SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Security Exchange
Act of 1934 For the Quarterly period ended September 28, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition period from _______ to ________
Commission File Number 1-7138
CAGLE'S, INC.
GEORGIA 58-0625713
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2000 Hills Avenue, N. W. Atlanta, Georgia 30318
(Address of Principal Executive Offices and Zip Code)
(404) 355-2820
(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 (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.
Yes __x__ No ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date
Class Outstanding September 28, 1996
- ------------------------------------- ------------------------------
Class A Common Stock, $1.00 Par Value 5,006,282
<PAGE>
<TABLE>
PART 1. FINANCIAL INFORMATION
Cagle's, Inc. And Subsidary
Consolidated Balance Sheets
September 30, 1995 and October 1, 1994
(In Thousands, Except Par Value)
(Unaudited)
<CAPTION>
09/28/96 03/30/96
------------ -------------
<S> <C> <C>
Assets
- -----------------------------------------
CURRENT ASSETS
Cash $ 212 $ 326
Accounts receivable, net of allowance for
doubtful accounts of $446 and $315 at
Sept. 28, 1996 and March 30, 1996,
respectively 20,019 18,631
Inventories 38,383 32,908
Insurance Proceeds Receivable 5,982 9,183
Other current assets 1,196 2,481
------------ ------------
Total current assets 65,792 63,529
------------ ------------
INVESTMENTS IN AND RECEIVABLES FROM
UNCONSOLIDATED AFFILIATES 17,169 14,675
OTHER ASSETS 1,039 1,038
PROPERTY, PLANT, AND EQUIPMENT 95,286 94,538
Less accumulated depreciation (34,024) (31,093)
------------ ------------
Property, plant, and equipment, net 61,262 63,445
------------ ------------
TOTAL ASSETS $145,262 $142,687
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES & STOCKHOLDERS' EQUITY
- -----------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Current Maturities $ 2,959 $ 1,570
Accounts payable 19,387 13,489
Accrued expenses 7,497 7,776
Current income taxes payable 0 184
Current deferred income taxes 0 0
------------ ------------
Total Current Liabilities 29,843 23,019
------------ ------------
LONG TERM DEBT (net of current maturities) 58,196 58,508
NONCURRENT DEFERRED INCOME TAXES 7,701 9,139
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 9,000
shares and 5006 and 5006 shares issued
respectively 5,006 5,006
Capital in excess of par value 7,946 7,946
Retained earnings 36,570 39,069
------------ ------------
Total stockholders' equity 49,522 52,021
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 145,262 $ 142,687
============ ============
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
Cagle's, Inc., & Subsidiary
Consolidated Statements of Income
For the 13 and 26 weeks ended Sept. 28, 1996 and Sept. 30, 1995
(Amounts in thousands, except per share data)
(unaudited)
13 wks 13 wks 26 wks 26 wks
ended ended ended ended
09/28/96 9/30/95 09/28/96 9/30/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $92,021 $77,243 $175,835 $166,664
Costs and Expenses:
Cost of Sales 88,856 74,264 171,926 157,887
Selling and Delivery 2,768 2,426 5,237 5,025
General and Administrative 1,785 1,799 3,336 3,406
------- -------- -------- --------
Total costs and expenses 93,409 78,489 180,499 166,318
------- -------- -------- --------
Income From Operations (1,388) (1,246) (4,664) 346
Other Income(Expense):
Interest expense (1,484) (442) (2,480) (735)
Income from unconsolidated
affiliates and other
income, net 1,815 6,092 3,597 7,367
-------- -------- -------- --------
Income Before Income Taxes (1,057) 4,404 (3,547) 6,978
Provision For Income Taxes 418 (1,492) 1,348 (2,471)
-------- -------- -------- --------
Net Income $ (639) $2,912 (2,199) 4,507
======== ======== ======== ========
Weighted Average Number Of
Common Shares Outstanding 5,006 5,023 5,006 5,028
======== ======== ======== ========
Net (Loss) Income Per Common Share $ (0.13) $ 0.58 $ (0.44) $ .090
Dividends Per Common Share .03 .03 .06 .06
======== ======== ======== ========
<FN>
The accompanying notes are an inteegral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
Cagle's, Inc & Subsidary
Consolidated Statements of Cash Flows
For the 26 weeks ended September 28, 1996 and September 30, 1995
(In Thousands)
(unaudited)
<CAPTION>
Sept 28, 1996 Sept 30, 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ (2,199) $ 4,508
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,796 2,327
(gain)loss on disposal of property, plant and
equipment 18 (4,587)
Changes in investment in and receivables from
unconsolidated affiliates (2,494) (1,055)
Changes in assets and liabilities:
Accounts receivables, net (1,388) 924
Inventories (5,475) 2,743
Insurance Proceeds Receivable 3,201 0
Other current assets 1,285 (2,054)
Accounts payable 5,898 (2,201)
Accrued expenses (279) (223)
Income taxes payable (184) (967)
Deferred income taxes (1,438) 909
------- -------
Total Adjustments 2,940 (4,184)
------- -------
Net cash provided by operating activities 741 324
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (1,738) (9,925)
(Increase)decrease in other assets ( 1) (410)
Proceeds from the sale of property, plant, and equip. 107 6,473
------- -------
Net cash used in investing activities (1,632) (3,862)
------- -------
Cash Flows from financing activities:
Payments of long-term debt and capital
lease obligations (923) (1,087)
Repurchase Common Stock 0 6,000
Proceeds from issuance of long-term debt 2,000 (182)
Dividends Paid (300) (302)
------- -------
Net cash provided by (used in)financing activities 777 4,429
------- -------
NET INCREASE(DECREASE) IN CASH (114) 891
CASH AT BEGINNING OF PERIOD 326 462
------- -------
CASH AT END OF PERIOD $ 212 $1,353
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $2,025 $735
======= =======
Income Taxes paid $ 0 $2,509
======= =======
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
Cagle's, Inc. & Subsidiary
Notes to Consolidated Condensed Financial Statements
September 28, 1996
(Unaudited)
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contains all adjustments which are of a normal and
recurring nature, necessary to present fairly the consolidated financial
position of Cagle's, Inc. and Subsidiary (the "Company") as of September
28, 1996 and March 30, 1996 and the results of their operations and their
cash flows for the 13 weeks and 26 weeks ended September 28, 1996 and
September 30, 1995.
