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 July 03, 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 July 03, 1999
- -------------------------------------- -----------------------------
Class A Common Stock, $1.00 Par Value 4,770,531
PART 1. FINANCIAL INFORMATION
Cagle's, Inc. And Subsidiary
Consolidated Balance Sheets
July 03, 1999 and April 03, 1999
(In Thousands, Except Par Value)
(July 03, 1999 Unaudited)
07/03/99 04/03/99
------------ -------------
Assets -----------------------------------------
CURRENT ASSETS
Cash $ 69 $ 97
Accounts receivable, net of allowance for
doubtful accounts of $830 and $715 at
July 03, 1999 and April 03, 1999,
respectively 19,610 22,533
Inventories 35,614 34,291
Notes Receivable 1,402 1,400
Other current assets 1,729 1,179
------------ ------------
Total current assets 58,424 59,500
------------ ------------
INVESTMENTS IN AND RECEIVABLES FROM
UNCONSOLIDATED AFFILIATES 29,012 28,199
OTHER ASSETS 694 694
PROPERTY, PLANT, AND EQUIPMENT 116,047 112,046
Less accumulated depreciation (51,648) (49,632)
------------ ------------
Property, plant, and equipment, net 64,399 62,414
------------ ------------
TOTAL ASSETS $152,529 $150,807
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY---------------
CURRENT LIABILITIES
Current Maturities of Long Term Debt $ 2,796 $ 2,796
Current Deferred Income Taxes 1,007 0
Accounts payable 14,502 12,804
Accrued expenses 13,790 13,431
------------ ------------
Total Current Liabilities 32,095 29,031
------------ ------------
LONG TERM DEBT (net of current maturities) 32,676 36,873
NONCURRENT DEFERRED INCOME TAXES 11,729 11,729
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 9,000
shares and 4770 and 4797 shares issued
respectively 4,770 4,797
Capital in excess of par value 4,617 5,035
Treasury Stock held for Options (72) (124)
Retained earnings 66,714 63,466
------------ ------------
Total stockholders' equity 76,029 73,174
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 152,529 $ 150,807
============ ============
<FN>
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 July 03, 1999 and June 27, 1998
(Amounts in thousands, except per share data)
(unaudited)
13 wks 13 wks
ended ended
07/03/99 06/27/98
-------- --------
Net Sales $86,358 $82,874
Costs and Expenses:
Cost of Sales 76,339 73,864
Selling and Delivery 2,444 2,596
General and Administrative 2,560 1,619
------- --------
Total costs and expenses 81,343 78,151
------- --------
Income (Loss) From Operations 5,015 4,723
Other Income(Expense):
Interest expense (627) (846)
Income from unconsolidated
affiliates and other
income, net 1,065 1,871
-------- --------
Income (Loss) Before Income Taxes 5,453 5,748
(Provision) Benefit For Income Taxes (2,062) (2,070)
-------- --------
Net Income (Loss) $3,391 $ 3,678
======== ========
Weighted Average Shares Outstanding
-Basic 4,765 4,981
-Diluted 4,770 5,003
======== ========
Net Income (Loss) Per Common Share
-Basic $ 0.71 $ 0.74
-Diluted $ 0.71 $ 0.74
Dividends Per Common Share .03 .03
======== ========
<FN>
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 July 03, 1999 and June 27, 1998
(In Thousands)
(unaudited)
July 03, 1999 June 27, 1998
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 3,391 $ 3,678
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,016 2,095
(gain)loss on disposal of property, plant and
equipment 0 28
Changes in investment in and receivables from
unconsolidated affiliates (813) (675)
Changes in assets and liabilities:
Accounts receivables, net 2,923 (452)
Inventories (1,323) 3,784
Notes Receivable (2) 0
Deferred Income Taxes asset 0 0
Other current assets (550) 406
Accounts payable 1,698 (495)
Accrued expenses 359 (167)
Income taxes payable 1,007 888
Deferred income taxes payable 0 0
------- -------
Total Adjustments 5,315 5,412
------- -------
Net cash provided (uses) by operating activities 8,706 9,090
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (4,001) (1,293)
(Increase)decrease in other assets 0 0
Proceeds from the sale of property, plant, and equip. 0 43
------- -------
Net cash used in investing activities (4,001) (1,250)
------- -------
Cash Flows from financing activities:
Payments of long-term debt and capital
lease obligations (4,197) (7,697)
Proceeds from issuance of long-term debt 0 0
Dividends Paid (143) (150)
Repurchase of Common Stock (416) (44)
Proceeds from exercise of Stock Options 23 25
Sale of Option Treasury Shares 0 35
------- -------
Net cash provided (used) by financing activities (4,733) (7,831)
------- -------
NET INCREASE(DECREASE) IN CASH (28) 9
CASH AT BEGINNING OF PERIOD 97 226
------- -------
CASH AT END OF PERIOD $ 69 $ 235
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for: Interest $ 512 $1,003
======= =======
Income Taxes paid $ 559 $ 8
======= =======
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc. & Subsidiary
Notes to Consolidated Condensed Financial Statements
July 03, 1999
(unaudited)
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 July 03,
1999 and April 03, 1999 and the results of their operations and their cash
flows for the 13 weeks ended July 03, 1999 and the 13 weeks ended June 27,
1998.
