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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, 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)
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 September 5,
2000.
Location in this filing where exhibit index is located : 31
Total number of pages included in this filing: 39
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:
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) 200 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,
2000, 1999, and 1998, this division accounted for 61%,
56%, and 55%, 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) Peanut clusters
(3) Home Style Poe Fudge (8) Champion Creme Drops
(4) Peco Flake (9) Jelly Candies
(5) Peanut Squares (10) Coconut Cubes
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, 2000,
1999, and 1998, this division accounted for 39%, 44%,
and 45%, respectively, of the consolidated revenue of
Dye Candy Company. The Company discontinued the
coconut cubes during the year ended June 30, 2000.
(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.
ITEM 1 BUSINESS (CONTINUED)
(iv) The largest single revenue producing product, the
"Cherry Mash" 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, 2000, 1999, and
1998, Associated Wholesale Grocers, accounted for
20.01%, 19.64% and 18.87% of gross sales,
respectively. For the years ending June 30, 2000
and June 30, 1999, Wal-Mart and its affiliates
accounted for 20.08% and 12.06% of gross sales,
respectively. The loss of Associated Wholesale
Grocers would not have an adverse effect on the
Company as the 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.
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.
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-eight 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, 2000, 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, 2000.
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 September 5, 2000, 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
06-30-2000 06-30-99 06-30-98 06-30-97 06-30-96
(i) Net sales or
operating revenue $2,129,785 $2,134,920 $2,113,777 $2,317,501 $2,316,031
(ii) Income (loss)
from continuing
operations $ 42,284 $ 49,262 $ (33,502) $ 50,174 $ 63,703
(iii)Income (loss)
from continuing
operations
per common share * $ (.09) $ (.09) $ (.17) $ (.08) $ (.07)
(iv) Total assets $ 800,691 $ 798,961 $ 770,998 $ 837,871 $ 815,954
(v) Long-term debt $ 127,672 $ 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.
* Refer to Note 6, "Notes to Financial Statements" for computation of income
(loss) from continuing operations per common share.
sf
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, 2000, 1999,
and 1998 in the amounts of $28,797, $99,294, and
$93,720, 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, 2000, 1999, and
1998 the Company had $100,000, $150,000, and $100,000,
respectively invested in short term certificates of
deposit to meet the 2000, 1999, and 1998 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 materials at June 30, 2000 were comparable to prior
year. 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 at June 30, 2000 were approximately
$125,000 higher than at June 30, 1999. This increase
was due to $26,000 in peanut contracts over prior year
and approximately $102,000 additional purchase
commitments of chocolate over prior year. The
Company's contracts for these products has been
fulfilled and new contracts established. Purchase
commitments for chocolate, peanuts and coconut were
$113,000 less at June 30, 1999 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 was higher than the cost of the commitment.
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. Packaging materials inventory
increased $53,000 from June 30, 1999 to June 30, 2000.
These inventory items were purchased during the year
ending June 30, 2000 to replenish inventory used in the
current and prior years production. These items were
purchased in quantities large enough to fulfill the
Company's packaging needs for several seasons.
Finished goods inventory did not significantly change
from June 30, 1999 to June 30, 2000. The slight
increase as due to timing of customer purchases of the
Cherry Mash products. 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.
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. 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, $15,104 was
used to add to transportation and office equipment.
Expenditures of $13,574 were made to upgrade existing
production equipment, in addition, $40,053 was made to
update transportation and office equipment during the
year ending June 30, 2000. 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 nine years, the Company has not been
indebted except for the series B notes. Of the
original $630,000 Series B notes payable, $127,672
remain outstanding at June 30, 2000. 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. Of the outstanding amount at June 30,
2000, $123,351 is classified long-term and $4,321 is
classified as current. Realizing that 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 four fiscal years. It is
anticipated that acceleration of principal payments
will continue as cash flow has been adequate 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 realized an operating loss. Increased cost of
sales and general and administrative expenses were the
primary sources for the loss. Company management
realized sales were declining during the 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 year ending June 30, 1999.
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 decreased by 13% for the year. This was
accomplished by decreasing selling expenses by 12%, and
general and administrative by 15%. During the year
ending June 30, 2000, net sales and the cost of sales
remained comparable to prior year.
