FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,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,September 30, 1996
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,October 31, 1996
Common Stock, $1 par value 969,834
CHASE GENERAL CORPORATION
INDEXIndex
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - March 31,September 30, 1996
(Unaudited) and June 30, 1995 . . . . . . . . . . . . . . . .31996......................... 3
Consolidated Condensed Statements of Operations -
Nine monthsFirst quarter ended March 31,September 30, 1996 and 1995
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . .4
Consolidated Condensed Statements of Operations -
Three months ended March 31, 1996 and 1995
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . .5...................................... 5
Consolidated Condensed Statements of Cash Flows -
Nine monthsFirst quarter ended March 31,September 30, 1996 and 1995
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . .6...................................... 6
Notes to Consolidated Condensed Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . .7Statements
...................................................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . .8Operations............. 8
Part II - Other Information
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . 10Securities............. 9
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 108-K............ 9
PART I. FINANCIAL INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1996 AND JUNE 30, 1995
MARCH 31, JUNE 30,
1996 1995
(Unaudited)
CURRENT ASSETS
Cash $ 248,191 $ 300,570
Receivables, net of allowance 87,571 70,851
Inventories:
Finished goods 30,982 67,614
Goods in process 5,269 3,276
Raw materials 93,006 71,059
Packaging materials 97,019 68,354
Prepaid expense 29,013 46,255
Total current assets 591,051 627,979
PROPERTY AND EQUIPMENT - AT COST 904,408 824,783
Less accumulated depreciation 685,162 654,853
Total property and equipment 219,246 169,930
TOTAL ASSETS $ 810,297 $ 797,909
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 24,963 $ 45,763
Notes payable, Series B current
maturities - 287,802
Accrued expense 31,825 53,148
Estimated liability for income taxes 13,931 -
Total current liabilities 70,719 386,713
LONG-TERM LIABILITIES
Notes payable, Series B 252,656 -
Total liabilities 323,375 386,713
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) (5,979,074) (6,054,800)
Total stockholders' equity 486,922 411,196
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 810,297 $ 797,909
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
September 30, 1996 and June 30, 1996
ASSETS
September 30, June 30,
1996 1996
(Unaudited)
CURRENT ASSETS
Cash $129,351 $236,316
Receivables, net of
allowance 243,051 74,754
Inventories:
Finished goods 160,479 51,204
Goods in process 10,133 2,024
Raw materials 119,117 42,189
Packaging materials 109,416 104,565
Prepaid expense 9,056 42,659
Total current 780,603 553,711
PROPERTY AND EQUIPMENT
- AT COST 949,567 942,011
Less accumulated
depreciation 692,427 679,768
Total property
and equipment 257,140 262,243
TOTAL ASSETS $1,037,743 $815,954
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, June 30,
1996 1996
(Unaudited)
CURRENT LIABILITIES
Accounts payable $228,317 $46,943
Notes payable, Series B,
current maturities 9,676 9,676
Accrued expenses 56,033 41,456
Total current liabilities 294,026 98,075
LONG-TERM LIABILITIES
Notes payable, Series B,
less current maturities
above 242,980 242,980
Total liabilities 537,006 341,055
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) (5,965,259) (5,991,097)
Total stockholders'
equity 500,737 474,899
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,037,743 $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
1996 1995
NET SALES $1,992,396 $1,913,551First Quarter Ended
September 30
1996 1995
NET SALES $532,263 $468,694
COST OF SALES 1,514,911 1,459,924
Gross profit on sales 477,485 453,627
OPERATING EXPENSES
Selling expense 241,702 224,342
General and administrative expense 124,158 111,196
Total operating expenses 365,860 335,538
Net income from operations 111,625 118,089
OTHER INCOME (EXPENSE) (8,936) (10,179)
Net income before income taxes 102,689 107,910
PROVISION FOR INCOME TAXES 26,963 29,011
NET INCOME $ 75,726 $ 78,899
LOSS PER SHARE $ (.02) $ (.02)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31
1996 1995
NET SALES $ 282,300 $254,489
COST OF SALES 305,900 250,409
Gross profit (loss) on sales (23,600) 4,080
OPERATING EXPENSES
Selling expense 57,412 49,134
General and administrative expense 46,188 36,691
Total operating expenses 103,600 85,825
Net loss from operations (127,200) (81,745)
OTHER INCOME (EXPENSE) (2,394) (3,362)
Net loss before income taxes (129,594) (85,107)
PROVISION FOR INCOME TAXES (REFUND) (54,418) (35,836)
NET LOSS $ (75,176) $ (49,271)
LOSS PER SHARE $ (.11) $ (.08)
SALES 400,395 357,854
Gross profit 131,868 110,840
OPERATING EXPENSES
Selling expense 59,798 60,938
General and administrative
expense 36,853 34,624
Total operating expenses 96,651 95,562
Income from operations 35,217 15,278
OTHER INCOME (EXPENSE) (2,944) (2,864)
Income before income
taxes 32,273 12,414
PROVISION FOR INCOME TAXES 6,435 2,475
NET INCOME $25,838 $9,939
LOSS PER SHARE $ (.01) $(.02)
See notes to consolidated condensed financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
MARCH 31
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 75,726 $ 78,899
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 42,405 32,161
Provision for bad debts 7,200 4,980
Changes in operating assets and
liabilities:
Net (increase) decrease in
receivables (23,920) 1,542
Net decrease in accounts payable (20,800) (68,541)
Net increase in inventories (15,973) (16,392)
Net decrease in prepaid expenses 17,242 50,233
Net increase (decrease) in accrued
expense and estimated liability
for income taxes (7,392) 23,263
Net cash provided by operating
activities 74,488 106,145
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on redemption of U.S.
