FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PERSUANT TOUNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999March 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)
(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
As of November 1, 1999 indicate the numberNumber 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 - September 30, 1999March 31, 2000
(Unaudited) and June 30, 1999. . . . . . . . . . . . . . .1999 3
Consolidated Condensed Statements of Operations -
First quarterNine months ended September 30,March 31, 2000 and 1999
(Unaudited) 5
Consolidated Condensed Statements of Operations -
Three months ended March 31, 2000 and 1998(Unaudited). . . . . . . . . . . . . . . . . . . . . . 51999
(Unaudited) 6
Consolidated Condensed Statements of Cash Flows -
First quarterNine months ended September 30,March 31, 2000 and 1999
and
1998(Unaudited). . . . . . . . . . . . . . . . . . . . . . 6(Unaudited) 7
Notes to Consolidated Condensed Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . 78
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. . . . . . . 9
PartOperations 10
PART II - Other InformationOTHER INFORMATION
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . .1012
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . .108-K 12
PART II. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
SeptemberMARCH 31, 2000 AND JUNE 30, 1999
MARCH 31, 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 June 30, 1999
(UNAUDITED)equipment 232,891 217,767
TOTAL ASSETS
September 30, June 30,
1999 1999
CURRENT ASSETS
Cash $ 66,072 $ 206,609
Trade receivables, net of
allowance 257,645 138,959
Inventories:
Finished goods 266,176 73,106
Goods in process 17,910 3,243
Raw materials 66,248 52,930
Packaging materials 84,703 70,878
Prepaid expense 9,232 35,469
Total current assets 767,986 581,194
PROPERTY AND EQUIPMENT - AT COST 1,044,272 1,036,457
Less accumulated depreciation 831,683 818,690
Total property and
equipment 212,589 217,767
TOTAL ASSETS $ 980,575$ 909,991 $ 798,961
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, June 30,
1998 1998
CURRENT LIABILITIES
Accounts payable $ 208,746 $ 48,383
Accrued expenses 54,623 47,073
Notes payable, Series B,
current maturities 6,066 6,066
Total current
liabilities 269,435 101,522
LONG-TERM LIABILITIES
Notes payable, Series B,
less current maturities
shown above 156,606 156,606
Total liabilities 426,041 258,128
STOCKHOLDERS' EQUITY
Capital stock issued and
outstanding:
Prior cumulative preferred
stock, $5 par value:
Series A (liquidation
preference
$1,222,500
and $1,215,000
respectively) 500,000 500,000
Series B (liquidation
preference $1,177,500
and $1,170,000
respectively) 500,000 500,000
Cumulative preferred
stock, $20 par value:
Series A (liquidation
preference $2,926,650
and $2,912,017
respectively) 1,170,660 1,170,660
Series B (liquidation
preference $476,950
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) (5,911,462) (5,925,163)
Total stockholders'
equity 554,534 540,833
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 980,575MARCH 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
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
First Quarter Ended
September 30
1999 1998
NET SALES $453,521 $391,701
COST OF SALES 337,768 305,048
Gross profit 115,753 86,653
OPERATING EXPENSES
Selling expense 55,981 54,759
General and administrative
expense 41,088 38,194
Total operating expenses 97,069 92,953
Income (loss) from
operations 18,684 (6,300)
OTHER INCOME (EXPENSE) (1,571) (647)
Income (loss)
before income taxes 17,113 (6,947)
PROVISION (CREDIT) FOR INCOME
TAXES 3,412 (1,386)
NET INCOME (LOSS) $ 13,701 $ (5,561)
LOSS PER SHARE $ (.02) $ (.04)
NINE MONTHS ENDED
MARCH 31
2000 1999
NET SALES $1,881,294 $1,753,469
COST OF SALES 1,441,195 1,351,032
Gross profit on sales 440,099 402,437
OPERATING EXPENSES
Selling expense 196,414 194,045
General and administrative expense 136,841 118,049
Total operating expenses 333,255 312,094
Net income from operations 106,844 90,343
OTHER INCOME (EXPENSE) (4,201) (4,235)
Net income before income taxes 102,643 86,108
PROVISION FOR INCOME TAXES 26,946 20,750
NET INCOME $ 75,697 $ 65,358
LOSS PER SHARE $ (.02) $ (.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
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)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
First Quarter Ended
September 30
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the quarter $ 13,701 $ (5,561)
Adjustments to reconcile net
income to net cash
used in operating activities:
Depreciation and amortization 12,994 13,467
Provision for doubtful accounts 1,605 1,605
Effects of changes in operating
assets and liabilities:
Trade accounts receivable (120,291) (70,929)
Income tax receivable -- (1,386)
Inventories (234,880) (213,016)
Prepaid expenses 26,237 27,252
Accounts payable 160,363 159,460
Accrued liabilities 7,550 4,773
Net cash used in
operating
activities (132,721) (84,335)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and
equipment (7,816) (6,390)
NET DECREASE IN CASH (140,537) (90,725)
CASH, BEGINNING OF QUARTER 206,609 161,093
CASH, END OF QUARTER $ 66,072 $ 70,368
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)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SUMMARY OF 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 necessarily indicative of
results for a full year.
