FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
Commission File Number 2-5916
CHASE GENERAL CORPORATION
(Exact name of registrant as specified in its Charter)
Missouri 36-2667734
State incorporation I.R.S. Employer Identification Number
3600 Leonard Road, St. Joseph, Missouri 64503
(Address of principal executive offices) (Zip Code)
(816) 279-1625
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports, required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No ____
Indicate the number of shares outstanding of the issuer's Common
Stock, as of the latest practicable date: 969,834 shares of the
Company's common stock ($1.00 par value) were outstanding
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CHASE GENERAL CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - December 31, 1997
(Unaudited) and June 30, 1997 . . . . . . . . . . . . . . .3
Consolidated Condensed Statements of Operations
Six months ended December 31, 1997 and 1996
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . .5
Consolidated Condensed Statements of Operations -
Three months ended December 31, 1997 and 1996
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . .6
Consolidated Condensed Statements of Cash Flows -
Six months ended December 31, 1997 and 1996
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . .7
Notes to Consolidated Condensed Financial Statements. . . . .8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . .9
Part II - Other Information
Item 3. Defaults Upon Senior Securities . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 10
<PAGE>
PART I. FINANCIAL INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, 1997 AND JUNE 30, 1997
DECEMBER 31, JUNE 30,
1997 1997
(Unaudited)
CURRENT ASSETS
Cash $ 278,671 $ 141,657
Receivables, net of allowance 112,750 83,579
Inventories:
Finished goods 29,251 89,725
Goods in process 6,295 3,560
Raw materials 101,315 92,975
Packaging materials 103,003 115,251
Prepaid expense 2,430 39,791
Prepaid income taxes -- 5,996
Total current assets 633,715 572,534
PROPERTY AND EQUIPMENT - AT COST 1,000,461 985,397
Less accumulated depreciation 742,080 721,060
Total property and equipment 258,381 264,337
TOTAL ASSETS $ 892,096 $ 836,871
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LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31, JUNE 30,
1997 1997
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 48,974 $ 59,162
Notes payable, Series B
current maturities -- 6,294
Accrued expense 20,103 38,683
Estimated liability for
income taxes 29,524 --
Total current liabilities 98,601 104,139
LONG-TERM LIABILITIES
Notes payable, Series B, less
current maturities above 185,305 207,659
Total liabilities 283,906 311,798
STOCKHOLDERS' EQUITY
Capital stock issued and
outstanding:
Prior cumulative preferred
stock, $5 par value:
Series A (liquidation
preference $1,170,000
and $1,155,000
respectively) 500,000 500,000
Series B (liquidation
preference $1,125,000
and $1,110,000
respectively) 500,000 500,000
Cumulative preferred stock,
$20 par value:
Series A (liquidation
preference $2,824,217
and $2,794,951
respectively) 1,170,660 1,170,660
Series B (liquidation
preference $460,257
and $455,487
respectively) 190,780 190,780
Common stock, $1 par value 969,834 969,834
Paid-in capital in excess
of par 3,134,722 3,134,722
Retained earnings (deficit) (5,857,806) (5,940,923)
Total stockholders' equity 608,190 525,073
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 892,096 $ 836,871
See notes to consolidated condensed financial statements.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED
DECEMBER 31
1997 1996
NET SALES $ 1,532,910 $ 1,795,953
COST OF SALES 1,149,005 1,278,330
Gross profit 383,905 517,623
OPERATING EXPENSES
Selling expense 170,514 199,808
General and administrative expense 88,582 77,933
Total operating expenses 259,096 277,741
Income from operations 124,809 239,882
OTHER INCOME (EXPENSE) (4,944) (6,197)
Income before income taxes 119,865 233,685
PROVISION FOR INCOME TAXES 36,748 81,970
NET INCOME $ 83,117 $ 151,715
EARNINGS PER SHARE $ .02 $ .09
See notes to consolidated condensed financial statements.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31
1997 1996
NET SALES $ 1,055,758 $ 1,263,690
COST OF SALES 782,343 877,935
Gross profit 273,415 385,755
OPERATING EXPENSES
Selling expense 102,361 140,010
General and administrative expense 43,793 41,080
Total operating expenses 146,154 181,090
Income from operations 127,261 204,665
OTHER INCOME (EXPENSE) (2,772) (3,253)
Income before income taxes 124,489 201,412
PROVISION FOR INCOME TAXES 37,670 75,535
NET INCOME $ 86,819 $ 125,877
EARNINGS PER SHARE $ .06 $ .09
See notes to consolidated condensed financial statements.
<PAGE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
DECEMBER 31
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 83,117 $ 151,715
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 30,454 25,753
Provision for doubtful accounts 3,210 3,210
Effects of changes in
operating assets and liabilities:
Accounts receivable (32,381) (59,392)
Inventory 61,647 (61,878)
Prepaid expenses 43,357 40,214
Accounts payable (10,188) 48,988
Accrued expense and
estimated liability for
income taxes 10,944 43,195
Net cash provided by
operating activities 190,160 191,805
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (24,498) (19,015)
Net cash used in
investing activities (24,498) (19,015)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on
long-term debt (28,648) (34,033)
Net cash used in
financing activities (28,648) (34,033)
NET INCREASE IN CASH 137,014 138,757
CASH, BEGINNING OF PERIOD 141,657 236,316
CASH, END OF PERIOD $ 278,671 $ 375,073
See notes to consolidated condensed financial statements.
