UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
Commission File Number 2-5916
CHASE GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
Missouri 36-2667734
(State of Incorporation) (I.R.S. Employer
(Identification Number)
3600 Leonard Road, St. Joseph, Missouri 64503
(Address of principal executive offices)
Registrants' telephone number, including area code: (816)
279-1625
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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.
x Yes No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
State the aggregate market value of the voting stock held by
non-affiliates of registrant: Voting stock not actively traded.
Therefore, market value of stock unknown as of 60 days prior to
the date of this filing.
Indicate the number of shares outstanding of each of the
registrants' classes of common stock as of the latest practicable
date: 969,834 (one class with $1 par value) as of June 30, 1996.
Location in this filing where exhibit index is located : 37
Total number of pages included in this filing: 46
<PAGE> 1
PART I
ITEM 1 BUSINESS
(a) General development of business
(1) Narrative history of business
Chase General Corporation was incorporated
November 6, 1944 for the purpose of manufacturing confectionery
products. In 1970 Chase General Corporation acquired 100%
interest in its wholly-owned subsidiary, Dye Candy Company.
(Chase General Corporation and Dye Candy Company are sometimes
referred herein as "the Company"). This subsidiary is the main
operating company for this reporting entity. There were no
material acquisitions, dispositions, new developments, or changes
in conducting business during the past five fiscal years.
However, as of June 30, 1987, the working capital of the Company
became impaired due to the maturity of $696,000 of notes payable.
During the fiscal year end 1991 a portion of the notes were paid
in full and the remaining notes were extended to December 20,
1994. Negotiation of a second extension of the notes began
during fiscal year ended 1995. An extension to December 20, 2002
was unanimously accepted December 20, 1995 with the agreement
that this will be the final extension. Refer to "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" contained in Part II of this filing for further
information.
(2) Not applicable.
(b) Segment information
The products of the Chase Candy Division and the Poe
Candy Division of Dye Candy Company are sold to the same types of
customers in the same geographical areas. In addition, both
divisions share a common labor force and utilize the same basic
equipment and raw materials in production. Therefore, due to the
similarity in the marketing and manufacturing of the products,
segment reporting for these divisions is not required to be
disclosed in accordance with FASB 14.
(c) Narrative description of businesses
(1) Description of business done and intended to be
done by dominant single industry
(i) The principal products produced and methods
of distribution are as follows:
(Continued)
<PAGE> 2
ITEM 1 BUSINESS (CONTINUED)
Chase Candy Division of Dye Candy Company
produces a candy bar under the trade name of "Cherry MashR". The
bar is distributed in four case sizes:
(1) 60 count pack
(2) 24 packs of 3 bars per pack
(3) 12 boxes of 24 bars per box
(4) 192 count shipper box
In addition to the regular size bar, a
"mini-mash" is distributed in four case sizes:
(1) 24 - 12 oz. bags
(2) 6 jars - 60 bars per jar
(3) 28 # wrapped bars
(4) 22 # unwrapped bars
The bars are sold primarily to wholesale
candy and tobacco jobbing houses, grocery accounts, and vendors.
"Cherry MashR" bars are marketed in the Midwest region of the
United States. For the years ended June 30, 1996, 1995, and
1994, this division accounted for 52%, 51%, and 48%,
respectively, of the consolidated revenue of Dye Candy Company.
Poe Candy Division of Dye Candy Company
produces coconut, peanut, chocolate, and fudge confectioneries.
These products are distributed in bulk or packaged. Principal
products include:
(1) Coconut Bon-Bons (6) Peanut brittle
(2) Coconut Stacks (7) Coconut cubes
(3) Home Style Poe (8) Peanut clusters
Fudge
(4) Peco Flake (9) Champion Creme
Drops
(5) Peanut Squares (10) Jelly Candies
The Poe line is sold primarily on a Midwest
regional basis to national syndicate accounts, repackers, and
grocery accounts. For the years ended June 30, 1996, 1995, and
1994, this division accounted for 48%, 49%, and 52%,
respectively, of the consolidated revenue of Dye Candy Company.
(ii) Not applicable.
(iii) Raw materials and packaging materials
are produced on a national basis with products coming from most
of the states of the United States. Raw materials and packaging
materials are generally widely available, depending, of course,
on common market influences.
(Continued)
<PAGE> 3
ITEM 1 BUSINESS (CONTINUED)
(iv) The largest single revenue producing
product, the "Cherry MashR" bar is protected by a trademark
registered with the United States Government Patents Office.
Management considers this trademark very important to the
Company. The trademark was renewed during the fiscal year ended
June 30, 1985.
(v) The Company is a seasonal business
whereby the largest volume of sales occur in the spring and fall
of each year. The net income per quarter of the Company varies
in direct proportion to the seasonal sales volume.
(vi) Due to the seasonal nature of the
business, there is a heavier demand on working capital in the
summer and winter months of the year when the Company is building
its inventories in anticipation of fall and spring sales. The
fluctuation of demand on working capital due to the seasonal
nature of the business is common to the confectionery industry.
If necessary, the Company has the ability to borrow short term
funds in early fall to finance operations prior to receiving cash
collections from fall sales. The Company occasionally offers
extended payment terms of up to sixty days. Since this practice
is infrequent, the effect on working capital is minimal.
(vii) No single customer accounted for 10% or
more of the gross sales for the fiscal years ended June 30, 1994.
For the year ending June 30, 1996 and 1995, Associated Wholesale
Grocers of Springfield, MO, accounted for 10.79% and 11.88% of
gross sales, respectively. The loss of this customer would not
have an adverse effect on the Company as customer purchases and
distributes to retail outlets and these outlets would continue to
demand products offered by Dye Candy Company.
(viii) Prompt, efficient service are traits
demanded in the confectionery industry resulting in a continual
low volume of back-orders. Therefore, at no time during the year
does the Company have a significant amount of back-orders.
(ix) Not applicable.
(Continued)
<PAGE> 4
ITEM 1 BUSINESS (CONTINUED)
(x) The confectionery market for the type of
product produced by the divisions of Dye Candy Company is very
competitive and quality minded. The confectionery (candy)
industry in which the divisions operate is highly competitive
with many small companies and, within certain specialized areas,
a few competitors dominate. In the United States, the dominant
competitors in the coconut candy industry are Bradley Candy
Company, Crown Candy Company, Vermico Candy Company, and the Poe
Division of Dye Candy Company with approximately 70% of the
market share among them. In the United States, Sophie Mae and
Old Dominion have approximately 80% of the market share of the
peanut candy business in which the Poe Division operates. Dye
Candy Company sells approximately 90% of its products in the
Midwest region with seasonal orders being shipped to the Southern
and Eastern regions of the United States. Except for the coconut
candy industry, Dye Candy Company is not a dominant competitor in
any of the candy industries in which it competes. Principal
methods of competition the Company uses include quality of
product, price, reduced transportation costs due to central
location, and service. The Company's competitive position is
positively influenced by labor costs being lower than industry
average. Chase General Corporation is firmly established in the
confectionery market and through its operating divisions has many
years' experience associated with its name.
(xi) Not applicable.
(xii) To the best of management's knowledge,
the Company is presently in compliance with all environmental
laws and regulations and does not anticipate any future
expenditures in this regard.