Operating expenses increased by 2.9% from June 30, 1999
through June 30, 2000. This increase was due to
increased general and administration expenses. While
most general and administration expenses remained
constant, insurance expense increased by $9,981 and bad
debt expense increased by $24,615. Insurance increased
as rates for general and liability insurance continue
to go up. During the year ending June 30, 2000 the
Company had several large customer accounts which had
to be written off. Of the current year write off of
$20,813, $9,240 was from one customer that purchased
product and immediately declared bankruptcy. During
the year ending June 30, 1999 the Company netted $4,012
more from collections of prior write-off than were
ultimately written off. The Company continues a very
aggressive collection effort. The aging of accounts
receivable is reviewed on a regular basis and accounts
which become overdue are pursued for collection.
Selling expenses decreased by $30,381 during the year
ending June 30, 2000. This decrease was due to the
Company change in policy on brokers fees or commissions
to customers. The Company discontinued allowing these
fees as a reduction of selling price.
Under the leadership of the CEO and his sales staff,
the Company has stabilized its customer base.
Certainly some customers were lost during 2000, 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, SBT software,
involves the payroll processing accounting function.
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, 2000.
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-five years and no disagreements
on accounting or financial disclosure.
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, 2000 and
1999 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, 2000. 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, 2000 and 1999, and the results of their operations and their
cash flows for each of the years in the three-year period ended
June 30, 2000, in conformity with generally accepted accounting
principles.
Clifton Gunderson L.L.C.
St. Joseph, Missouri
August 17, 2000
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND 1999
ASSETS
2000 1999
CURRENT ASSETS
Cash and cash equivalents $ 146,779 $ 206,609
Receivables:
Trade, less allowance for doubtful
accounts of $11,393 in 2000 and
$11,516 in 1999 129,018 138,959
Other receivables 3,239 --
Inventories:
Finished goods 85,147 73,106
Goods in process 4,872 3,243
Raw materials 53,232 52,930
Packaging materials 123,938 70,878
Prepaid expense 34,960 35,469
Prepaid income taxes 1,158 --
Total current assets 582,343 581,194
PROPERTY AND EQUIPMENT
Land 35,000 35,000
Buildings 85,738 85,738
Machinery and equipment 676,914 663,341
Trucks and autos 104,513 99,113
Office equipment 49,123 31,909
Leasehold improvements 121,356 121,356
Total, at cost 1,072,644 1,036,457
Less accumulated depreciation 854,296 818,690
Total property and equipment 218,348 217,767
TOTAL ASSETS $ 800,691 $ 798,961
LIABILITIES AND STOCKHOLDERS' EQUITY
2000 1999
CURRENT LIABILITIES
Accounts payable $ 54,718 $ 48,383
Series B notes payable, related
parties, current maturities 1,642 2,305
Series B notes payable, unrelated
parties, current maturities 2,679 3,761
Accrued expense:
Interest 8,711 10,440
Income taxes -- 8,855
Other 26,473 27,778
Total current liabilities 94,223 101,522
LONG-TERM LIABILITIES
Series B notes payable,
related parties 46,644 59,219
Series B notes payable,
unrelated parties 76,707 97,387
Total long-term liabilities 123,351 156,606
Total liabilities 217,574 258,128
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock,
$5 par value:
Series A (liquidation
preference $1,245,000
and $1,215,000 respectively) 500,000 500,000
Series B (liquidation
preference $1,200,000
and $1,170,000 respectively) 500,000 500,000
Cumulative preferred stock,
$20 par value:
Series A (liquidation
preference $2,970,550
and $2,912,017 respectively) 1,170,660 1,170,660
Series B (liquidation
preference $484,104
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
Accumulated deficit (5,882,879) (5,925,163)
Total stockholders' equity 583,117 540,833
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 800,691 $ 798,961
These consolidated financial statements should be read only in
connection with the accompanying summary of significant
accounting policies and notes to consolidated financial
statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
2000 1999 1998
NET SALES $2,129,785 $2,134,920 $2,113,777
COST OF SALES 1,665,882 1,677,258 1,696,845
Gross profit 463,903 457,662 416,932
OPERATING EXPENSES
Selling expenses 218,211 246,592 280,764
General and
administrative
expenses 188,660 148,838 175,442
Total operating
expenses 406,871 395,430 456,206
Income
(loss)
from
operations 57,032 62,232 (39,274)
OTHER INCOME (EXPENSE)
Interest income 6,323 6,498 5,896
Miscellaneous income 347 1,758 691
Interest expense (8,842) (10,571) (12,077)
Other expense (173) -- --
Total other
income
(expense) (2,345) (2,315) (5,490)
Income
(loss)
before
income
taxes 54,687 59,917 (44,764)
PROVISION (CREDIT)
FOR INCOME TAXES 12,403 10,655 (11,262)
NET INCOME (LOSS) $ 42,284 $ 49,262 $ (33,502)
(LOSS) PER SHARE
OF COMMON STOCK $ (.09) $ (.09) $ (.17)
These consolidated financial statements should be read only in
connection with the accompanying summary of significant
accounting policies and notes to consolidated financial
statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
PRIOR CUMULATIVE CUMULATIVE
PREFERRED STOCK PREFERRED STOCK
SERIES A SERIES B SERIES A SERIES B
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
Net income -- -- -- --
BALANCE (DEFICIT), JUNE 30, 2000 $500,000 $500,000 $1,170,660 $190,780
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
(CONTINUED)
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
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
Net income -- -- 42,284 42,284
BALANCE (DEFICIT), JUNE 30, 2000 $969,834 $3,134,722 $(5,882,879) $583,117
These consolidated financial statements should be read only in connection with
the accompanying summary of significant accounting policies and notes to
consolidated financial statements.
