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 March 31, 20012002
--------------
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 April 30, 20012002 there were 969,834 shares outstanding of the Registrant's
($1.00 par value) common stock.
1
CHASE GENERAL CORPORATION
Index
PART I--FINANCIALI - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--MarchSheets - March 31, 20012002
(Unaudited) and June 30, 2000 ..................................................2001 ................................ 3
Consolidated Condensed Statements of Operations--NineOperations -
Three months ended March 31, 2002 and 2001 and 2000 (Unaudited) ....................................... 5
Consolidated Condensed Statements of Operations--ThreeOperations -
Nine months ended March 31, 2002 and 2001 and 2000 (Unaudited) ........................................ 6
Consolidated Condensed Statements of Cash Flows--NineFlows -
Nine months ended March 31, 2002 and 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--OTHERII - 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 8-K .......................................................... 11
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, 20012002 and June 30, 2000
ASSETS2001
(Unaudited)
ASSETS
March 31, June 30,
2002 2001
2000
----------- ----------
(Unaudited)--------- --------
CURRENT ASSETS
Cash $ 225,229238,856 $ 146,779117,114
Trade receivables, net of allowance 101,642 129,018103,756 100,494
Other receivables -- 3,2397,053 7,053
Inventories:
Finished goods 16,925 85,14719,283 73,138
Goods in process 3,931 4,8726,218 1,943
Raw materials 64,379 53,23261,802 80,592
Packaging materials 91,842 123,93864,003 64,536
Prepaid expense 24,459 34,9608,587 34,606
Prepaid income taxes 2,615 1,158-- 11,220
---------- ----------
Total current assets 531,022 582,343509,558 490,696
---------- ----------
PROPERTY AND EQUIPMENT--ATEQUIPMENT - AT COST 1,119,113 1,072,6441,121,853 1,117,639
Less accumulated depreciation 878,922 854,296926,358 893,434
---------- ----------
Total property and equipment 240,191 218,348195,495 224,205
---------- ----------
TOTAL ASSETS $ 771,213705,053 $ 800,691714,901
========== ==========
3
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
March 31, June 30,
2002 2001
2000
----------- -----------
(Unaudited)--------- --------
CURRENT LIABILITIES
Accounts payable $ 56,33929,284 $ 54,71846,002
Accrued expense 29,721 35,18438,576 35,301
Notes payable, Series B, current maturities 4,321 4,32151,010 --
----------- -----------
Total current liabilities 90,381 94,223118,870 81,303
LONG-TERM LIABILITIES
Notes payable, Series B, less current maturities above 73,351 123,351-- 77,672
----------- -----------
Total liabilities 163,732 217,574118,870 158,975
----------- -----------
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock, $5 par value:
Series A (liquidation preference $1,267,500$1,297,500
and $1,245,000$1,275,000 respectively) 500,000 500,000
Series B (liquidation preference $1,222,500$1,252,500
and $1,200,000$1,230,000 respectively) 500,000 500,000
Cumulative preferred stock, $20 par value
Series A (liquidation preference $3,014,449$3,072,982
and $2,970,550$3,029,083 respectively) 1,170,660 1,170,660
Series B (liquidation preference $491,259$500,798
and $484,104$493,643 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) (5,858,515) (5,882,879)(5,879,813) (5,910,070)
----------- -----------
Total stockholders' equity 607,481 583,117586,183 555,926
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 771,213705,053 $ 800,691
==========714,901
=========== ===========
The accompanying notes are an integral part of these
consolidated condensed financial statements.
