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, 1999
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 August 24,
1999.
Location in this filing where exhibit index is located : 32
Total number of pages included in this filing: 40
<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 a
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 the 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 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. Due to the
similarities in the products manufactured, segment
reporting for the two divisions is not maintained
by Management and, accordingly, is not available
for inclusion in this filing.
(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:
<PAGE>
ITEM 1 BUSINESS (CONTINUED)
CHASE CANDY DIVISION OF DYE CANDY
COMPANY produces a candy bar under the
trade name of "Cherry Mash". 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) 23 # wrapped bars
(4) 22 # unwrapped bars
The bars are sold primarily to wholesale
candy and tobacco jobbing houses,
grocery accounts, and vendors. "Cherry
Mash" bars are marketed in the Midwest
region of the United States. For the
years ended June 30, 1999, 1998, and
1997, this division accounted for 56%,
55%, and 54%, 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, 1999, 1998, and 1997, this
division accounted for 44%, 45%, and
46%, 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.
<PAGE>
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. This
trademark expires in the year 2002.
Management and its legal representatives
do not expect any impediment to renewing
this trademark prior to its expiration.
(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 years ending June 30, 1999,
1998, and 1997, Associated Wholesale
Grocers, accounted for 19.64%, 18.87%
and 19.67% of gross sales,
respectively. For the year ending June
30, 1999, Wal-Mart and its affiliates
accounted for 12.06% of gross sales.
The loss of Associated Wholesale Grocers
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.
However, due to the affiliation certain
outlets have with Wal-Mart, a loss of
this customer would reduce gross sales.
The Company continues to seek additional
markets for its products.
(viii) Prompt, efficient service are traits
demanded in the confectionery industry,
which results 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.
<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. Dye Candy
Company's Shares in the coconut industry
approximates 15% to 20% annually. This does not
vary significantly from year to year. 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. This expands to
approximately 50 full time personnel during the
two busy production seasons in spring and fall.
(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-seven
year old building which is in fair condition and
is adequate to meet present requirements. The
warehouse has approximately 15,000 square feet and it
is not encumbered.
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, 1999, 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, 1999.
<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 August 24, 1999, 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
<TABLE>
<CAPTION>
06-30-99 06-30-98 06-30-97 06-30-96 06-30-95
<S> <C> <C> <C> <C> <C>
(i) NET SALES OR
OPERATING REVENUE $2,134,920 $2,113,777 $2,317,501 $2,316,031 $2,235,656
(ii) INCOME (LOSS)
FROM CONTINUING
OPERATIONS $ 49,262 $ (33,502) $ 50,174 $ 63,703 $ 60,146
(iii) INCOME (LOSS)
FROM CONTINUING
OPERATIONS PER
COMMON SHARE<F*> $ (.09) $ (.17) $ (.08) $ (.07) $ (.07)
(iv) TOTAL ASSETS $ 798,961 $ 770,998 $ 837,871 $ 815,954 $ 797,909
(v) LONG-TERM DEBT $ 162,672 $ 185,305 $ 207,659 $ 242,980 $ --
(vi) CASH DIVIDEND
DECLARED PER
COMMON SHARE $ -- $ -- $ -- $ -- $ --
(b) No additional years are necessary to keep the summary from being misleading.
<FN>
<F*>
Refer to Note 6, "Notes to Financial Statements" for computation of income (loss) from
continuing operations per common share.
</FN>
</TABLE>
<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, 1999,
1998, and 1997 in the amounts of $99,294, $93,720,
and $8,940, 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, 1999, 1998, and 1997 the
Company had $150,000, $100,000, and $90,000,
respectively invested in short term certificates
of deposit to meet the 1999, 1998, and 1997 fall
production season.
The Company continually monitors raw material
pricing, and when a price increase/decrease is
anticipated adjustments to inventory levels are
made accordingly. Raw material inventory
decreased slightly when comparing 1998 to 1997.
In late spring 1997, predicted weather conditions
dictated a future increase in peanut costs.
Therefore, the Company purchased additional peanut
inventory for its 1997 fall production season.
