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, 1997
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, 1997.
Location in this filing where exhibit index is located : 31
Total number of pages included in this filing: 39
<PAGE>
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) Financial information about industry segments
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>
ITEM 1 BUSINESS (CONTINUED)
Chase Candy Division of Dye Candy Company produces
a candy bar under the trade name of "Cherry Mash
[Registered Trademark]". The bar is distributed
in four case sizes:
(1) 60 count pack
(2) 12 boxes of 24 bars per box
(3) 192 count shipper box
(4) 96 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
(5) 18 - 12 oz. Collector's Tin
The bars are sold primarily to wholesale candy and
tobacco jobbing houses, grocery accounts, and
vendors. "Cherry Mash [Registered Trademark]"
bars are marketed in the Midwest region of the
United States. For the years ended June 30, 1997,
1996, and 1995, this division accounted for 54%,
52%, and 51%, 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 Fudge (8) Peanut clusters
(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, 1997, 1996, and 1995, this division
accounted for 46%, 48%, and 49%, 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>
ITEM 1 BUSINESS (CONTINUED)
(iv) The largest single revenue producing product, the
"Cherry Mash [Registered Trademark]" 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) For the year ending June 30, 1997 and 1996 and
1995, Associated Wholesale Grocers of Springfield,
Mo, accounted for 13.08%, 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>
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>
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-
six 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, 1997, 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, 1997.
<PAGE>
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, 1997, 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.
ITEM 6 SELECTED FINANCIAL DATA
(a) Last five years
06-30-97 06-30-96 06-30-95
(i) Net sales or
operating revenue $2,317,501 $2,316,031 $2,235,656
(ii) Income from
continuing
operations $ 50,174 $ 63,703 $ 60,146
(iii) Income (loss)
from continuing
operations per
common share * $ (.08) $ (.07) $ (.07)
(iv) Total assets $ 836,871 $ 815,954 $ 797,909
(v) Long-term debt $ 207,659 $ 242,980 $ -
(vi) Cash dividend
declared per
common share $ - $ - $ -
06-30-94 06-30-93
(i) Net sales or
operating revenue $2,476,259 $2,531,740
(ii) Income from
continuing
operations $ 25,421 $ 95,015
(iii) Income (loss)
from continuing
operations per
common share * $ (.11) $ (.03)
(iv) Total assets $ 784,506 $ 737,169
(v) Long-term debt $ - $ 302,802
(vi) Cash dividend
declared per
common share $ - $ -
(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>
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, 1997, 1996
and 1995 in the amounts of $8,940, $104,944 and
$116,893, respectively.
At various times during the years, and in anticipation
of heavier cash demands due to seasonal production,
plant improvements, and/or major promotional programs,
it is the Company's practice to invest in short term
U.S. Treasury obligations or financial institution
certificates of deposit. At June 30, 1997, the Company
had $90,000 invested in short term certificates of
deposit to meet the 1997 fall production season. No
funds were invested in temporary investments at June
30, 1996 and 1995.
The Company continually monitors raw material pricing,
and when a price increase/decrease is anticipated
adjustments to inventory levels are made accordingly.
In late spring 1997, predicted weather conditions
dictated a future increase in peanut costs. Therefore,
the Company purchased additional peanut inventory for
its fall production season. In addition, the Company
had $215,189 of outstanding raw material purchase
commitments at June 30, 1997 compared to $269,000 at
June 30, 1996. The above two factors increased raw
material inventory at June 30, 1997. At June 30, 1996,
raw material costs were declining, and accordingly,
June 30, 1996 raw material inventory was lower than
June 30, 1995. Packaging inventory is consistently
maintained at a relatively higher balance than other
inventories since packaging materials are continually
purchased in large volumes and carried for several
years due to the high cost from suppliers to cut dies
and print materials. The modest increase in packaging
supplies at June 30, 1997 is due to the purchase of a
new packaging display case for distribution to
convenience stores. Finished goods inventory increased
from prior years due to timing of production to prepare
for the fall sales. Finished goods are produced when
it is most advantageous from a labor stand point and
stored in the warehouse. Goods in process remained
comparable to prior years.
