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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A
(Amendment No. 1)
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Security Exchange
Act of 1934 For the Quarterly period ended June 29, 2002
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 29, 2002
- -------------------------------------- -----------------------------
Class A Common Stock, $1.00 Par Value 4,746,030 Issued
Description of Amendment No. 1
Subsequent to the quarter ended June 29, 2002, the Company entered into an
amendment to the credit agreement covering a term loan and its revolving
credit agreement with its primary lender. This amendment, among other things,
provided for a change in the maturity dates for these instruments to April
2003. Accordingly, the outstanding balances under this agreement totaling
$46,767,094 have been reclassified to current maturities of long-term debt in
the accompanying financial statements as of June 29, 2002. The Company
continues to negotiate for replacement financing as well as explore other
actions that will provide necessary liquidity.
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PART 1. FINANCIAL INFORMATION
Cagle's, Inc. And Subsidiary Consolidated Balance Sheets
June 29, 2002 and March 30, 2002
(In Thousands, Except Par Value)
(Period 6/29/02 Unaudited)
06/29/02 03/30/02
------------ -------------
Assets -----------------------------------------
CURRENT ASSETS
Cash $ 100 $ 91
Accounts receivable, net of allowance for
doubtful accounts of $439 and $446 at
June 29, 2002 and March 30, 2002,
respectively 18,226 16,919
Inventories 32,795 34,176
Income Tax Refund Receivable 9,979 10,016
Other current assets 1,948 559
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Total Current Assets 63,048 61,761
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Investments in and receivables from
unconsolidated affiliates 7,411 45,136
Other Assets 1,909 2,232
Assets held for sale 6,887 6,738
Property, Plant, and Equipment 198,629 198,293
Less accumulated depreciation (78,129) (74,209)
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Property, plant, and equipment, net 120,500 124,084
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TOTAL ASSETS $ 199,755 $ 239,951
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LIABILITIES & STOCKHOLDERS' EQUITY---------------
CURRENT LIABILITIES
Current maturities of long term debt $ 57,251 $ 9,921
Accounts payable 22,264 24,143
Accrued expenses 9,083 8,847
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Total Current Liabilities 89,598 42,911
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Long Term Debt (net of current maturities) 24,575 114,885
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Noncurrent Deferred Income Taxes 13,901 11,831
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Other Noncurrent Liabilities 4,505 5,927
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STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 4,748
shares, 4748 shares issued at June 29, 2002
and March 30, 2002, respectively 4,748 4,748
Capital in excess of par value 4,198 4,198
Treasury stock held for options (82) (94)
Retained earnings 60,112 56,402
OCI (Other Accum. Comprehensive Income) (800) (857)
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Total Stockholders' Equity 68,176 64,397
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 199,755 $ 239,951
============ ============
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 29, 2002
and the 13 weeks ended June 30, 2001
(Amounts in thousands, except per share data)
(Unaudited)
13 wks 13 wks
ended ended
06/29/02 06/30/01
-------- --------
Net Sales $84,758 $88,943
Costs and Expenses:
Cost of Sales 84,909 89,322
Selling and Delivery 2,291 2,301
General and Administrative 2,583 2,278
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Total costs and expenses 89,783 93,901
Loss From Operations (5,025) (4,958)
Other Income(Expense):
Interest expense (1,718) (2,615)
Other Income, Net 10,959 (46)
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Earnings or (Loss) Before equity in
earnings of unconsolidated affiliates
and income taxes 4,216 (7,619)
Equity in earnings of unconsolidated
affiliates 1,563 2,898
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Income(Loss) before income taxes 5,779 (4,721)
Income Taxes Provision (Benefit) 2,069 (7,134)
-------- --------
Net Income(Loss) $ 3,710 $ 2,413
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Weighted Average Shares Outstanding
-Basic 4,745 4,742
-Diluted 4,745 4,742
======== ========
Net Income (Loss) Per Common Share
-Basic $ .78 $ .51
-Diluted $ .78 $ .51
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 29, 2002 and June 30, 2001
(In Thousands) (unaudited)
June 29, 2002 June 30, 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 3,710 $ 2,413
Adjustments to reconcile net income to net cash
Used in operating activities:
Depreciation and amortization 4,303 4,262
Gain on sale of joint venture (11,959) 0
Changes in assets and liabilities:
Accounts receivables, net (1,307) (3,288)
Income Tax Receivables 37 3,505
Inventories 1,381 (1,340)
Other current assets (1,389) (120)
Changes in investment in and receivables from
unconsolidated affiliates (316) (2,511)
Accounts payable (1,879) (284)
Accrued expenses (964) (1,342)
Deferred Income Taxes 2,070 (1,772)
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Total Adjustments (10,023) (2,890)
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Net cash produced(used) in operating activities (6,313) (477)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (384) (514)
(Increase) decrease in Other Assets (177) 0
Change in assets held for sale (149) 0
Proceeds from sale of joint venture 50,000 0
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Net cash used in investing activities 49,290 (514)
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Cash Flows from financing activities:
Payments of long-term debt and capital
lease obligations (42,980) (2,125)
Proceeds from issuance of long-term debt 0 3,500
Dividends Paid 0 0
Proceeds from exercise of options 12 0
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Net cash provided (used) by financing activities (42,968) 1,375
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NET INCREASE (DECREASE) IN CASH 9 384
CASH AT BEGINNING OF PERIOD 91 1,113
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CASH AT END OF PERIOD $ 100 $ 1,497
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest(including capitalized interest
of $3,124 in 2001) $ 1,827 $ 6,037
============= =============
Income Taxes (Refunded), Paid $ 0 $ (8,867)
============= =============
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 29, 2002
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 29,
2002 and March 30, 2002 and the results of their operations for the 13
weeks ended June 29, 2002 and the 13 weeks ended June 30, 2001.
