FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DecemberMarch 31, 2000
-----------------2001
--------------
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)
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] No [_]
As of February 1,April 30, 2001 there were 969,834 shares outstanding of the Registrant's
($1.00 par value) common stock.
1
CHASE GENERAL CORPORATION
Index
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--March 31, 2001 (Unaudited)
and June 30, 2000 .................................................. 3
Consolidated Condensed Statements of Operations--Nine months ended
March 31, 2001 and 2000 (Unaudited) ................................ 5
Consolidated Condensed Statements of Operations--Three months ended
March 31, 2001 and 2000 (Unaudited) ................................ 6
Consolidated Condensed Statements of Cash Flows--Nine months ended
March 31, 2001 and 2000 (Unaudited) ................................ 7
Notes to Consolidated Condensed Financial Statements ................. 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ..................................... 9
PART II--OTHER INFORMATION
Item 3. Defaults Upon Senior Securities ............................... 11
Item 4. Submission of matters to a vote of security holders ........... 11
Item 6. Exhibits and Reports on Form 10-Q
December 31, 2000
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - December 31, 2000
(Unaudited) and June 30, 2000..................................................................................... 3
Consolidated Condensed Statements of Operations
Six months ended December 31, 2000 and 1999 (Unaudited)........................................................... 5
Consolidated Condensed Statements of Operations
Three months ended December 31, 2000 and 1999 (Unaudited)......................................................... 6
Consolidated Condensed Statements of Cash Flows
Six months ended December 31, 2000 and 1999 (Unaudited)........................................................... 7
Notes to Consolidated Condensed Financial Statements.................................................................. 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................................... 9
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities.................................................................................. 10
Item 6. Exhibits and Reports on Form 8-K................................................................................. 10
Signatures................................................................................................................ 10
Exhibit No. 27 Financial Data Schedule....................................................................................8-K .............................. 11
2
PART I -I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
DecemberMarch 31, 20002001 and June 30, 2000
(Unaudited)
ASSETS
DecemberMarch 31, June 30,
2001 2000
2000
-------------- ----------------------- ----------
(Unaudited)
CURRENT ASSETS
Cash $ 317,364225,229 $ 146,779
Trade receivables, net of allowance 192,109101,642 129,018
Other receivables -- 3,239
Inventories:
Finished goods 11,75816,925 85,147
Goods in process 5,1593,931 4,872
Raw materials 39,62564,379 53,232
Packaging materials 103,07191,842 123,938
Prepaid expense 2,71724,459 34,960
Prepaid income taxes --2,615 1,158
-------------- ------------------------ ----------
Total current assets 671,803531,022 582,343
-------------- ------------------------ ----------
PROPERTY AND EQUIPMENT - ATEQUIPMENT--AT COST 1,073,0881,119,113 1,072,644
Less accumulated depreciation 876,863878,922 854,296
-------------- ------------------------ ----------
Total property and equipment 196,225240,191 218,348
-------------- ------------------------ ----------
TOTAL ASSETS $ 868,028771,213 $ 800,691
============== ======================== ==========
3
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
DecemberMarch 31, June 30,
2001 2000
2000
------------------ ------------------------- -----------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 40,33056,339 $ 54,718
Accrued expense 19,75629,721 35,184
Notes payable, Series B, current maturities 4,321 4,321
Income taxes payable 42,133 --
-------------- ------------------------- -----------
Total current liabilities 106,54090,381 94,223
LONG-TERM LIABILITIES
Notes payable, Series B, less current maturities above 73,351 123,351
-------------- ------------------------- -----------
Total liabilities 179,891163,732 217,574
-------------- ------------------------- -----------
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock, $5 par value:
Series A (liquidation preference $1,260,000$1,267,500
and $1,245,000 respectively) 500,000 500,000
Series B (liquidation preference $1,215,000$1,222,500
and $1,200,000 respectively) 500,000 500,000
Cumulative preferred stock, $20 par value:value
Series A (liquidation preference $2,999,816$3,014,449
and $2,970,550 respectively) 1,170,660 1,170,660
Series B (liquidation preference $488,874$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) (5,777,859)(5,858,515) (5,882,879)
-------------- ------------------------- -----------
Total stockholders' equity 688,137607,481 583,117
-------------- ------------------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 868,028771,213 $ 800,691
============== ======================== ===========
SeeThe accompanying notes toare an integral part of these
consolidated condensed financial statements.