(xiii) The Company employs approximately 25
full time personnel year round which expands to approximately 50
full time personnel during the two busy production seasons.
(d) Foreign and domestic operations and export sales
The Company has no foreign operations or export
sales. In addition, all domestic sales are primarily in the
Midwest region of the United States.
<PAGE> 5
ITEM 2 PROPERTIES
The registrant operates out of two buildings consisting of
the following:
Chase and Poe Warehouse - This building located in St.
Joseph, Missouri is owned by Dye Candy Company, a wholly-owned
subsidiary of the registrant. The facilities are currently
devoted entirely to the storage of supplies, and the warehousing
and shipping of candy products. This warehouse consists of a
sixty-five year old building which is in fair condition and is
adequate to meet present requirements. The warehouse has
approximately 15,000 square feet.
Chase General Office and Dye Candy Company Operating Plant -
The building housing the office and plant is located in St.
Joseph, Missouri, and was originally owned by Chase Building
Corporation, a wholly-owned subsidiary of Dye Candy Company. In
March, 1975, the subsidiary was liquidated by Dye Candy Company.
Subsequently, the Company sold this facility. The property was
leased from the purchaser in March, 1975. Refer to Note 3,
"Notes to Financial Statements," for terms of the lease. The
building contains the general offices of Chase General
Corporation, Dye Candy Company, and its divisions. The
production plant of Dye Candy Company occupies the remainder of
the building. The building was acquired new in 1964 and was
specifically designed for the type of operations conducted by the
registrant. The facility is adequate to meet present
requirements. The operating plant is approximately 20,000 square
feet and the office is approximately 2,000 square feet. The
Company renegotiated the original lease on this building which
expired March 31, 1995. The terms of the new lease began April
1, 1995 and continues for ten years.
ITEM 3 LEGAL PROCEEDINGS
The Company is not, and has not been, a party in any
material pending legal proceedings, other than ordinary
litigation incidental to its business, during the fiscal year
ended June 30, 1996, nor are any such proceedings contemplated.
ITEM 4 RESULTS OF VOTES OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of
the registrant during the fourth quarter of the fiscal year ended
June 30, 1996.
<PAGE> 6
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
(a) Market information
There is no established public trading market for the
common stock (par value $1 per share) of the Company.
(b) Approximate number of security holders
As of June 30, 1996, the latest practicable date, the
approximate number of record holders of common stock was 1,439,
including individual participants in security listings.
(c) Dividends
(1) Dividend history and restrictions
No dividends have been paid during the past three
fiscal years. Refer to Note 1, "Notes to Financial Statements"
for dividend restrictions.
(2) Dividend policy
There is no set policy on the payment of dividends
due to the financial condition of the Company and other factors.
It is not anticipated that cash dividends will be paid in the
foreseeable future. See Item 5(c) (1) for further information.
ITEM 6 SELECTED FINANCIAL DATA
(a) Last five years
<TABLE>
<CAPTION>
06-30-96 06-30-95 06-30-94 06-30-93 06-30-92
<S> <C> <C> <C> <C> <C>
(i) Net sales or
operating
revenue $2,316,031 $2,235,656 $2,476,259 $2,531,740 $2,603,469
(ii) Income from
continuing
operations $ 63,703 $ 60,146 $ 25,421 $ 95,015 $ 129,546
(iii)Income
(loss) from
continuing
operations per
common share* $ (.07) $ (.07) $ (.11) $ (.03) $ -
(iv)Total assets $ 815,954 $ 797,909 $ 784,506 $ 737,169 $ 710,085
(v) Long-term
debt $ 242,980 $ - $ - $ 302,802 $ 320,307
(vi)Cash dividend
declared
per common
share $ - $ - $ - $ - $ -
</TABLE>
(b) No additional years necessary to keep the summary from
being misleading.
* Refer to Note 6, "Notes to Financial Statements" for
computation of income (loss) from continuing operations per
common share.
<PAGE> 7
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(a & b) Liquidity and capital resources
Positive cash flows from operating activities were
generated for fiscal years ended June 30, 1996, 1995 and 1994 in
the amounts of $104,944, $116,893 and $79,135, respectively.
In order to preserve cash for the fall production
season, the Company continues to invest in U.S. Treasury
obligations. The Company redeemed its June 30, 1994 obligation
in early fall of 1994. However, due to the timing of a new
promotional product to be released in early fall 1995, the U.S.
Treasury obligation purchased December 22, 1994 was redeemed
immediately prior to June 30, 1995. Due to a capital asset
purchase in June 1996, the U.S. Treasury obligation purchased
November 24, 1995 was redeemed on May 23, 1996.
Inventory balance of raw materials decreased from June
30, 1995 to June 30, 1996. This is due to timing of product
purchases and commitments to purchase products at different times
during the fiscal year. At June 30, 1995 year end there were
purchase commitments totaling $160,600 to purchase raw materials
from three suppliers. At June 30, 1996, there were purchase
commitments totaling $269,000 to purchase raw materials from four
suppliers. This accounted for a decrease of raw materials at
June 30, 1996. The majority of these commitments have now been
delivered to the Company and are in inventory ready for
processing during the 1996 fall season. Inventory balances of
packaging materials increased from June 30, 1995 to June 30,
1996. There was an increase in packaging materials at June 30,
1996, due to timing of purchase of packaging supplies. In the
prior year certain wrapping materials for Cherry Mash products
were at a low volume whereas at June 30, 1996 these products had
been restored. Packaging materials are purchased in large
volumes and carried for several years due to the high cost to
suppliers to cut dies and print materials. Finished goods
inventory remained comparable to prior year as did goods in
process.
The Company continues to write off equipment that is no
longer useful to the operations of the Company. These write offs
have been immaterial over the past three years. The Company also
continues to replace old equipment on a yearly basis in order to
streamline operations. However, due to cash flow needs in other
areas, the Company has not been able to update the equipment at
any significant level. In June 1996, the Company purchased
$69,443 of new equipment. The equipment was not in operation at
June 30, 1996 but is expected to be ready for production in early
fall of 1996. The equipment consists of a wrapper machine and
metal detector. Any additional cost to have the equipment
completely operational will be minimal.
(Continued)
<PAGE> 8
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Of the original $630,000 Series B notes payable,
$252,656 remain outstanding at June 30, 1996. The Company
received approval effective December 20, 1995 to extend the notes
to December 20, 2002 at the current 6% rate of interest. Of the
$252,656 amount outstanding $9,676 has been classified as a
current liability and $242,980 is classified as long-term at June
30, 1996.
The Company's lease on its manufacturing facility
expired March 31, 1995. The lease was renewed effective April 1,
1995 for a period of 10 years at $2,955 per month.
(c) Results of Operations
Net sales for year ending June 30, 1994 decreased 2.19%
from 1993 and net sales for the year ending June 30, 1995
decreased 9.71% from 1994. The depressed economy due to the 1993
floods adversely affected the Company since the majority of the
Company's market is in the Midwest area. The Company also lost a
customer in 1994 who accounted for 2.7% of the 1993 net sales.
This customer had requested a special size product which the
Company felt was not feasible or profitable to produce based upon
the amount of orders the customer would give the Company.