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Collections from customers $2,119,123 $2,094,487 $2,087,531
Interest received 6,323 6,498 5,896
Other income 1,182 2,042 1,926
Income tax refunds -- 24,710 2,384
Cost of sales, selling,
general and administrative
expenses paid (2,075,152) (2,015,534) (1,979,084)
Interest paid (10,571) (12,109) (14,097)
Income tax paid (12,108) (800) (10,836)
Net cash provided by
operating activities 28,797 99,294 93,720
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and
equipment (53,627) (31,145) (45,636)
Net cash used in investing
activities (53,627) (31,145) (45,636)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes
payable, Series B (35,000) (22,633) (28,648)
Net cash used in financing
activities (35,000) (22,633) (28,648)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (59,830) 45,516 19,436
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 206,609 161,093 141,657
CASH AND CASH EQUIVALENTS,
END OF YEAR $146,779 $206,609 $161,093
2000 1999 1998
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Net income (loss) $ 42,284 $ 49,262 $(33,502)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 52,211 55,813 66,019
Loss on disposal of equipment 835 284 1,235
Provision for doubtful accounts 20,603 (4,012) 15,311
Effects of changes in operating
assets and liabilities:
Trade accounts receivable (10,662) (40,433) (26,246)
Other receivables (3,239) -- --
Income tax receivable -- 24,710 (24,710)
Inventories (67,032) 11,256 90,098
Prepaid expense 509 80 4,242
Prepaid income taxes (1,158) 1,000 4,996
Accounts payable 6,335 (10,811) 32
Income tax payable (8,855) 8,855 --
Accrued liabilities (3,034) 3,290 (3,755)
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 28,797 $ 99,294 $ 93,720
These consolidated financial statements should be read only in
connection with the accompanying summary of significant
accounting policies and notes to consolidated financial
statements.
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. 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.
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.
INVENTORIES
Inventories are carried at the "lower of cost or market value,"
cost being determined on the "first-in, first-out" basis of
accounting. Finished goods and goods in process include a
provision for manufacturing overhead.
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
INCOME TAXES
The Company has no significant timing differences that would give
rise to deferred tax items.
This information is an integral part of the accompanying
consolidated financial statements.
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,
2000 and 1999, $35,000 and $22,633 principal was paid on the
Series B notes, respectively.
As of June 30, 2000 and 1999, the outstanding Series B notes
total $127,672 and $162,672, respectively. Of these amounts
$48,286 and $61,524 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, 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, 2000, 1999, and 1998.
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:
2000 1999 1998
NET INCOME (LOSS)
Chase General Corporation $(10,798) $(11,829) $(12,410)
Dye Candy Company 53,082 61,091 (21,092)
Consolidated net income (loss) 42,284 49,262 (33,502)
NON-ALLOWANCE EXPENSE DEDUCTION
Interest on indebtedness 8,842 10,571 12,077
Net income (loss) basis
for "surplus net earnings" 51,126 59,833 (21,425)
DEDUCTIONS FROM INCOME BASIS
Set aside as reserve for
accumulation of working capital 25,000 25,000 25,000
"Surplus net earnings"
(loss) 26,126 34,833 (46,425)
INTEREST PAYMENT REQUIRED 8,842 10,571 12,077
EXCESS "SURPLUS NET EARNINGS" (LOSS)
OVER INTEREST PAYMENT REQUIRED $ 17,284 $ 24,262 $(58,502)
SINKING FUND REQUIREMENT $ 4,321 $ 6,066 $ --
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, 2000, 1999 and 1998 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, 2001 $ 35,460
Year ending June 30, 2002 35,460
Year ending June 30, 2003 35,460
Year ending June 30, 2004 35,460
Year ending June 30, 2005 29,550
Total $ 171,390
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, 2000, the Company had raw materials purchase
commitments with four vendors totaling $286,289.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - CAPITAL STOCK
Capital stock authorized, issued and outstanding as of June 30,
2000 and 1999 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, 2000
and 1999, totaled $5,899,654 and $5,771,582, respectively. Total
dividends in arrears, on a per share basis, consist of the
following at June 30:
2000 1999
6% Convertible
Series A $12 $12
Series B 12 12
5% Convertible
Series A 51 50
Series B 51 50
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 FOR INCOME TAXES
The provision for income taxes consists of the following as of
June 30:
2000 1999 1998
Federal income tax $ 9,213 $ 7,551 $(8,817)
State income tax 3,190 3,104 (2,445)
Total provision for
income taxes $12,403 $10,655 $(11,262)
The Company's provision for income taxes differs from the tax
that would result from applying statutory federal and state
income tax rates primarily because of nondeductible expenses.