With stable weather conditions being predicted for
1998, the additional purchase of peanut inventory
was not necessary. Purchase commitments for
peanuts as of June 30, 1998 were comparable to
those at June 30, 1997. Raw materials decreased
approximately $28,000 from June 30, 1998 to June
30, 1999. The Company had approximately $23,000
less chocolate, peanuts and coconut in inventory
than at June 30, 1998. Purchase commitments for
chocolate, peanuts and coconut were $113,000 less
than at June 30, 1998. The Company watches
markets for these commodities and purchases are
made accordingly. There were $198,900 in purchase
commitments for peanuts at June 30, 1998 and of
this total, there still remained a commitment to
purchase peanuts in the amount of approximately
$80,000. The market price at June 30, 1998 for
this product is higher than the cost of the
commitment. Packaging inventory significantly
decreased in 1998 compared to 1997 due to usage of
existing supplies. Packaging materials are
purchased in large volumes and carried for several
years due to the high cost from suppliers to cut
dies and print materials. Therefore, when
supplier pricing remains consistent over the years
and is not predicted to increase, the Company
utilizes its present inventory supply without
making additional purchases necessary to lock in
pricing. Package inventory at June 30, 1999 was
comparable to inventory at June 30, 1998.
Finished goods inventory increased in 1997 over
1996 and decreased in 1998 to a level comparable
to 1996 due to timing of production to prepare for
the fall sales. The main component wich made up
these fluctuations were the "Cherry Mash bars".
Finished goods increased from June 30, 1998 from
June 30, 1999 due to an increase in the Champion
Creme Drops and Jelly Candies. The items are
purchased by the Company in large lots and resold
to customers under the Poe name. Purchases are
normally made closer to the peak selling season,
however, the Company believed that the price was
right for getting the product into their
inventory. 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.
<PAGE>
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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. Expenditures of $5,113 were
made during fiscal year ended June 30, 1997 to
update existing equipment. The Company spent an
additional $59,783 during 1997 to update
transportation equipment, add to leasehold
improvements, and replace outdated equipment. The
Company spent $23,921 during 1998 to make major
improvements to existing equipment. In addition,
$21,715 was expended on buildings and
transportation equipment. During the year ending
June 30, 1999, $16,041 was spent to upgrade
production equipment. Also, during 1999, $21,087
was used to add to transportation and office
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.
For the past eight years, the Company has not been
indebted except for the series B notes. Of the
original $630,000 Series B notes payable, $162,672
remain outstanding at June 30, 1999. On December
20, 1995, the Company received approval to extend
the notes to December 20, 2002 at the current 6%
rate of interest, with the agreement that this was
the final note extension. The entire $162,672
outstanding at June 30, 1999, 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 three 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
1998 was the first year in over ten years that the
Company has realized an operating loss. Increased
cost of sales and general and administrative
expenses were the primary sources for the loss.
In comparing 1998 to 1997, net sales decreased 9%
while cost of sales only decreased 5%. Company
management realized sales were declining during
the current year due to broker turnover. However,
in anticipation of future increased sales,
management decided to retain their current labor
force during the slower productive times. This
decision was made due to the excellent quality of
the current labor force as well as the tight job
market. Management redirected certain job
functions to concentrate more on internal
improvements of the plant; however, the overall
production per hour declined for those whose job
functions could not be redirected. It was the
intention of the Company to re-evaluate the
quantity of the labor force as well as their
efficiencies for the upcoming year.
<PAGE>
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The company realized success due to this
evaluation, and for the year ending June 30, 1999
net sales increased by 1% and the cost of sales
decreased by 1%. Operating expenses were closely
monitored during 1999 and were decreased by 13%
for the year. This was accomplished by decreasing
selling expenses by 12%, and general and
administrative by 15%.
During 1998 general and administrative expenses
increased $18,745 compared to 1997. While the
majority of general and administrative expenses
remain stable regardless of sales volume, the
Company experienced an increase in legal fees
regarding the dividend arrearage as well as an
increase in the allowance for doubtful accounts
for the year.
Selling expenses were reduced by targeting
advertising and promotion expenditures to their
most profitable areas. The decrease in these
areas realized $16,500 less costs. In addition,
the Company decreased their allowance for doubtful
accounts by a net amount of $19,300 for the year.
A more aggressive collections effort was made
during the year which reduced current year write
offs and also realized the collections of some
prior year write-offs.
Under the leadership of the CEO and his sales
staff, the Company has stabilized its customer
base. Certainly some customers were lost during
1999, 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 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.