Therefore, the customer was lost in the entirety. During year
ending June 30, 1995 several small customers discontinued
operations. This along with the customer loss in 1994 were
contributing factors in the 1995 decrease in net sales. However,
during the year ending June 30, 1996 net sales increased 3.60%
over 1995. This increase was attributed to an increase in
promotion of the Cherry Mash line of products, and an aggressive
sales approach to existing customers. It is anticipated that the
increased promotion of this product line will have a continued
positive impact on future sales.
For the year ending June 30, 1996, the Company realized
a .26% decrease in cost of sales compared to fiscal 1995. This
decrease was due to tighter inventory controls and consistent
pricing from suppliers. Cost of sales decreased 2.84% from June
30, 1994 to June 30, 1995 due primarily to a decrease in material
cost and labor expense. Also there was a reduction of workmen's
compensation insurance expense which was attributed to a change
in insurance carriers and the hiring of part-time workers through
a temporary employment agency. Cost of sales for year ending
June 30, 1994 increased 3.88% compared to fiscal 1993 due
primarily to increased supervision salaries and increased
production incentives provided to the plant labor force.
(Continued)
<PAGE> 9
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
It is estimated that gross profit will increase due to
an increase in promotion and due to an increase in sales price of
the Cherry Mash line of candies. It does not appear that the
price increase will affect sales volume of the product as it has
established its market in prior years. Also new products
introduced in prior years can be expected to be offered to the
market at a higher profit margin since acceptance has now been
obtained in the market place.
Selling expenses and general and administrative
expenses have remained constant for the three years included in
the current fiscal reporting period. Interest expense continues
to decline due to a reduction in outstanding balances for notes
payable.
In order to maintain funds to finance operations and
meet debt obligations, it is the intention of management to
continue its efforts to expand the present market area and
increase sales to its customers. Management also intends to
continue tight control on all expenditures.
There has been no material impact from inflation and
changing prices on net sales and revenues or on income from
continuing operations for the last three fiscal years.
The effects of the Tax Reform Act of 1986 on the
Company's liquidity and results of operations for the years
ending June 30, 1994 through 1996 were immaterial and therefore
the Company did not feel it necessary to record any deferred
taxes as the result of the Tax Reform Act. As of the date of
this filing, the Company does not feel that future years'
liquidity and operations will be adversely affected by the Tax
Reform Act of 1986 or the Revenue Reconciliation Act of 1993. In
addition, the Company does not feel that any accounting changes,
as proposed by the Financial Accounting Standards Board, with
effective dates after the date of this report, will have a
material effect on future financial statements of the Company.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements meeting the requirements of Regulation
S-X are contained on pages 12 through 31 of the filing.
(a) Selected quarterly financial data
Exempt from requirements per second major condition for
smaller companies.
(b) Information about oil and gas producing activities
Registrant is not engaged in any oil and gas producing
activities.
<PAGE> 10
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable. There has been no change in
accountants for approximately twenty-one years and no
disagreements on accounting or financial disclosure.
<PAGE> 11
Board of Directors
Chase General Corporation
St. Joseph, Missouri
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheets of
Chase General Corporation and Subsidiary as of June 30, 1996 and
1995 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the
three-year period ended June 30, 1996. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Chase General Corporation and Subsidiary as of June
30, 1996 and 1995, and the results of their operations and their
cash flows for each of the years in the three-year period ended
June 30, 1996, in conformity with generally accepted accounting
principles.
St. Joseph, Missouri
August 21, 1996
<PAGE> 12
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $236,316 $300,570
Trade receivables, less
allowance for doubtful
accounts of $12,757 in
1996 and $12,216 in 1995 74,754 70,851
Inventories:
Finished goods 51,204 67,614
Goods in process 2,024 3,276
Raw materials 42,189 71,059
Packaging materials 104,565 68,354
Prepaid expense 42,659 46,255
Total current assets 553,711 627,979
PROPERTY AND EQUIPMENT
Land 35,000 35,000
Buildings 76,273 76,273
Machinery and equipment 593,754 520,793
Trucks and autos 87,683 54,639
Office equipment 30,155 23,976
Leasehold improvements 119,146 114,102
Total, at cost 942,011 824,783
Less accumulated depreciation 679,768 654,853
Total property and equipment 262,243 169,930
TOTAL ASSETS $815,954 $797,909
</TABLE>
<PAGE> 13
STATEMENT 1
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 46,943 $ 45,763
Series B notes payable,
related parties current
maturities 3,483 104,174
Series B notes payable,
unrelated parties current
maturities 6,193 183,628
Income tax payable 2,164 11,253
Accrued expense:
Interest 16,214 17,718
Other 23,078 24,177
Total current liabilities 98,075 386,713
LONG-TERM LIABILITIES
Series B notes payable,
related parties less
current maturities above 87,969 -
Series B notes payable,
unrelated parties less
current maturities above 155,011 -
Total long-term liabilities 242,980 -
Total liabilities 341,055 386,713
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock,
$5 par value:
Series A (liquidation preference
$1,125,000 and $1,095,000
respectively) 500,000 500,000
Series B (liquidation
preference $ 1,080,000
and $1,050,000 respectively) 500,000 500,000
Cumulative preferred stock,
$20 par value:
Series A (liquidation
preference $2,736,418
and $2,677,885 respectively) 1,170,660 1,170,660
Series B (liquidation
preference $445,948
and $436,409 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
Accumulated deficit (5,991,097) (6,054,800)
Total stockholders' equity 474,899 411,196
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $815,954 $797,909
</TABLE>
These consolidated financial statements should be read
only in connection with the accompanying summary of
significant accounting policies and notes to consolidated
financial statements.
<PAGE> 14
STATEMENT 2
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
NET SALES $2,316,031 $2,235,656 $2,476,259
COST OF SALES 1,771,381 1,715,729 1,970,652
Gross profit 544,650 519,927 505,607
OPERATING EXPENSES
Selling expense 295,561 277,540 309,537
General and
administrative expense 156,875 155,567 151,220
Total operating expenses 452,436 433,107 460,757
Income from operations 92,214 86,820 44,850
OTHER INCOME (EXPENSE)
Interest income 6,362 7,011 4,712
Miscellaneous income 1,643 1,407 2,570
Loss on disposal of equipment (69) (128) (1,267)
Interest expense (16,214) (17,718) (19,536)
Total other income
(expense) (8,278) (9,428) (13,521)
Income before income taxes 83,936 77,392 31,329
PROVISION FOR INCOME TAXES 20,233 17,246 5,908
NET INCOME $ 63,703 $ 60,146 $ 25,421
(LOSS) PER SHARE $ (.07) $ (.07) $ (.11)
</TABLE>
These consolidated financial statements should be read
only in connection with the accompanying summary of
significant accounting policies and notes to consolidated
financial statements.
