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, 1999
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, 2000 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,
1999 (Unaudited) and June 30, 1999 .................. 3
Consolidated Condensed Statements of Operations
Six months ended December 31, 1999 and
1998 (Unaudited)................................ 5
Consolidated Condensed Statements of Operations
Three months ended December 31, 1999 and
1998 (Unaudited)................................ 6
Consolidated Condensed Statements of Cash Flows
Six months ended December 31, 1999 and
1998 (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
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PART I - FINANCIAL INFORMATION
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
December 31, 1999 and June 30, 1999
(Unaudited)
December 31 June 30,
1999 1999
CURRENT ASSETS
Cash $ 311,786 $ 206,609
Trade receivables, net of
allowance 159,095 138,959
Inventories:
Finished goods 34,995 73,106
Goods in process 10,484 3,243
Raw materials 80,637 52,930
Packaging materials 96,402 70,878
Prepaid expense 8,914 35,469
Total current assets 702,313 581,194
PROPERTY AND EQUIPMENT - AT COST 1,055,689 1,036,457
Less accumulated depreciation 832,045 818,690
Total property and equipment 223,644 217,767
TOTAL ASSETS $ 925,957 $ 798,961
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LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
December 31 June 30,
1999 1999
CURRENT LIABILITIES
Accounts payable $ 60,361 48,383
Accrued expense 21,056 47,073
Notes payable, Series B,
current maturities 6,066 6,066
Estimated liability for
income taxes 54,191 --
Total current liabilities 141,674 101,522
LONG-TERM LIABILITIES
Notes payable, Series B 121,606 156,606
Total liabilities 263,280 258,128
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred
stock, $5 par value:
Series A (liquidation
preference $1,230,000
and $1,215,000
respectively) 500,000 500,000
Series B (liquidation
preference $1,185,000
and $1,170,000
respectively) 500,000 500,000
Cumulative preferred stock,
$20.00 par value:
Series A (liquidation
preference $2,941,283
and $2,912,017
respectively) 1,170,660 1,170,660
Series B (liquidation
preference $479,335
and $474,565
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) (5,803,319) (5,925,163)
Total stockholders' equity 662,677 540,833
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 925,957 $ 798,961
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
1999 1998
NET SALES $1,558,240 $1,481,011
COST OF SALES 1,136,001 1,106,689
Gross profit 422,239 374,322
OPERATING EXPENSES
Selling expense 146,876 151,021
General and administrative
expense 89,574 77,155
Total operating expenses 236,450 228,176
Income from operations 185,789 146,146
OTHER INCOME (EXPENSE) (3,700) (2,799)
Income before income
taxes 182,089 143,347
PROVISION FOR INCOME TAXES 60,245 46,273
NET INCOME $ 121,844 $ 97,074
EARNINGS PER SHARE $ .06 $ .03
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
1999 1998
NET SALES $1,104,719 $1,089,310
COST OF SALES 798,233 801,641
Gross profit 306,486 287,669
OPERATING EXPENSES
Selling expense 90,895 96,262
General and administrative
expense 48,486 38,961
Total operating expenses 139,381 135,223
Income from operations 167,105 152,446
OTHER INCOME (EXPENSE) (2,129) (2,152)
Income before income
taxes 164,976 150,294
PROVISION FOR INCOME TAXES 56,833 47,659
NET INCOME $ 108,143 $ 102,635
EARNINGS PER SHARE $ .08 $ .07
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
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the six months $121,844 $ 97,074
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and amortization 24,068 26,773
Provision for doubtful accounts 6,705 3,210
Effects of changes in operating
assets and liabilities:
Trade accounts receivable (26,841) (19,149)
Income taxes receivable -- 24,710
Inventory (22,361) 42,618
Prepaid expenses 26,555 34,725
Accounts payable 11,978 (33,530)
Accrued liabilities 28,174 26,917
Net cash provided
by operating
activities 170,122 203,348
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (29,945) (6,804)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term
debt (35,000) (22,633)
NET INCREASE IN CASH 105,177 173,911
CASH, BEGINNING OF PERIOD 206,609 161,093
CASH, END OF PERIOD $311,786 $335,004
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 pages 19 and 20 (not shown) of its 1999 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, 1999.
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, 1999 and June
30, 1999 and the results of its operations for the six months and
three months ended December 31, 1999 and 1998, and its cash flows
for the six months ended December 31, 1999 and 1998.
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
1999 1998 1999 1998
Net income $121,844 $ 97,074 $108,143 $102,635
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 $ 57,808 $ 33,038 $ 76,125 $ 70,617
Weighted average of
outstanding common
shares 969,834 969,834 969,834 969,834
Earnings per share $ .06 $ .03 $ .08 $ .07
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, 1999 and 1998
Sales:
The Company had no unusual transactions for the six months ended
December 31, 1999. The Company realized a gross profit margin of
27.10% for the six months ended December 31, 1999 as compared to
25.27% for the same period ended a year ago. Consolidated net
sales for the six months ended December 31, 1999 of $1,558,240,
were 5% over the $1,481,011 in fiscal year 1999's first six
months. The growth in sales was from the "Cherry Mash" product.
No major customer was lost during this first six months.
Expenses:
Selling, general and administrative expenses were 15.2% of sales
in the six months ended December 31, 1999 compared to 15.4% in
the first six months of 1998. Interest expense continues to
decrease because of debt retirement.
Inventories at December 31, 1999 were $22,000 lower than at June
30, 1999 since the Company is entering their slow season of the
year. In addition, accounts payable and accrued expenses is
$40,000 lower at December 31, 1999 compared to June 30, 1999,
which also reflects the entrance into the Company's slower
business cycle.
Three Months ended December 31, 1999 and 1998
Sales:
The Company realized a gross profit margin of 27.7% and 26.4% for
the three months ended December 31, 1999 and 1998, respectively.
Net sales increased 1% 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,
1999 resulted in selling expenses decreasing 6% compared to
selling expenses for the three months ended December 31, 1998.
General and administrative expenses increased 24% as a result of
higher insurance costs and bad debt expense.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, the Company has no commitments for
capitalized expenditures. Cash increased $105,177 during the
current six month period as a result of completing the busy
season and controlling overhead. Working capital increased
approximately $81,000 for the six month period.
<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
contingency at December 31, 1999 is $5,835,618.
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,
1999.
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
February 10, 2000 /s/ Barry M. Yantis
Date Barry M. Yantis
President and Chief Financial
Officer
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<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-2000
<CASH> 311,786
<SECURITIES> 0
<RECEIVABLES> 173,469
<ALLOWANCES> 14,374
<INVENTORY> 222,518
<CURRENT-ASSETS> 702,313
<PP&E> 1,055,689
<DEPRECIATION> 832,045
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<CURRENT-LIABILITIES> 141,674
<BONDS> 121,606
0
2,361,440
<COMMON> 969,834
<OTHER-SE> (2,668,597)
<TOTAL-LIABILITY-AND-EQUITY> 925,957
<SALES> 1,558,240
<TOTAL-REVENUES> 1,559,420
<CGS> 1,136,001
<TOTAL-COSTS> 229,745
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,705
<INTEREST-EXPENSE> 4,880
<INCOME-PRETAX> 182,089
<INCOME-TAX> 60,245
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 121,844
<EPS-BASIC> .06
<EPS-DILUTED> 0
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