The Company's only computer application, run on
SBT software, involves the payroll processing
accounting function. Company management is aware
of the Year 2000 (Y2K) technology issue and is in
the process of obtaining written confirmation from
SBT, that their programs are Y2K compliant.
Should it be necessary to change software for
non-compliance, the cost is projected to be less than
$1,000. In addition, management will require that
any future investment in technology will be Y2K
compliant before purchasing.
<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, 1998.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements meeting the requirements of
Regulation S-X are contained on pages 12 through
26 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-four 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, 1999 and
1998 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, 1999. 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, 1999 and 1998, and the results of their operations and their
cash flows for each of the years in the three-year period ended
June 30, 1999, in conformity with generally accepted accounting
principles.
St. Joseph, Missouri
August 11, 1999
<PAGE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND 1998
ASSETS
1999 1998
CURRENT ASSETS
Cash and cash equivalents $ 206,609 $ 161,093
Receivables:
Trade, less allowance
for doubtful accounts
of $11,516 in 1999
and $11,604 in 1998 138,959 94,514
Income tax -- 24,710
Inventories:
Finished goods 73,106 47,397
Goods in process 3,243 3,633
Raw materials 52,930 81,377
Packaging materials 70,878 79,006
Prepaid expense 35,469 35,549
Prepaid income taxes -- 1,000
Total current assets 581,194 528,279
PROPERTY AND EQUIPMENT
Land 35,000 35,000
Buildings 85,738 85,738
Machinery and equipment 663,341 648,360
Trucks and autos 99,113 94,639
Office equipment 31,909 31,706
Leasehold improvements 121,356 121,356
Total, at cost 1,036,457 1,016,799
Less accumulated depreciation 818,690 774,080
Total property and
equipment 217,767 242,719
TOTAL ASSETS $ 798,961 $ 770,998
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
1999 1998
CURRENT LIABILITIES
Accounts payable $ 48,383 $ 59,194
Series B notes payable,
related parties,
current maturities 2,305 --
Series B notes payable,
unrelated parties,
current maturities 3,761 --
Accrued expense:
Interest 10,440 11,978
Income taxes 8,855 --
Other 27,778 22,950
Total current
liabilities 101,522 94,122
LONG-TERM LIABILITIES
Series B notes payable,
related parties 59,219 68,331
Series B notes payable,
unrelated parties 97,387 116,974
Total long-term
liabilities 156,606 185,305
Total liabilities 258,128 279,427
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred
stock, $5 par value:
Series A (liquidation
preference $1,215,000
and $1,185,000
respectively) 500,000 500,000
Series B (liquidation
preference $1,170,000
and $1,140,000
respectively) 500,000 500,000
Cumulative preferred stock,
$20 par value:
Series A (liquidation
preference $2,912,017
and $2,853,484
respectively) 1,170,660 1,170,660
Series B (liquidation
preference $474,565
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
Accumulated deficit (5,925,163) (5,974,425)
Total stockholders'
equity 540,833 491,571
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 798,961 $ 770,998
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, 1999, 1998 AND 1997
1999 1998 1997
NET SALES $ 2,134,920 $ 2,113,777 $ 2,317,501
COST OF SALES 1,677,258 1,696,845 1,787,350
Gross profit 457,662 416,932 530,151
OPERATING EXPENSES
Selling expenses 246,592 280,764 302,871
General and
administrative
expenses 148,838 175,442 156,697
Total operating
expenses 395,430 456,206 459,568
Income (loss)
from
operations 62,232 (39,274) 70,583
OTHER INCOME (EXPENSE)
Interest income 6,498 5,896 7,388
Miscellaneous income 1,758 691 1,272
Interest expense (10,571) (12,077) (13,998)
Total other
income (expense) (2,315) (5,490) (5,338)
Income (loss)
before income taxes 59,917 (44,764) 65,245
PROVISION (CREDIT) FOR
INCOME TAXES 10,655 (11,262) 15,071
NET INCOME (LOSS) $ 49,262 $ (33,502) $ 50,174
(LOSS) PER SHARE OF
COMMON STOCK $ (.09) $ .(.17) $ (.08)
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>
<TABLE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<CAPTION>
PRIOR CUMULATIVE CUMULATIVE
PREFERRED STOCK PREFERRED STOCK
SERIES A SERIES B SERIES A SERIES B
<S> <C> <C> <C> <C>
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
Net loss -- -- -- --
BALANCE (DEFICIT),
JUNE 30, 1998 500,000 500,000 1,170,660 190,780
Net income -- -- -- --
BALANCE (DEFICIT),
JUNE 30, 1999 $ 500,000 $ 500,000 $ 1,170,660 $ 190,780
</TABLE>
<TABLE>
<CAPTION>
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C>
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
Net loss -- -- (33,502) (33,502)
BALANCE (DEFICIT),
JUNE 30, 1998 969,834 3,134,722 (5,974,425) 491,571
Net income -- -- 49,262 49,262
BALANCE (DEFICIT),
JUNE 30, 1999 $ 969,834 $ 3,134,722 $ (5,925,163) $ 540,833
These consolidated financial statements should be read only in connection
with the accompanying summary of significant accounting
policies and notes to consolidated financial statements.