<PAGE> 15
<TABLE>
<CAPTION> STATEMENT 3
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'EQUITY
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
Prior Cumulative Cumulative Common Paid-in Accumulated
Preferred Stock Preferred Stock Stock Capital Deficit Total
Series A Series B Series A Series B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE (DEFICIT),
JULY 1, 1993 $500,000 $500,000 $1,170,660 $190,780 $969,834 $3,134,722 $(6,140,367) $325,629
Net income - - - - - - 25,421 25,421
BALANCE (DEFICIT),
JUNE 30, 1994 500,000 500,000 1,170,660 190,780 969,834 3,134,722 (6,114,946) 351,050
Net income - - - - - - 60,146 60,146
BALANCE (DEFICIT),
JUNE 30, 1995 500,000 500,000 1,170,660 190,780 969,834 3,134,722 (6,054,800) 411,196
Net income - - - - - - 63,703 63,703
BALANCE (DEFICIT),
JUNE 30, 1996 $500,000 $500,000 $1,170,660 $190,780 $969,834 $3,134,722 $(5,991,097) $474,899
</TABLE>
These consolidated financial statements should be read only in
connection with the accompanying summary of significant accounting
policies and notes to consolidated financial statements.
<PAGE> 16
<TABLE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Collections from customers $2,305,712 $2,239,899 $2,468,802
Interest received 6,362 7,011 4,712
Other income 1,643 1,407 2,570
Income tax refunds - 33,435 9,714
Cost of sales, selling,
general and administrative
expenses paid (2,161,733) (2,141,693) (2,355,152)
Interest paid (17,718) (18,693) (20,845)
Income tax paid (29,322) (4,473) (30,666)
Net cash provided by
operating activities 104,944 116,893 79,135
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of U.S. Treasury
obligation (99,308) (100,827) (99,193)
Purchase of certificate of
deposit (100,000) - -
Purchases of property and
equipment (134,052) (10,161) (35,693)
Proceeds on redemption of U.S.
Treasury obligation 99,308 200,020 101,364
Proceeds on redemption of
certificate of deposit 100,000 - -
Net cash provided by (used in)
investing activities (134,052) 89,032 (33,522)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on bank
notes payable - - (36,000)
Principal payments on notes
payable, Series B (35,146) (15,000) (17,504)
Proceeds from short-term
note payable - - 36,000
Net cash used in
financing activities (35,146) (15,000) (17,504)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (64,254) 190,925 28,109
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 300,570 109,645 81,536
CASH AND CASH EQUIVALENTS,
END OF YEAR $236,316 $300,570 $109,645
<PAGE> 17
STATEMENT 4
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Net income $63,703 $60,146 $25,421
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 41,670 42,903 50,144
Loss on disposal of
equipment 69 128 1,267
Provision for doubtful
accounts 6,416 10,033 6,450
Changes in operating assets
and liabilities:
(Increase) decrease in trade
accounts receivable (10,319) 4,243 (7,457)
(Increase) decrease in
inventories 10,321 (7,709) 4,745
(Increase) decrease in
prepaid expense 3,596 3,937 (25,811)
(Increase) decrease in
prepaid income taxes - 34,955 (15,044)
Increase (decrease) in
accounts payable 1,180 (41,904) 36,018
Increase (decrease) in
income tax payable (9,089) 11,253 -
Increase (decrease) in
accrued liabilities (2,603) (1,092) 3,402
NET CASH PROVIDED BY
OPERATING ACTIVITIES $104,944 $116,893 $79,135
</TABLE>
These consolidated financial statements should be read
only in connection with the accompanying summary of
significant accounting policies and notes to consolidated
financial statements.
<PAGE> 18
CHASE GENERAL CORPORATION AND SUBSIDIARY
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Chase General Corporation was incorporated on November 6, 1944 in
the State of Missouri for the purpose of manufacturing
confectionery products. The Company's fiscal year ends June 30.
Significant accounting policies followed by the Company are
presented below:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Dye Candy Company. All
intercompany transactions have been eliminated in consolidation.
ACCOUNTING METHOD
The Company and its subsidiary use the accrual method of
accounting. Under this method, revenue is recognized when earned
and expense is recognized when the obligation is incurred.
SEGMENT REPORTING OF THE BUSINESS
The subsidiary, Dye Candy Company, operates two divisions, Chase
Candy Company and Poe Candy Company. Operations in Chase Candy
Company involve production and sale of a candy bar marketed under
the trade name "Cherry Mash". Operations in Poe Candy Company
involve production and sale of coconut, peanut, chocolate, and
fudge confectioneries. Division products are sold to the same
type of customers in the same geographical areas. In addition,
both divisions share a common labor force and utilize the same
basic equipment and raw materials. Therefore, due to the
similarities in the products manufactured, segment reporting for
the two divisions has not been disclosed in these financial
statements.
For the year ending June 30, 1996 and June 30, 1995, one customer
accounted for 10.79% and 11.88% of the gross sales respectively.
No single customer accounted for 10% or more of gross sales for
the year ending June 30, 1994.
INVENTORIES
Inventories are carried at the "lower of cost or market value,"
cost being determined on the "first-in, first-out" basis of
accounting.
<PAGE> 19
CHASE GENERAL CORPORATION AND SUBSIDIARY
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PROPERTY AND EQUIPMENT
Depreciation is computed by the straight-line method for
additions prior to 1981, and by the ACRS and MACRS methods for
assets acquired after 1980 for both financial reporting and
income tax purposes. Any difference between the amount of
depreciation determined under the ACRS and MACRS systems and that
determined in accordance with generally accepted accounting
principles is considered to be immaterial.
The Company's property and equipment are being depreciated on
straight-line and accelerated methods over the following
estimated useful lives:
Buildings 25 years
Machinery and equipment 3 - 10 years
Trucks and autos 3 - 5 years
Office equipment 5 - 10 years
Leasehold improvements 8 - 31.5 years
For the years ending June 30, 1996, 1995 and 1994, the
depreciation expense was $41,670, $42,903 and $50,144,
respectively.
CASH AND CASH EQUIVALENTS
The Company considers all liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS
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 and disclosure 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 could differ from those estimates.
This information is an integral part of the accompanying
consolidated financial statements.
<PAGE> 20
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NOTES PAYABLE, SERIES B
On December 1, 1967, the Company issued Collateral Sinking Fund
6% Income Registered Notes in the amount of $680,000. These
notes were issued to extend and consolidate notes and
certificates of indebtedness then held by F. S. Yantis & Co.,
Inc. (Yantis & Co.), aggregating approximately $569,000 together
with unpaid accrued interest of $111,000. Interest is payable
from "surplus net earnings" on the 20th day of December following
the fiscal year end.
Pursuant to a supplemental indenture, dated April 1, 1968 and
executed in compliance with a request by Yantis & Co. in
furtherance of the winding-up of its affairs, the original notes
aggregating $680,000 were reissued in two series designated as A
and B, respectively. The Series A notes aggregating $50,000 had
priority and were retired during the year ended June 30, 1984.
The Series B notes totaling $630,000 are held by the former
shareholders of Yantis & Co. During the years ended June 30,
1996 and 1995, $35,146 and $15,000 principal was paid on the
Series B notes, respectively.
As of June 30, 1996 and 1995, the outstanding Series B notes
total $252,656 and $287,802, respectively. Of these amounts
$91,452 and $104,174 are owed to officers and directors of the
Company.
The Company has agreed to secure the payment of principal and
interest on the notes by the pledge of the capital stock of Dye
Candy Company under an indenture dated December 1, 1967, and
supplemental indenture dated June 30, 1970.