A summary of the Company's significant accounting policies is
presented on pages 19page 9 and 20 (not shown) of its 1999 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 September 30, 1999.March 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 September 30, 1999March 31, 2000 and June
30, 1999, and the results of its operations for the nine months and
three months ended March 31, 2000 and 1999, and its cash flows
for the first quarternine months ended September 30, 1999March 31, 2000 and 1998.1999.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 - LOSS PER SHARE
LossThe loss per share was computed on the weighted average of
outstanding common shares during the years as follows:
First Quarter Ended
September 30
1999 1998
Net income (loss) $ 13,701 $ (5,561)
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 $ (18,317) $(37,579)
Weighted average of
outstanding common
shares 969,834 969,834
Loss per share (.02) $ (.04)
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)
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
First Quarter ended September 30,NINE MONTHS ENDED MARCH 31, 2000 AND 1999
and 1998
Sales -Sales:
The Company had no unusual transactions for the first
quarternine months ended
September 30, 1999.March 31, 2000. The Company realized a gross profit percentagemargin of
25.52% and 22.12%23.39% for the first quarternine months ended September 30, 1999 and 1998, respectively.March 31, 2000 as compared to
22.95% for the same period ended a year ago. Consolidated net
sales for the quarternine months ended September 30, 1999March 31, 2000 of $453,521,$1,881,294,
were 16%7% above the $391,701$1,753,469 in 1998's1999's first quarter.nine months. The
2000 growth in sales was from the "Cherry Mash" product. No
major customers were lost during the current quarter. The 1999
improved gross margin is due to a volume increase in sales.
Expenses -this nine month period.
Expenses:
Selling, general and administrative expenses were 21.4%17.7% of sales
in the quarternine month period ended September 30 1999March 31, 2000 compared to 23.73%17.8%
in the first quarternine months of 1998, which is consistent with last year.1999. Interest expense continues to
decrease because of debt retirement.
Inventories at September 30,March 31, 1999 are $235,000were $7,300 higher than at June 30,
1999 since the Company is presently in their fall busy
season. In addition accountsdue to increased non-seasonal sales orders from a major
customer. Accounts payable is $160,363are $37,000 higher than at
September 30, 1999 compared to June 30,
1999 which also reflectsdue to better payment terms from vendors.
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Sales:
The Company's net sales increased 19% over net sales for the
entrance intothree months ended March 31, 1999. This three month period is
normally the Company's fall busyslowest 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, general and administrative expenses were 30.0% of sales
in the three month period ended March 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.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999,March 31, 2000, the Company has no commitments for
capitalized expenditures. Cash decreased $140,537increased $36,000 during the
current nine month period as a result of controlling overhead
costs. Working capital also increased approximately $25,500 for
the increased seasonal build-up of inventories.
The officers of the Company and legal counsel continue to discuss
liquidity and capital resource options to resolve the $5.8
million cumulative preferred stock dividends in arrears.current nine month period.
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 arrears at
September 30, 1999 are $5,803,600.March 31, 2000 is $5,867,636.
Item 6. EXHIBITS AND REPORTS ON FORM 8.K.8-K.
a. Exhibits - None
b. Reports on Form 8-K: There were no reports on Form 8-K
filed by the Company during July, August, and September,
1999.the quarter ended March 31, 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
11/16/99May 10, 2000 /s/ Barry M. Yantis
Date Barry M. Yantis
President and
Chief Financial Officer