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, 2001
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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, 2002 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, 2001
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - December 31, 2001
(Unaudited) and June 30, 2001..................................... 3
Consolidated Condensed Statements of Operations
Three months ended December 31, 2001 and 2000 (Unaudited)......... 5
Consolidated Condensed Statements of Operations
Six months ended December 31, 2001 and 2000 (Unaudited)........... 6
Consolidated Condensed Statements of Cash Flows
Six months ended December 31, 2001 and 2000 (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 4. Submission of Matters to a Vote of Security Holders..............10
Item 6. Exhibits and Reports on Form 8-K.................................10
Signatures................................................................10
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PART I - FINANCIAL INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
December 31, 2001 and June 30, 2001
(Unaudited)
ASSETS
December 31, June 30,
2001 2001
------------- ------------
CURRENT ASSETS
Cash $ 345,312 $ 117,114
Trade receivables, net of allowance 130,266 100,494
Income tax receivable -- 7,053
Inventories
Finished goods 21,445 73,138
Goods in process 4,336 1,943
Raw materials 68,978 80,592
Packaging materials 65,494 64,536
Prepaid expense 1,884 34,606
Prepaid income taxes -- 11,220
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Total current assets 637,715 490,696
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PROPERTY AND EQUIPMENT - AT COST 1,121,276 1,117,639
Less accumulated depreciation 915,775 893,434
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Total property and equipment 205,501 224,205
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TOTAL ASSETS $ 843,216 $ 714,901
========== ===========
3
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
December 31, June 30,
2001 2001
------------ -----------
CURRENT LIABILITIES
Accounts payable $ 88,230 $ 46,002
Accrued expense 20,690 35,301
Income taxes payable 31,671 --
----------- -----------
Total current liabilities 140,591 81,303
LONG-TERM LIABILITIES
Notes payable, Series B 51,010 77,672
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Total liabilities 191,601 158,975
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STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock, $5 par value:
Series A (liquidation preference $1,290,000
and $1,275,000 respectively) 500,000 500,000
Series B (liquidation preference $1,245,000
and $1,230,000 respectively) 500,000 500,000
Cumulative preferred stock, $20 par value:
Series A (liquidation preference $3,058,351
and $3,029,083 respectively) 1,170,660 1,170,660
Series B (liquidation preference $498,411
and $493,643 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) (5,814,381) (5,910,070)
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Total stockholders' equity 651,615 555,926
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 843,216 $ 714,901
=========== ===========
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
----------------------
2001 2000
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NET SALES $979,472 $1,040,830
COST OF SALES 668,385 746,855
-------- ----------
Gross profit 311,087 293,975
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OPERATING EXPENSES
Selling expense 89,910 89,005
General and administrative expense 54,682 48,063
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Total operating expenses 144,592 137,068
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Income from operations 166,495 156,907
OTHER EXPENSE (706) (1,517)
-------- ----------
Income before income taxes 165,789 155,390
PROVISION FOR INCOME TAXES 47,224 48,481
-------- ----------
NET INCOME $118,565 $ 106,909
======== ==========
EARNINGS PER SHARE $ .09 $ .08
======== ==========
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
--------------------------
2001 2000
---------- ----------
NET SALES $1,291,449 $1,493,783
COST OF SALES 910,023 1,095,964
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Gross profit 381,426 397,819
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OPERATING EXPENSES
Selling expense 139,168 145,721
General and administrative expense 104,182 96,471
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Total operating expenses 243,350 242,192
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Income from operations 138,076 155,627
OTHER EXPENSE (1,163) (2,596)
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Income before income taxes 136,913 153,031
PROVISION FOR INCOME TAXES 41,224 48,011
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NET INCOME $ 95,689 $ 105,020
========== ==========
EARNINGS PER SHARE $ .03 $ .04
========== ==========
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,
--------------------------
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the six months $ 95,689 $ 105,020
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 22,341 22,568
Provision for doubtful accounts 3,210 3,210
Effects of changes in operating assets
and liabilities:
Trade and other accounts receivable (25,929) (63,062)
Inventories 59,956 107,576
Prepaid expenses 32,722 32,243
Prepaid income taxes 11,220 1,158
Accounts payable 42,228 (14,388)
Accrued liabilities (14,611) (15,428)
Income taxes payable 31,671 42,133
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Net cash provided by operating activities 258,497 221,030
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (3,637) (445)
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CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (26,662) (50,000)
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NET INCREASE IN CASH 228,198 170,585
CASH, BEGINNING OF PERIOD 117,114 146,779
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CASH, END OF PERIOD $ 345,312 $ 317,364
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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, 2001 and June 30, 2001, and the
results of its operations for the six months and three months ended December 31,
2001 and 2000, and its cash flows for the six months ended December 31, 2001 and
2000.
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 2001 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, 2001.
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
----------------------- -------------------------
2001 2000 2001 2000
-------- -------- --------- --------
Net income $ 95,689 $105,020 $118,565 $106,909
-------- -------- -------- --------
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 $ 31,653 $ 40,984 $ 86,547 $74,891
======== ======== ======== =======
Weighted average of outstanding
common shares 969,834 969,834 969,834 969,834
-------- -------- -------- -------
Earnings per share $ .03 $ .04 $ .09 $ .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
Three Months ended December 31, 2001 and 2000
- ---------------------------------------------
Sales:
The Company realized a gross profit percentage of 31.76% and 28.24% for the
three months ended December 31, 2001 and 2000, respectively. Net sales decreased
6% over the same period a year ago as a result of several customers closing
retail locations.
Expenses:
Selling expenses of $89,910 were comparable to selling expenses for the three
months ended December 31, 2000 of $89,005. General and administrative expenses
increased 14% compared to these expenses for the three months ended December 31,
2000. These increased expenses were for insurance and website updates.
Six Months ended December 31, 2001 and 2000
- -------------------------------------------
Sales:
The Company had no unusual transactions for the six months ended December 31,
2001. The Company realized a gross profit percentage of 29.53% and 26.63% for
the six months ended December 31, 2001 and 2000, respectively. Consolidated net
sales for the six months ended December 31, 2001 of $1,291,449 were 14% below
the $1,493,783 sales in fiscal year 2000's first six months. The loss in net
sales was due to less repeat sales from one customer who closed several retail
outlets in Chase's territory. No major customer was lost during this first six
months.
Expenses:
Selling, general and administrative expenses were 18.84% of sales in the six
months ended December 31, 2001 compared to 16.21% in the first six months of
2000. Additional costs for a computer consultant working on the Company's
website and insurance caused the increase in administrative costs for 2001.
Inventories at December 31, 2001 were $60,000 lower than at June 30, 2001 since
the Company is entering its slow season of the year. In addition, accounts
payable and accrued expenses are $27,600 higher at December 31, 2001 compared to
June 30, 2001, which is in direct relation to accounts receivable increasing
$30,000.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2001, the Company has no commitments for capitalized
expenditures. Cash increased $228,000 during the current six month period as a
result of completing the busy season and controlling overhead. Working capital
increased approximately $87,700 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, 2001 is $6,091,762.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. None submitted
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibit - None required
b. Reports on From 8-K: There were no reports on From 8-K filed during
October, November, and December 2001.
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
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Registrant
- ---------------------------- -------------------------------------
Date Barry M. Yantis
President and Chief Financial Officer
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