The indenture provides for a sinking fund deposit to be made by
the Company each year of not less than one-fourth of the
Company's fiscal year "surplus net earnings," which exceeds the
amount of interest required to be paid on the outstanding notes.
If at any time the sinking fund deposits aggregate $10,000 or
more, the same will be applied to prepayment of the notes
outstanding. At June 30, 1996 and 1995, all sinking fund
deposits had been disbursed to the noteholders. The "surplus net
earnings" is the amount by which the consolidated net income,
after adding back the current year's interest on the outstanding
notes, exceeds a $25,000 working capital reserve.
See Note 2 for computation of "surplus net earnings" and sinking
fund requirements for years ended June 30, 1996, 1995 and 1994.
(Continued)
<PAGE> 21
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NOTES PAYABLE, SERIES B (CONTINUED)
Principal payments are made by the trustee under terms of the
indenture and may be prepaid at the option of the Company.
During the year ended June 30, 1991, the notes were extended to
December 20, 1994. Effective December 20, 1995, the notes were
extended to December 20, 2002 at the same 6% interest rate and
with the agreement that this will be the final note extension.
Due to the nature of sinking fund requirements, it is not
practicable to include a schedule of future principal payments.
Dividends, other than stock dividends, may not be paid on capital
stock at any time interest on the notes is not current.
NOTE 2 - "SURPLUS NET EARNINGS" AND SINKING FUND REQUIREMENTS
The following is an analysis of the computation of the "surplus
net earnings" and sinking fund requirements for years ended June
30:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
NET INCOME (LOSS)
Chase General Corporation $(18,655) $(18,922) $(23,890)
Dye Candy Company 82,358 79,068 49,311
Consolidated net income 63,703 60,146 25,421
NON-ALLOWANCE EXPENSE DEDUCTION
Interest on indebtedness 16,214 17,718 18,693
Net income basis for
"surplus net earnings" 79,917 77,864 44,114
DEDUCTIONS FROM INCOME BASIS
Set aside as reserve for
accumulation of working capital 25,000 25,000 25,000
"Surplus net earnings" 54,917 52,864 19,114
INTEREST PAYMENT REQUIRED 16,214 17,718 18,693
EXCESS "SURPLUS NET EARNINGS"
OVER INTEREST PAYMENT REQUIRED $ 38,703 $ 35,146 $ 421
SINKING FUND REQUIREMENT $ 9,676 $ 8,787 $ 105
</TABLE>
<PAGE> 22
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - COMMITMENTS
Dye Candy Company leases its manufacturing facilities located at
3600 Leonard Road, St. Joseph, Missouri. The original lease,
which commenced March 31, 1975, was for a twenty-year period and
required a monthly rental fee of $2,263, payable on the first day
of each calendar month. This lease was renegotiated effective
April 1, 1995 for 10 years at $2,955 per month. Rental expense
for the years ended June 30, 1996, 1995 and 1994 totaled $37,723,
$29,232 and $27,156, respectively and is included in cost of
sales.
Future minimum lease payments under this lease are as follows:
Year ending June 30, 1997 $ 35,460
Year ending June 30, 1998 35,460
Year ending June 30, 1999 35,460
Year ending June 30, 2000 35,460
Year ending June 30, 2001 35,460
Later years 132,975
Total $ 310,275
The manufacturing facilities referred to above were owned by Dye
Candy Company prior to March 31, 1975. When the building was
sold on March 31, 1975, the gain on the sale of the building was
included in the income of Dye Candy Company in the year of sale.
Financial Accounting Standards Board Statement 13, Accounting for
leases, calls for the amortization of any profit or loss on a
sale-leaseback transaction to be amortized in proportion to the
amortization of the leased asset. However, the effective date of
FASB 13 was for transactions entered into after January 1, 1977.
As of June 30, 1996, the Company had purchase commitments with
four vendors for approximately $269,000.
<PAGE> 23
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - CAPITAL STOCK
Capital stock authorized, issued and outstanding as of June 30,
1996 and 1995 is as follows:
<TABLE>
<CAPTION>
SHARES
ISSUED AND
AUTHORIZED OUTSTANDING
<S> <C> <C>
Prior Cumulative Preferred Stock,
$5 par value: 240,000
6% Convertible
Series A 100,000
Series B 100,000
Cumulative Preferred Stock,
$20 par value: 150,000
5% Convertible
Series A 58,533
Series B 9,539
Common Stock, $1 par value 2,000,000 969,834
Reserved for conversion of
Preferred Stock - 1,030,166 shares
</TABLE>
Cumulative Preferred Stock dividends in arrears at June 30, 1996
and 1995, totaled $5,387,366 and $5,259,294, respectively. Total
dividends in arrears, on a per share basis, consist of the
following at June 30:
1996 1995
6% Convertible
Series A $11 $11
Series B 11 11
5% Convertible
Series A 47 46
Series B 47 46
(Continued)
<PAGE> 24
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - CAPITAL STOCK (CONTINUED)
Six Percent Convertible Prior Cumulative Preferred Stock may,
upon thirty days prior notice, be redeemed by the Corporation at
$5.25 a share plus unpaid accrued dividends to date of
redemption. In the event of voluntary liquidation, holders of
this stock are entitled to receive $5.25 per share plus accrued
dividends. It may be exchanged for common stock at the option of
the shareholders in the ratio of four common shares for one share
of Series A and 3.75 common shares for one share of Series B.
The Company has the privilege of redemption of 5% convertible
cumulative preferred stock at $21.00 a share plus unpaid accrued
dividends. In the event of voluntary or involuntary liquidation,
holders of this stock are entitled to receive $20.00 a share plus
unpaid accrued dividends. It may be exchanged for common stock
at the option of the shareholders, in the ratio of 3.795 common
shares for one of preferred.
NOTE 5 - PROVISION FOR INCOME TAXES
The provision for income taxes consists of the following as of
June 30:
1996 1995 1994
Federal income tax $15,420 $13,204 $4,357
State income tax 4,813 4,013 1,576
Correction of prior year
provision - 29 (25)
Total provision $20,233 $17,246 $5,908
<PAGE> 25
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - (LOSS) PER SHARE
The (loss) per share was computed on the weighted average of
outstanding common shares during the years as follows:
1996 1995 1994
Net income $63,703 $60,146 $25,421
Preferred dividend requirements:
6% Prior Cumulative Preferred,
$5 par value 60,000 60,000 60,000
5% Convertible Cumulative
Preferred, $20 par value 68,072 68,072 68,072
Total dividend requirements 128,072 128,072 128,072
Net (loss) - common
stockholders $(64,369) $(67,926) $(102,651)
Weighted average of
outstanding common shares 969,834 969,834 969,834
(Loss) per share $ (.07) $ (.07) $ (.11)
No computation was made on common stock equivalents outstanding
at year-end because earnings per share would be anti-dilutive.
NOTE 7 - CONCENTRATIONS OF CREDIT RISK
The Company's confectionery products are sold primarily in the
Midwest region of the United States to repackers, grocery
accounts, and national syndicate accounts. The Company grants
credit terms to substantially all customers.
