FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File Number 2-5916
CHASE GENERAL CORPORATION
(Exact name of registrant as specified in its Charter)
Missouri 36-2667734
State incorporation I.R.S. Employer Identification Number
3600 Leonard Road, St. Joseph, Missouri 64503
(Address of principal executive offices) (Zip Code)
(816) 279-1625
(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,
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
Number of shares outstanding of the issuer's Common Stock:
Class Outstanding at April 30, 1997
Common Stock, $1 par value 969,834
CHASE GENERAL CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
March 31, 1997 (Unaudited) and June 30, 1996 3
Consolidated Condensed Statements of Operations -
Nine months ended March 31, 1997 and 1996
(Unaudited) 4
Consolidated Condensed Statements of Operations -
Three months ended March 31, 1997 and 1996
(Unaudited) 5
Consolidated Condensed Statements of Cash Flows -
Nine months ended March 31, 1997 and 1996
(Unaudited) 6
Notes to Consolidated Condensed Financial
Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II - Other Information
Item 3. Defaults Upon Senior Securities 10
Item 6. Exhibits and Reports on Form 8-K 10
PART I. FINANCIAL INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, 1997 and June 30, 1996
March 31, June 30,
1997 1996
(Unaudited)
CURRENT ASSETS
Cash $ 309,534 $ 236,316
Receivables, net of allowance 68,596 74,754
Inventories:
Finished goods 29,244 51,204
Goods in process 4,053 2,024
Raw materials 127,771 42,189
Packaging materials 104,482 104,565
Prepaid expense 27,250 42,659
Total current assets 670,930 553,711
PROPERTY AND EQUIPMENT - AT COST 956,313 942,011
Less accumulated depreciation 703,427 679,768
Total property and equipment 252,886 262,243
TOTAL ASSETS $ 923,816 $ 815,954
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 70,441 $ 46,943
Notes payable, Series B
current maturities 9,676 9,676
Accrued expense 28,693 41,456
Estimated liability for
income taxes 31,892 -
Total current liabilities 140,702 98,075
LONG-TERM LIABILITIES
Notes payable, Series B 204,277 242,980
Total liabilities 344,979 341,055
STOCKHOLDERS' EQUITY
Capital stock 3,331,274 3,331,274
Paid-in capital in excess of par 3,134,722 3,134,722
Retained earnings (deficit) (5,887,159) (5,991,097)
Total stockholders' equity 578,837 474,899
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 923,816 $ 815,954
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
March 31
1997 1996
NET SALES $2,054,847 $1,992,396
COST OF SALES 1,531,856 1,514,911
Gross profit on sales 522,991 477,485
OPERATING EXPENSES
Selling expense 243,333 241,702
General and administrative expense 119,489 124,158
Total operating expenses 362,822 365,860
Net income from operations 160,169 111,625
OTHER INCOME (EXPENSE) (9,009) (8,936)
Net income before income taxes 151,160 102,689
PROVISION FOR INCOME TAXES 47,222 26,963
NET INCOME $ 103,938 $ 75,726
EARNINGS (LOSS) PER SHARE $ .01 $ (.02)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31
1997 1996
NET SALES $ 258,894 $ 282,300
COST OF SALES 253,526 305,900
Gross profit (loss) on sales 5,368 (23,600)
OPERATING EXPENSES
Selling expense 43,525 57,412
General and administrative expense 41,556 46,188
Total operating expenses 85,081 103,600
Net loss from operations (79,713) (127,200)
OTHER INCOME (EXPENSE) (2,812) (2,394)
Net loss before income taxes (82,525) (129,594)
PROVISION FOR INCOME TAXES (REFUND) (34,748) (54,418)
NET LOSS $ (47,777) $ (75,176)
LOSS PER SHARE $ (.08) $ (.11)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $103,938 $ 75,726
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 39,658 42,405
Provision for bad debts 4,815 7,200
Effects of changes in operating
assets and liabilities:
Accounts receivables 1,343 (23,920)
Accounts payable 23,498 (20,800)
Inventories (65,568) (15,973)
Prepaid expenses 15,409 17,242
Accrued expense (12,763) (21,323)
Estimated liability for income
taxes 31,892 13,931
Net cash provided by operating
activities 142,222 74,488
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (30,301) (91,721)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (38,703) (35,146)
NET INCREASE (DECREASE) IN CASH 73,218 (52,379)
CASH, BEGINNING OF PERIOD 236,316 300,570
CASH, END OF PERIOD $309,534 $248,191
SUPPLEMENTAL DISCLOSURES
Interest paid $ 16,214 $ 17,718
Income taxes paid $ 17,494 $ 13,032
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, the accompanying unaudited and
audited consolidated condensed financial statements contain all
adjustments necessary to present fairly Chase General
Corporation's financial position as of March 31, 1997 and June
30, 1996, the results of its operations for the nine months and
three months ended March 31, 1997 and 1996, and its cash flows
for the nine months ended March 31, 1997 and 1996.