2. The results of operations for the 13 weeks ended June 29, 2002 and June 30,
2001 are not necessarily indicative of the results expected for the full
year.
3. Inventories consisted of the following:
(In Thousands)
June 29, 2002 March 30, 2002
Finished Product $ 9,966 $11,116
Field Inventory and Breeders 16,597 16,789
Feed, Eggs, and Medication 4,499 4,395
Supplies 1,733 1,876
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$32,795 $34,176
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 its unconsolidated affiliates
using the equity method. The Company's share of earnings from these
affiliates totaled $1,563,000 for the 13 weeks ended June 29, 2002, and
$2,897,347 for the 13 weeks ended June 30, 2001. On April 30, 2002 the
Company sold its interest in Cagle Foods JV, LLC and Cagles Foods Credit
for $50,000,000 and recorded a gain of $11,958,535 as other income.
Adjusted for taxes this gain represents $1.61 per share.
6. Other Non-Recurring Activities.
During the 13 weeks ended June 29, 2002 the Company reached an agreement
to settle lawsuits with a number of growers for $1,250,000. This amount
was recorded as other expense during the period.
The Company received $1,671,000 during the quarter as recover in a
lawsuit from a vitamin manufacturer. This represents recovery of
overcharges for vitamins used in the manufacturing of poultry feed and
as such was recorded as a credit to cost of sales.
7. Certain prior year amounts have been re-classified for consistency with
current period presentation.
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Management's Discussion and Analysis of Financial
Condition and Results of Operations
June 30, 2001
Financial Condition
The Company continued to experience losses from operations during the quarter
due primarily to persistent low market prices for breast meat and especially
depressed prices for dark meat which continues to be severely affected by the
disruption in export sales due to trade issues with Russia, the largest market
for poultry export, mainly leg quarters.
In April the Company closed on the sale of its interest in Cagles Foods JV,
LLC and Cagle Food Credit LLC, two joint ventures for fifty million. The
proceeds were used to pay down bank debt, $37.5 million of term debt and
$12.5 million of revolver debt, which freed up availability under the
Company's line of credit. As of June 29, 2002 the remaining availability
under the revolving credit facility was $3,016,376 and subsequent to the
end of the period an additional $1,000,000 has been drawn down.
The Company is due a substantial refund of federal income taxes that is
expected to be received early in the second quarter that will boost liquidity.
Results of Operations
Revenues for the 13 week period ended June 29, 2002 decreased by 4.7% as
compared to the same period of a year ago. This decrease in revenue can be
attributed to market prices that have continued to be depressed. Leg quarter
prices have been especially burdensome as well as wing prices. The quoted
market for breast meat including tenders were comparable to a year ago prices
but far less than required to cover the lower prices of the other parts.
Feed prices for the quarter ended June 29,2002 were essentially unchanged
from the period of a year ago; providing some stability in production cost;
however, the new plant in Perry continues to provide a challenge as it
progresses toward a more maturely trained work force and a settled product mix.
Selling, Delivery and Administrative Expenses
As a group these expenses increased by 6.44% with a large portion of the
increase in bank fees.
Interest Expense
Interest expense was 34.3% lower for the quarter ended June 29, 2002 than for
the comparable quarter of a year ago. This reduction reflects the effect of
lower debt levels during May and June.
Equity in Earnings of Unconsolidated Affiliates
Reflects absence of income from the two joint venture which were sold April
30, 2002.
Other Income
Other income reflects the gain from the sale of the Company's interest in two
joint ventures as well as the effect of settlement of several grower lawsuits.
Income Taxes
The provision for income taxes reflects the Company's estimated liability for
income taxes net of any credits to which the Company may be entitled.
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Part II Other Information
Item 9 Exhibits and Reports on Form 8-K
a. Not applicable
b. Reports on 8-K were filed on April 10, 2002 and amended on April 17,
2002 relating to the change of the Company's auditors.
An 8-k report was filed May 9, 2002 relating to the sale of the
Company's interest in Cagle Foods JV, LLC and Cagle Foods Credit LLC
and amended on June 26, 2002 to provide pro forma statements
reflecting the sale of the two joint ventures.
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: October 31, 2002 /s/ J. Douglas Cagle
Chairman and C.E.O.
Date: October 31, 2002 /s/ Kenneth R. Barkley
Sr. VP Finance/Treas/CFO
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Sarbanes-Oxley Act of 2002 Section 906 Certifications
I hereby certify that the foregoing report fully complies with the requirements
of section 13(a) or 15(d) of the Securities Act of 1934 (15 U.S.C. 78m or 78o(d)
and that information contained therein fairly represents, in all material
respects, the financial condition and results of the issuer, Cagle's, Inc.
The signed original of the foregoing certification will be kept at Cagle's,
Inc. or its council for a period of five years as required by regulation ST
(section 302).
/s/ J. Douglas Cagle
Chief Executive Officer
/s/ Kenneth R. Barkley
Chief Financial Officer
Date: October 31, 2002
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