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 2, 1999
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 2, 1999
- -------------------------------------- -----------------------------
Class A Common Stock, $1.00 Par Value 4,790,482
PART 1. FINANCIAL INFORMATION
Cagle's, Inc. And Subsidiary
Consolidated Balance Sheets
January 2, 1999 and March 28, 1998
(In Thousands, Except Par Value)
(Period 1/02/99 Unaudited)
01/02/99 03/28/98
------------ -------------
Assets -----------------------------------------
CURRENT ASSETS
Cash $ 154 $ 226
Accounts receivable, net of allowance for
doubtful accounts of $839 and $752 at
January 2, 1999 and March 28, 1998,
respectively 16,451 17,269
Inventories 32,730 32,567
Other current assets 669 1,907
------------ ------------
Total current assets 50,004 51,969
------------ ------------
INVESTMENTS IN AND RECEIVABLES FROM
UNCONSOLIDATED AFFILIATES 28,465 27,069
OTHER ASSETS 694 694
PROPERTY, PLANT, AND EQUIPMENT 112,309 102,495
Less accumulated depreciation (48,751) (42,808)
------------ ------------
Property, plant, and equipment, net 63,558 59,687
------------ ------------
TOTAL ASSETS $ 142,721 $ 139,419
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY---------------
CURRENT LIABILITIES
Current Maturities of Long Term Debt $ 2,795 $ 2,795
Income Taxes Payable 0 0
Accounts payable 11,415 9,886
Accrued expenses 11,907 11,007
------------ ------------
Total Current Liabilities 26,117 23,688
------------ ------------
LONG TERM DEBT (net of current maturities) 36,578 48,366
NONCURRENT DEFERRED INCOME TAXES 11,444 12,223
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 9,000
shares and 4790 and 5006 shares issued
respectively 4,790 5,006
Capital in excess of par value 5,042 7,946
Treasury Stock (124) (354)
Retained earnings 58,872 42,544
------------ ------------
Total stockholders' equity 68,582 55,142
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 142,721 $ 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 and 40 weeks ended January 2, 1999
and the 13 and 39 weeks ended December 27, 1997
(Amounts in thousands, except per share data)
(Period 01/02/99 Unaudited)
13 wks 13 wks 40 wks 39 wks
ended ended ended ended
01/02/99 12/27/97 01/02/99 12/27/97
-------- -------- -------- --------
Net Sales $ 83,466 $ 82,532 $259,142 $265,986
Costs and Expenses:
Cost of Sales 70,597 79,472 222,287 254,463
Selling and Delivery 2,131 2,617 7,539 8,192
General and Administrative 1,846 1,579 5,426 4,741
------- -------- -------- --------
Total costs and expenses 74,574 83,668 235,252 267,396
------- -------- -------- --------
Income (Loss) From Operations 8,892 (1,136) 23,890 (1,410)
Other Income(Expense):
Interest expense (608) (828) (2,246) (2,713)
Income from unconsolidated
affiliates and other
income, net 790 2,356 4,510 6,784
-------- -------- -------- --------
Income (Loss) Before Income Taxes 9,074 392 26,154 2,661
(Provision) Benefit For Income Taxes (3,317) (150) (9,383) (992)
-------- -------- -------- --------
Net Income (Loss) $ 5,757 $ 242 $ 16,771 $ 1,669
======== ======== ======== ========
Weighted Average Shares Outstanding
-Basic 4,790 5,006 4,896 5,006
-Diluted 4,797 5,006 4,905 5,006
======== ======== ======== ========
Net Income (Loss) Per Common Share
-Basic $ 1.20 $ 0.05 $ 3.43 $ 0.33
-Diluted $ 1.20 $ 0.05 $ 3.42 $ 0.33
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 40 weeks ended January 2, 1999
and the 39 weeks ended December 27, 1997
(In Thousands) (unaudited)
Jan. 02, 1999 Dec. 27, 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 16,771 $ 1,672
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,457 5,937
loss on disposal of property, plant and equipment 18 (276)
Changes in investment in and receivables from
unconsolidated affiliates (1,396) (6,510)
Changes in assets and liabilities:
Accounts receivables, net 818 (369)
Inventories (163) 558
Insurance Proceeds Receivable 0 3,054
Deferred Income Taxes asset 0 114
Other current assets 1,238 1,332
Accounts payable 1,529 (112)
Accrued expenses 900 1,961
Income taxes payable 0 0
Deferred income taxes payable (779) (346)
------------- -------------
Total Adjustments 8,622 5,343
------------- -------------
Net cash provided by operating activities 25,393 7,015
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (10,409) (4,826)
(increase) decrease in other assets 0 (9)
Proceeds from the sale of property, plant, and equip. 65 2,832
------------- -------------
Net cash used in investing activities (10,344) (2,003)
------------- -------------
Cash Flows from financing activities:
Payments of long-term debt and capital
lease obligations (11,788) (4,259)
Dividends Paid (443) (450)
Repurchase of Common Stock (2,949) (222)
Proceeds from exercise of Stock Options 59 0
------------- -------------
Net cash used by financing activities (15,121) (4,931)
------------- -------------
NET INCREASE IN CASH (72) 81
CASH AT BEGINNING OF PERIOD 226 94
------------- -------------
CASH AT END OF PERIOD $ 154 $ 175
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 2,246 $ 2,966
============= =============
Income Taxes $ 10,162 $ 967
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc. & Subsidiary
Notes to Consolidated Condensed Financial Statements
October 3, 1998
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 January 2,
1999 and March 28, 1998 and the results of their operations and their
cash flows for the 13 weeks and 40 weeks ended January 2, 1999 and the
13 weeks and 39 weeks ended December 27, 1997.
