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 December 31, 2000
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Commission File Number 2-5916
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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)
Telephone: (816) 279-1625
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 [_]
As of February 1, 2001 there were 969,834 shares outstanding of the Registrant's
($1.00 par value) common stock.
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CHASE GENERAL CORPORATION
Index to Form 10-Q
December 31, 2000
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - December 31, 2000
(Unaudited) and June 30, 2000..................................................................................... 3
Consolidated Condensed Statements of Operations
Six months ended December 31, 2000 and 1999 (Unaudited)........................................................... 5
Consolidated Condensed Statements of Operations
Three months ended December 31, 2000 and 1999 (Unaudited)......................................................... 6
Consolidated Condensed Statements of Cash Flows
Six months ended December 31, 2000 and 1999 (Unaudited)........................................................... 7
Notes to Consolidated Condensed Financial Statements.................................................................. 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................................... 9
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities.................................................................................. 10
Item 6. Exhibits and Reports on Form 8-K................................................................................. 10
Signatures................................................................................................................ 10
Exhibit No. 27 Financial Data Schedule.................................................................................... 11
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PART I - FINANCIAL INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
December 31, 2000 and June 30, 2000
(Unaudited)
ASSETS
December 31, June 30,
2000 2000
-------------- ------------
CURRENT ASSETS
Cash $ 317,364 $ 146,779
Trade receivables, net of allowance 192,109 129,018
Other receivables -- 3,239
Inventories:
Finished goods 11,758 85,147
Goods in process 5,159 4,872
Raw materials 39,625 53,232
Packaging materials 103,071 123,938
Prepaid expense 2,717 34,960
Prepaid income taxes -- 1,158
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Total current assets 671,803 582,343
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PROPERTY AND EQUIPMENT - AT COST 1,073,088 1,072,644
Less accumulated depreciation 876,863 854,296
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Total property and equipment 196,225 218,348
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TOTAL ASSETS $ 868,028 $ 800,691
============== ==============
3
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
December 31, June 30,
2000 2000
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CURRENT LIABILITIES
Accounts payable $ 40,330 $ 54,718
Accrued expense 19,756 35,184
Notes payable, Series B, current maturities 4,321 4,321
Income taxes payable 42,133 --
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Total current liabilities 106,540 94,223
LONG-TERM LIABILITIES
Notes payable, Series B 73,351 123,351
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Total liabilities 179,891 217,574
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STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock, $5 par value:
Series A (liquidation preference $1,260,000
and $1,245,000 respectively) 500,000 500,000
Series B (liquidation preference $1,215,000 and $1,200,000
respectively) 500,000 500,000
Cumulative preferred stock, $20 par value:
Series A (liquidation preference $2,999,816 and $2,970,550
respectively) 1,170,660 1,170,660
Series B (liquidation preference $488,874 and $484,104
respectively) 190,780 190,780
Common stock, $1 par value 969,834 969,834
Paid-in capital in excess of par 3,134,722 3,134,722
Retained earnings (deficit) (5,777,859) (5,882,879)
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Total stockholders' equity 688,137 583,117
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 868,028 $ 800,691
============== ==============
See notes to consolidated condensed financial statements.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
December 31
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2000 1999
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NET SALES $ 1,493,783 $ 1,558,240
COST OF SALES 1,095,964 1,136,001
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Gross profit 397,819 422,239
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OPERATING EXPENSES
Selling expense 145,721 146,876
General and administrative expense 96,471 89,574
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Total operating expenses 242,192 236,450
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Income from operations 155,627 185,789
OTHER INCOME (EXPENSE) (2,596) (3,700)
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Income before income taxes 153,031 182,089
PROVISION FOR INCOME TAXES 48,011 60,245
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NET INCOME $ 105,020 $ 121,844
=========== =============
EARNINGS PER SHARE $ .04 $ .06
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See notes to consolidated condensed financial statements.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
December 31
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2000 1999
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NET SALES $ 1,040,830 $ 1,104,719
COST OF SALES 746,855 798,233
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Gross profit 293,975 306,486
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OPERATING EXPENSES
Selling expense 89,005 90,895
General and administrative expense 48,063 48,486
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Total operating expenses 137,068 139,381
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Income from operations 156,907 167,105
OTHER INCOME (EXPENSE) (1,517) (2,129)
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Income before income taxes 155,390 164,976
PROVISION FOR INCOME TAXES 48,481 56,833
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NET INCOME $ 106,909 $ 108,143
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EARNINGS PER SHARE $ .08 $ .08
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See notes to consolidated condensed financial statements.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the six months $ 105,020 $ 121,844
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 22,568 24,068
Provision for doubtful accounts 3,210 6,705
Effects of changes in operating assets and liabilities:
Trade and other accounts receivable (63,062) (26,841)
Inventories 107,576 (22,361)
Prepaid expenses 32,243 26,555
Prepaid income taxes 1,158 --
Accounts payable (14,388) 11,978
Accrued liabilities (15,428) 28,174
Income taxes payable 42,133 --
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Net cash provided by operating activities 221,030 170,122
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (445) (29,945)
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CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (50,000) (35,000)
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NET INCREASE IN CASH 170,585 105,177
CASH, BEGINNING OF PERIOD 146,779 206,609
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CASH, END OF PERIOD $ 317,364 $ 311,786
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See notes to consolidated condensed financial statements.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim consolidated
condensed financial statements include all adjustments (consisting only of
normal adjustments) necessary for a fair presentation of the financial position
of Chase General Corporation as of December 31, 2000 and June 30, 2000 and the
results of its operations for the six months and three months ended December 31,
2000 and 1999, and its cash flows for the six months ended December 31, 2000 and
1999.