</TABLE>
<PAGE>
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
1999 1998 1997
CASH FLOWS FROM OPERATING
ACTIVITIES
Collections from
customers $ 2,094,487 $ 2,087,531 $ 2,305,349
Interest received 6,498 5,896 7,388
Other income 2,042 1,926 1,272
Income tax refunds 24,710 2,384 --
Cost of sales,
selling, general
and administrative
expenses paid (2,015,534) (1,979,084) (2,265,624)
Interest paid (12,109) (14,097) (16,214)
Income tax paid (800) (10,836) (23,231)
Net cash provided
by operating
activities 99,294 93,720 8,940
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchases of property
and equipment (31,145) (45,636) (64,896)
Net cash used in
investing
activities (31,145) (45,636) (64,896)
CASH FLOWS FROM
FINANCING ACTIVITIES
Principal payments
on notes payable,
Series B (22,633) (28,648) (38,703)
Net cash used in
financing
activities (22,633) (28,648) (38,703)
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 45,516 19,436 (94,659)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 161,093 141,657 236,316
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 206,609 $ 161,093 $ 141,657
<PAGE>
1999 1998 1997
RECONCILIATION OF
NET INCOME TO NET
CASH PROVIDED BY
OPERATING ACTIVITIES
Net income (loss) $ 49,262 $(33,502) $ 50,174
Adjustments to reconcile
net income (loss) to net
cash provided by
operating activities:
Depreciation 55,813 66,019 62,802
Loss on disposal of
equipment 284 1,235 --
Provision for
doubtful accounts (4,012) 15,311 3,327
Effects of changes
in operating assets
and liabilities:
Trade accounts
receivable (40,433) (26,246) (12,152)
Income tax
receivable 24,710 (24,710) --
Inventories 11,256 90,098 (101,529)
Prepaid expense 80 4,242 2,868
Prepaid income taxes 1,000 4,996 (5,996)
Accounts payable (10,811) 32 12,219
Income tax payable 8,855 -- (2,164)
Accrued liabilities 3,290 (3,755) (609)
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 99,294 $ 93,720 $ 8,940
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.
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.
Finished goods and goods in process include a provision for
manufacturing overhead.
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 declining balance methods for
assets acquired after 1980.
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
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,
1999 and 1998, $22,633 and $24,648 principal was paid on the
Series B notes, respectively.
As of June 30, 1999 and 1998, the outstanding Series B notes
total $162,672 and $185,305, respectively. Of these amounts
$61,524 and $68,331 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, 1998 and 1997, 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, 1999, 1998, and 1997.
<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:
1999 1998 1997
NET INCOME (LOSS)
Chase General
Corporation $ (11,829) $ (12,410) $ (14,737)
Dye Candy Company 61,091 (21,092) 64,911
Consolidated
net income
(loss) 49,262 (33,502) 50,174
NON-ALLOWANCE
EXPENSE DEDUCTION
Interest on
indebtedness 10,571 12,077 13,998
Net income
(loss) basis
for "surplus
net earnings" 59,833 (21,425) 64,172
DEDUCTIONS FROM INCOME
BASIS
Set aside as reserve
for accumulation
of working capital 25,000 25,000 25,000
"Surplus net
earnings"
(loss) 34,833 (46,425) 39,172
INTEREST PAYMENT
REQUIRED 10,571 12,077 13,998
EXCESS "SURPLUS NET
EARNINGS" (LOSS) OVER
INTEREST PAYMENT
REQUIRED $ 24,262 $ (34,348) $ 25,174
SINKING FUND
REQUIREMENT $ 6,066 $ -- $ 6,294
<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 period of the lease
is from April 1, 1995 through March 31, 2005, and requires
payments of $2,955 per month. Rental expense for the years ended
June 30, 1999, 1998 and 1997 totaled $35,460, $35,460 and
$35,460, respectively, and is included in cost of sales.
