SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Security Exchange
Act of 1934 For the Quarterly period ended January 1, 2000
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition period from ______ to _______
Commission File Number 1-7138
CAGLE'S, INC.
GEORGIA 58-0625713
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2000 Hills Avenue, N. W. Atlanta, Georgia 30318
(Address of Principal Executive Offices and Zip Code)
(404) 355-2820
(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 (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __x__ No ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date
Class Outstanding January 1, 2000
- -------------------------------------- -----------------------------
Class A Common Stock, $1.00 Par Value 4,747,280
PART 1. FINANCIAL INFORMATION
Cagle's, Inc. And Subsidiary
Consolidated Balance Sheets
January 1, 2000 and April 03, 1999
(In Thousands, Except Par Value)
(Period 1/01/00 Unaudited)
01/01/00 04/03/99
------------ -------------
Assets -----------------------------------------
CURRENT ASSETS
Cash $ 1,897 $ 97
Accounts receivable, net of allowance for
doubtful accounts of $918 and $715 at
January 1, 2000 and April 03, 1999,
respectively 14,216 22,533
Inventories 34,600 34,291
Notes receivable 1,400 1,400
Other current assets 584 1,179
------------ ------------
Total current assets 52,697 59,500
------------ ------------
INVESTMENTS IN AND RECEIVABLES FROM
UNCONSOLIDATED AFFILIATES 32,052 28,199
OTHER ASSETS 1,089 694
PROPERTY, PLANT, AND EQUIPMENT 134,849 112,046
Less accumulated depreciation (55,564) (49,632)
------------ ------------
Property, plant, and equipment, net 79,285 62,414
------------ ------------
TOTAL ASSETS $ 165,123 $ 150,807
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY---------------
CURRENT LIABILITIES
Current maturities of long term debt $ 4,262 $ 2,796
Accounts payable 11,474 12,804
Accrued expenses 13,448 13,431
------------ ------------
Total current liabilities 29,184 29,031
------------ ------------
LONG TERM DEBT (net of current maturities) 44,009 36,873
NONCURRENT DEFERRED INCOME TAXES 11,097 11,729
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 9,000
shares, 4747 and 4797 shares issued at
January 1, 2000 and April 03, 1999, respectively 4,747 4,797
Capital in excess of par value 4,198 5,035
Treasury stock held for options (106) (124)
Retained earnings 71,994 63,466
------------ ------------
Total stockholders' equity 80,833 73,174
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 165,123 $ 150,807
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc., & Subsidiary
Consolidated Statements of Income
For the 13 and 39 weeks ended January 1, 2000
and the 13 and 40 weeks ended January 2, 1999
(Amounts in thousands, except per share data)
(Period 01/01/00 Unaudited)
13 wks 13 wks 39 wks 40 wks
ended ended ended ended
01/01/00 01/02/99 01/01/00 01/02/99
-------- -------- -------- --------
Net Sales $ 77,270 83,466 $246,674 $259,142
Costs and Expenses:
Cost of Sales 70,660 70,597 220,677 222,287
Selling and Delivery 2,609 2,131 7,834 7,539
General and Administrative 2,387 1,846 7,052 5,426
------- -------- -------- --------
Total costs and expenses 75,656 74,574 235,563 235,252
------- -------- -------- --------
Income From Operations 1,614 8,892 11,111 23,890
Other Income(Expense):
Interest expense (550) (608) (1,580) (2,246)
Income from unconsolidated affiliates
and other income, net 2,599 790 4,625 4,510
-------- -------- -------- --------
Income Before Income Taxes 3,663 9,074 14,156 26,154
(Provision) Benefit For Income Taxes (1,329) (3,317) (5,198) (9,383)
-------- -------- -------- --------
Net Income $ 2,334 $ 5,757 $ 8,958 $ 16,771
======== ======== ======== ========
Weighted Average Shares Outstanding
-Basic 4,747 4,790 4,756 4,896
-Diluted 4,753 4,797 4,760 4,905
======== ======== ======== ========
Net Income Per Common Share
-Basic $ 0.49 $ 1.20 $ 1.88 $ 3.43
-Diluted $ 0.49 $ 1.20 $ 1.88 $ 3.42
Dividends Per Common Share $ .03 $ .03 $ .09 $ .09
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
Cagle's, Inc & Subsidiary
Consolidated Statements of Cash Flows
For the 39 weeks ended January 1, 2000
and the 40 weeks ended January 2, 1999
(In Thousands) (unaudited)
Jan. 01, 2000 Jan. 02, 1999
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 8,958 $ 16,771
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,052 6,457
loss on disposal of property, plant and equipment (29) 18
Changes in investment in and receivables from
unconsolidated affiliates (3,853) (1,396)
Changes in assets and liabilities:
Accounts receivables, net 8,317 818
Inventories (309) (163)
Other current assets 595 1,238
Accounts payable (1,330) 1,529
Accrued expenses 17 900
Deferred income taxes payable (632) (779)
------------- -------------
Total Adjustments 8,828 8,622
------------- -------------
Net cash provided by operating activities 17,786 25,393
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (22,940) (10,409)
(increase) in other assets (395) 0
Proceeds from the sale of property, plant, and equip. 46 65
------------- -------------
Net cash used in investing activities (23,289) (10,344)
------------- -------------
Cash Flows from financing activities:
Payments of long-term debt and capital
lease obligations (39,453) (11,788)
Proceeds fron issuance of long-term debt 48,055 0
Dividends Paid (428) (443)
Repurchase of Common Stock (894) (2,949)
Proceeds from exercise of Stock Options 23 59
------------- -------------
Net cash provided or (used) by financing activities 7,303 (15,121)
------------- -------------
NET INCREASE (DECREASE) IN CASH 1,800 (72)
CASH AT BEGINNING OF PERIOD 97 226
------------- -------------
CASH AT END OF PERIOD $ 1,897 $ 154
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest(including capitalized interest
of $575,000) $ 2,246 $ 2,966
============= =============
Income Taxes $ 5,286 $ 10,162
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc. & Subsidiary
Notes to Consolidated Condensed Financial Statements
January 1, 2000
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments which are of a normal and
recurring nature necessary to present fairly the consolidated financial
position of Cagle's, Inc. and Subsidiary (the "Company") as of January 1,
2000 and April 3, 1999 and the results of their operations and their cash
flows for the 13 weeks and 39 weeks ended January 1, 2000 and the 13
weeks and 40 weeks ended January 2, 1999.
