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 October 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 October 2, 1999
- -------------------------------------- -----------------------------
Class A Common Stock, $1.00 Par Value 4,747,280
PART 1. FINANCIAL INFORMATION
Cagle's, Inc. and Subsidiary
Consolidated Balance Sheets
October 2, 1999 and April 3, 1999
(In Thousands, Except Par Value)
(Period 10/02/99 Unaudited)
10/02/99 04/03/99
------------ -------------
Assets -----------------------------------------
CURRENT ASSETS
Cash $ 114 $ 97
Accounts receivable, net of allowance for
doubtful accounts of $918 and $715 at
October 2, 1999 and April 3, 1999,
respectively 17,988 22,533
Inventories 35,150 34,291
Notes receivable 1,401 1,400
Other current assets 1,013 1,179
------------ ------------
Total current assets 55,666 59,500
------------ ------------
INVESTMENTS IN AND RECEIVABLES FROM
UNCONSOLIDATED AFFILIATES 29,739 28,199
OTHER ASSETS 694 694
PROPERTY, PLANT, AND EQUIPMENT 120,804 112,046
Less accumulated depreciation (53,614) (49,632)
------------ ------------
Property, plant, and equipment, net 67,190 62,414
------------ ------------
TOTAL ASSETS $ 153,289 $ 150,807
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY---------------
CURRENT LIABILITIES
Current maturities of long term debt $ 2,796 $ 2,796
Accounts payable 11,781 12,804
Accrued expenses 14,225 13,431
------------ ------------
Total Current Liabilities 28,802 29,031
------------ ------------
LONG TERM DEBT (net of current maturities) 35,478 36,873
NONCURRENT DEFERRED INCOME TAXES 10,367 11,729
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 9,000
shares, issued and outstanding 4,747 and 4,797
shares, respectively 4,747 4,797
Capital in excess of par value 4,198 5,035
Treasury stock held for options (106) (124)
Retained earnings 69,803 63,466
------------ ------------
Total stockholders' equity 78,642 73,174
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 153,289 $ 150,807
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc. & Subsidiary
Consolidated Statements of Income
For the 14 and 26 weeks ended October 2, 1999
and the 13 and 27 weeks ended October 3, 1998
(Amounts in thousands, except per share data)
(Period 10/02/99 Unaudited)
13 wks 14 wks 26 wks 27 wks
ended ended ended ended
10/02/99 10/03/98 10/02/99 10/03/98
-------- -------- -------- --------
Net Sales $ 83,046 $ 92,802 $169,404 $175,676
Costs and Expenses:
Cost of Sales 73,678 77,826 150,017 151,690
Selling and Delivery 2,781 2,812 5,225 5,408
General and Administrative 2,105 1,889 4,665 3,580
------- -------- -------- --------
Total costs and expenses 78,564 82,527 159,907 160,678
------- -------- -------- --------
Income From Operations 4,482 10,275 9,497 14,998
Other Income(Expense):
Interest expense (403) (792) (1,030) (1,638)
Income from unconsolidated
affiliates and other
income, net 961 1,849 2,026 3,720
-------- -------- -------- --------
Income before income taxes 5,040 11,332 10,493 17,080
(Provision) benefit for income taxes (1,807) (3,996) (3,869) (6,066)
-------- -------- -------- --------
Net Income $ 3,233 $ 7,336 $ 6,624 $ 11,014
======== ======== ======== ========
Weighted Average Shares Outstanding
-Basic 4,758 4,929 4,761 4,967
-Diluted 4,761 4,929 4,766 4,967
======== ======== ======== ========
Net Income (Loss) Per Common Share
-Basic $ 0.68 $ 1.49 $ 1.39 $ 2.22
-Diluted $ 0.68 $ 1.49 $ 1.39 $ 2.22
Dividends Per Common Share $ .03 $ .03 $ .06 $ .06
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
Cagle's, Inc & Subsidiary
Consolidated Statements of Cash Flows
For the 26 weeks ended October 2, 1999 and 27 weeks ended October 3, 1998
(In Thousands) (Period 10/02/99 Unaudited)
Oct. 02, 1999 Oct. 03, 1998
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 6,624 $ 11,014
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,019 4,174
(gain)/loss on disposal of property,
plant and equipment (10) 19
Changes in investment in and receivables from
unconsolidated affiliates (1,540) (963)
Changes in operating assets and liabilities:
Accounts receivables, net 4,545 (1,815)
Inventories (859) 2,954
Other current assets 165 1,039
Accounts payable (1,023) 2,070
Accrued expenses 794 892
Income taxes payable 0 1,024
Deferred income taxes payable (1,362) 0
------------- ------------
Total Adjustments 4,729 9,394
------------- ------------
Net cash provided by operating activities 11,353 20,408
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (8,807) (5,041)
Proceeds from the sale of property, plant, and equip. 22 63
------------- -----------
Net cash used in investing activities (8,785) (4,978)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt and capital
lease obligations (1,395) (12,088)
Dividends paid (285) (299)
Repurchase of common stock (894) (2,949)
Proceeds from exercise of stock options 23 59
------------- ------------
Net cash used in financing activities (2,551) (15,277)
------------- ------------
NET INCREASE IN CASH 17 153
CASH AT BEGINNING OF PERIOD 97 226
------------- ------------
CASH AT END OF PERIOD $ 114 $ 379
============= ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,026 $ 1,795
============= ============
Income Taxes $ 4,736 $ 3,768
============= ============
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc. & Subsidiary
Notes to Consolidated Condensed Financial Statements
October 2, 1999
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 October 2,
1999 and April 3, 1999 and the results of their operations and their cash
flows for the 13 weeks and 26 weeks ended October 2, 1999 and the 14 weeks
and 27 weeks ended October 3, 1998.