2. The results of operations for the 13 weeks ended July 3, 1999 and June 27,
1998 are not necessarily indicative of the results expected for the full
year.
3. Inventories consisted of the following: (In Thousands)
July 03, 1999 April 03, 1999
Finished Product $17,281 $16,618
Field Inventory and Breeders 14,546 13,316
Feed, Eggs, and Medication 2,506 2,937
Supplies 1,281 1,420
---------------- --------------
$35,614 $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) five unconsolidated
affiliates using the equity method. The Company's share of earnings from
from these affiliates totaled $1,012,000 for the 13 weeks ended July 03,
1999. The earnings reported for these same affiliates totaled $1,902,000
for the 13 weeks ended June 27, 1998.
6. Year 2000 Compliance
The Company implemented a formal plan to address issues associated with
the Year 2000 during 1998 as these issues relate to systems throughout the
Company and with vendors and customers. Progress is monitored regularly
and the status reported to the Board of Directors quarterly. The Company
completed its last major software system conversion during the July 4th
weekend and hardware upgrade over the weekend of July 24th and 25th.
All systems, internal and external (i.e. vendors and customers) will
continue to be tested and monitored throughout the remainder of the time
leading up to 1/1/2000. Substantially all of the Company's compliance
activities are anticipated to be complete by the end of the second
quarter of fiscal 2000. Total budget for this project is expected to be
less than $500,000.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
July 03, 1999
Financial Condition
The Company's continued strong profit performance to further strengthen its
financial condition during the quarter ended July 3, 1999 by paying down funded
debt and increasing shareholder equity. Funded debt was $35,472,000 at July 3,
1999 as compared to $39,669,000 at April 3, 1999. The Company had $20,970,000
available for borrowing under existing revolving loan agreement as of July 3,
1999.
The Company is currently negotiating an addition to the current term credit
facility to fund the two previously announced capital projects, a processing
facility in Perry, GA and a feed mill in Rockmart, GA totaling $54,000,000.
This package is expected to close not later than September 30, 1999. It is
expected that the total package will involve industrial revenue bonds at each
location.
Results of Operations
Sales for the 13 week period ended July 3, 1999 increased by 4.2% as compared
to the same period of a year ago and is due primarily to added volume created
by outside purchases as the Company prepares for new production that will be
generated through the new Perry, GA facility in early 2000. In addition,
production tonnage from existing plants increased by 6.5% over the same period
of a year ago, however, continued depressed prices for export items, mostly
dark meat items, and lower than year ago prices for white meat, predominately
marketed as boneless breast and wings, offset to some extent the sales benefit
of the increased volume. Gross margins for the quarter averaged 11.65% as
compared to 10.9% for the same period of a year ago. Again, feed ingredient
cost was the major component of the margin increase as feed cost was 15.2%
lower than a year ago. Feed grain cost is the largest single factor in the
production cost of a broiler chicken.
Selling, Delivery and Administrative Expenses
As a category, these expenses increased by 16.7% as compared to the
corresponding period of a year ago with the component exhibiting the major
increase being professional fees required as a result of a series of lawsuits
in which the Company is currently involved.
Interest Expense
Interest Expense for the quarter was 25.9% lower than for the same period of a
year ago and is a function of reduced debt levels and favorable interest rates.
Other Income
Other income declined by 43% for the quarter as compared to a year ago and
reflects the import of start-up costs and the resulting losses associated with
the new Kentucky Joint Venture.
Income Taxes
The provision for income taxes reflects taxes at statutory rates adjusted for
available tax credits to which the company expects 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, 1999 /s/ J. Douglas Cagle
Date: August 6, 1999 /s/ Kenneth R. Barkley