4
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
December 31
----------------------------
2000 1999
----------- -------------
NET SALES $ 1,493,783 $ 1,558,240
COST OF SALES 1,095,964 1,136,001
----------- -------------
Gross profit 397,819 422,239
----------- -------------
OPERATING EXPENSES
Selling expense 145,721 146,876
General and administrative expense 96,471 89,574
----------- -------------
Total operating expenses 242,192 236,450
----------- -------------
Income from operations 155,627 185,789
OTHER INCOME (EXPENSE) (2,596) (3,700)
----------- -------------
Income before income taxes 153,031 182,089
PROVISION FOR INCOME TAXES 48,011 60,245
----------- -------------
NET INCOME $ 105,020 $ 121,844
=========== =============
EARNINGS PER SHARE $ .04 $ .06
=========== =============
See
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
DecemberMarch 31
-----------------------------------------------------
2001 2000
1999
-------------- --------------------- --------
NET SALES $ 1,040,830 $ 1,104,719$217,524 $323,054
COST OF SALES 746,855 798,233
-------------- -------------237,980 305,194
-------- --------
Gross profit 293,975 306,486
-------------- -------------(loss) on sales (20,456) 17,860
-------- --------
OPERATING EXPENSES
Selling expense 89,005 90,89549,119 49,538
General and administrative expense 48,063 48,486
-------------- -------------51,613 47,267
-------- --------
Total operating expenses 137,068 139,381
-------------- -------------
Income100,732 96,805
-------- --------
Net loss from operations 156,907 167,105(121,188) (78,945)
OTHER INCOME (EXPENSE) (1,517) (2,129)
-------------- -------------
IncomeEXPENSE (1,411) (501)
-------- --------
Net loss before income taxes 155,390 164,976
PROVISION(122,599) (79,446)
CREDIT FOR INCOME TAXES 48,481 56,833
-------------- -------------(41,943) (33,299)
-------- --------
NET INCOME $ 106,909 $ 108,143
============== =============
EARNINGSLOSS $(80,656) $(46,147)
======== ========
LOSS PER SHARE $ .08(.12) $ .08
============== =============(.08)
======== ========
SeeThe accompanying notes toare an integral part of these
consolidated condensed financial statements.
6
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
SixNine Months Ended
DecemberMarch 31
--------------------------
2000 1999
----------- ---------------------------------
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the six months $ 105,02024,364 $ 121,84475,697
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 22,568 24,06832,082 35,776
Provision for doubtful accounts 3,210 6,705bad debts 4,815 11,805
Effects of changes in operating assets and liabilities:
Trade and other accounts receivable (63,062) (26,841)
Inventories 107,576 (22,361)
Prepaid expenses 32,243 26,555
Prepaid income taxes 1,158 --Accounts receivables 25,800 (78,705)
Accounts payable (14,388) 11,9781,621 66,739
Inventories 90,112 (7,364)
Prepaid expense 9,044 14,152
Accrued liabilities (15,428) 28,174expense (5,463) (14,271)
Income taxes payable 42,133 -- ----------- -----------17,865
-------- --------
Net cash provided by operating activities 221,030 170,122
----------- -----------182,375 121,694
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (445) (29,945)
----------- -----------(53,925) (50,900)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (50,000) (35,000)
----------- ------------------- --------
NET INCREASE IN CASH 170,585 105,17778,450 35,794
CASH, BEGINNING OF PERIOD 146,779 206,609
----------- ------------------- --------
CASH, END OF PERIOD $225,229 $242,403
======== ========
SUPPLEMENTAL DISCLOSURES
Interest paid $ 317,3648,710 $ 311,786
=========== ===========10,571
======== ========
Income taxes paid $ 7,525 $ 9,081
======== ========
SeeThe accompanying notes toare an integral part of these
consolidated condensed financial statements.
7
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(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 DecemberMarch 31, 20002001 and June 30, 2000 and the
results of its operations for the sixnine months and three months ended DecemberMarch 31,
20002001 and 1999,2000, and its cash flows for the sixnine months ended DecemberMarch 31, 20002001 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 sixnine months ended DecemberMarch 31, 2000.2001.