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 was
ready for production in early fall of 1996. The
equipment consists of a wrapper machine and metal
detector. Additional expenditures of $5,113 were made
during fiscal year ended June 30, 1997 to make the
equipment completely operational. The Company spent an
additional $59,783 during 1997 to update transportation
equipment, add to leasehold improvements, and replace
outdated equipment. Depending on results of operations
and cash flows, the Company is hoping to replace their
antiquated brittle cookers in the next several years
with no set target date.
(Continued)
<PAGE>
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the past six years, the Company has not been
indebted except for the series B notes. Of the
original $630,000 Series B notes payable, $213,953
remain outstanding at June 30, 1997. 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 $213,953 amount outstanding at
June 30, 1997, $6,294 has been classified as a current
liability and $207,659 is classified as long-term.
Realizing the minimum yearly principal payment required
by the note indenture will not satisfy the notes on
December 20, 2002, the Company has accelerated the
principal payments on the notes during the past two
fiscal years. It is anticipated that acceleration of
principal payments will continue if cash is not
required for operations and equipment replacement.
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
Under the leadership of the CEO and his sales staff,
the Company has now stabilized its customer base as
well as the cost of sales, selling, and general and
administrative expenses. Consequently there are no
significant fluctuations in the above expense
categories in the past three years. Certainly some
customers have been lost, but those have been replaced.
The Company continues to look for new markets but only
when the addition of a new market is profitable.
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, 1995 through 1997 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 Taxpayer
Relief Act of 1997. 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.
(Continued)
<PAGE>
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable. Refer to Note 7, "Notes to Financial
Statements" for fair value of financial instruments as
of June 30, 1997.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements meeting the requirements of
Regulation S-X are contained on pages 11 through 25 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.
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-two years and no
disagreements on accounting or financial disclosure.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Chase General Corporation
St. Joseph, Missouri
We have audited the accompanying consolidated balance sheets of
Chase General Corporation and Subsidiary as of June 30, 1997 and
1996 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, 1997. 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, 1997 and 1996, and the results of their operations and their
cash flows for each of the years in the three-year period ended
June 30, 1997, in conformity with generally accepted accounting
principles.
St. Joseph, Missouri
August 21, 1997
<PAGE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and 1996
ASSETS
1997 1996
CURRENT ASSETS
Cash and cash equivalents $ 141,657 $236,316
Trade receivables, less
allowance for doubtful
accounts of $12,714 in 1997
and $12,757 in 1996 83,579 74,754
Inventories:
Finished goods 89,725 51,204
Goods in process 3,560 2,024
Raw materials 92,975 42,189
Packaging materials 115,251 104,565
Prepaid expense 39,791 42,659
Prepaid income taxes 5,996 -
Total current assets 572,534 553,711
PROPERTY AND EQUIPMENT
Land 35,000 35,000
Buildings 76,273 76,273
Machinery and equipment 628,844 593,754
Trucks and autos 91,824 87,683
Office equipment 32,100 30,155
Leasehold improvements 121,356 119,146
Total, at cost 985,397 942,011
Less accumulated depreciation 721,060 679,768
Total property and equipment 264,337 262,243