2. The results of operations for the 13 weeks and 40 weeks ended January 2,
1999 and the 13 weeks and 39 weeks ended December 27, 1997 are not
necessarily indicative of the results expected for the full year.
3. Inventories consisted of the following: (In Thousands)
January 2, 1999 March 28, 1998
Finished Product $14,422 $14,295
Field Inventory and Breeders 14,686 14,036
Feed, Eggs, and Medication 2,405 2,582
Supplies 1,217 1,654
---------------- --------------
$32,730 $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 $1,056,000 and $4,726,000 for the 13 weeks
and 40 weeks ended January 2, 1999. Earnings from unconsolidated
affiliates existing during the 13 and 39 weeks ended December 27, 1997
were $1,466,000 and $5,799,000 respectively.
6. Year 2000 Compliance
The Company has implemented a formal plan to address issues associated
with the Year 2000 as it relates to systems throughout the company and
with vendors and customers. Progress is monitored regularly and the
status is reported to management and quarterly to the Board of Directors.
The Company is on schedule to be fully compliant by April 3, 1999 as it
relates to all major issues. The total costs associated with this program
is not expected to materially affect earnings although final cost will not
be known until program is complete.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
January 2, 1999
Financial Condition
Continued strong earnings and cash flows have enabled the Company to make
Capital improvements, continue its stock re-purchase program and significantly
reduce its debt during the nine months ended January 2, 1999. During the
quarter just completed the Company renewed its revolving line of credit and
increased the line to $40 million of which $19 million was outstanding at the
end of the period.
Results of Operations
Sales for the 13 week period ended January 2, 1999 compared to the 13 weeks
ended December 27, 1997 were 1.1% higher and is attributed to 4% more production
pounds, a higher market price for whole birds. Georgia Dock quoted market price
was 16.1% higher, however the impact of depressed export prices for dark meat
tended to off-set other positive market conditions. Sales for the 40 weeks
ended January 2, 1999 were 2.6% lower than year ago levels and while production
for the quarter was up slightly over year ago levels the year to date production
total was slightly less and the same market factors influenced the total year to
days results.
Another factor influencing revenues for the 13 week and 40 week period as
compared to year ago levels is volume of outside purchases for further
processing which has been lower than previous years due to ability to better
utilize production from within the company to produce further processed items.
Gross margins for the quarter and 40 week period ended January 2, 1999 were
significantly improved over the corresponding periods of a year ago. For the
quarter ended January 2, 1999 gross margin was 15.4% as compared to 3.71% for
the same quarter of a year ago. For the 40 weeks ended January 2, 1999 the
gross margin was 14.2% as compared to 4.3% for the 39 weeks ended December 27,
1997. The major contributor to this improvement was lower feed cost which
averaged 26.5% and 23.4% lower for the quarter and 9 month periods
respectively as compared to year ago prices.
Selling, Delivery and Administrative Expenses
Selling, delivery and administrative expenses were down slightly for the
quarter and unchanged for year to date as compared to the same period of a
year ago.
Interest Expense
Interest Expense was 26.6% lower for the quarter and 17.2% lower for the 40
weeks as compared to the same periods of a year ago and is a function of
reduced borrowing.
Other Income
Other income declined by 66.4% for the quarter and 33.5% for the 40 weeks as
compared to the comparable periods of a year ago. This drop-off in other
income reflects the impact of Kentucky Joint Ventures operations which are
recorded via the equity method. When netted together against earnings of the
other unconsolidated affiliates the total is substantially reduced.
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. A report on Form 8-k was filed on July 22, 1998 to disclose discovery
of an event of employee dishonesty.
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 5, 1999 /s/ J. Douglas Cagle
Date: February 5, 1999 /s/ Kenneth R. Barkley