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 June 30, 2001
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 June 30, 2001
- -------------------------------------- -----------------------------
Class A Common Stock, $1.00 Par Value 4,747,280
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PART 1. FINANCIAL INFORMATION
Cagle's, Inc. And Subsidiary
Consolidated Balance Sheets
June 30, 2001 and March 31, 2001
(In Thousands, Except Par Value)
(Period 6/30/01 Unaudited)
06/30/01 03/31/01
------------ -------------
Assets -----------------------------------------
CURRENT ASSETS
Cash $ 1,497 $ 1,113
Accounts receivable, net of allowance for
doubtful accounts of $546 and $554 at
June 30, 2001 and March 31, 2001,
respectively 15,228 11,940
Inventories 36,410 35,070
Income Tax Refund Receivable 5,980 9,485
Other current assets 834 714
------------ ------------
Total current assets 59,949 58,322
------------ ------------
INVESTMENTS IN AND RECEIVABLES FROM
UNCONSOLIDATED AFFILIATES 41,608 39,097
OTHER ASSETS 1,514 1,598
------------ ------------
PROPERTY, PLANT, AND EQUIPMENT 214,128 213,649
Less accumulated depreciation (71,308) (67,164)
------------ ------------
Property, plant, and equipment, net 142,820 146,485
------------ ------------
TOTAL ASSETS $ 245,891 $ 245,502
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY---------------
CURRENT LIABILITIES
Current maturities of long term debt $ 9,069 $ 8,501
Accounts payable 17,511 17,801
Accrued expenses 9,982 10,315
------------ ------------
Total current liabilities 36,562 36,617
------------ ------------
LONG TERM DEBT (net of current maturities) 116,242 115,429
------------ ------------
NONCURRENT DEFERRED INCOME TAXES 11,940 13,712
------------ ------------
OTHER NONCURRENT LIABILITIES 7,449 7,541
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 4,748
shares, 4748 shares issued at June 30, 2001
and March 31, 2001, respectively 4,748 4,748
Capital in excess of par value 4,198 4,198
Treasury stock held for options (106) (106)
Retained earnings 65,776 63,363
OCI (Other Accum. Comprehensive Income) (918) 0
------------ ------------
Total stockholders' equity 73,698 72,203
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 245,891 $ 245,502
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
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Cagle's, Inc., & Subsidiary
Consolidated Statements of Income
For the 13 weeks ended June 30, 2001
and the 13 weeks ended July 1, 2000
(Amounts in thousands, except per share data)
(Unaudited)
13 wks 13 wks
ended ended
06/30/01 07/01/00
-------- --------
Net Sales $88,943 $71,260
Costs and Expenses:
Cost of Sales 89,322 69,370
Selling and Delivery 2,301 2,413
General and Administrative 2,278 2,080
-------- --------
Total costs and expenses 93,901 73,863
Loss From Operations (4,958) (2,603)
Other Income(Expense):
Interest expense (2,614) (567)
Income from unconsolidated affiliates
and other income, net 2,851 2,875
-------- --------
Loss Before Income Taxes (4,721) (295)
Benefit For Income Taxes 7,134 106
-------- --------
Net Income(Loss) $ 2,413 $ (189)
======== ========
Weighted Average Shares Outstanding
-Basic 4,742 4,742
-Diluted 4,742 4,742
======== ========
Net Income (Loss) Per Common Share
-Basic $ .51 $ (.04)
-Diluted $ .51 $ (.04)
Dividends Per Common Share $ .00 $ .03
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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Cagle's, Inc & Subsidiary
Consolidated Statements of Cash Flows
For the 13 weeks ended June 30, 2001 and July 1, 2000
(In Thousands) (unaudited)
June 30, 2001 July 1, 2000
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 2,413 $ (189)
Adjustments to reconcile net income to net cash
Used in operating activities:
Depreciation and amortization 4,262 1,970
Changes in investment in and receivables from
unconsolidated affiliates (2,511) (1,327)
Changes in assets and liabilities:
Accounts receivables, net (3,288) (538)
Income Tax Receivables 3,505 0
Inventories (1,340) (1,487)
Other current assets (120) 108
Accounts payable (284) (626)
Accrued expenses (1,342) (977)
Deferred Income Taxes (1,772) (1,138)
------------- -------------
Total Adjustments (2,890) (4,015)
------------- -------------
Net cash used in operating activities (477) (4,204)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (514) (19,071)
------------- -------------
Net cash used in investing activities (514) (19,071)
------------- -------------
Cash Flows from financing activities:
Payments of long-term debt and capital
lease obligations (2,125) (1)
Proceeds from issuance of long-term debt 3,500 15,000
Dividends Paid 0 (145)
------------- -------------
Net cash provided by financing activities 1,375 14,854
------------- -------------
NET INCREASE (DECREASE) IN CASH 384 (8,421)
CASH AT BEGINNING OF PERIOD 1,113 9,526
------------- -------------
CASH AT END OF PERIOD $ 1,497 $ 1,105
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest(including capitalized interest
of $3,124) $ 6,037 $ 2,246
============= =============
Income Taxes (Refunded), Paid $ (8,867) $ 112
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
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Cagle's, Inc. & Subsidiary
Notes to Consolidated Condensed Financial Statements
June 30, 2001
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 June 30,
2001 and March 31, 2001 and the results of their operations for the 13
weeks ended June 30, 2001 and the 13 weeks ended July 1, 2000.