Future minimum lease payments under this lease are as follows:
Year ending June 30, 2000 $ 35,460
Year ending June 30, 2001 35,460
Year ending June 30, 2002 35,460
Year ending June 30, 2003 35,460
Year ending June 30, 2004 35,460
Later years 29,550
Total $ 206,850
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, 1999, the Company had purchase commitments with
four vendors for approximately $161,324.
<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,
1999 and 1998 is as follows:
SHARES
ISSUED AND
AUTHORIZED OUTSTANDING
Prior Cumulative Preferred
Stock, $5 par value:
6% Convertible 240,000
Series A 100,000
Series B 100,000
Cumulative Preferred
Stock, $20 par value:
5% Convertible 150,000
Series A 58,533
Series B 9,539
Common Stock,
$1 par value
Reserved for conversion
of Preferred Stock -
1,033,333 shares 2,000,000 969,834
Cumulative Preferred Stock dividends in arrears at June 30, 1999
and 1998, totaled $5,771,582 and $5,643,510, respectively. Total
dividends in arrears, on a per share basis, consist of the
following at June 30:
1999 1998
6% Convertible
Series A $12 $12
Series B 12 11
5% Convertible
Series A 50 49
Series B 50 49
<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 (CREDIT) FOR INCOME TAXES
The provision (credit) for income taxes consists of the following
as of June 30:
1999 1998 1997
Federal income tax $ 7,551 $ (8,817) $ 11,257
State income tax 3,104 (2,445) 3,814
Total provision
(credit) for
income taxes $ 10,655 $ (11,262) $ 15,071
The Company's provision (credit) for income taxes differs from
the tax that would result from applying statutory federal and
state income tax rates primarily because of nondeductible
expenses.
<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:
1999 1998 1997
Net income (loss) $ 49,262 $ (33,502) $ 50,174
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 $ (78,810) $ (161,574) $ (77,898)
Weighted average
of outstanding
common shares 969,834 969,834 969,834
Loss per share $ (.09) $ (.17) $ (.08)
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.
NOTE 8 - CONCENTRATION OF CREDIT RISK
For the years ending June 30, 1998 and June 30, 1997 one customer
accounted for 18.87%, and 19.67%, of the gross sales,
respectively. For the year ending June 30, 1999, two customers
accounted for 31.70% of the gross sales.
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
PERIODS OF SERVICE
NAME AGE AS DIRECTOR TERMS
W.A. Yantis, III 56 1980 to January 21, 1999 --
Barry M. Yantis 54 1980 to present One year
Brian A. Yantis 53 07-16-86 to present One year
Brett A. Yantis 31 January 21, 1999 to present One year
An insufficient number of proxies were returned by
the shareholders for the January 21, 1999
annual stockholder meeting. Therefore, the
Directors noted above are continuing for an
additional one year term except for W.A. Yantis,
III whose resignation was accepted by the
Directors. To fill the vacated position, Brett A.
Yantis was elected for the remainder of the term.
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 53 President and 19 Until
Treasurer successor
elected
Brian A. Yantis 50 Vice-President 8 Until
and Secretary successor
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 eighteen years,
thirteen years as vice-president and seven years
as president. He has been on the board of
directors for eighteen years and has been
associated with the candy business for twenty-three years.
Brian A. Yantis, vice-president and secretary has
been an officer of the Company for seven years as
vice-president and since May, 1992 as secretary.
He has been associated with the insurance business
for twenty-six years and has been a Vice-President
of Aon Risk Services in Chicago, Illinois during
the past eleven years.
<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 eighteen years. He
has held the position of account manager for
Prudential Insurance Company Asset Management
Group in Newark, New Jersey during the past three
years and in Chicago, Illinois during the prior
seven years.