TOTAL ASSETS $836,871 $815,954
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
CURRENT LIABILITIES
Accounts payable $ 59,162 $ 46,943
Series B notes payable, related
parties current maturities 2,266 3,483
Series B notes payable, unrelated
parties current maturities 4,028 6,193
Income tax payable - 2,164
Accrued expense:
Interest 13,998 16,214
Other 24,685 23,078
* Total current liabilities 104,139 98,075
LONG-TERM LIABILITIES
Series B notes payable, related
parties less current maturities
above 75,177 87,969
Series B notes payable, unrelated
parties less current maturities
above 132,482 155,011
Total long-term liabilities 207,659 242,980
Total liabilities 311,798 341,055
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock,
$5 par value:
Series A (liquidation preference
$1,155,000 and $1,125,000
respectively) 500,000 500,000
Series B (liquidation preference
$ 1,110,000 and $1,080,000
respectively) 500,000 500,000
Cumulative preferred stock,
$20 par value:
Series A (liquidation preference
$2,794,951 and $2,736,418
respectively) 1,170,660 1,170,660
Series B (liquidation preference
$455,487 and $445,948
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 (5,940,923) (5,991,097)
Total stockholders' equity 525,073 474,899
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 836,871 $ 815,954
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>
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 1997, 1996 and 1995
1997 1996 1995
NET SALES $2,317,501 $2,316,031 $2,235,656
COST OF SALES 1,787,350 1,771,381 1,715,729
Gross profit 530,151 544,650 519,927
OPERATING EXPENSES
Selling expense 302,871 295,561 277,540
General and administrative
expense 156,697 156,875 155,567
Total operating expenses 459,568 452,436 433,107
Income from operations 70,583 92,214 86,820
OTHER INCOME (EXPENSE)
Interest income 7,388 6,362 7,011
Miscellaneous income 1,272 1,643 1,407
Loss on disposal of equipment - (69) (128)
Interest expense (13,998) (16,214) (17,718)
Total other income
(expense) (5,338) (8,278) (9,428)
Income before income
taxes 65,245 83,936 77,392
PROVISION FOR INCOME TAXES 15,071 20,233 17,246
NET INCOME $50,174 $63,703 $60,146
(LOSS) PER SHARE OF COMMON
STOCK $ (.08) $ (.07) $ (.07)
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>
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended June 30, 1997, 1996 and 1995
Prior Cumulative Cumulative
Preferred Stock Preferred Stock
Series A Series B Series A Series B
BALANCE (DEFICIT),
JULY 1, 1994 $500,000 $500,000 $1,170,660 $190,780
Net income - - - -
BALANCE (DEFICIT),
JUNE 30, 1995 500,000 500,000 1,170,660 190,780
Net income - - - -
BALANCE (DEFICIT),
JUNE 30, 1996 500,000 500,000 1,170,660 190,780
Net income - - - -
BALANCE (DEFICIT),
JUNE 30, 1997 $ 500,000 $500,000 $ 1,170,660 $ 190,780
Common Paid-in Accumulated
Stock Capital Deficit Total
BALANCE (DEFICIT),
JULY 1, 1994 $969,834 $3,134,722 $(6,114,946) $351,050
Net income - - 60,146 60,146
BALANCE (DEFICIT),
JUNE 30, 1995 969,834 3,134,722 (6,054,800) 411,196
Net income - - 63,703 63,703
BALANCE (DEFICIT),
JUNE 30, 1996 969,834 3,134,722 (5,991,097) 474,899
Net income - - 50,174 50,174
BALANCE (DEFICIT),
JUNE 30, 1997 $969,834 $3,134,722 $(5,940,923) $ 525,073
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>
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 1997, 1996 and 1995
1997 1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES
Collections from customers $2,305,349 $2,305,712 $2,239,899
Interest received 7,388 6,362 7,011
Other income 1,272 1,643 1,407
Income tax refunds - - 33,435
Cost of sales, selling,
general and administrative
expenses paid (2,265,624)(2,161,733) (2,141,693)
Interest paid (16,214) (17,718) (18,693)
Income tax paid (23,231) (29,322) (4,473)
Net cash provided by
operating activities 8,940 104,944 116,893
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of U.S. Treasury
obligation - (99,308) (100,827)
Purchase of certificate of
deposit - (100,000) -
Purchases of property and
equipment (64,896) (134,052) (10,161)
Proceeds on redemption of U.S.