2. The results of operations for the 13 weeks and 26 weeks ended September 28,
1996 and September 30, 1995 are not necessarily indicative of the results
expected for the full year.
3. Inventories Consisted of the following (in Thousands):
Sept. 28, 1996 March 30, 1996
Finished Product $14,217 $10,640
Field Inventory and Breeders 18,651 17,630
Feed, Eggs and Medication 3,780 3,000
Supplies 1,735 1,638
------------ --------------
$38,383 $32,908
4. Use of Estimates
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, the disclosures 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 may differ from those estimates.
5. Investments in and Receivables from Unconsolidated affiliates.
The Company accounts for its investments in three unconsolidated affiliates
using the equity method. The Company's share of earnings and management fees
was $1,776,000 and $1,165,000 and $3,547,000 and $2,410,000 respectively for
the 13 weeks and 26 weeks ended September 28, 1996 and September 30, 1995.
6. Insurance Proceeds Receivable
As of September 28, 1996, the Company has accrued $5,982,000 for the receipt
of insurance proceeds related to the fire at the Company's Pine Mountain
Valley plant on June 24, 1995. During the six months ended September 28,
1996, the Compnay received $3,200,000 from its insurance carrier relating to
business interruption costs and lost profits due to the fire.
<PAGE>
<Management's Discussion and Analysis of Financial
Condition and Results of Operations.
September 28, 1996
Financial Condition
While remaining high the Company's debt stabilized during the quarter while
at the same time the Company replaced an existing construction term loan with a
new $25M term loan to finance the new processing plant at Pine Mountain Valley
and the Revolving Credit facility was increased to $35,000,000 to provide
liquidity in light of the record high grain prices experienced during the
summer. As of September 28, 1996, $22M was advanced against the revolver.
High borrowing levels were necessary to finance higher working capital levels
required by high cost of feed grains.
Results of Operations
Sales for the 13 weeks and 26 weeks ended September 28, 1996 increased
19.1% and 5.5% respectively as compared to the same periods of a year ago.
This increase is due mainly to the Pine Mountain facility operating at full
one shift capacity this quarter. It was out of production for the entire
second quarter of a year ago due to a fire.
Gross margins declined by .42% and 3.05% for the quarter and 6 months
respectively and this is due primarily to record high grain cost during the
quarter and 6 months periods. Feed averaged 40.3% higher for the quarter
ended September 28, 1996 than for the same period a year ago and 40.7% higher
for the 6 month period ended September 28, 1996 than for the same period of a
year ago. This increase was somewhat offset by higher market prices with
whole bird markets averaging 11.8% higher for the quarter than a year ago and
13.7% higher for the six month period as compared to a year ago. The prices
for deboned product have not risen as significantly. Consequently the Company
did not benefit to the full extent of the increase in the above mentioned
market prices.
Selling, Delivery and General and Administrative Expenses
This category of expense increased by 7.8% and is the result of increased
storage cost due to increased frozen product production for domestic and
export sales which due to shipping schedule requires higher inventory levels.
Interest Expense
Interest expense increased by 235.7% and 237.4% for the quarter and six
month period respectively ended September 28, 1996 as compared to the same
periods of last year and is attributable to the elevated debt levels caused by
re-building the Pine Mountain Plant and higher working capital needs, due to
increased inventory levels.
Other Income
Other income declined by $4.3 million for the quarter and $3.8 for the six
months due to the inclusion of a gain from insurance recovery as a result of
the fire at the Company's Pine Mountain plant. Other income includes
management fees and income from unconsolidated affiliates.
Income Taxes
The benefit provision for income taxes reflects a credit at statutory rates
for the loss currently reported.
<PAGE>
Part II Other Information
Item 9 Exhibits and Reports on Form 8-K
a. Not applicable
b. No reports on Form 8-K were filed during the quarter.
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 8, 1996 /s/ J. Douglas Cagle
Date: November 8, 1996 /s/ Kenneth R. Barkley
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000016104
<NAME> CAGLE'S, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-START> MAR-31-1996
<PERIOD-END> SEP-28-1996
<CASH> 212
<SECURITIES> 0
<RECEIVABLES> 20465
<ALLOWANCES> 446
<INVENTORY> 38383
<CURRENT-ASSETS> 65792
<PP&E> 95286
<DEPRECIATION> 34024
<TOTAL-ASSETS> 145262
<CURRENT-LIABILITIES> 29843
<BONDS> 58196
<COMMON> 5006
0
0
<OTHER-SE> 44516
<TOTAL-LIABILITY-AND-EQUITY> 145262
<SALES> 175835
<TOTAL-REVENUES> 175835
<CGS> 171926
<TOTAL-COSTS> 180499
<OTHER-EXPENSES> (3597)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2480
<INCOME-PRETAX> (3547)
<INCOME-TAX> (1348)
<INCOME-CONTINUING> (2199)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2199)
<EPS-PRIMARY> (.439)
<EPS-DILUTED> (.439)
</TABLE>