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:
2000 1999 1998
Net income (loss) $ 42,284 $ 49,262 $ (33,502)
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 $(85,788) $(78,810) $(161,574)
Weighted average of
outstanding common shares 969,834 969,834 969,834
Loss per share $ (.09) $ (.09) $ (.17)
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 year ending June 30, 1998 one customer accounted for
18.87% of the gross sales. For the years ending June 30, 2000
and 1999, two customers accounted for 40.09% and 31.70%,
respectively, of the gross sales.
For the year ending June 30, 2000, two customers accounted for
53.01% of accounts receivable and for the year ending June 30,
1999 one customer accounted for 32.79% of accounts receivable.
For the year ending June 30, 1998, four customers accounted for
47.58% of accounts receivable.
This information is an integral part of the accompanying
consolidated financial statements.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) DIRECTORS
Name Age Periods of Service as Director Terms
Barry M. Yantis 55 1980 to present One year
Brian A. Yantis 54 July 16, 1986 One year
Brett A. Yantis 32 January 21, 1999 to present One year
An insufficient number of proxies were returned by
the shareholders for the January 21, 2000 annual
stockholder meeting. Therefore, the Directors noted
above are continuing for an additional one year term.
See Item 10(b) for offices held by Barry M. Yantis
and Brian A. Yantis.
(b) EXECUTIVE OFFICERS
Years of
Service as
Name Age Position an Officer Term
Barry M. Yantis 55 President and 20 Until successor elected
Treasurer
Brian A. Yantis 54 Vice-President 9 Until successor elected
and Secretary
(c) CERTAIN SIGNIFICANT EMPLOYEES
There are no significant employees other than above.
(d) FAMILY RELATIONSHIPS
Barry M. Yantis, and Brian A. Yantis are brothers.
Brett A. Yantis is the Son of Barry M. Yantis.
(e) BUSINESS EXPERIENCE
(1) Barry M. Yantis, president and treasurer has
been an officer of the Company for twenty-two
years, fourteen years as vice-president and eight
years as president. He has been on the board of
directors for twenty-two years and has been
associated with the candy business for twenty-six
years.
Brian A. Yantis, vice-president and secretary has
been an officer of the Company for eight years as
vice-president and since May, 1992 as secretary. He
has been associated with the insurance business for
twenty-seven years and has been a vice-president of
Aon Risk Services in Chicago, Illinois during the
past twelve years.
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(CONTINUED)
Brett A. Yantis was elected to the position of
director during the year ending June 30, 1999.
Brett has been associated with the Company for
seven 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)
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
OTHER RESTRICTED
NAME AND FISCAL ANNUAL STOCK OPTION/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR END SALARY BONUS COMPENSATION AWARD(S) SARS(#) PAYOUTS COMPENSATION
Barry M. Yantis /1/ 06-30-00 $112,800 $10,000 $2,240 -- -- -- --
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 -- -- -- --
/1/ CEO
/2/ No other compensation than that which is listed in compensation table.
/3/ No other officers are compensated for their services besides those listed in this compensation table.
(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
ITEM 11 - EXECUTIVE COMPENSATION (CONTINUED)
(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 2000, $120 of travel expenses
were reimbursed to board members, 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, Brian A. Yantis, Barry M.
Yantis, and Brett A. Yantis annually approve the
compensation of Barry M. Yantis, CEO.
(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.