Treasury obligation - 99,308 200,020
Proceeds on redemption of
certificate of deposit - 100,000 -
Net cash provided by (used in)
investing activities (64,896) (134,052) 89,032
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes
payable, Series B (38,703) (35,146) (15,000)
Net cash used in financing
activities (38,703) (35,146) (15,000)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (94,659) (64,254) 190,925
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 236,316 300,570 109,645
CASH AND CASH EQUIVALENTS,
END OF YEAR $141,657 $236,316 $300,570
<PAGE>
1997 1996 1995
RECONCILIATION OF NET INCOME
TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 50,174 $ 63,703 $ 60,146
Adjustments to reconcile
net income to net cash provided
by operating activities:
Depreciation 62,802 41,670 42,903
Loss on disposal of equipment - 69 128
Provision for doubtful accounts 3,327 6,416 10,033
Effects of changes in
operating assets and
liabilities:
Trade accounts receivable (12,152) (10,319) 4,243
Inventories (101,529) 10,321 (7,709)
Prepaid expense 2,868 3,596 3,937
Prepaid income taxes (5,996) - 34,955
Accounts payable 12,219 1,180 (41,904)
Income tax payable (2,164) (9,089) 11,253
Accrued liabilities (609) (2,603) (1,092)
NET CASH PROVIDED BY
OPERATING ACTIVITIES $8,940 $104,944 $116,893
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>
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 grants credit terms to
substantially all customers, consisting of repackers, grocery
accounts, and national syndicate accounts, who are primarily
located in the Midwest region of the United States. 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 and balances 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, 1997, June 30, 1996 and June 30,
1995 one customer accounted for 13.08%, 10.79%, and 11.88% of the
gross sales respectively.
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.
<PAGE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
INVENTORIES
Inventories are carried at the "lower of cost or market value,"
cost being determined on the "first-in, first-out" basis of
accounting.
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, 1997, 1996 and 1995, the
depreciation expense was $62,802, $41,670 and $42,903,
respectively.
This information is an integral part of the accompanying
consolidated financial statements.
<PAGE>
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,
1997 and 1996, $38,703 and $35,146 principal was paid on the
Series B notes, respectively.
As of June 30, 1997 and 1996, the outstanding Series B notes
total $213,953 and $252,656, respectively. Of these amounts
$77,443 and $91,452 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, 1997 and 1996, 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, 1997, 1996 and 1995.
(Continued)
<PAGE>
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:
1997 1996 1995
NET INCOME (LOSS)
Chase General Corporation $(14,737) $(18,655) $(18,922)
Dye Candy Company 64,911 82,358 79,068
Consolidated net income 50,174 63,703 60,146
NON-ALLOWANCE EXPENSE DEDUCTION
Interest on indebtedness 13,998 16,214 17,718
Net income basis for
"surplus net earnings" 64,172 79,917 77,864
DEDUCTIONS FROM INCOME BASIS
Set aside as reserve for
accumulation of working capital 25,000 25,000 25,000
"Surplus net earnings" 39,172 54,917 52,864
INTEREST PAYMENT REQUIRED 13,998 16,214 17,718
EXCESS "SURPLUS NET EARNINGS"
OVER INTEREST PAYMENT REQUIRED $25,174 $38,703 $35,146
SINKING FUND REQUIREMENT $ 6,294 $ 9,676 $ 8,787
<PAGE>
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, 1997, 1996 and 1995 totaled $35,460,
$37,723 and $29,232, respectively and is included in cost of
sales.
Future minimum lease payments under this lease are as follows:
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
Year ending June 30, 2002 35,460
Later years 97,515
Total $ 274,815
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, 1997, the Company had purchase commitments with
two vendors for approximately $215,189.
