FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
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 March 31, 19992000
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) 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
_____
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
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - March 31, 19992000
(Unaudited) and June 30, 1998 ........................1999 3
Consolidated Condensed Statements of Operations -
Nine months ended March 31, 2000 and 1999
and 1998
(Unaudited)........................................... 5
Consolidated Condensed Statements of Operations -
Three months ended March 31, 2000 and 1999
and 1998
(Unaudited)........................................... 6
Consolidated Condensed Statements of Cash Flows -
Nine months ended March 31, 2000 and 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 ............. 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
MARCH 31, 19992000 AND JUNE 30, 19981999
MARCH 31, JUNE 30,
2000 1999 1998
(Unaudited)
CURRENT ASSETS
Cash $ 278,164242,403 $ 161,093206,609
Trade receivables, net of allowance 70,542 94,514
Income tax receivables -- 24,710205,859 138,959
Inventories:
Finished goods 65,874 47,3979,045 73,106
Goods in process 4,628 3,6338,240 3,243
Raw materials 72,544 81,37754,894 52,930
Packaging materials 104,632 79,006135,342 70,878
Prepaid expense 20,018 35,549
Prepaid income taxes -- 1,00021,317 35,469
Total current assets 616,402 528,279677,100 581,194
PROPERTY AND EQUIPMENT - AT COST 1,023,603 1,016,7991,076,644 1,036,457
Less accumulated depreciation 814,646 774,080843,753 818,690
Total property and equipment 208,957 242,719232,891 217,767
TOTAL ASSETS $ 825,359909,991 $ 770,998798,961
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, JUNE 30,
2000 1999 1998
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 54,726115,122 $ 59,19448,383
Accrued expense 31,282 34,92832,802 47,073
Notes payable, Series B,
current maturities 6,066 6,066
Income taxes payable 19,75017,865 --
Total current liabilities 105,758 94,122171,855 101,522
LONG-TERM LIABILITIES
Notes payable, Series B, less
current maturities above 162,672 185,305121,606 156,606
Total liabilities 268,430 279,427293,461 258,128
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred
stock, $5 par value:
Series A (liquidation preference
$1,207,500$1,237,500 and $1,185,000$1,215,000
respectively) 500,000 500,000
Series B (liquidation preference
$1,162,500$1,192,500 and
$1,140,000$1,170,000 respectively) 500,000 500,000
Cumulative preferred stock,
$20 par value:value
Series A (liquidation preference
$2,897,383$2,955,916 and $2,853,484$2,912,017
respectively) 1,170,660 1,170,660
Series B (liquidation preference
$472,181$481,720 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)(5,849,466) (5,925,163)
Total stockholders' equity 556,929 491,571616,530 540,833
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 825,359909,991 $ 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 31
2000 1999 1998
NET SALES $ 1,753,469 $ 1,773,026$1,881,294 $1,753,469
COST OF SALES 1,441,195 1,351,032 1,389,744
Gross profit on sales 440,099 402,437 383,282
OPERATING EXPENSES
Selling expense 196,414 194,045 214,364
General and administrative expense 136,841 118,049 129,437
Total operating expenses 333,255 312,094 343,801
Net income from operations 106,844 90,343 39,481
OTHER INCOME (EXPENSE) (4,201) (4,235) (7,218)
Net income before income taxes 102,643 86,108 32,263
PROVISION FOR INCOME TAXES 26,946 20,750 6,432
NET INCOME $ 65,35875,697 $ 25,83165,358
LOSS PER SHARE $ (.03)(.02) $ (.07)(.03)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31
2000 1999 1998
NET SALES $ 272,458 $ 240,116323,054 $272,458
COST OF SALES 305,194 244,343 240,739
Gross profit (loss) on sales 17,860 28,115 (623)
OPERATING EXPENSES
Selling expense 49,538 43,024 43,850
General and administrative expense 47,267 40,894 40,855
Total operating expenses 96,805 83,918 84,705
Net loss from operations (78,945) (55,803) (85,328)
OTHER INCOME (EXPENSE) (501) (1,436) (2,274)
Net loss before income taxes (79,446) (57,239) (87,602)
CREDIT FOR INCOME TAXES (33,299) (25,523) (30,316)
NET LOSS $ (31,716) $ (57,286)(46,147) $(31,716)
LOSS 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 31
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 65,35875,697 $ 25,83165,358
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 35,776 40,566 46,955
Provision for bad debts 4,81511,805 4,815
Effects of changes in
operating assets and
liabilities:
Accounts receivables (78,705) 43,867 (29)
Accounts payable 66,739 (4,468)
(26,288)
Inventories (7,364) (36,265)
96,134
Prepaid expensesexpense 14,152 16,531 20,655
Accrued expense (14,271) (3,646) (3,931)
Income taxes payable 17,865 19,750 --
Net cash provided by
operating activities 121,694 146,508 164,142
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (50,900) (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 35,794 117,071 107,642
CASH, BEGINNING OF PERIOD 206,609 161,093 141,657
CASH, END OF PERIOD $ 278,164 $ 249,299$242,403 $278,164
SUPPLEMENTAL DISCLOSURES
Interest paid $ 12,10910,571 $ 14,09812,109
Income taxes paid (received) $ (24,710) $ 4,8409,081 $(24,710)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(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 89 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 nine months ended March 31, 1999.2000.
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, 19992000 and June
30, 1998,1999, the results of its operations for the nine months and
three months ended March 31, 1992000 and 1998,1999, and its cash flows
for the nine months ended March 31, 19992000 and 1998.1999.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 - LOSS PER SHARE
The loss 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)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) $ (.07) $ (.09)
No computation was made on common stock equivalents outstanding
because loss 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 MARCH 31, 19982000 AND 19971999
Sales:
The Company had no unusual transactions for the nine months ended
March 31, 1999.2000. The Company realized a gross profit margin of
22.95%23.39% for the nine months ended March 31, 19992000 as compared to
21.62%22.95% for the same period ended a year ago. Consolidated net
sales for the nine months ended March 31, 19992000 of $1,881,294,
were 7% above the $1,753,469 were 1% below the $1,773,026 in 1998's1999's first nine months. The
2000 growth in sales was from the "Cherry Mash" product. No
major customers were lost during this nine month period.
The
1999 improved gross profit margin is due to a decrease in direct
and indirect labor costs.
Expenses:
Selling, general and administrative expenses were 17.8%17.7% of sales
in the nine month period ended March 31, 19992000 compared to 19.4%17.8%
in the first nine months of 1998.1999. Interest expense continues to
decrease because of debt retirement.
Inventories at March 31, 1999 were $36,000$7,300 higher than at June 30,
19981999 due to increased non-seasonal sales orders from a major
customer. Accounts payable are $4,500 lower$37,000 higher than at June 30,
1998.1999 due to better payment terms from vendors.
THREE MONTHS ENDED MARCH 31, 19992000 AND 19981999
Sales:
The Company's net sales increased 13%19% over net sales for the
three months ended March 31, 1998.1999. 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 19992000 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%30.0% of sales
in the three month period ended March 31, 19992000 compared to 35.3%30.8%
in the same period a year ago. The improved percentage is a
result of increased sales for the current period.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999,2000, the Company has no commitments for
capitalized expenditures. Cash increased $117,000$36,000 during the
current nine month period as a result of controlling overhead
costs. Working capital also increased approximately $76,500$25,500 for
the current nine 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
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividends in arrears at
March 31, 19992000 is $5,739,564.
ITEM$5,867,636.
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, 1999.2000.
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 11, 199910, 2000 /s/ Barry M. Yantis
Date Barry M. Yantis
President and
Chief Financial Officer