Brett A. Yantis was elected to the position of
director for the remaining part of W.A. Yantis'
term. Brett has been associated with the Company
for six 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>
ANNUAL COMPENSATION
OTHER
NAME AND FISCAL ANNUAL
PRINCIPAL POSITION YEAR END SALARY BONUS COMPENSATION
<S> <C> <C> <C> <C>
BARRY M. YANTIS 1) 06-30-99 $ 112,950 $ 8,000 $ 2,240
BARRY M. YANTIS 1) 06-30-98 $ 100,000 $ 15,750 $ 2,240
BARRY M. YANTIS 1) 06-30-97 $ 103,025 $ 11,250 $ 2,240
</TABLE>
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS PAYOUTS
RESTRICTED
NAME AND FISCAL STOCK OPTION/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR END AWARD(S) SARS (#) PAYOUTS COMPENSATION
<S> <C> <C> <C> <C> <C>
BARRY M. YANTIS 1) 06-30-99 -- -- -- --
BARRY M. YANTIS 1) 06-30-98 -- -- -- --
BARRY M. YANTIS 1) 06-30-97 -- -- -- --
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>
<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 1999, $693, $74 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. Brett A. Yantis, newly
elected to the board is the son of Barry M.
Yantis.
(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.
<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 BENE-
FICIAL % OF
TITLE OF CLASS NAME AND ADDRESS OWNERSHIP CLASS
(a) Security ownership
of certain
beneficial owners
Common; par value
$1 per share Barry Yantis 194,385(1) 16.8%(2)
5605 Osage Drive
St. Joseph, Mo.
64503
Brian Yantis 97,192 (1) 8.4%(2)
1210 E. Clarendon
Arlington Heights, IL.
60004
(b) Security ownership of management
Common; par value All directors 110,856 11.4%
$1 per share and officers
as a group
Prior Cumulative All directors 21,533 21.5%
Preferred, and officers
$5 par value: as a group
Series A,
6% convertible
Prior Cumulative All directors 21,533 21.5%
Preferred $5 par and officers
value: Series B, as a group
6% convertible
Cumulative All directors 3,017 5.2%
Preferred, and officers
$20 par value: as a group
Series A,
$5 convertible
<PAGE>
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (CONTINUED)
AMOUNTS
AND
NATURE
OF BENE-
FICIAL % OF
TITLE OF CLASS NAME AND ADDRESS OWNERSHIP 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
<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 12
Consolidated Balance Sheets -
June 30, 1999 and 1998 13 - 14
Consolidated Statements of
Operations for the years
ended June 30, 1999, 1998,
and 1997 15
Consolidated Statements of
Stockholders' Equity for
the years ended June 30,
1999, 1998, and 1997 16
Consolidated Statements of
Cash Flows for the years
ended June 30, 1999, 1998,
and 1997 17 - 18
Summary of Significant
Accounting Policies 19 - 20
Notes to Consolidated
Financial Statements 21 - 26
(2) The following are included in Part IV of this
report:
PAGE NUMBER
Independent Auditor's Report on
Supplemental Schedules 34
Schedule I: Condensed Financial
Information of the Registrant 35 - 38
Schedule II: Valuation and
Qualifying Accounts, June 30,
1999, 1998, and 1997 39
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the
fourth quarter of the year ended June 30, 1999.
<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
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
21, 1999 annual meeting mailed to security
holders during the 1999 fiscal year.
(2) For the 1999 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 11, 1999
<PAGE>
SCHEDULE I
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CHASE GENERAL CORPORATION
(REGISTRANT ONLY)
CONDENSED BALANCE SHEETS
JUNE 30, 1999 AND 1998
ASSETS
1999 1998
Income tax refund receivable $ -- $ 4,392
Investment in subsidiary -
at equity 713,945 684,462
TOTAL ASSETS $ 713,945 $ 688,854
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Series B notes payable and accrued
interest, unrelated parties $ 107,693 $ 124,578
Series B notes payable and accrued
interest, related parties 65,419 72,705
Total liabilities 173,112 197,283
Capital stock 3,331,274 3,331,274
Paid in capital in excess of par 3,134,722 3,134,722
Accumulated (deficit) (5,925,163) (5,974,425)
Total stockholders' equity 540,833 491,571
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 713,945 $ 688,854
(1) The restricted assets of 100% consolidated subsidiary, Dye
Candy Company, are $798,961 and $770,998 as of June 30,
1999 and 1998, 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.
