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, 1998
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
As of February 1, 1999 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, 1998
(Unaudited) and June 30, 1998 . . . . . . . . . . . .3
Consolidated Condensed Statements of Operations
Six months ended December 31, 1998 and 1997
(Unaudited) . . . . . . . . . . . . . . . . . . . . .5
Consolidated Condensed Statements of Operations
Three months ended December 31, 1998 and 1997
(Unaudited) . . . . . . . . . . . . . . . . . . . . .6
Consolidated Condensed Statements of Cash Flows
Six months ended December 31, 1998 and 1997
(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, 1998 AND JUNE 30, 1998
DECEMBER 31, JUNE 30,
1998 1998
(Unaudited)
CURRENT ASSETS
Cash $ 335,004 $ 161,093
Trade receivables,
net of allowance 110,453 94,514
Income tax receivable -- 24,710
Inventories:
Finished goods 9,834 47,397
Goods in process 4,421 3,633
Raw materials 64,371 81,377
Packaging materials 90,169 79,006
Prepaid expense 1,824 35,549
Prepaid income taxes -- 1,000
Total current assets 616,076 528,279
PROPERTY AND EQUIPMENT
- AT COST 1,023,603 1,016,799
Less accumulated
depreciation 800,853 774,080
Total property and
equipment 222,750 242,719
TOTAL ASSETS $ 838,826 $ 770,998
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LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31, JUNE 30,
1998 1998
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 25,664 $ 59,194
Accrued expense 16,572 34,928
Estimated liability for
income taxes 45,273 --
Total current liabilities 87,509 94,122
LONG-TERM LIABILITIES
Notes payable, Series B 162,672 185,305
Total liabilities 250,181 279,427
STOCKHOLDERS' EQUITY
Capital stock issued
and outstanding:
Prior cumulative
preferred stock,
$5 par value:
Series A (liquidation
preference $1,200,000
and $1,185,000
respectively) 500,000 500,000
Series B (liquidation
preference $1,155,000
and $1,140,000
respectively) 500,000 500,000
Cumulative preferred stock,
$20 par value:
Series A (liquidation
preference $2,882,750
and $2,853,484
respectively) 1,170,660 1,170,660
Series B (liquidation
preference $469,796
and $465,026
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) (5,877,351) (5,974,425)
Total stockholders'
equity 588,645 491,571
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 838,826 $ 770,998
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
1998 1997
NET SALES $1,481,011 $1,532,910
COST OF SALES 1,106,689 1,149,005
Gross profit 374,322 383,905
OPERATING EXPENSES
Selling expense 151,021 170,514
General and administrative expense 77,155 88,582
Total operating expenses 228,176 259,096
Income from operations 146,146 124,809
OTHER INCOME (EXPENSE) (2,799) (4,944)
Income before income taxes 143,347 119,865
PROVISION FOR INCOME TAXES 46,273 36,748
NET INCOME $ 97,074 $ 83,117
EARNINGS PER SHARE $ .03 $ .02
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
1998 1997
NET SALES $1,089,310 $1,055,758
COST OF SALES 801,641 782,343
Gross profit 287,669 273,415
OPERATING EXPENSES
Selling expense 96,262 102,361
General and administrative expense 38,961 43,793
Total operating expenses 135,223 146,154
Income from operations 152,446 127,261
OTHER INCOME (EXPENSE) (2,152) (2,772)
Income before income taxes 150,294 124,489
PROVISION FOR INCOME TAXES 47,659 37,670
NET INCOME $ 102,635 $ 86,819
EARNINGS PER SHARE $ .07 $ .06
See notes to consolidated condensed financial statements.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
DECEMBER 31
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 97,074 $ 83,117
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 26,773 30,454
Provision for doubtful accounts 3,210 3,210
Effects of changes in operating
assets and liabilities:
Trade accounts receivable (19,149) (32,381)
Income taxes receivable 24,710 --
Inventory 42,618 61,647
Prepaid expenses 34,725 43,357
Accounts payable (33,530) (10,188)
Accrued liabilities 26,917 10,944
Net cash provided by
operating activities 203,348 190,160
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and
equipment (6,804) (24,498)
Net cash used in
investing activities (6,804) (24,498)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on
long-term debt (22,633) (28,648)
Net cash used in
financing activities (22,633) (28,648)
NET INCREASE IN CASH 173,911 137,014
CASH, BEGINNING OF PERIOD 161,093 141,657
CASH, END OF PERIOD $ 335,004 $278,671
See notes to consolidated condensed financial statements.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - 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 pages 8 and 9 (not shown) of its 1998 Annual Report
to Shareholders. Users of financial information produced for
interim periods are encouraged to refer to the footnotes
contained in the Annual Report to Shareholders when reviewing
interim financial results. There has been no material change in
the accounting policies followed by the Company during the
quarter and six months ended December 31, 1998.