The Company maintains all of its cash and temporary investments
in one commercial bank located in St. Joseph, Missouri. Balances
on deposits are insured by the Federal Deposit Insurance
Corporation (FDIC) up to specified limits. Balances in excess of
FDIC limits are uninsured. Total cash and temporary investments
held by the bank was $236,316 and $300,570 at June 30, 1996 and
1995, respectively.
<PAGE> 26
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist principally of cash
and cash equivalents, trade receivables and payables, and notes
payable. There are no significant differences between the
carrying value and fair value of any of these financial
instruments.
<PAGE> 27
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - REGISTRANT ONLY FINANCIAL STATEMENTS
CHASE GENERAL CORPORATION
(REGISTRANT ONLY)
CONDENSED BALANCE SHEETS
JUNE 30, 1996 AND 1995
ASSETS
1996 1995
Income tax refund receivable $ 5,853 $ 5,413
Investment in subsidiary - at equity 737,916 711,303
TOTAL ASSETS $743,769 $716,716
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Series B notes payable and
accrued interest,
unrelated parties $171,549 $194,933
Series B notes payable and
accrued interest,
related parties 97,321 110,587
Total liabilities 268,870 305,520
Capital stock 3,331,274 3,331,274
Paid in capital in excess of par 3,134,722 3,134,722
Accumulated (deficit) (5,991,097) (6,054,800)
Total stockholders' equity 474,899 411,196
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $743,769 $716,716
(1) The restricted assets of Dye Candy Company are $815,954 and
$797,909 as of June 30, 1996 and 1995, respectively.
(2) No cash dividends have been paid by the registrants'
wholly-owned subsidiary, Dye Candy Company, during the past three
fiscal years.
(Continued)
<PAGE> 28
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - REGISTRANT ONLY FINANCIAL STATEMENTS (CONTINUED)
CHASE GENERAL CORPORATION
(REGISTRANT ONLY)
CONDENSED STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
1996 1995 1994
REVENUE
Equity in net income of
subsidiary $ 82,358 $ 79,068 $ 49,311
Total revenue 82,358 79,068 49,311
EXPENSE
General and administrative 8,294 6,617 10,939
Interest 16,214 17,718 18,693
Total expense 24,508 24,335 29,632
Income before income taxes 57,850 54,733 19,679
PROVISION (CREDIT) FOR
INCOME TAXES (5,853) (5,413) (5,742)
NET INCOME $ 63,703 $ 60,146 $ 25,421
(Continued)
<PAGE> 29
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - REGISTRANT ONLY FINANCIAL STATEMENTS (CONTINUED)
CHASE GENERAL CORPORATION
(REGISTRANT ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
General and administrative
expenses paid $(8,294) $(6,617) $(10,939)
Interest paid (17,718) (18,693) (20,002)
Income tax refund received 5,413 5,742 7,519
Net cash used in
operating activities (20,599) (19,568) (23,422)
CASH FLOWS FROM INVESTING ACTIVITIES
Advances received from
wholly owned subsidiary 55,745 34,568 40,926
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on
Series B notes payable (35,146) (15,000) (17,504)
NET DECREASE IN CASH AND
CASH EQUIVALENTS - - -
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR - - -
CASH AND CASH EQUIVALENTS,
END OF YEAR $ - $ - $ -
(Continued)
<PAGE> 30
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - REGISTRANT ONLY FINANCIAL STATEMENTS (CONTINUED)
CHASE GENERAL CORPORATION
(REGISTRANT ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
1996 1995 1994
RECONCILIATION OF NET INCOME TO NET
CASH USED IN OPERATING ACTIVITIES
Net income $63,703 $60,146 $25,421
Adjustments to reconcile net
income to net cash
used in operating
activities:
Net income from wholly
owned subsidiary (82,358) (79,068) (49,311)
Changes in operating
assets and liabilities:
Decrease in accrued interest (1,504) (975) (1,309)
(Increase) decrease in
income tax refund
receivable (440) 329 1,777
NET CASH USED IN
OPERATING ACTIVITIES $(20,599) $(19,568) $(23,422)
This information is an integral part of the accompanying
consolidated financial statements.
<PAGE> 31
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Directors
Name Age Periods of Service Terms
as Director
W.A. Yantis, III 53 1980 to present One year
Barry M. Yantis 51 1980 to present One year
Brian A. Yantis 48 07-16-86 to present One year
See Item 10(b) for offices held by Barry M. Yantis and Brian A.
Yantis. W.A. Yantis, III has never held an office with the
Company.
(b) Executive Officers
Years of
Service as
Name Age Position an Officer Term
Barry M. Yantis 51 President and 16 Until successor elected
Treasurer
Brian A. Yantis 48 Vice-President 5 Until successor elected
and Secretary
(c) Certain Significant Employees
There are no significant employees other than above.
(d) Family Relationships
W. A. Yantis, III, Barry M. Yantis, and Brian A. Yantis are
brothers.
(e) Business Experience
(1) Barry M. Yantis, president and treasurer has been an
officer of the Company for sixteen years, eleven years as
vice-president and five years as president. He has been on the
board of directors for sixteen years and has been associated with
the candy business for twenty-one years.
Brian A. Yantis, vice-president and secretary has been
an officer of the Company for five years as vice-president and
since May 1992 as secretary. He has been associated with the
insurance business for twenty-four years and has been a
Vice-President of Rollins, Burdick, and Hunter in Chicago,
Illinois during the past nine years.
(Continued)
<PAGE> 32
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(CONTINUED)
(e) Business Experience (Continued)
W.A. Yantis III, has served as a board member of Chase
General Corporation for sixteen years. He has held the position
of account manager for Prudential Insurance Company Asset
Management Group in Newark, New Jersey during the past year and
in Chicago, Illinois during the prior eight years.
(2) The directors and executive officers listed above are also
the directors and executive officers of Dye Candy Company.
(f) Involvement in Certain Legal Proceedings
Not applicable
(g) Promoters and Control Persons
Not applicable
ITEM 11 - EXECUTIVE COMPENSATION
(a) General
Executive officers are compensated for their services
as set forth in the Summary Compensation Table. These salaries
are approved yearly by the Board of Directors.
(b)
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
Other Restricted
Name and Fiscal Annual Stock Option/ LTIP All other
Principal Position Year End Salary Bonus Compensation Award(s) SARs(#) Payouts Compensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Barry M. Yantis 1) 06-30-96 $ 103,850 - - - - -
Barry M. Yantis 1) 06-30-95 $ 102,840 - - - - -
Barry M. Yantis 1) 06-30-94 $ 90,839 - - - - -
1) CEO
2) No other compensation other than that which is listed in compensation table.
3) No other officers are compensated for their services than those listed in this compensation table.
</TABLE>
(Continued)
<PAGE> 33
ITEM 11 - EXECUTIVE COMPENSATION (CONTINUED)
(c) Option/SAR grants table
Not applicable
(d) Aggregated option/SAR exercises and fiscal year-end
option/SAR value table
Not applicable
(e) Long-term incentive awards table
Not applicable
(f) Defined benefit or actuarial plan disclosure
Not applicable
(g) Compensation of Directors
Directors are not compensated for services on the
board. The directors are reimbursed for travel expenses incurred
in attending board meetings. During the fiscal year 1996,
$1,048, $289 and $-0- of travel expenses were reimbursed to board
members, W.A. Yantis III, Brian A. Yantis, and Barry M. Yantis,
respectively.