<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, 1999, 1998 AND 1997
1999 1998 1997
REVENUE
Equity in net income
(loss) of subsidiary $ 61,091 $ (21,092) $ 64,911
Total revenue 61,091 (21,092) 64,911
EXPENSE
General and
administrative 4,204 4,726 4,892
Interest 10,571 12,076 13,998
Total expense 14,775 16,802 18,890
Income (loss)
before income
taxes 46,316 (37,894) 46,021
PROVISION (CREDIT) FOR
INCOME TAXES 2,946 (4,392) (4,153)
NET INCOME (LOSS) $ 49,262 $ (33,502) $ 50,174
<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, 1999, 1998 AND 1997
1999 1998 1997
CASH FLOWS FROM
OPERATING ACTIVITIES
General and
administrative
expenses paid $ (4,204) $ (4,726) $ (4,892)
Interest paid (12,109) (14,097) (16,214)
Income tax refund
received 4,392 4,153 5,853
Net cash used in
operating
activities (11,921) (14,670) (15,253)
CASH FLOWS FROM INVESTING ACTIVITIES
Advances received
from wholly owned
subsidiary 34,554 43,318 53,956
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on
Series B notes
payable (22,633) (28,648) (38,703)
NET DECREASE IN CASH AND
CASH EQUIVALENTS -- -- --
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR -- -- --
CASH AND CASH EQUIVALENTS,
END OF YEAR $ -- $ -- $ --
<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, 1999, 1998 AND 1997
1999 1998 1997
RECONCILIATION OF
NET INCOME TO NET
CASH USED IN
OPERATING ACTIVITIES
Net income (loss) $ 49,262 $ (33,502) $ 50,174
Adjustments to
reconcile net
income (loss)to
net cash used in
operating activities:
Net income (loss)
from wholly owned
subsidiary (61,091) 21,092 (64,911)
Effects of changes
in operating assets
and liabilities:
Accrued interest (1,538) (2,021) (2,216)
Income tax
refund receivable 1,446 (239) 1,700
NET CASH USED IN
OPERATING ACTIVITIES $ (11,921) $ (14,670) $ (15,253)
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, 1999, 1998, AND 1997
COLUMN C
COLUMN A COLUMN B ADDITIONS COLUMN D COLUMN E
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AT END
DESCRIPTION OF PERIOD AND EXPENSES DEDUCTIONS<F*> OF PERIOD
Valuation
accounts
deducted
from assets
to which
they apply
for doubtful
accounts
receivable:
June 30, 1999 $ 11,604 $ (4,012) $ 3,924 $ 11,516
June 30, 1998 12,714 15,311 16,421 11,604
June 30, 1997 12,216 3,327 3,370 12,714
<F*>
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: September 28, 1999 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
/s/ Barry M. Yantis Accounting Officer) and Director September 28, 1999
Barry M. Yantis Date
Vice-President, Secretary
/s/ Brian A. Yantis and Director September 28, 1999
Brian A. Yantis Date
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CHASE GENERAL CORPORATION CONTAINED IS ITS ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 206,609
<SECURITIES> 0
<RECEIVABLES> 150,475
<ALLOWANCES> 11,516
<INVENTORY> 200,157
<CURRENT-ASSETS> 581,194
<PP&E> 1,036,457
<DEPRECIATION> 818,690
<TOTAL-ASSETS> 798,961
<CURRENT-LIABILITIES> 101,522
<BONDS> 156,606
0
2,361,440
<COMMON> 969,834
<OTHER-SE> (2,790,441)
<TOTAL-LIABILITY-AND-EQUITY> 798,961
<SALES> 2,134,920
<TOTAL-REVENUES> 2,143,176
<CGS> 1,677,258
<TOTAL-COSTS> 399,442
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (4,012)
<INTEREST-EXPENSE> 10,571
<INCOME-PRETAX> 59,917
<INCOME-TAX> 10,655
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,262
<EPS-BASIC> (.09)
<EPS-DILUTED> 0
</TABLE>