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, 1998 and June
30, 1998 and the results of its operations for the six months and
three months ended December 31, 1998 and 1997, and its cash flows
for the six months ended December 31, 1998 and 1997.
NOTE 2 - EARNINGS PER SHARE
The earnings per share was computed on the weighted average of
outstanding common shares as follows:
SIX MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31 DECEMBER 31
1998 1997 1998 1997
Net income $97,074 $83,117 $102,635 $86,819
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 $33,038 $19,081 $ 70,617 $54,801
Weighted average of
outstanding common
shares 969,834 969,834 969,834 969,834
Earnings per share $ .03 $ .02 $ .07 $ .06
No computation was made on common stock equivalents outstanding because
earnings per share would be anti-dilutive.
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ITEM 2
CHASE GENERAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Chase General and its wholly-owned subsidiary are engaged in the
manufacture of confectionery products which are sold primarily to
wholesale houses, grocery accounts, vendors, and repackers.
RESULTS OF OPERATIONS
Six Months ended December 31, 1998 and 1997
Sales:
The Company had no unusual transactions for the six months ended
December 31, 1998. The Company realized a gross profit margin of
25.27% for the six months ended December 31, 1998 as compared to
25.04% for the same period ended a year ago. Consolidated net
sales for the six months ended December 31, 1998 of $1,481,011,
were 3% under the $1,532,910 in 1998's first six months. No
major customer was lost during this first six months.
Expenses:
Selling, general and administrative expenses were 15.4% of sales
in the six months ended December 31, 1998 compared to 16.9% in
the first six months of 1997. Interest expense continues to
decrease because of debt retirement.
Inventories at December 31, 1998 were $42,000 lower than at June
30, 1998 since the Company is entering their slow season of the
year. In addition, accounts payable is $33,500 lower at December
31, 1998 compared to June 30, 1998, which also reflects the
entrance into the Company's slower business cycle.
Three Months ended December 31, 1998 and 1997
Sales:
The Company realized a gross profit margin of 26.4% and 25.9% for
the three months ended December 31, 1998 and 1997, respectively.
Net sales increased 3% over the same period a year ago as a
result of one customer ordering $20,000 - $25,000 of product in
the current quarter of 1998 rather than the first quarter of the
Company's fiscal year. No major customers were lost during this
period.
Expenses:
Reduced brokerage activity for three months ended December 31,
1998 resulted in selling expenses decreasing 6% compared to
selling expenses for the three months ended December 31, 1997.
General and administrative expenses decreased 11% as a result of
lower professional and insurance costs.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1998, the Company has no commitments for
capitalized expenditures. Cash increased $173,911 during the
current six month period as a result of completing the busy
season and controlling overhead. Working capital increased
approximately $94,400 for the six month period.
The officers of the corporation and legal counsel continue to
discuss liquidity and capital resource options to resolve the
$5.7 million cumulative preferred stock dividends in arrears.
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PART II. OTHER INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
Item 3. DEFAULTS UPON SENIOR SECURITIES
a. None
b. The total cumulative preferred stock dividend in
arrears at December 31, 1998 is $5,707,546.
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, 1998.
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
/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 FINANCIAL STATEMENTS CONTAINED IN ITS QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 335,004
<SECURITIES> 0
<RECEIVABLES> 1,308,000
<ALLOWANCES> 20,347
<INVENTORY> 168,795
<CURRENT-ASSETS> 616,076
<PP&E> 1,023,603
<DEPRECIATION> 800,853
<TOTAL-ASSETS> 838,826
<CURRENT-LIABILITIES> 87,509
<BONDS> 162,672
0
2,361,440
<COMMON> 969,834
<OTHER-SE> (2,742,629)
<TOTAL-LIABILITY-AND-EQUITY> 838,826
<SALES> 1,481,011
<TOTAL-REVENUES> 1,483,771
<CGS> 1,106,689
<TOTAL-COSTS> 224,966
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,210
<INTEREST-EXPENSE> 5,559
<INCOME-PRETAX> 143,347
<INCOME-TAX> 46,273
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97,074
<EPS-PRIMARY> .03
<EPS-DILUTED> 0
</TABLE>