<PAGE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - CAPITAL STOCK
Capital stock authorized, issued and outstanding as of June 30,
1997 and 1996 is as follows:
Shares
Issued and
Authorized Outstanding
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
Cumulative Preferred Stock dividends in arrears at June 30, 1997
and 1996, totaled $5,515,438 and $5,387,366, respectively. Total
dividends in arrears, on a per share basis, consist of the
following at June 30:
1997 1996
6% Convertible
Series A $12 $11
Series B 11 11
5% Convertible
Series A 48 47
Series B 48 47
(Continued)
<PAGE>
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:
1997 1996 1995
Federal income tax $ 10,630 $ 15,420 $ 13,204
State income tax 3,814 4,813 4,013
Correction of prior
year provision 627 - 29
Total provision $ 15,071 $ 20,233 $ 17,246
<PAGE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - (LOSS) PER SHARE OF COMMON STOCK
The loss per share was computed on the weighted average of
outstanding common shares during the years as follows:
1997 1996 1995
Net income $ 50,174 $ 63,703 $ 60,146
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 $ (77,898) $ (64,369) $ (67,926)
Weighted
average of
outstanding
common shares 969,834 969,834 969,834
Loss per share $ (.08) $ (.07) $ (.07)
No computation was made on common stock equivalents outstanding
at year-end because earnings per share would be anti-dilutive.
NOTE 7 - 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.
This information is an integral part of the accompanying
consolidated financial statements.
<PAGE>
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 54 1980 to present One year
Barry M. Yantis 52 1980 to present One year
Brian A. Yantis 49 07-16-86 to present One year
An insufficient number of proxies were returned by the
shareholders for the January 24, 1997 annual stockholder
meeting. Therefore, the Directors noted above are
continuing for an additional one year term or until a
successor is elected.
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 52 President and 17 Until successor
Treasurer elected
Brian A. Yantis 49 Vice-President 6 Until successor
and Secretary elected
(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 seventeen years,
twelve years as vice-president and six years as
president. He has been on the board of directors
for seventeen years and has been associated with
the candy business for twenty-two years.
Brian A. Yantis, vice-president and secretary has
been an officer of the Company for six years as
vice-president and since May 1992 as secretary.
He has been associated with the insurance business
for twenty-five years and has been a Vice-President
of Rollins, Burdick, and Hunter in Chicago, Illinois
during the past ten years.
(Continued)
<PAGE>
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 seventeen years. He
has held the position of account manager for
Prudential Insurance Company Asset Management
Group in Newark, New Jersey during the past two
years 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)
Summary Compensation Table
Annual Compensation
Name and Other
Principal Fiscal Annual
Position Year End Salary Bonus Compensation
Barry M. Yantis 1) 06-30-97 $103,025 $11,250 $2,240
Barry M. Yantis 1) 06-30-96 $90,950 $10,800 $2,100
Barry M. Yantis 1) 06-30-95 $91,000 $10,000 $1,840
Long Term Compensation
Awards Payouts
Name and Restricted
Principal Stock Option/ LTIP All other
Position Award (s) SARs (#) Payouts Compensation
Barry M. Yantis - - - -
Barry M. Yantis - - - -
Barry M. Yantis - - - -
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.
(Continued)
<PAGE>
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 1997, $581, $124 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
No employment contracts exist with any executive
officers. In addition, there are no contracts
currently in place regarding termination of
employment or change in control arrangements.
(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>
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
Amounts
and
Nature
of
Beneficial
Title of Class Name and Address Ownership % of Class
(a) Security ownership of certain beneficial owners
Common; par value
$1 per share Barry Yantis 97,192/1/ 8.4%/2/
5605 Osage Drive
St. Joseph, Mo.
64503
Brian Yantis 97,192/1/ 8.4%/2/
1210 E. Clarendon
Arlington Heights, IL.
60004
W.A. Yantis III 97,193/1/ 8.4%/2/
29 Calais Rd.
Mendham, N.J.
