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 27, 1998
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 27, 1998
- -------------------------------------- -----------------------------
Class A Common Stock, $1.00 Par Value 4,980,732
PART 1. FINANCIAL INFORMATION
Cagle's, Inc. And Subsidiary
Consolidated Balance Sheets
June 27, 1998 and March 28, 1998
(In Thousands, Except Par Value)
(Period 06/27/98 Unaudited)
06/27/98 03/28/98
------------ -------------
Assets -----------------------------------------
CURRENT ASSETS
Cash $ 235 $ 226
Accounts receivable, net of allowance for
doubtful accounts of $860 and $752 at
June 27, 1998 and March 28, 1998,
respectively 17,721 17,269
Inventories 28,783 32,567
Other current assets 1,501 1,907
------------ ------------
Total current assets 48,240 51,969
------------ ------------
INVESTMENTS IN AND RECEIVABLES FROM
UNCONSOLIDATED AFFILIATES 27,744 27,069
OTHER ASSETS 694 694
PROPERTY, PLANT, AND EQUIPMENT 103,242 102,495
Less accumulated depreciation (44,425) (42,808)
------------ ------------
Property, plant, and equipment, net 58,817 59,687
------------ ------------
TOTAL ASSETS $135,495 $139,419
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY---------------
CURRENT LIABILITIES
Current Maturities of Long Term Debt $ 2,795 $ 2,795
Income Taxes Payable 888 0
Accounts payable 9,391 9,886
Accrued expenses 10,840 11,007
------------ ------------
Total Current Liabilities 23,914 23,688
------------ ------------
LONG TERM DEBT (net of current maturities) 40,669 48,366
NONCURRENT DEFERRED INCOME TAXES 12,223 12,223
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 9,000
shares and 5006 and 5006 shares issued
respectively 5,006 5,006
Capital in excess of par value 7,946 7,946
Treasury Stock (336) (354)
Retained earnings 46,073 42,544
------------ ------------
Total stockholders' equity 58,689 55,142
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 135,495 $ 139,419
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc., & Subsidiary
Consolidated Statements of Income
For the 13 weeks ended June 27, 1998 and June 28, 1997
(Amounts in thousands, except per share data)
(Period 06/27/98 Unaudited)
13 wks 13 wks
ended ended
06/27/98 06/28/97
-------- --------
Net Sales $82,874 $86,767
Costs and Expenses:
Cost of Sales 73,864 81,645
Selling and Delivery 2,596 2,858
General and Administrative 1,691 1,619
------- --------
Total costs and expenses 78,151 86,122
------- --------
Income (Loss) From Operations 4,723 645
Other Income(Expense):
Interest expense (846) (977)
Income from unconsolidated
affiliates and other
income, net 1,871 2,201
-------- --------
Income (Loss) Before Income Taxes 5,748 1,869
(Provision) Benefit For Income Taxes (2,070) (699)
-------- --------
Net Income (Loss) $3,678 $ 1,170
======== ========
Weighted Average Shares Outstanding
-Basic 4,981 5,006
-Diluted 5,003 5,006
======== ========
Net Income (Loss) Per Common Share
-Basic $ 0.74 $ 0.23
-Diluted $ 0.74 $ 0.23
Dividends Per Common Share .03 .03
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
Cagle's, Inc & Subsidiary
Consolidated Statements of Cash Flows
For the 13 weeks ended June 27, 1998 and June 28, 1997
(In Thousands)
(unaudited)
June 27, 1998 June 28, 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,678 $ 1,170
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,095 1,954
loss on disposal of property, plant and
equipment 28 9
Changes in investment in and receivables from
unconsolidated affiliates (675) (1,325)
Changes in assets and liabilities:
Accounts receivables, net (452) 241
Inventories 3,784 (2,629)
Insurance Proceeds Receivable 0 3,054
Deferred Income Taxes asset 0 114
Other current assets 406 523
Accounts payable (495) 532
Accrued expenses (167) 984
Income taxes payable 888 0
Deferred income taxes payable 0 (471)
------- -------
Total Adjustments 5,412 2,986
------- -------
Net cash provided by operating activities 9,090 4,156
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (1,293) (551)
Proceeds from the sale of property, plant, and equip. 43 0
------- -------
Net cash used in investing activities (1,250) (546)
------- -------
Cash Flows from financing activities:
Payments of long-term debt and capital
lease obligations (7,697) (3,416)
Dividends Paid (150) (150)
Repurchase of Common Stock (44) 0
Proceeds from exercise of Stock Options 60 0
------- -------
Net cash used by financing activities (7,831) (3,566)
------- -------
NET INCREASE IN CASH 9 44
CASH AT BEGINNING OF PERIOD 226 94
------- -------
CASH AT END OF PERIOD $ 235 $ 138
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $1,003 $ 691
======= =======
Income Taxes $ 8 $ 736
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc. & Subsidiary
Notes to Consolidated Condensed Financial Statements
June 28, 1997
1. In the opinion of Management, the accompanying unaudited consolidated
financial statements contain all adjustments which are of normal and
recurring nature, necessary to present fairly the consolidated financial
position of Cagle's, Inc. and Subsidiary (the "Company") as of June 27,
1998 and March 28, 1998 and the results of their operations and their
cash flows for the 13 weeks ended June 27, 1998 and June 28, 1997.