(h) Employment contracts and termination of employment and
change in control arrangements
Not applicable
(i) Report on repricing of option/SARs
Not applicable
(j) Additional information with respect to compensation
committee interlocks and insider participation in compensation
decisions
The registrant has no formal compensation committee.
The board of directors, W.A. Yantis III, Brian A. Yantis, and
Barry M. Yantis, who are brothers, annually approve the
compensation of Barry M. Yantis, CEO.
(k) Board compensation committee report on executive
compensation
The board bases the annual salary of the CEO on the
Company's prior year performance. The criteria is based upon,
but is not limited to, market area expansion, gross profit
improvement, control of operating expenses, generation of
positive cash flow, and hours devoted to the business during the
previous fiscal year.
(Continued)
<PAGE> 34
ITEM 11 - EXECUTIVE COMPENSATION (CONTINUED)
(l) Performance graph
Not applicable as there are no dividends available to
distribute to common stockholders after preferred dividends are
met. In addition, there is no market value price for the common
stock (par value $1 per share) as there is no public trading
market for the Company's stock.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
<TABLE>
<CAPTION>
Amounts
and
Nature
of
Beneficial
Title of Class Name and Address Ownership % of Class
(a) Security ownership of certain beneficial owners
<S> <C> <C> <C>
Common; par value
$1 per share W.A. Yantis Trust /1/ 291,577 /2/ 25.3% /3/
c/o Barry Yantis
5605 Osage Drive
St. Joseph, Missouri
64503
(b) Security ownership of management
Common; par value All directors 110,856 /4/ 11.4%
$1 per share and officers
as a group
Prior Cumulative Preferred, W.A. Yantis Trust /1/ 21,533 /5/ 21.5%
$5 par value: Series A, c/o Barry Yantis
6% convertible 5605 Osage Drive
St. Joseph, Missouri
64503
Prior Cumulative Preferred W.A. Yantis Trust /1/ 21,533 /5/ 21.5%
$5 par value: Series B, c/o Barry Yantis
6% convertible 5605 Osage Drive
St. Joseph, Missouri
64503
Cumulative Preferred, W.A. Yantis Trust /1/ 3,017 /5/ 5.2%
$20 par value: Series A, c/o Barry Yantis
$5 convertible 5605 Osage Drive
St. Joseph, Missouri
64503
</TABLE>
(Continued)
<PAGE> 35
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (CONTINUED)
Amounts
and
Nature
of
Beneficial
Title of Class Name and Address Ownership % ofClass
Cumulative Preferred, W.A. Yantis Trust /1/ 630 /5/ 6.6%
$20 par value: Series B, c/o Barry Yantis
$5 convertible 5605 Osage Drive
St. Joseph, Missouri
64503
/1/ W. A. Yantis passed away September 25, 1986. Brian Yantis,
Barry Yantis, and W.A. Yantis, III are the beneficiaries of this
trust and the stock held in this trust will be divided equally
among the beneficiaries. As of June 30, 1996, the assets from
the W.A. Yantis trust have not yet been distributed.
/2/ Includes 180,721 shares which could be received within 30
days upon conversion of preferred stock.
/3/ Reflects the percentage 291,577 shares would represent if
the 180,721 shares above were converted to common stock.
/4/ Represents 110,856 shares owned by W. A. Yantis Trust.
/5/ Held by W. A. Yantis Trust.
(c) No known change of control is anticipated except for the
change in control which will result when the stock from the W. A.
Yantis Trust is distributed to the three beneficiaries.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with management and others
No reportable transactions with management and others,
to which the registrant or its subsidiary was a party, have
occurred since the registrant's last fiscal year. In addition,
there are no such currently proposed transactions.
(b) Certain business relationships
Not applicable
(c) Indebtedness of management
Not applicable
(Continued)
<PAGE> 36
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(CONTINUED)
(d) Transactions with promoters
Not applicable
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Documents filed as part of the Form 10-K
(1) The following are included in Part II of this
report:
Page Number
Independent Auditor's Report 12
Consolidated Balance Sheets -
June 30, 1996 and 1995 13 - 14
Consolidated Statements of Operations
for the years ended June 30, 1996,
1995, and 1994 15
Consolidated Statements of Stockholders'
Equity for the years ended June 30,
1996, 1995, and 1994 16
Consolidated Statements of Cash Flows
for the years ended June 30, 1996,
1995, and 1994 17 - 18
Summary of Significant Accounting Policies 19 - 20
Notes to Consolidated Financial Statements 21 - 27
Registrant Only Financial Statements
(Note 9) 28 - 31
(2) The following are included in Part IV of this
report:
Page Number
Independent Auditor's Report on
Supplemental Schedule 39
Schedule II: Valuation and Qualifying
Accounts, June 30, 1996, 1995, and
1994 40
Exhibit 3i: Amendment to Articles of
Incorporation 41 - 44
Exhibit 3ii: Amendment to By-Laws 45
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth
quarter of the year ended June 30, 1996.
(Continued)
<PAGE> 37
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(c) Exhibits required by Item 601 of Regulation S-K
The following have been previously filed and are
incorporated by reference to prior years' Forms 10-K filed by the
Registrant:
(3) Articles of Incorporation and By-Laws
(21) Subsidiaries of registrant
The following explanations are included in "Notes to
Financial Statements" in Part II of this report:
(4) Rights of security holders including indentures -
Refer to Notes 1 and 4.
(11) Computation of per share earnings - Refer to Note
6.
(21) Subsidiaries of registrant - Refer to "Summary of
Significant Accounting Policies".
(d) Financial statement schedules required by Regulation
S-X
Note 9 included in "Notes to Financial Statements" on
page 28 through 31 was excluded from the annual report to
shareholders.
In addition the Schedule required by Regulation S-X
contained on page 40 and the Amendments to the Articles of
Incorporation and By-Laws required by item 601 of regulation S-K
contained on pages 41 through 45 have been excluded from the
annual report to the shareholders.
SUPPLEMENTAL INFORMATION TO BE FURNISHED, FILED
PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934,
BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934.
(1) With this filing, the Registrant is furnishing to
the Commission four (4) copies of the Proxy Statement regarding
the January 19, 1996 annual meeting mailed to security holders
during the 1996 fiscal year.
(2) During 1997 fiscal year, the Registrant will
furnish a copy of the annual report and any Proxy information to
the Commission at time the aforementioned are mailed to security
holders.
<PAGE> 38
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTAL SCHEDULE
In connection with the audit of the consolidated financial
statements of Chase General Corporation and Subsidiary, we have
also audited supplemental schedule II. In our opinion, this
schedule presents fairly the financial position as set forth
therein, in conformity with generally accepted accounting
principles.