NOTE 2 - EARNINGS PER SHARE
The earnings per share was computed on the weighted average of outstanding
common shares as follows:
SixNine Months Ended Three Months Ended
DecemberMarch 31 DecemberMarch 31
-------------------------- ---------------------------
2000 1999 2000 1999
----------- ---------- ----------- ---------------------------------- -----------------------
2001 2000 2001 2000
-------- -------- --------- --------
Net income (loss) $ 105,02024,364 $ 121,84475,697 $ 106,909 $ 108,143
----------- ---------- ----------- -----------(80,656) $(46,147)
-------- -------- --------- --------
Preferred dividend requirements:
6% Prior Cumulative Preferred, $5 par value 30,000 30,00045,000 45,000 15,000 15,000
5% Convertible Cumulative Preferred,
$20 par value 34,036 34,03651,054 51,054 17,018 17,018
-------- -------- --------- --------
Total dividend requirements 64,036 64,03696,054 96,054 32,018 32,018
----------- ---------- ----------- ------------------- -------- --------- --------
Net incomeloss common shareholders $ 40,984 $ 57,808 $ 74,891 $ 76,125
=========== ========== =========== ===========$(71,690) $(20,357) $(112,674) $(78,165)
======== ======== ========= ========
Weighted average of outstanding
common shares 969,834 969,834 969,834 969,834
=========== ========== =========== ===========
Earnings======== ======== ========= ========
Loss per share $ .04(.07) $ .06(.02) $ .08(.12) $ .08
=========== ========== =========== ===========(.08)
======== ======== ========= ========
No computation was made on common stock equivalents outstanding because earningsloss per
share would be anti-dilutive.
8
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
SixNine Months ended DecemberMarch 31, 2001 and 2000
and 1999
- ------------------------------------------------------------------------------------
Sales:
The Company had no unusual transactions for the sixnine months ended DecemberMarch 31,
2000.2001. The Company realized a gross profit percentagemargin of 26.63% and 27.10%22.05% for the sixnine months
ended DecemberMarch 31, 2000 and 1999, respectively.2001 as compared to 23.39% for the same period ended a year ago.
Consolidated net sales for the sixnine months ended DecemberMarch 31, 20002001 of $1,493,783$1,711,307,
were 4%9% below the $1,558,240 sales$1,881,294 in fiscal year 1999's2000's first sixnine months. The lossdecrease was due
to not repeating a "Cherry Mash" "mini mash" promotion for a major supplier that
was done in net sales
was from the additional allowances given to several customers as a result of
overbuying for the holiday season.2000. No major customer wascustomers were lost during this first
six months.nine month period.
Expenses:
Selling, general and administrative expenses were 16.21%20% of sales in the six
monthsnine month
period ended DecemberMarch 31, 20002001 compared to 15.2%17.7% in the first sixnine months of 1999.2000.
Additional costs for a computer consultant working on 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 DecemberMarch 31, 20002001 were $107,500$90,000 lower than at June 30, 2000 sincedue to
the Company is entering their slow season of the year. In addition, accounts
payable and accrued expenses are $30,000 lower at December 31, 2000 compared to
June 30, 2000, which also reflects the entrance into the Company'sbeing in its slower business cycle.
Three Months ended DecemberEnded March 31, 2001 and 2000
and 1999
- ---------------------------------------------------------------------------------------
Sales:
The Company realized a gross profit percentageCompany's net sales of 28.2% and 27.7%$217,524 for period ended March 31, 2001decreased 33%
over net sales of $323,054 for the three months ended DecemberMarch 31, 2000. This three
month period is normally the Company's slowest season. However, due to a sales
promotion for a major customer in the quarter ending March 31, 2000, and 1999, respectively. Net sales decreased 6%
overwere
significantly lower for the same period a year ago asMarch, 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,
ofgross profit on sales for the allowances given to several
customers. No major customers were lost during this period.
Expenses:three months ended March 31, 2001 was a negative
$20,456.
Selling expenses decreased 2%1% compared to selling expenses for the three months
ended DecemberMarch 31, 1999.2000. General and administrative expenses decreased 1%increased 9% compared
to these expenses for the three months ended DecemberMarch 31, 2000.2000, 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 DecemberMarch 31, 2000,2001, the Company has no commitments for capitalized
expenditures. Cash increased $170,500$78,450 during the current sixnine month period as a
result of completing the busy season and controlling overhead.
Working capital
increased approximately $77,000 for the six month period.
910
PART II. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
Item 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividenddividends contingency at DecemberMarch
31, 20002001 is $5,963,690.$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.
a. ExhibitExhibits - Number and Description
27. Chase General Corporation and Subsidiary Financial Data
Schedule.None required
b. Reports on Form 8-K: There were no reports on Form 8-K filed during
October, November,January, February, and December, 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
February 9, 2001 /s/ Barry M. Yantis
- ---------------------------------- ------------------------------------______________________ ___________________________________
Date Barry M. Yantis
President and Chief Financial Officer
1011