While the Company believes that the disclosures presented are
adequate to make the information not misleading, it is suggested
that these consolidated condensed financial statements be read in
conjunction with the financial statements and the notes included
in the Company's annual report for June 30, 1996, Form 10-K. All
adjustments made during the period ended March 31, 1997 were of a
normal recurring nature.
NOTE 2 - EARNINGS (LOSS) PER SHARE
The earnings (loss) per share was computed on the weighted
average of outstanding common shares during the years as follows:
Nine Months Ended Three Months Ended
March 31 March 31
1997 1996 1997 1996
Net income (loss) $103,938 $ 75,726 $ (47,777) $ (75,176)
Preferred dividend
requirements:
6% Prior Cumulative
Preferred,
$5 par value 45,000 45,000 15,000 15,000
5% Convertible
Cumulative Preferred,
$20 par value 51,054 51,054 17,018 17,018
Total dividend
requirements 96,054 96,054 32,018 32,018
NET INCOME (LOSS) COMMON
STOCKHOLDERS $ 7,884 $ (20,328) $ (79,795) $(107,194)
WEIGHTED AVERAGE OF
OUTSTANDING COMMON
SHARES 969,834 969,834 969,834 969,834
EARNINGS (LOSS) PER
SHARE $ .01 $ (.02) $ (.08) $ (.11)
No computation was made on common stock equivalents outstanding
because earnings (loss) per share would be anti-dilutive.
ITEM 2
CHASE GENERAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Chase General and its wholly-owned subsidiary are engaged in the
manufacture of confectionery products which are sold primarily to
wholesale houses, grocery accounts, vendors, and repackers.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company has a $12,940 commitment for
capitalized expenditures. Cash increased $73,218 during the
current nine month period. Working capital increased
approximately $75,000 as a result of a profitable busy season.
The officers of the Corporation and legal counsel continue to
discuss liquidity and capital resource options to resolve the $5
million cumulative preferred stock dividends in arrears.
RESULTS OF OPERATIONS
Nine Months ended March 31, 1997
The Company had no unusual transactions for the nine months ended
March 31, 1997. The Company realized a gross profit percentage
of 25.45% and 23.97% for the nine months ended March 31, 1997 and
1996, respectively. The gross profit increased as a result of
improved labor costs. Net sales increased 3.13% over the same
period a year ago as a result of more regional sales activity.
Selling expenses are $1,600 higher than the same period a year
ago. General and administrative expenses are $4,700 lower than
same period a year ago as a result of monitoring fixed overhead
costs and not outsourcing proxy costs. Interest expense
continues to decrease from reduced debt outstanding.
Inventories at March 31, 1997 are $66,000 higher than at June 30,
1996 as a result of anticipated orders for spring product lines
and taking advantage of price savings on raw materials.
(Continued)
ITEM 2
CHASE GENERAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Three months ended March 31, 1997
Net sales decreased $23,000 over the same period a year ago.
However gross profit was a positive 2.07% as compared to a
negative 8.36% for the same period ended a year ago. This three
month period is normally the Company's slowest season. Sales are
usually weak and plant maintenance is performed in anticipation
of the next six months increased activity.
Selling expense decreased $14,000 over the same period a year ago
from reducing promotion and advertising costs. General and
administrative expense also decreased by $4,600 over the same
period a year ago as a result of monitoring fixed overhead.
Accounts payable are $23,500 higher than at June 30, 1996 as a
result of increased inventory on hand at March 31, 1997.
PART II. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividends in
arrears at March 31, 1997 is $5,483,420.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8.K.
a. Exhibits - None
b. Reports on Form 8-K: There were no reports on
Form 8-K filed by the Company during the quarter
ended March 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CHASE GENERAL CORPORATION
Registrant
May 12, 1997 /s/ Barry M. Yantis
Date Barry M. Yantis
President and Chief Financial
Officer