07945
(b) Security ownership of management
Common; par value
$1 per share All directors and 110,856 11.4%
officers as a group
Prior Cumulative All directors and 21,533 21.5%
Preferred, officers
$5 par value:
Series A, as a group
6% convertible
Prior Cumulative All directors and 21,533 21.5%
Preferred officers
$5 par value:
Series B, as a group
6% convertible
Cumulative Preferred, All directors 3,017 5.2%
$20 par value: and officers
Series A, as a group
$5 convertible
(Continued)
<PAGE>
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (CONTINUED)
Amounts
and
Nature
of
Beneficial
Title of Class Name and Address Ownership % of Class
Cumulative Preferred, All directors 630 6.6%
$20 par value: and officers
Series B, as a group
$5 convertible
(1) Includes 180,721 shares which could be received within
30 days upon conversion of preferred stock.
(2) Reflects the percentage 291,577 shares would represent
if the 180,721 shares above were converted to common
stock.
(c) No known change of control is anticipated.
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>
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 11
Consolidated Balance Sheets - June 30,
1997 and 1996 12 - 13
Consolidated Statements of Operations for
the years ended June 30, 1997, 1996,
and 1995 14
Consolidated Statements of Stockholders'
Equity for the years ended June 30,
1997, 1996, and 1995 15
Consolidated Statements of Cash Flows for
the years ended June 30, 1997, 1996,
and 1995 16 - 17
Summary of Significant Accounting
Policies 18 - 19
Notes to Consolidated Financial
Statements 20 - 25
(2) The following are included in Part IV of this
report:
Page Number
Independent Auditor's Report on
Supplemental Schedules 33
Schedule I: Condensed Financial
Information of Registrant 34 - 37
Schedule II: Valuation and Qualifying
Accounts, June 30, 1997, 1996, and
1995 38
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
fourth quarter of the year ended June 30, 1997.
(Continued)
<PAGE>
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
Schedules required by Regulation S-X contained on
page 34 through 38 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 24, 1997 annual meeting mailed to
security holders during the 1997 fiscal year.
(2) During 1998 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>
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTAL SCHEDULES
In connection with the audit of the consolidated financial
statements of Chase General Corporation and Subsidiary, we have
also audited supplemental schedules I and II. In our opinion,
these schedules present fairly the financial position as set
forth therein, in conformity with generally accepted accounting
principles.
St. Joseph, Missouri
August 21, 1997
<PAGE>
SCHEDULE I
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CHASE GENERAL CORPORATION
(Registrant Only)
CONDENSED BALANCE SHEETS
June 30, 1997 and 1996
ASSETS
1997 1996
Income tax refund receivable $ 4,153 $ 5,853
Investment in subsidiary - at equity 748,871 737,916
TOTAL ASSETS $ 753,024 $ 743,769
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Series B notes payable and accrued
interest, unrelated parties $ 145,441 $ 171,549
Series B notes payable and accrued
interest, related parties 82,510 97,321
Total liabilities 227,951 268,870
Capital stock 3,331,274 3,331,274
Paid in capital in excess of par 3,134,722 3,134,722
Accumulated (deficit) (5,940,923) (5,991,097)
Total stockholders' equity 525,073 474,899
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 753,024 $ 743,769
(1) The restricted assets of 100% consolidated subsidiary, Dye
Candy Company, are $836,871 and $815,954 as of June 30,
1997 and 1996, respectively. See "Notes to Financial
Statements" in Part II of this report for restrictions.
(2) No cash dividends have been paid by the registrants' wholly-
owned subsidiary, Dye Candy Company, during the past three
fiscal years.