<PAGE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. Interim results are not necessarily indicative of
results for a full year.
A summary of the company's significant accounting policies is
presented on page 8 (not shown) of its 1997 Annual Report to
Shareholders. Users of financial information produced for
interim periods are encouraged to refer to the footnotes
contained in the Annual Report to Shareholders when reviewing
interim financial results. There has been no material change in
the accounting policies followed by the Company during 1997.
In the opinion of management, the accompanying interim
consolidated condensed financial statements contain all
adjustments necessary to present fairly Chase General
Corporation's financial position as of December 31, 1997 and June
30, 1997 and the results of its operations for the six months and
three months ended December 31, 1997 and 1996, and its cash flows
for the six months ended December 31, 1997 and 1996.
NOTE 2 - EARNINGS PER SHARE
The earnings per share was computed on the weighted average of
outstanding common shares as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31 DECEMBER 31
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net income $ 83,117 $ 151,715 $ 86,819 $ 125,877
Preferred dividend requirements:
6% Prior Cumulative Preferred,
$5 par value 30,000 30,000 15,000 15,000
5% Convertible Cumulative Preferred,
$20 par value 34,036 34,036 17,018 17,018
Total dividend requirements 64,036 64,036 32,018 32,018
Net income common
shareholders $ 19,081 $ 87,679 $ 54,801 $ 93,859
Weighted average of outstanding
common shares 969,834 969,834 969,834 969,834
Earnings per share $ .02 $ .09 $ .06 $ .09
</TABLE>
No computation was made on common stock equivalents outstanding because
earnings per share would be anti-dilutive.
<PAGE>
ITEM 2
CHASE GENERAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Chase General and its wholly-owned subsidiary are engaged in the
manufacture of confectionery products which are sold primarily to
wholesale houses, grocery accounts, vendors, and repackers.
RESULTS OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
Sales:
The Company had no unusual transactions for the six months ended
December 31, 1997. The Company realized a gross profit margin of
25.04% for the six months ended December 31, 1997 as compared to
28.82% for the same period ended a year ago. Net sales decreased
15% over the same period a year ago as a result of non-recurring
sales to customers.
Expenses:
Selling expenses were also 15% lower than the same period a year
ago as a result of reduced marketing efforts on low volume
customers. General and administrative expenses remained
consistent compared with the same period a year ago. Interest
expense continues to decrease because of debt retirement.
Inventories at December 31, 1997 were $62,000 lower than at June
30, 1997 due to decreased finished goods on hand.
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
Sales:
The Company realized a gross profit margin of 25.9% and 30.52%
for the three months ended December 31, 1997 and 1996,
respectively. Net sales decreased 16% over the same period a
year ago. No major customers were lost during this period.
Expenses:
Reduced brokerage activity for three months ended December 31,
1997 resulted in selling expenses decreasing 27% as compared to
selling expenses for the three months ended December 31, 1996.
General and administrative expenses remained consistent compared
with the same period a year ago.
Accounts payable are lower than at June 30, 1997 as a result of
decreased inventory on hand at December 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1997, the Company has no commitments for
capitalized expenditures. Cash increased $137,014 during the
current six month period as a result of completing the busy
season and controlling overhead. Working capital increased
approximately $66,700 for the six month period.
The officers of the corporation and legal counsel continue to
discuss liquidity and capital resource options to resolve the $5
million cumulative preferred stock dividends in arrears.
(Continued)
<PAGE>
PART II. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividend in
arrears at December 31, 1997 is $5,579,474.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits - None
b. Reports on Form 8-K: There were no reports on
Form 8-K filed during October, November, and
December, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CHASE GENERAL CORPORATION
Registrant
March 2, 1998 /s/ Barry M. Yantis
Date Barry M. Yantis
President and Chief Financial Officer
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 278,671
<SECURITIES> 0
<RECEIVABLES> 128,674
<ALLOWANCES> 15,924
<INVENTORY> 239,864
<CURRENT-ASSETS> 633,715
<PP&E> 1,000,461
<DEPRECIATION> 742,080
<TOTAL-ASSETS> 892,096
<CURRENT-LIABILITIES> 98,601
<BONDS> 185,305
0
2,361,440
<COMMON> 969,834
<OTHER-SE> (2,723,084)
<TOTAL-LIABILITY-AND-EQUITY> 892,096
<SALES> 1,532,910
<TOTAL-REVENUES> 1,534,385
<CGS> 1,149,005
<TOTAL-COSTS> 254,816
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,280
<INTEREST-EXPENSE> 6,419
<INCOME-PRETAX> 119,865
<INCOME-TAX> 36,748
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,117
<EPS-PRIMARY> .02
<EPS-DILUTED> 0
</TABLE>