4
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
NineThree Months Ended
March 31
----------------------------------------------
2002 2001
---- ----
2001 2000
---------- ----------
NET SALES $1,711,307 $1,881,294$240,665 $ 217,524
COST OF SALES 1,333,944 1,441,195
---------- ----------237,317 237,980
-------- ---------
Gross profit (loss) on sales 377,363 440,099
----------3,348 (20,456)
-------- ----------
OPERATING EXPENSES
Selling expense 194,840 196,41448,401 49,119
General and administrative expense 148,084 136,841
---------- ----------53,567 51,613
-------- ---------
Total operating expenses 342,924 333,255
---------- ----------101,968 100,732
-------- ---------
Net incomeloss from operations 34,439 106,844(98,620) (121,188)
OTHER INCOME (EXPENSE) (4,007) (4,201)
---------- ----------(501) (1,411)
-------- ---------
Net incomeloss before income taxes 30,432 102,643
PROVISION(99,121) (122,599)
CREDIT FOR INCOME TAXES 6,068 26,946
---------- ----------(33,689) (41,943)
-------- ---------
NET INCOME $ 24,364 $ 75,697
========== ==========LOSS (65,432) (80,656)
Preferred dividends 32,018 32,018
-------- ---------
Net loss applicable to common shareholders $(97,450) $(112,674)
======== =========
LOSS PER SHARE OF COMMON STOCK $ (.07)(.10) $ (.02)
========== ==========(.12)
======== =========
The accompanying notes are an integral part of these
consolidated condensed financial statements.
5
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
ThreeNine Months Ended
March 31
---------------------------------------
2002 2001
2000
-------- ------------ ----
NET SALES $217,524 $323,054$1,532,114 $1,711,307
COST OF SALES 237,980 305,194
-------- --------1,147,340 1,333,944
---------- ----------
Gross profit (loss) on sales (20,456) 17,860
-------- --------384,774 377,363
---------- ----------
OPERATING EXPENSES
Selling expense 49,119 49,538187,569 194,840
General and administrative expense 51,613 47,267
-------- --------157,749 148,084
---------- ----------
Total operating expenses 100,732 96,805
-------- --------345,318 342,924
---------- ----------
Net lossincome from operations (121,188) (78,945)39,456 34,439
OTHER EXPENSE (1,411) (501)
-------- --------INCOME (EXPENSE) (1,664) (4,007)
---------- ----------
Net lossincome before income taxes (122,599) (79,446)
CREDIT37,792 30,432
PROVISION FOR INCOME TAXES (41,943) (33,299)
-------- --------7,535 6,068
---------- ----------
NET LOSS $(80,656) $(46,147)
======== ========INCOME 30,257 24,364
Preferred dividends 96,054 96,054
---------- ----------
Net loss applicable to common shareholders $ (65,797) $ (71,690)
========== ==========
LOSS PER SHARE OF COMMON STOCK $ (.12)(.07) $ (.08)
======== ========(.07)
============ ==========
The accompanying notes are an integral part of these
consolidated condensed financial statements.
6
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31
------------------------------------------
2002 2001
---- ----
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 24,36430,257 $ 75,69724,364
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 32,925 32,082 35,776
Provision for bad debts 4,815 11,8054,815
Effects of changes in operating assets and liabilities:
Accounts receivables (8,077) 25,800 (78,705)
Accounts payable (16,718) 1,621
66,739
Inventories 68,903 90,112 (7,364)
Prepaid expense 26,019 9,044
14,152Prepaid income taxes 11,220 --
Accrued expense 3,275 (5,463)
(14,271)
Income taxes payable -- 17,865
-------- ------------------- -----------
Net cash provided by operating activities 152,619 182,375
121,694
-------- ------------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (4,215) (53,925)
(50,900)
-------- ------------------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (26,662) (50,000)
(35,000)
-------- ------------------- -----------
NET INCREASE IN CASH 121,742 78,450 35,794
CASH, BEGINNING OF PERIOD 117,114 146,779
206,609
-------- ------------------- -----------
CASH, END OF PERIOD $225,229 $242,403
======== ========$ 238,856 $ 225,229
=========== ===========
SUPPLEMENTAL DISCLOSURES
Interest paid $ 6,161 $ 8,710
$ 10,571
======== =================== ===========
Income taxes paid $ -- $ 7,525
$ 9,081
======== =================== ===========
The accompanying notes are 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 March 31, 20012002 and June 30, 20002001 and the
results of its operations for the nine months and three months ended March 31,
20012002 and 2000,2001, and its cash flows for the nine months ended March 31, 20012002 and
2000.2001.
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 fully year.
A summary of the Company's significant accounting policies is presented on pages
19 and 20 (not shown) of its 20002001 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 nine months ended March 31, 2001.2002.
