UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PERSUANTPURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberFOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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.(State of incorporation) (I.R.S. Employer Identification NumberNumber)
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 ] No As of[ ]
At November 1, 1999 indicate the number of2000 there were 969,834 shares outstanding of the
issuer's Common Stock, as of the latest practicable date:
969,834 shares of the Company'sRegistrant's $1.00 par value common stock ($1.00 par value)
were outstanding.stock.
CHASE GENERAL CORPORATION
INDEX TO FORM 10-Q
SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - September 30, 19992000
(Unaudited) and June 30, 1999. . . . . . . . . . . . . . .2000 ............................ 3
Consolidated Condensed Statements of Operations -
First quarter ended September 30, 2000 and 1999
and
1998(Unaudited). . . . . . . . . . . . . . . . . . . . . .(Unaudited) ......................................... 5
Consolidated Condensed Statements of Cash Flows -
First quarter ended September 30, 2000 and 1999
and
1998(Unaudited). . . . . . . . . . . . . . . . . . . . . .(Unaudited) ......................................... 6
Notes to Consolidated Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .......... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . .Operations........................ 9
PartPART II - Other InformationOTHER INFORMATION
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . .10..................10
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . .108-K ......................10
Signatures...................................................... 10
Exhibit No. 27 Financial Data Schedule .......................11
PART I FINANCIAL INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 2000 AND JUNE 30, 2000
(UNAUDITED)
ASSETS
September 30, 1999 and June 30,
1999
(UNAUDITED)2000 2000
CURRENT 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 $ 798,961
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
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 $ 980,575 $ 798,961
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 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) (5,884,768) (5,882,879)
Total stockholders' equity 581,228 583,117
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,058,111 $800,691
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)
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 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
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
Effects 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 to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SUMMARYBASIS OF SIGNIFICANT ACCOUNTING POLICIESPRESENTATION
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, 2000 and June 30, 2000 and the
results of its operations and its cash flows for the first
quarter ended September 30, 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 pages 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 ended September 30, 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 September 30, 1999 and
June 30, 1999 and the results of its operations and its cash
flows for the first quarter ended September 30, 1999 and 1998.2000.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 - LOSS PER SHARE OF COMMON STOCK
Loss per share was computed on the weighted average of
outstanding common shares 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)
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)
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 SeptemberFIRST QUARTER ENDED SEPTEMBER 30, 19992000 and 19981999
Sales - The Company had no unusual transactions for the first
quarter ended September 30, 1999.2000. The Company realized a gross
profit percentage of 25.52%22.93% and 22.12%25.52% for the first quarter
ended September 30, 19992000 and 1998,1999, respectively. Consolidated
net sales for the quarter ended September 30, 19992000 of $452,953,
were comparable to $453,521 were 16% above the $391,701 in 1998's1999's first quarter. No major
customers were lost during the current quarter. The 1999
improvedloss of
gross margin is due tofor 2000 came from a volume increasedifferent product mix sold with
a lower margin than the product mix sold for in sales.1999.
Expenses - Selling, general and administrative costs were 21.4%23.21%
of sales in the quarter ended September 30, 19992000 compared to
23.73%21.4% in the first quarter of 1998, which is consistent with last year.1999. Additional costs for a
computer consultant caused the increase in administrative costs
for 2000.
Inventories at September 30, 19992000 are $235,000$221,000 higher than at
June 30, 19992000 since the Company is presently in their fall busy
season. In addition, accounts payable is $160,363$250,000 higher at
September 30, 19992000 compared to June 30, 19992000, which also reflects
the entrance into the Company's fall busy season.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999,2000, the Company has no commitments for
capitalized expenditures. Cash decreased $140,537$83,879 as a result of
the increased seasonal build-up of inventories. The officers ofWorking capital
increased approximately $10,700 for 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.first quarter ended
September 30, 2000.
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
arrears at September 30, 19992000 are $5,803,600.
Item$5,931,672.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8.K.
a. Exhibits - NoneExhibit Number 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 during July, August, and September,
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
11/16/99November 14, 2000 /s/ Barry M. Yantis
Date Barry M. Yantis
President and Chief Financial
Officer