2. The results of operations for the 13 weeks ended June 30, 2001 and July 1,
2000 are not necessarily indicative of the results expected for the full
year.
3. Inventories consisted of the following:
(In Thousands)
June 30, 2001 March 31, 2001
Finished Product $14,418 $14,289
Field Inventory and Breeders 15,409 15,396
Feed, Eggs, and Medication 4,796 3,780
Supplies 1,787 1,605
---------------- --------------
$36,410 $35,070
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 $2,897,347 for the 13 weeks ended June 30, 2001. The
earnings reported for these same affiliates totaled $2,784,000 for the 13
weeks ended July 1, 2000.
6. New Accounting Standards
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 133 "Accounting for Derivative Instruments and Hedging Activities"
during the 13 weeks ended June 30, 2001 and, as a result, recorded the
change in fair market of interest rate swaps used to hedge $25,000,000
in variable rate debt. The resulting charge to accumulated other
comprehensive income was approximately $917,000. There was no effect
on earnings for the 13 week period ended June 30,2001.
In July 2001, the Financial Accounting Standards Board issued SFAS No.
142, "Goodwill and Other Intangible Assets." SFAS No. 142 requires
companies to cease amortizing goodwill that existed at June 30, 2001.
The adoption of SFAS No. 142 will not have material effect on the
Company's financial position or results of operations.
7. Certain prior year amounts have been re-classified for consistency with
current period presentation.
<page>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
June 30, 2001
Financial Condition
Persistently lower than expected market prices for boneless breast meat
continued to stymie any rally in earnings during the period. The absence
of operating profits caused the Company to continue to rely on its revolving
bank facility to supplement operating capital. A substantial tax refund at
the end of the quarter allowed the company to reduce the amount of outstanding
revolver debt. As of June 30, 2001 the Company's availability under its
revolving credit facility was $5,760,000.
Results of Operations
Revenues for the 13 week period ended June 30, 2001 increased by 24.8% as
compared to the same period of a year ago. This increase in revenue is the
result of 20.5% more processed volume combined with the addition of outside
feed sales of $3.6 million which did not exist in the previous year and a
combination of lower breast meat prices and higher wing and dark meat prices.
While feed cost was slightly lower for the period when compared to the same
period of a year ago, total cost increased as depreciation advanced by 138%,
fuel cost advanced by 13.7% and volume inefficiencies associated with the
Perry Plant operating at less than full volume as it progresses through the
ramp-up in production.
Selling, Delivery and Administrative Expenses
These expenses as a group advanced by 1.9% when compared to the same period
of a year ago with the increases occurring mainly in payroll, professional
fees, and sales commissions.
Interest Expense
Interest expense for the quarter ended June 30, 2001 was 361% higher than
for the same quarter of a year ago and is the result of higher borrowing
levels offset slightly by rates which trended lower during the quarter and
during the quarter ended July 1, 2000, $940,000 of incurred interest charges
were capitalized into the two major construction projects that were on going
during that period.
Other Income
Other income remained virtually unchanged from the same period of a year ago.
This amount is predominately the Company's share of earnings of unconsolidated
affiliates accounted for on the equity method.
Income Taxes
The benefit for income taxes reflects the Company's taxes calculated at
statutory rates and in the case of a reported loss reflects the Company's
ability to carry back the loss to obtain a refund of previously paid income
taxes. During the quarter ended June 30, 2001 legislation was enacted that
will enable the Company to benefit from previously earned but not recorded
tax credits of $5 million. The Company is required to record these credits
in the period enacted.
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Part II Other Information
Item 9 Exhibits and Reports on Form 8-K
a. Not applicable
b. No report on Form 8-K was filed during this period.
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: August 9, 2001 /s/ J. Douglas Cagle
Chairman and C.E.O.
Date: August 9, 2001 /s/ Kenneth R. Barkley
Sr. VP Finance/Treas/CFO