(Continued)
<PAGE>
SCHEDULE I
(Continued)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CHASE GENERAL CORPORATION
(Registrant Only)
CONDENSED STATEMENTS OF OPERATIONS
Years Ended June 30, 1997, 1996 and 1995
1997 1996 1995
REVENUE
Equity in net income
of subsidiary $64,911 $82,358 $79,068
Total revenue 64,911 82,358 79,068
EXPENSE
General and administrative 4,892 8,294 6,617
Interest 13,998 16,214 17,718
Total expense 18,890 24,508 24,335
Income before income
taxes 46,021 57,850 54,733
PROVISION (CREDIT) FOR
INCOME TAXES (4,153) (5,853) (5,413)
NET INCOME $50,174 $63,703 $60,146
(Continued)
<PAGE>
SCHEDULE I
(Continued)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CHASE GENERAL CORPORATION
(Registrant Only)
CONDENSED STATEMENTS OF CASH FLOWS
Years Ended June 30, 1997, 1996 and 1995
1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
General and administrative
expenses paid $(4,892) $(8,294) $(6,617)
Interest paid (16,214) (17,718) (18,693)
Income tax refund received 5,853 5,413 5,742
Net cash used in
operating activities (15,253) (20,599) (19,568)
CASH FLOWS FROM INVESTING ACTIVITIES
Advances received from
wholly owned subsidiary 53,956 55,745 34,568
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on
Series B notes payable (38,703) (35,146) (15,000)
NET DECREASE IN CASH AND
CASH EQUIVALENTS - - -
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR - - -
CASH AND CASH EQUIVALENTS,
END OF YEAR $ - $ - $ -
(Continued)
<PAGE>
SCHEDULE I
(Continued)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CHASE GENERAL CORPORATION
(Registrant Only)
CONDENSED STATEMENTS OF CASH FLOWS
Years Ended June 30, 1997, 1996 and 1995
1997 1996 1995
RECONCILIATION OF NET INCOME TO NET
CASH USED IN OPERATING ACTIVITIES
Net income $50,174 $63,703 $60,146
Adjustments to reconcile
net income to net cash
used in operating
activities:
Net income from wholly
owned subsidiary (64,911) (82,358) (79,068)
Effects of changes in
operating assets and
liabilities:
Accrued interest (2,216) (1,504) (975)
Income tax refund
receivable 1,700 (440) 329
NET CASH USED IN
OPERATING ACTIVITIES $(15,253) $(20,599) $(19,568)
This information should be read only in connection with
the accompanying independent auditor's report on
supplemental schedules.
<PAGE>
SCHEDULE II
CHASE GENERAL CORPORATION AND ITS SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
June 30, 1997, 1996, and 1995
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Balance
Beginning Costs and at end
Description of Period Expenses Deductions* of Period
Valuation
accounts
deducted from
assets to which
they apply for
doubtful
accounts
receivable:
June 30,
1997 $12,757 $3,327 $3,370 $12,714
June 30,
1996 12,216 6,416 5,875 12,757
June 30,
1995 13,496 10,033 11,313 12,216
* 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 schedules.
<PAGE>
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: 10/3/97 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
Barry M. Yantis Date: 10/3/97
Vice-President, Secretary and
Director
/s/ Brian A. Yantis
Brian A. Yantis Date: 10/3/97
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 141,657
<SECURITIES> 0
<RECEIVABLES> 96,293
<ALLOWANCES> 12,714
<INVENTORY> 301,511
<CURRENT-ASSETS> 572,534
<PP&E> 985,397
<DEPRECIATION> 721,060
<TOTAL-ASSETS> 836,871
<CURRENT-LIABILITIES> 104,139
<BONDS> 207,659
0
2,361,440
<COMMON> 969,834
<OTHER-SE> (2,806,201)
<TOTAL-LIABILITY-AND-EQUITY> 836,871
<SALES> 2,317,501
<TOTAL-REVENUES> 2,326,161
<CGS> 1,787,350
<TOTAL-COSTS> 2,243,591
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,327
<INTEREST-EXPENSE> 13,998
<INCOME-PRETAX> 65,245
<INCOME-TAX> 15,071
<INCOME-CONTINUING> 50,174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,174
<EPS-PRIMARY> (.08)
<EPS-DILUTED> 0
</TABLE>