St. Joseph, Missouri
August 21, 1996
<PAGE> 39
SCHEDULE II
<TABLE>
CHASE GENERAL CORPORATION AND ITS SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
JUNE 30, 1996, 1995, AND 1994
<CAPTION>
Column A Column B Column C. Additions Column D Column E
Balance at Charged to Balance
Beginning Costs at end
Description of Period and Expenses Deductions* of Period
<S> <C> <C> <C> <C>
Valuation accounts deducted from
assets to which they apply for
doubtful accounts receivable:
June 30, 1996 $12,216 $ 6,416 $ 5,875 $12,757
June 30, 1995 13,496 10,033 11,313 12,216
June 30, 1994 13,755 6,450 6,709 13,496
</TABLE>
* Represents accounts written off, net of (recoveries), for the
respective years.
This information should be read only in connection
with the accompanying independent auditor's
report on supplemental schedule.
<PAGE> 40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
Date: 9/30/96 By: /s/ Barry M. Yantis
Barry M. Yantis, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated below.
President, Treasurer (Principal Executive
Officer and Chief Financial and Accounting
Officer) and Director
/s/ Barry M. Yantis 9-30-96
Barry M. Yantis Date
Vice-President, Secretary and Director
/s/ Brian A. Yantis 9-30-96
Brian A. Yantis Date
Exhibit 3i
STATE OF MISSOURI
REBECCA MCDOWELL COOK
SECRETARY OF STATE
CORPORATION DIVISION
CERTIFICATE OF AMENDMENT
WHEREAS,
CHASE GENERAL CORPORATION
A CORPORATION ORGANIZED UNDER THE GENERAL AND BUSINESS
CORPORATION LAW HAS DELIVERED TO ME A CERTIFICATE OF
AMENDMENT OF ITS ARTICLES OF INCORPORATION AND HAS IN
ALL RESPECTS COMPLIED WITH THE REQUIREMENTS OF LAW
GOVERNING THE AMENDMENT OF ARTICLES OF INCORPORATION
UNDER THE GENERAL BUSINESS CORPORATION LAW, AND THAT
THE ARTICLES OF INCORPORATION OF SAID CORPORATION ARE
AMENDED IN ACCORDANCE THEREWITH.
IN TESTIMONY WHEREOF, I HAVE SET MY
HAND AND IMPRINTED THE GREAT SEAL OF
THE STATE OF MISSOURI, ON THIS, THE
6TH DAY OF MARCH, 1996.
/s/ Rebecca McDowell Cook
Secretary of State
$25.00
<PAGE>
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF
CHASE GENERAL CORPORATION
The undersigned, Chase General Corporation, a Missouri corporation
(the "Corporation"), for the purpose of amending the Articles of
Incorporation of the Corporation, in accordance with The General
and Business Corporation Law of Missouri, does hereby make and
execute this Certificate of Amendment of Articles of Incorporation
and does hereby certify that:
I. The name of the Corporation is Chase General Corporation,
and the name under which it was originally organized was Chase
Candy Company.
II. The amendment set forth below was adopted by the
shareholders of the Corporation on January 19, 1996.
III. The following resolution of the shareholders sets forth the
amendment adopted:
RESOLVED, that the Articles of Incorporation of the Corporation be
amended by deleting all of the present Article VI and inserting in
lieu thereof the following Article VI:
The number of directors of the Corporation shall be three. Hereafter the
number of the directors shall be fixed by, or in the manner provided in,
the Bylaws of the Corporation. Any change in the number of directors shall
be reported to the Secretary of State of Missouri within 30 calendar days of
such change, or with such other period, if any, as may then be required by
law.
IV. The number of shares of stock of the Corporation outstanding was
1,237,906 and the number of shares entitled to vote on the amendment was
1,237,906 shares.
V. The number of shares of the Corporation voted for the amendment was
694,124 and the number of shares voted against the amendment was none.
<PAGE>
IN WITNESS WHEREOF, this Certificate of Amendment has been executed
on behalf of the Corporation by its President and by its Secretary as of January
19, 1996.
Chase General Corporation
By: /s/ Barry M. Yantis
Barry M. Yantis
President
(CORPORATE SEAL)
ATTEST:
/s/ Brian A. Yantis
Brian A. Yantis
Secretary
STATE OF MISSOURI )
) SS.
COUNTY OF BUCHANAN )
I, Laura Taylor, a notary public, do hereby certify that on this
29th day of February, 1996, personally appeared before me Barry M.
Yantis, who being by me first duly sworn, declared that he is the
President of the Corporation, that he signed the foregoing certificate
as President of the Corporation, and that the statements therein
contained are true.
/s/ Laura Taylor
Notary Public
(NOTARIAL SEAL)
My commission expires: 12-22-96
<PAGE>
Office of Secretary of State
State of Missouri
Jefferson City
65101
Judith K. Moriarty
Secretary of State
STATEMENT OF CHANGE IN NUMBER OF DIRECTORS
Sections 351.055(6), 351.085(4) and 351.315.3 RSMo
**NO FILING FEE - FILE ONE COPY**
Charter No.: 00065761
1. The name of the corporation is Chase General Corporation
The name under which it was originally organized was
Chase Candy Company
2. Effective January 9, 1996 , the number of persons
constituting its board of directors was changed from five (5)
to three (3) .
/s/ Barry M. Yantis 1-30-96
CORPORATE OFFICER DATE
<PAGE>
Exhibt 3ii
STATEMENT OF UNANIMOUS CONSENT
OF THE BOARD OF DIRECTORS
OF
CHASE GENERAL CORPORATION
The undersigned members of the Board of Directors of Chase General
Corporation, a Missouri corporation (the "Corporation"), being all of the
directors of the Corporation, do hereby consent to the adoption of, and do
hereby adopt, the following resolutions.
RESOLVED, that Article III, Section Two of the Bylaws be amended to
change the number of directors of the Corporation from five to three.
FURTHER RESOLVED, that the officers of the Corporation be, and each
hereby is, authorized and directed to execute, acknowledge, deliver,
file and record a Statement of Change in Number of Directors with the
Missouri Secretary of State and to take such other action and execute
and deliver such other instruments as the officer so acting deems
necessary or appropriate to effect the change in the number of directors
of the Corporation.
Dated: January 19, 1996.
/s/ Barry M. Yantis
Barry M. Yantis
/s/ Brian A. Yantis
Brian A. Yantis
/s/ W.A. Yantis, III
W.A. Yantis, III
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CHASE GENERAL CORPORATION CONTAINED IN ITS ANNUAL REPORT
ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 236,316
<SECURITIES> 0
<RECEIVABLES> 87,511
<ALLOWANCES> 12,757
<INVENTORY> 199,982
<CURRENT-ASSETS> 553,711
<PP&E> 942,011
<DEPRECIATION> 679,768
<TOTAL-ASSETS> 815,954
<CURRENT-LIABILITIES> 98,075
<BONDS> 242,980
0
2,361,440
<COMMON> 969,834
<OTHER-SE> (2,856,375)
<TOTAL-LIABILITY-AND-EQUITY> 815,954
<SALES> 2,316,031
<TOTAL-REVENUES> 2,324,036
<CGS> 1,771,381
<TOTAL-COSTS> 446,020
<OTHER-EXPENSES> 69
<LOSS-PROVISION> 6,416
<INTEREST-EXPENSE> 16,214
<INCOME-PRETAX> 83,936
<INCOME-TAX> 20,233
<INCOME-CONTINUING> 63,703
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,703
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
</TABLE>