Treasury Obligation - 99,193
Purchases of property and equipment (91,721) (9,946)
Net cash provided by (used in)
investing activities (91,721) 89,247
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (35,146) (15,000)
Net cash used in financing
activities (35,146) (15,000)
NET INCREASE (DECREASE) IN CASH (52,379) 180,392
CASH, BEGINNING OF PERIOD 300,570 109,645
CASH, END OF PERIOD $ 248,191 $290,037
SUPPLEMENTAL DISCLOSURES
Interest paid $ 17,718 $ 18,693
Income taxes paid $ 13,032 $ 2,982
Income tax refund $ - $ 33,435
First Quarter Ended
September 30
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the quarter $25,838 $9,939
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 12,660 9,890
Provision for doubtful accounts 1,605 2,400
Changes in operating assets and
liabilities:
Net increase in accounts
receivable (169,902) (128,255)
Net increase in inventory (199,163) (252,450)
Net decrease in prepaid
expenses 33,603 29,395
Net increase in accounts
payable 181,374 151,474
Net increase in accrued
liabilities 14,577 6,037
Net cash used in operating
activities (99,408) (171,570)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (7,557) (53,811)
NET DECREASE IN CASH (106,965) (225,381)
CASH, BEGINNING OF QUARTER 236,316 300,570
CASH, END OF QUARTER $129,351 $75,189
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,September 30, 1996 and
June 30, 1995,1996 and the results of its operations for the nine months and
three months ended March 31, 1996 and 1995, and its cash
flows for the nine monthsfirst quarter ended March 31,September 30, 1996 and 1995.
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, 1995,1996, Form 10-K. All
adjustments made during the period ended March 31,September 30, 1996 were
of a normal recurring nature.
NOTE 2 - LOSS PER SHARE
The lossLoss 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
1996 1995 1996 1995
Net income (loss) $75,726 $78,899 $(75,176) $(49,271)
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 LOSS COMMON STOCKHOLDERS $(20,328) $(17,155) $(107,194) $(81,289)
WEIGHTED AVERAGE OF OUTSTANDING
COMMON SHARES 969,834 969,834 969,834 969,834
LOSS PER SHARE $ (.02) $ (.02) $ (.11) $ (.08)
First Quarter Ended
September 30
1996 1995
Net income $25,838 $9,939
Preferred dividend requirements:
6% Prior Cumulative Preferred,
$5 par value 15,000 15,000
5% Convertible Cumulative Preferred,
$20 par value 17,018 17,018
Total dividend requirements 32,018 32,018
Loss - common shareholders $(6,180) $(22,079)
Weighted average of outstanding
common shares 969,834 969,834
Loss per share $(.01) $(.02)
No computation was made on common stock equivalents outstanding
because lossearnings 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,September 30, 1996, the Company has a $69,000 commitmentno commitments for
capitalized expenditures. Cash decreased $52,379 during$106,965 as a result of
building up inventory to begin the current nine month period.busy season. Working capital
increased approximately $279,000$31,000 for the nine month period, as a result of
the Corporate officers successfully negotiating a seven year
extension with the Series B noteholders which allowed for the
remaining note balance of $252,656 to be classified as long-term
liabilities.current quarter.
The officers of the Corporationcorporation 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 MonthsFirst Quarter ended March 31,September 30, 1996 and 1995
The Company had no unusual transactions for the nine monthsfirst quarter
ended March 31,September 30, 1996. The Company realized a gross profit
percentage of 23.97%24.77% and 23.71%23.65% for the nine monthsfirst quarter ended
March 31,September 30, 1996 and 1995, respectively. The gross profit
increasedimproved slightly from a year ago as a result of improved labor costs.increased net
sales. Net sales increased $78,800$63,569 over the same period a year
ago. No major customers were lost during this period.
Selling, expenses are $17,000 higher than the same period a year
ago as a result of more aggressive brokerage activity. Generalgeneral and administrative expenses are $13,000 higher than same period
a year ago as a result of depreciation for upgrading office
equipment and higher salaries. Interest expense continues to
decrease from reduced debt outstanding.
Inventories at March 31, 1996 are $16,000 higher than at June 30,
1995 as a result of anticipated orders for spring product lines.
(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, 1996
Net sales increased $28,000 overremained consistent
compared with the same period a year ago.
However gross profit was (8.36)% as compared to 1.60% forInventories and accounts payable are higher than at June 30, 1996
since the same period ended a year ago. This three month periodCompany is normally the Company's slowest season. Sales are usually weak
and plant maintenance is performed in anticipationentering their busy cycle of the next
six months increased activity. In addition, the Company had a
return of product which also caused a negative gross profit on
sales.
Selling expense increased $8,000 over the same period a year ago
from increased promotion and advertising costs. General and
administrative expense increased $9,500 over the same period a
year ago as a result of depreciation for upgrading office
equipment.year.
PART II. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEMItem 3. DEFAULTS UPON SENIOR SECURITIES
a. None
a)
b. The total cumulative preferred stock dividenddividends in
arrears at March 31,September 30, 1996 is $5,355,348.
ITEM$5,419,384.
Item 6. EXHIBITS AND REPORTS ON FORM 8.K.
a. Exhibits - None
a)
b.) Reports on Form 8-K: There were no reports on Form 8-K
filed by the Company during the quarter ended
March 31,July, August, September, 1996.
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
05\13\96 \s\November 25, 1996 /s/ Barry M. Yantis
Date Barry M. Yantis
President and Chief
Financial Officer