10-Q 1 d10q.txt FORM 10-Q 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 March 31, 2001 -------------- 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) 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 [_] As of April 30, 2001 there were 969,834 shares outstanding of the Registrant's ($1.00 par value) common stock. 1 CHASE GENERAL CORPORATION Index PART I--FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheets--March 31, 2001 (Unaudited) and June 30, 2000 .................................................. 3 Consolidated Condensed Statements of Operations--Nine months ended March 31, 2001 and 2000 (Unaudited) ................................ 5 Consolidated Condensed Statements of Operations--Three months ended March 31, 2001 and 2000 (Unaudited) ................................ 6 Consolidated Condensed Statements of Cash Flows--Nine months ended March 31, 2001 and 2000 (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 ............................... 11 Item 4. Submission of matters to a vote of security holders ........... 11 Item 6. Exhibits and Reports on Form 8-K .............................. 11 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS March 31, 2001 and June 30, 2000 ASSETS
March 31, June 30, 2001 2000 ----------- ---------- (Unaudited) CURRENT ASSETS Cash $ 225,229 $ 146,779 Trade receivables, net of allowance 101,642 129,018 Other receivables -- 3,239 Inventories: Finished goods 16,925 85,147 Goods in process 3,931 4,872 Raw materials 64,379 53,232 Packaging materials 91,842 123,938 Prepaid expense 24,459 34,960 Prepaid income taxes 2,615 1,158 ---------- ---------- Total current assets 531,022 582,343 ---------- ---------- PROPERTY AND EQUIPMENT--AT COST 1,119,113 1,072,644 Less accumulated depreciation 878,922 854,296 ---------- ---------- Total property and equipment 240,191 218,348 ---------- ---------- TOTAL ASSETS $ 771,213 $ 800,691 ========== ==========
3 LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, June 30, 2001 2000 ----------- ----------- (Unaudited) CURRENT LIABILITIES Accounts payable $ 56,339 $ 54,718 Accrued expense 29,721 35,184 Notes payable, Series B, current maturities 4,321 4,321 ----------- ----------- Total current liabilities 90,381 94,223 LONG-TERM LIABILITIES Notes payable, Series B, less current maturities above 73,351 123,351 ----------- ----------- Total liabilities 163,732 217,574 ----------- ----------- STOCKHOLDERS' EQUITY Capital stock issued and outstanding: Prior cumulative preferred stock, $5 par value: Series A (liquidation preference $1,267,500 and $1,245,000 respectively) 500,000 500,000 Series B (liquidation preference $1,222,500 and $1,200,000 respectively) 500,000 500,000 Cumulative preferred stock, $20 par value Series A (liquidation preference $3,014,449 and $2,970,550 respectively) 1,170,660 1,170,660 Series B (liquidation preference $491,259 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) (5,858,515) (5,882,879) ----------- ----------- Total stockholders' equity 607,481 583,117 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 771,213 $ 800,691 ========== ===========
The accompanying notes are an integral part of these consolidated condensed financial statements. 4 CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Nine Months Ended March 31 -------------------------- 2001 2000 ---------- ---------- NET SALES $1,711,307 $1,881,294 COST OF SALES 1,333,944 1,441,195 ---------- ---------- Gross profit on sales 377,363 440,099 ---------- ---------- OPERATING EXPENSES Selling expense 194,840 196,414 General and administrative expense 148,084 136,841 ---------- ---------- Total operating expenses 342,924 333,255 ---------- ---------- Net income from operations 34,439 106,844 OTHER INCOME (EXPENSE) (4,007) (4,201) ---------- ---------- Net income before income taxes 30,432 102,643 PROVISION FOR INCOME TAXES 6,068 26,946 ---------- ---------- NET INCOME $ 24,364 $ 75,697 ========== ========== LOSS PER SHARE $ (.07) $ (.02) ========== ==========
The accompanying notes are an integral part of these consolidated condensed financial statements. 5 CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31 ---------------------- 2001 2000 -------- -------- NET SALES $217,524 $323,054 COST OF SALES 237,980 305,194 -------- -------- Gross profit (loss) on sales (20,456) 17,860 -------- -------- OPERATING EXPENSES Selling expense 49,119 49,538 General and administrative expense 51,613 47,267 -------- -------- Total operating expenses 100,732 96,805 -------- -------- Net loss from operations (121,188) (78,945) OTHER EXPENSE (1,411) (501) -------- -------- Net loss before income taxes (122,599) (79,446) CREDIT FOR INCOME TAXES (41,943) (33,299) -------- -------- NET LOSS $(80,656) $(46,147) ======== ======== LOSS PER SHARE $ (.12) $ (.08) ======== ========
The accompanying notes are an integral part of these consolidated condensed financial statements. 6 CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended March 31 ---------------------- 2001 2000 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 24,364 $ 75,697 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,082 35,776 Provision for bad debts 4,815 11,805 Effects of changes in operating assets and liabilities: Accounts receivables 25,800 (78,705) Accounts payable 1,621 66,739 Inventories 90,112 (7,364) Prepaid expense 9,044 14,152 Accrued expense (5,463) (14,271) Income taxes payable -- 17,865 -------- -------- Net cash provided by operating activities 182,375 121,694 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (53,925) (50,900) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on long-term debt (50,000) (35,000) -------- -------- NET INCREASE IN CASH 78,450 35,794 CASH, BEGINNING OF PERIOD 146,779 206,609 -------- -------- CASH, END OF PERIOD $225,229 $242,403 ======== ======== SUPPLEMENTAL DISCLOSURES Interest paid $ 8,710 $ 10,571 ======== ======== Income taxes paid $ 7,525 $ 9,081 ======== ========
