10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 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) Telephone: (816) 279-1625 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 [ ] At November 1, 2000 there were 969,834 shares outstanding of the Registrant's $1.00 par value common stock. CHASE GENERAL CORPORATION INDEX TO FORM 10-Q SEPTEMBER 30, 2000 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheets - September 30, 2000 (Unaudited) and June 30, 2000 ............................ 3 Consolidated Condensed Statements of Operations - First quarter ended September 30, 2000 and 1999 (Unaudited) ......................................... 5 Consolidated Condensed Statements of Cash Flows - First quarter ended September 30, 2000 and 1999 (Unaudited) ......................................... 6 Notes to Consolidated Condensed Financial Statements ......... 7 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 Signatures...................................................... 10 Exhibit No. 27 Financial Data Schedule .......................11 PART I FINANCIAL INFORMATION CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS SEPTEMBER 30, 2000 AND JUNE 30, 2000 (UNAUDITED) ASSETS September 30, June 30, 2000 2000 CURRENT ASSETS Cash $ 62,900 $146,779 Trade receivables, net of allowance 290,899 129,018 Other receivables -- 3,239 Income tax receivable 470 -- Inventories: Finished goods 271,109 85,147 Goods in process 11,918 4,872 Raw materials 97,581 53,232 Packaging materials 107,790 123,938 Prepaid expense 8,546 34,960 Prepaid income taxes 1,158 1,158 Total current assets 852,371 582,343 PROPERTY AND EQUIPMENT - AT COST 1,073,088 1,072,644 Less accumulated depreciation 867,348 854,296 Total property and equipment 205,740 218,348 TOTAL ASSETS $1,058,111 $800,691 LIABILITIES AND STOCKHOLDERS' EQUITY September 30, June 30, 2000 2000 CURRENT LIABILITIES Accounts payable $304,256 $ 54,718 Accrued expenses 44,955 35,184 Notes payable, Series B, current maturities 4,321 4,321 Total current liabilities 353,532 94,223 LONG-TERM LIABILITIES Notes payable, Series B, less current maturities shown above 123,351 123,351 Total liabilities 476,883 217,574 STOCKHOLDERS' EQUITY Capital stock issued and outstanding: Prior cumulative preferred stock, $5 par value: Series A (liquidation preference $1,252,500 and $1,245,000 respectively) 500,000 500,000 Series B (liquidation preference $1,207,500 and $1,200,000 respectively) 500,000 500,000 Cumulative preferred stock, $20 par value: Series A (liquidation preference $2,985,183 and $2,970,550 respectively) 1,170,660 1,170,660 Series B (liquidation preference $486,489 and $484,104 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) (5,884,768) (5,882,879) Total stockholders' equity 581,228 583,117 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,058,111 $800,691 See notes to consolidated condensed financial statements. CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) FIRST QUARTER ENDED SEPTEMBER 30 2000 1999 NET SALES $452,953 $453,521 COST OF SALES 349,109 337,768 Gross profit 103,844 115,753 OPERATING EXPENSES Selling expense 56,716 55,981 General and administrative expense 48,408 41,088 Total operating expenses 105,124 97,069 Income (loss) from operations (1,280) 18,684 OTHER INCOME (EXPENSE) (1,079) (1,571) Income (loss) before income taxes (2,359) 17,113 PROVISION (CREDIT) FOR INCOME TAXES (470) 3,412 NET INCOME (LOSS) $(1,889) $13,701 LOSS PER SHARE OF COMMON STOCK $(.03) $(.02) See notes to consolidated condensed financial statements. CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FIRST QUARTER ENDED SEPTEMBER 30 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) for the quarter $(1,889) $13,701 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 13,052 12,994 Provision for doubtful accounts 1,605 1,605 Effects of changes in operating assets and liabilities: Trade accounts receivable (160,247) (120,291) Income tax receivable (470) -- Inventories (221,209) (234,880) Prepaid expenses 26,414 26,237 Accounts payable 249,538 160,363 Accrued liabilities 9,771 7,550 Net cash used in operating activities (83,435) (132,721) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (444) (7,816) NET DECREASE IN CASH (83,879) (140,537) CASH, BEGINNING OF QUARTER 146,779 206,609 CASH, END OF QUARTER $62,900 $66,072 See notes to consolidated condensed financial statements. CHASE GENERAL CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited interim consolidated condensed financial statements include all adjustments (consisting only of normal adjustments) necessary for a fair presentation of the financial position of Chase General Corporation as of September 30, 2000 and June 30, 2000 and the results of its operations and its cash flows for the first quarter ended September 30, 2000 and 1999. 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 2000 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 ended September 30, 2000. CHASE GENERAL CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 - LOSS PER SHARE OF COMMON STOCK Loss per share was computed on the weighted average of outstanding common shares as follows: FIRST QUARTER ENDED SEPTEMBER 30 2000 1999 Net income (loss) $(1,889) $13,701 Preferred dividend requirements: 6% Prior Cumulative Preferred, $5 par value 15,000 15,000 5% Convertible Cumulative Preferred, $20 par value 17,018 17,018 Total dividend requirements 32,018 32,018 Net loss - common shareholders $(33,907) $(18,317) Weighted average of outstanding common shares 969,834 969,834 Loss per share of common stock $(.03) $(.02) No computation was made on common stock equivalents outstanding because loss per share would be anti-dilutive. 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 FIRST QUARTER ENDED SEPTEMBER 30, 2000 and 1999 Sales - The Company had no unusual transactions for the first quarter ended September 30, 2000. The Company realized a gross profit percentage of 22.93% and 25.52% for the first quarter ended September 30, 2000 and 1999, respectively. Consolidated net sales for the quarter ended September 30, 2000 of $452,953, were comparable to $453,521 in 1999's first quarter. No major customers were lost during the current quarter. The loss of gross margin for 2000 came from a different product mix sold with a lower margin than the product mix sold for in 1999. Expenses - Selling, general and administrative costs were 23.21% of sales in the quarter ended September 30, 2000 compared to 21.4% in the first quarter of 1999. Additional costs for a computer consultant caused the increase in administrative costs for 2000. Inventories at September 30, 2000 are $221,000 higher than at June 30, 2000 since the Company is presently in their fall busy season. In addition, accounts payable is $250,000 higher at September 30, 2000 compared to June 30, 2000, which also reflects the entrance into the Company's fall busy season. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2000, the Company has no commitments for capitalized expenditures. Cash decreased $83,879 as a result of the increased seasonal build-up of inventories. Working capital increased approximately $10,700 for the first quarter ended September 30, 2000. PART II OTHER INFORMATION CHASE GENERAL CORPORATION AND SUBSIDIARY ITEM 3. DEFAULTS UPON SENIOR SECURITIES a. None b. The total cumulative preferred stock dividends in arrears at September 30, 2000 are $5,931,672. ITEM 6. EXHIBITS AND REPORTS ON FORM 8.K. a. Exhibit Number and Description 27.Chase General Corporation and Subsidiary Financial Data Schedule. b. Reports on Form 8-K: There were no reports on Form 8-K filed during July, August, and September, 2000. 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 November 14, 2000 /s/ Barry M. Yantis Date Barry M. Yantis President and Chief Financial Officer