2. The results of operations for the 13 weeks and 26 weeks ended October 2,
1999 and the 14 weeks and 27 weeks ended October 3, 1998 are not necessarily
indicative of the results expected for the full year.
3. Inventories consisted of the following: (In Thousands)
October 2, 1999 April 3, 1999
Finished Product $17,592 $16,618
Field Inventory and Breeders 13,615 13,316
Feed, Eggs, and Medication 2,481 2,937
Supplies 1,462 1,420
---------------- --------------
$35,150 $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) unconsolidated affiliates
using the equity method. The Company's share of earnings from these
affiliates totaled $930,573 for the 13 weeks ended October 2, 1999 and
$1,943,573 for the 26 weeks ended October 2, 1999. The earnings reported
for the 14 weeks and 27 weeks ended October 3, 1998 were $1,769,000 and
$3,671,000, respectively.
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 is reported to the Board of Directors quarterly.
The Company completed its last major hardware and software system
conversion during the quarter just ended. All systems, internal and
external, (i.e. vendors and customers), will continue to be monitored
throughout the remaining time leading up to 1/1/2000. Substantially all
of the Company's compliance projects are complete and the total cost is
expected to be less than $500,000.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
October 2, 1999
Financial Condition
Although margins have declined due to lower market prices when compared to
year ago levels, the Company remained profitable for the quarter and six months
ended October 2, 1999. The Company has utilized the cash flow generated by
continued profits to reduce debt and fund capital needs of the new Perry
Processing facility and the new Rockmart, Georgia feed mill. A new
credit facility has been negotiated to fund the $54 million required for the
above mentioned projects and has been closed subsequent to the end of the
quarter. The total credit facility will be comprised of a $72,750,000 term
loan and a $40,000,000 revolving credit facility.
Results of Operations
Sales for the 13 week period were 10.5% lower than for the same period of a
year ago and is attributed to the extra week included for the comparable
quarter last year and somewhat weaker market prices, especially for white
meat. Sales for the 26 week period were 3.6% lower than for the 27 week
period of a year ago and, as for the quarter, was attributed to the one week
difference along with overall lower market prices.
Gross margins for the quarter were 4.8% lower than for the same period of a
year ago and 2.2% lower for the 6 month period as compared to year ago margins.
The lower margin is the result for lower market prices for broilers and white
meat items as well as export products, predominately leg quarters. The market
impact was offset to some extent by lower feed grain cost. Feed cost averaged
9.2% less for the 13 weeks and 11.5% lower for the 26 week periods when
compared to the same periods of a year ago.
Selling, Delivery and Administrative Expenses
As a classification these expenses were up 3.9% for the quarter and 10.0% for
the six month period as compared to a year ago. This increase is attributed
primarily to increased professional fees associated with ongoing litigation
and increased management staffing in preparation for the new processing facility
under construction in Perry, Georgia.
Interest Expense
Interest Expense for the quarter was 49.1% lower than for the comparable
quarter and 37.1% lower for the six month period of a year ago due to reduced
debt levels and the allocation of $144,934 of interest to the ongoing capital
projects.
Other Income
Other income declined by 48% for the quarter and 45.5% for the 6 month
period when compared to the same periods of a year ago and is the result
of losses incurred in the start-up of the Kentucky Joint Venture Company.
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: November 5, 1999 /s/ J. Douglas Cagle
Chairman & CEO
Date: November 5, 1999 /s/ Kenneth R. Barkley
Senior VP Finance/Tres/CFO