The accompanying notes are an integral part of these consolidated condensed financial statements. 7 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 March 31, 2001 and June 30, 2000 and the results of its operations for the nine months and three months ended March 31, 2001 and 2000, and its cash flows for the nine months ended March 31, 2001 and 2000. 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 fully 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 nine months ended March 31, 2001. NOTE 2 - EARNINGS PER SHARE The earnings per share was computed on the weighted average of outstanding common shares as follows:
Nine Months Ended Three Months Ended March 31 March 31 ---------------------- ----------------------- 2001 2000 2001 2000 -------- -------- --------- -------- Net income (loss) $ 24,364 $ 75,697 $ (80,656) $(46,147) -------- -------- --------- -------- Preferred dividend requirements: 6% Prior Cumulative Preferred, $5 par value 45,000 45,000 15,000 15,000 5% Convertible Cumulative Preferred, $20 par value 51,054 51,054 17,018 17,018 -------- -------- --------- -------- Total dividend requirements 96,054 96,054 32,018 32,018 -------- -------- --------- -------- Net loss common shareholders $(71,690) $(20,357) $(112,674) $(78,165) ======== ======== ========= ======== Weighted average of outstanding common shares 969,834 969,834 969,834 969,834 ======== ======== ========= ======== Loss per share $ (.07) $ (.02) $ (.12) $ (.08) ======== ======== ========= ========
No computation was made on common stock equivalents outstanding because loss per share would be anti-dilutive. 8 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 Nine Months ended March 31, 2001 and 2000 ----------------------------------------- Sales: The Company had no unusual transactions for the nine months ended March 31, 2001. The Company realized a gross profit margin of 22.05% for the nine months ended March 31, 2001 as compared to 23.39% for the same period ended a year ago. Consolidated net sales for the nine months ended March 31, 2001 of $1,711,307, were 9% below the $1,881,294 in 2000's first nine months. The decrease was due to not repeating a "Cherry Mash" "mini mash" promotion for a major supplier that was done in 2000. No major customers were lost during this nine month period. Expenses: Selling, general and administrative expenses were 20% of sales in the nine month period ended March 31, 2001 compared to 17.7% in the first nine months of 2000. Additional costs for a computer consultant building and maintaining a website as well as additional professional fees for updating securities filings caused the increase in administrative costs for 2001. Inventories at March 31, 2001 were $90,000 lower than at June 30, 2000 due to the Company being in its slower business cycle. Three Months Ended March 31, 2001 and 2000 ------------------------------------------ Sales: The Company's net sales of $217,524 for period ended March 31, 2001decreased 33% over net sales of $323,054 for the three months ended March 31, 2000. This three month period is normally the Company's slowest season. However, due to a sales promotion for a major customer in the quarter ending March 31, 2000, sales were significantly lower for the March, 2001 quarter because this promotion was not repeated. Due to the loss of sales in the Chase product line, the volume of net sales realized was not enough to cover the direct cost of sales. As a result, gross profit on sales for the three months ended March 31, 2001 was a negative $20,456. Selling expenses decreased 1% compared to selling expenses for the three months ended March 31, 2000. General and administrative expenses increased 9% compared to these expenses for the three months ended March 31, 2000, as a result of website maintenance costs. 9 ITEM 2 CHASE GENERAL CORPORATION AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2001, the Company has no commitments for capitalized expenditures. Cash increased $78,450 during the current nine month period as a result of completing the busy season and controlling overhead. 10 PART II. OTHER INFORMATION CHASE GENERAL CORPORATION AND SUBSIDIARY Item 3. DEFAULTS UPON SENIOR SECURITIES a. None b. The total cumulative preferred stock dividends contingency at March 31, 2001 is $5,995,708. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS a. The annual meeting of shareholders scheduled for January 19, 2001 was not held due to the lack of receipts of required proxies to hold such meetings. Item 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits - None required b. Reports on Form 8-K: There were no reports on Form 8-K filed during January, February, and March, 2001. 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 ______________________ ___________________________________ Date Barry M. Yantis President and Chief Financial Officer 11