2. The results of operations for the 13 weeks and 39 weeks ended January 1,
2000 and the 13 weeks and 40 weeks ended January 2, 1999 are not
necessarily indicative of the results expected for the full year.
3. Inventories consisted of the following: (In Thousands)
January 1, 2000 April 3 1999
Finished Product $17,136 $16,618
Field Inventory and Breeders 12,833 13,316
Feed, Eggs, and Medication 3,231 2,937
Supplies 1,400 1,420
---------------- --------------
$34,600 $34,291
4. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
the disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results may vary from those
estimates.
5. Investments in and Receivables from Unconsolidated Affiliates.
The Company accounts for its investments in 5 unconsolidated affiliates
using the equity method. The Company's share of earnings from these
affiliates totaled $2,535,427 for the 13 weeks ended January 1, 2000 and
$4,479,000 for the 39 weeks ended January 1, 2000. The earnings reported
for the 13 weeks and 40 weeks ended January 2, 1999 were $1,056,000 and
$4,726,000 respectively.
6. Year 2000 Compliance
The Company implemented a formal plan to address issues associated with
the Year 2000 as it related to systems throughout the Company and with
vendors and customers. The Company had experienced no significant
problems as January 1, 2000 passed. The total cost for achieving
compliance including hardware and software updates was less
than $500,000.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
January 1, 2000
Financial Condition
Sharply lower market prices for broiler and broiler meat products have had a
major impact on earnings for the quarter and for the nine month period ended
January 1, 2000 as compared to year ago levels, yet the Company remains
profitable and in a strong financial position. During the quarter, the
Company closed a new credit facility comprised of a $72,750,000 term loan
and a $40,000,000 revolving credit facility. The new term loan is being
utilized to construct the new processing facility at Perry, Ga. and a new
feed mill in Rockmart, Ga. As of January 1, 2000 $48,055,500 had been
advanced on the term loan and there were no amounts outstanding on the revolver.
Results of Operations
Sales for the 13 week period ended January 1, 2000 were 7.4% lower as compared
to the comparable period ended January 2, 1999 and 4.8% lower for the 39 week
period ended January 1, 2000. The lower revenue is the result of significantly
lower market prices for broilers and especially white meat items. Export
markets have continued to be very weak keeping downward pressure on dark meat,
mainly leg quarters and drumsticks. These market factors account for all of
the lower revenues for the 13 week period compared to year ago levels. The
year to date revenue for the 39 weeks ended January 1, 2000 is also impacted
by 1 less week when compared to year to date revenues for the period ended
January 2, 1999.
Gross margins for the quarter were 6.9% lower than for the same quarter of a
year ago and the year to date gross margin was 3.7% lower than for the
comparable period of a year ago. These sharply reduced margins are the direct
result of lower market prices as cost of production, primarily feed grain cost,
have continued to be a favorable factor for margins.
Selling, Delivery and Administrative Expenses
Expenses in this category increased by 25.6% and 14.8% for the quarter and 9
month period, respectively, as compared to the quarter and 9 month period
ending January 2, 1999. This increase is attributed to increased professional
fees associated with ongoing litigation and sharing of management personnel to
staff the new facilities at Perry, Ga. and Rockmart, Ga. as well as marketing
the anticipated increase in volume.
Interest Expense
Interest Expense was lower by 9.5% and 29.7%, respectively, for the quarter
and 9 month period as compared to the same periods of a year ago. This
reflects lower over all borrowing levels with the expectation of project
financing amounts of which the associated interest was capitalized.
Other Income
Other income for the 13 weeks ended January 1, 2000 increased by 228.9% as
compared to the 13 weeks ended January 2, 1999 and increased by 2.5% for the
9 months ended January 1, 2000 as compared to the same period ended January
2, 1999. This increase is due to the Kentucky joint ventures company
attaining profitable operational levels.
Income Taxes
The provision for income taxes reflects taxes at statutory rates adjusted
for available tax credits to which the company expects it is entitled.
Part II Other Information
Item 9 Exhibits and Reports on Form 8-K
a. Not applicable
b. A report or Form 8-K was filed on November 10, 1999 to disclose
a new credit facility
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 2, 2000 /s/ J. Douglas Cagle
Date: February 2, 2000 /s/ Kenneth R. Barkley