2. The results of operations for the 13 weeks ended June 27, 1998 and June
28, 1997 are not necessarily indicative of the results expected for the
full year.
3. Inventories consisted of the following: (In Thousands)
June 27, 1998 March 28, 1998
Finished Product $11,073 $14,295
Field Inventory and Breeders 13,924 14,036
Feed, Eggs, and Medication 2,235 2,582
Supplies 1,551 1,654
---------------- --------------
$28,783 $32,567
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) five unconsolidated
affiliates using the equity method. The Company's share of earnings from
from these affiliates totaled $1,902,000 for the 13 weeks ended June 27,
1998. The earnings reported for the 3 unconsolidated affiliates existing
during the 13 weeks ended June 28, 1997 was $2,168,000.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
June 27, 1998
Financial Condition
Improved profitability and reduced inventory levels enabled the Company to
reduce its total funded debt by $7.7 million as compared to March 28, 1998
levels thus improving its leverage ratio from .48 to 1 at March 28, 1998 to
.43 to 1 at June 27, 1998.
As of June 27, 1998 the Company had $10,885,000 available for borrowing under
unsecured lines of credit and is confident that this is adequate to fund
anticipated requirements.
Results of Operations
Sales for the 13 weeks ended June 27, 1998 declined by 4.49% as compared to the
comparable period of a year ago and is attributable mainly to 12% less
production pounds while the quoted Georgia Dock Market Price for whole birds
averaged 2.8% lower than for the comparable period of a year ago. The trend
was one of strengthening prices for white meat throughout the quarter.
Gross margins for the quarter ended June 27, 1998 averaged 10.9% as compared to
5.9% during the comparable period ended June 28, 1997. The primary cause of
this major improvement is lower production cost due to 19.2% lower feed cost as
feed grain accounts for the largest single factor in cost of producing a broiler
chicken.
Selling, Delivery and Administrative Expenses
Selling, delivery and administrative expenses as a group declined by 4.2% for
the quarter as compared to the comparable period of a year ago with the major
reduction in outside storage expense due to reduced inventory levels.
Interest Expense
Interest expense for the quarter ended June 27, 1998 was 13.4% lower than for
the same quarter of a year ago and reflective the lower borrowing levels
during the quarter.
Other Income
Other income declined by 15% for the 13 weeks ended June 27, 1998 as compared
to the 13 weeks ended June 28, 1997. The decline is due to the impact of
start-up cost in the Cagle's/Keystone Foods LLC and Franklin Poultry
Equipment, LLC which are recorded using the equity method and consequently
netting against the recorded earnings of the other joint venture companies.
Income Taxes
The provision for income taxes reflects taxes at statutory rates adjusted for
available tax credits to which the company is entitled.
Part II Other Information
Item 9 Exhibits and Reports on Form 8-K
a. Not applicable
b. No reports on Form 8-K were filed during the quarter.
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 6, 1998 /s/ J. Douglas Cagle
Date: August 6, 1998 /s/ Kenneth R. Barkley