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. Interim
results are not necessarily indicative of results for a full year.
A summary of the Company's significant accounting policies is presented on pages
19 and 20 (not shown) of its 2000 Annual Report to Shareholders. Users of
financial information produced for interim periods are encouraged to refer to
the footnotes contained in the Annual Report to Shareholders when reviewing
interim financial results. There has been no material change in the accounting
policies followed by the Company during the six months ended December 31, 2000.
NOTE 2 - EARNINGS PER SHARE
The earnings per share was computed on the weighted average of outstanding
common shares as follows:
Six Months Ended Three Months Ended
December 31 December 31
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2000 1999 2000 1999
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Net income $ 105,020 $ 121,844 $ 106,909 $ 108,143
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Preferred dividend requirements:
6% Prior Cumulative Preferred, $5 par value 30,000 30,000 15,000 15,000
5% Convertible Cumulative Preferred,
$20 par value 34,036 34,036 17,018 17,018
Total dividend requirements 64,036 64,036 32,018 32,018
----------- ---------- ----------- -----------
Net income common shareholders $ 40,984 $ 57,808 $ 74,891 $ 76,125
=========== ========== =========== ===========
Weighted average of outstanding
common shares 969,834 969,834 969,834 969,834
=========== ========== =========== ===========
Earnings per share $ .04 $ .06 $ .08 $ .08
=========== ========== =========== ===========
No computation was made on common stock equivalents outstanding because earnings
per share would be anti-dilutive.
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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.
RESULTS OF OPERATIONS
Six Months ended December 31, 2000 and 1999
- -------------------------------------------
Sales:
The Company had no unusual transactions for the six months ended December 31,
2000. The Company realized a gross profit percentage of 26.63% and 27.10% for
the six months ended December 31, 2000 and 1999, respectively. Consolidated net
sales for the six months ended December 31, 2000 of $1,493,783 were 4% below the
$1,558,240 sales in fiscal year 1999's first six months. The loss in net sales
was from the additional allowances given to several customers as a result of
overbuying for the holiday season. No major customer was lost during this first
six months.
Expenses:
Selling, general and administrative expenses were 16.21% of sales in the six
months ended December 31, 2000 compared to 15.2% in the first six months of
1999. Additional costs for a computer consultant working on building a website
caused the increase in administrative costs for 2000.
Inventories at December 31, 2000 were $107,500 lower than at June 30, 2000 since
the Company is entering their slow season of the year. In addition, accounts
payable and accrued expenses are $30,000 lower at December 31, 2000 compared to
June 30, 2000, which also reflects the entrance into the Company's slower
business cycle.
Three Months ended December 31, 2000 and 1999
- ---------------------------------------------
Sales:
The Company realized a gross profit percentage of 28.2% and 27.7% for the three
months ended December 31, 2000 and 1999, respectively. Net sales decreased 6%
over the same period a year ago as a result of the allowances given to several
customers. No major customers were lost during this period.
Expenses:
Selling expenses decreased 2% compared to selling expenses for the three months
ended December 31, 1999. General and administrative expenses decreased 1%
compared to these expenses for the three months ended December 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2000, the Company has no commitments for capitalized
expenditures. Cash increased $170,500 during the current six month period as a
result of completing the busy season and controlling overhead. Working capital
increased approximately $77,000 for the six month period.
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PART II. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
Item 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividend contingency at
December 31, 2000 is $5,963,690.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibit - Number and Description
27. Chase General Corporation and Subsidiary Financial Data
Schedule.
b. Reports on Form 8-K: There were no reports on Form 8-K filed
during October, November, and December, 2000.
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
February 9, 2001 /s/ Barry M. Yantis
- ---------------------------------- ------------------------------------
Date Barry M. Yantis
President and Chief Financial Officer
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