NOTE 2 - EARNINGS (LOSS) PER SHARE
The earnings (loss) per share was computed on the weighted average of
outstanding common shares as follows:
Nine Months Ended Three Months Ended
March 31 March 31
---------------------- ----------------------- -----------------------
2002 2001 2002 2001
---- ---- ---- ----
2001 2000 2001 2000
-------- -------- --------- --------
Net income (loss) $ 30,257 $ 24,364 $ 75,697$(65,432) $ (80,656)
$(46,147)-------- -------- -------- --------- --------
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 applicable to common
shareholders $(65,797) $(71,690) $(20,357)$(97,450) $(112,674)
$(78,165)======== ======== ======== ========= ========
Weighted average of outstanding
common shares 969,834 969,834 969,834 969,834
======== ======== ======== ========= ========
Loss per share $ (.07) $ (.02)(.07) $ (.10) $ (.12)
$ (.08)======== ======== ======== ========= ========
No computation was made on common stock equivalents outstanding because loss 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
Three Months Ended March 31, 2002 and 2001
- ------------------------------------------
Sales:
The Company's net sales of $240,665 for period ended March 31, 2002 increased
11% over net sales of $217,524 for the three months ended March 31, 2001. This
three month period is normally the Company's slowest season. The Company gained
net sales due to a major customer increasing distribution sites of the mini mash
bar.
Expenses:
Selling expenses decreased 1.46% compared to selling expenses for the three
months ended March 31, 2001. General and administrative expenses increased 3.78%
compared to these expenses for the three months ended March 31, 2001, as a
result of website maintenance costs and increased health insurance premiums.
Nine Months ended March 31, 20012002 and 20002001
- -----------------------------------------
Sales:
The Company had no unusual transactions for the nine months ended March 31,
2001.2002. The Company realized a gross profit margin of 22.05%25.11% for the nine months
ended March 31, 20012002 as compared to 23.39%22.05% for the same period ended a year ago.
Consolidated net sales for the nine months ended March 31, 2001 of $1,711,307,$1,5352,114,
$1,532,114 were 9%10% below the $1,881,294$1,711,307 in 2000's2001's first nine months. The
decreaseimproved gross profit was due to not repeating a "Cherry Mash" "mini mash" promotion for a major supplier thatlower labor costs, equipment repairs and
utilities. The loss in net sales was donedue to less repeat sales from one customer
who closed several retail outlets in 2000. No major customers were lost during this nine month period.Chase's territory.
Expenses:
Selling, general and administrative expenses were 20%22.5% of sales in the nine
month period ended March 31, 20012002 compared to 17.7%20% in the first nine months of
2000.2001. Additional costs for a computer consultant buildingmaintaining the Company's
website and maintaining a website as
well as additional professional fees for updating securities filingshealth insurance premiums caused the increase in administrative
costs for 2001.2002.
Inventories at March 31, 20012002 were $90,000$68,900 lower than at June 30, 20002001 due to
the Company being in its slower business cycle. Three Months Ended March 31, 2001In addition, accounts payable
and 2000
- ------------------------------------------
Sales:
The Company's net sales of $217,524 for period ended March 31, 2001decreased 33%
over net sales of $323,054 for the three months ended March 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, salesprepaid expenses were significantly lower for the March, 2001 quarter becausereduced $54,000 during 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,
gross profit on sales for the three months ended March 31, 2001 was a negative
$20,456.
Selling expenses decreased 1% compared to selling expenses for the three months
ended March 31, 2000. General and administrative expenses increased 9% compared
to these expenses for the three months ended March 31, 2000, as a result of
website maintenance costs.period.
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 March 31, 2001,2002, the Company has no commitments for capitalized
expenditures. Cash increased $78,450$121,700 during the current nine month period as a
result of completing the busy season and controlling overhead.
10
PART II. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
Item 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividends contingency at March 31,
20012002 is $5,995,708.$6,123,780.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The annual meeting of shareholders scheduled for January 19, 200114, 2002 was
not held due to the lack of receiptsreceiving the required number of required proxies
to hold such meetings.the meeting.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits - None required
b. Reports on Form 8-K: There were no reports on Form 8-K filed during
January, February, and March, 2001.2002.
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
______________________ ___________________________________5-14-02 /s/ Barry M. Yantis
- -------------------- --------------------------------
Date Barry M. Yantis
President and Chief Financial Officer
11