322
OPERATING EXPENSES
Selling expense 194,045 214,364146,876 151,021
General and administrative
expense 118,049 129,43789,574 77,155
Total operating expenses 312,094 343,801
Net income236,450 228,176
Income from operations 90,343 39,481185,789 146,146
OTHER INCOME (EXPENSE) (4,235) (7,218)
Net income(3,700) (2,799)
Income before income
taxes 86,108 32,263182,089 143,347
PROVISION FOR INCOME TAXES 20,750 6,43260,245 46,273
NET INCOME $ 65,358121,844 $ 25,831
LOSS97,074
EARNINGS PER SHARE $ (.03).06 $ (.07).03
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH(Unaudited)
Three Months Ended
December 31
1999 1998
NET SALES $ 272,458 $ 240,116$1,104,719 $1,089,310
COST OF SALES 244,343 240,739798,233 801,641
Gross profit (loss) on sales 28,115 (623)306,486 287,669
OPERATING EXPENSES
Selling expense 43,024 43,85090,895 96,262
General and administrative
expense 40,894 40,85548,486 38,961
Total operating expenses 83,918 84,705
Net loss139,381 135,223
Income from operations (55,803) (85,328)167,105 152,446
OTHER INCOME (EXPENSE) (1,436) (2,274)
Net loss(2,129) (2,152)
Income before income
taxes (57,239) (87,602)
CREDIT164,976 150,294
PROVISION FOR INCOME TAXES (25,523) (30,316)56,833 47,659
NET LOSSINCOME $ (31,716)108,143 $ (57,286)
LOSS102,635
EARNINGS PER SHARE $ (.07).08 $ (.09).07
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
MARCH(Unaudited)
Six Months Ended
December 31
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the six months $121,844 $ 65,358 $ 25,83197,074
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and amortization 40,566 46,95524,068 26,773
Provision for bad debts 4,815 4,815doubtful accounts 6,705 3,210
Effects of changes in operating
assets and liabilities:
Accounts receivables 43,867 (29)Trade accounts receivable (26,841) (19,149)
Income taxes receivable -- 24,710
Inventory (22,361) 42,618
Prepaid expenses 26,555 34,725
Accounts payable (4,468) (26,288)
Inventories (36,265) 96,134
Prepaid expenses 16,531 20,65511,978 (33,530)
Accrued expense (3,646) (3,931)
Income taxes payable 19,750 --liabilities 28,174 26,917
Net cash provided
by operating
activities 146,508 164,142170,122 203,348
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (29,945) (6,804) (27,852)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term
debt (35,000) (22,633) (28,648)
NET INCREASE IN CASH 117,071 107,642105,177 173,911
CASH, BEGINNING OF PERIOD 206,609 161,093 141,657
CASH, END OF PERIOD $ 278,164 $ 249,299
SUPPLEMENTAL DISCLOSURES
Interest paid $ 12,109 $ 14,098
Income taxes paid (received) $ (24,710) $ 4,840$311,786 $335,004
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 necessarynecessarily indicative of
results for a full year.
A summary of the Company's significant accounting policies is
presented on page 8pages 19 and 920 (not shown) of its 19981999 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, 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 MarchDecember 31, 1999 and June
30, 1998,1999 and the results of its operations for the ninesix months and
three months ended MarchDecember 31, 1991999 and 1998, and its cash flows
for the ninesix months ended MarchDecember 31, 1999 and 1998.
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) $ 65,358 $ 25,831 $ (31,716) $ (57,286)
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 $ (30,696) $ (70,223) $ (63,734) $ (89,304)
WEIGHTED AVERAGE OF OUTSTANDING
COMMON SHARES 969,834 969,834 969,834 969,834
LOSS PER SHARE $ (.03) $ (.07) $ (.07) $ (.09)
Six Months Ended Three Months Ended
December 31 December 31
1999 1998 1999 1998
Net income $121,844 $ 97,074 $108,143 $102,635
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 $ 57,808 $ 33,038 $ 76,125 $ 70,617
Weighted average of
outstanding common
shares 969,834 969,834 969,834 969,834
Earnings per share $ .06 $ .03 $ .08 $ .07
No computation was made on common stock equivalents outstanding
because lossearnings 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
NINE MONTHS ENDED MARCHSix Months ended December 31, 1999 and 1998 AND 1997
Sales:
The Company had no unusual transactions for the ninesix months ended
MarchDecember 31, 1999. The Company realized a gross profit margin of
22.95%27.10% for the ninesix months ended MarchDecember 31, 1999 as compared to
21.62%25.27% for the same period ended a year ago. Consolidated net
sales for the ninesix months ended MarchDecember 31, 1999 of $1,753,469,$1,558,240,
were 1% below5% over the $1,773,026$1,481,011 in 1998'sfiscal year 1999's first ninesix
months. The growth in sales was from the "Cherry Mash" product.
No major customers werecustomer was lost during this nine month period. The
1999 improved gross profit margin is due to a decrease in direct
and indirect labor costs.first six months.
Expenses:
Selling, general and administrative expenses were 17.8%15.2% of sales
in the nine month periodsix months ended MarchDecember 31, 1999 compared to 19.4%15.4% in
the first ninesix months of 1998. Interest expense continues to
decrease because of debt retirement.
Inventories at MarchDecember 31, 1999 were $36,000 higher than at June
30, 1998 due to increased non-seasonal sales orders from a major
customer. Accounts payable are $4,500$22,000 lower than at June
30, 1998.
THREE MONTHS ENDED MARCH1999 since the Company is entering their slow season of the
year. In addition, accounts payable and accrued expenses is
$40,000 lower at December 31, 1999 ANDcompared to June 30, 1999,
which also reflects the entrance into the Company's slower
business cycle.
Three Months ended December 31, 1999 and 1998
Sales:
The Company's net sales increased 13% over net salesCompany realized a gross profit margin of 27.7% and 26.4% for
the three months ended March 31, 1998. 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 1999 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 administrative expenses were 30.8% of sales
in the three month period ended MarchDecember 31, 1999 compared to 35.3%
inand 1998, respectively.
Net sales increased 1% over the same period a year ago. The improved percentage isNo 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
increased sales for the current period.higher insurance costs and bad debt expense.
LIQUIDITY AND CAPITAL RESOURCES
As of MarchDecember 31, 1999, the Company has no commitments for
capitalized expenditures. Cash increased $117,000$105,177 during the
current ninesix month period as a result of completing the busy
season and controlling overhead
costs.overhead. Working capital also increased
approximately $76,500$81,000 for the current ninesix month period.
The officers of the corporation and legal counsel continue to
discuss liquidity and capital resource options to resolve the
$5.7 million cumulative preferred stock dividends that are in
arrears.
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, 1999 is $5,739,564.
ITEM$5,835,618.
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 the quarter
ended March 31,October, November, and December,
1999.
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 11, 1999February 10, 2000 /s/ Barry M. Yantis
Date Barry M. Yantis
President and Chief Financial
Officer