(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
BENEFICIAL
TITLE OF CLASS NAME AND ADDRESS OWNERSHIP % OF CLASS
(a) Security ownership of certain beneficial owners
Common; par value Barry Yantis 194,385/1/ 16.8% /2/
$1 per share 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 and officers
$5 par value: as a group
Series B,
6% convertible
Cumulative All directors 3,017 5.2%
Preferred, and officers
$20 par as a group
value:
Series A,
$5 convertible
AMOUNTS
AND
NATURE
OF
BENEFICIAL
TITLE OF CLASS NAME AND ADDRESS OWNERSHIP % OF CLASS
Cumulative All directors 630 6.6%
Preferred, and officers
$20 par as a group
value:
Series B,
$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
(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, 2000 and 1999 13 - 14
Consolidated Statements of Operations for the years
ended June 30, 2000, 1999, and 1998 15
Consolidated Statements of Stockholders' Equity for
the years ended June 30, 2000, 1999, and 1998 16
Consolidated Statements of Cash Flows for the years
ended June 30, 2000, 1999, and 1998 17 - 18
Summary of Significant Accounting Policies 19 - 20
Notes to Consolidated Financial Statements 21 - 26
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K (CONTINUED)
(2) The following are included in Part IV of this
report:
Page Number
Independent Auditor's Report on Supplemental Schedules 33
Schedule I: Condensed Financial Information of
the Registrant 34 - 37
Schedule II: Valuation and Qualifying Accounts,
June 30, 2000, 1999, and 1998 38
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth
quarter of the year ended June 30, 2000.
(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, 2000 annual
meeting mailed to security holders during the 2000
fiscal year.
(2) For the 2000 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.
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, in all material respects, in
relation to the consolidated financial statements taken as a
whole, the information required to be stated therein.
Clifton Gunderson L.L.C.
St. Joseph, Missouri
August 17, 2000
SCHEDULE I
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CHASE GENERAL CORPORATION
(REGISTRANT ONLY)
CONDENSED BALANCE SHEETS
JUNE 30, 2000 AND 1999
ASSETS
2000 1999
Investment in subsidiary - at equity $ 719,500 $ 713,945
TOTAL ASSETS $ 719,500 $ 713,945
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Series B notes payable and accrued interest,
unrelated parties $ 84,802 $ 107,693
Series B notes payable and accrued interest,
related parties 51,581 65,419
Total liabilities 136,383 173,112
Capital stock 3,331,274 3,331,274
Paid in capital in excess of par 3,134,722 3,134,722
Accumulated (deficit) (5,882,879) (5,925,163)
Total stockholders' equity 583,117 540,833
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 719,500 $ 713,945
(1)The restricted assets of 100% consolidated subsidiary, Dye
Candy Company, are $800,691 and $798,961 as of June 30, 2000
and 1999, 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.
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, 2000, 1999 AND 1998
2000 1999 1998
REVENUE
Equity in net income (loss) of subsidiary $ 53,082 $ 61,091 $ (21,092)
Total revenue 53,082 61,091 (21,092)
EXPENSE
General and administrative 4,645 4,204 4,726
Interest 8,842 10,571 12,076
Total expense 13,487 14,775 16,802
Income (loss) before income taxes 39,595 46,316 (37,894)
PROVISION (CREDIT) FOR
INCOME TAXES 2,689 2,946 (4,392)
NET INCOME (LOSS) $ 42,284 $ 49,262 $ (33,502)
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, 2000, 1999 AND 1998
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
General and administrative expenses paid $(4,645) $(4,204) $(4,726)
Interest paid (10,571) (12,109) (14,097)
Income tax refund received 2,946 4,392 4,153
Net cash used in operating activities (12,270) (11,921) (14,670)
CASH FLOWS FROM INVESTING ACTIVITIES
Advances received from wholly owned
subsidiary 47,270 34,554 43,318
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on Series B notes
payable (35,000) (22,633) (28,648)
NET DECREASE IN CASH AND
CASH EQUIVALENTS -- -- --
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR -- -- --
CASH AND CASH EQUIVALENTS,
END OF YEAR $ -- $ -- $ --
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, 2000, 1999 AND 1998
2000 1999 1998
RECONCILIATION OF NET INCOME TO NET
CASH USED IN OPERATING ACTIVITIES
Net income (loss) $42,284 $ 49,262 $(33,502)
Adjustments to reconcile net income
(loss)to net cash used in operating
activities:
Net income (loss) from wholly owned
subsidiary (53,082) (61,091) 21,092
Effects of changes in operating assets
and liabilities:
Accrued interest (1,729) (1,538) (2,021)
Income tax refund receivable 257 1,446 (239)
NET CASH USED IN OPERATING ACTIVITIES $(12,270) $(11,921) $(14,670)
This information should be read only in connection with the
accompanying independent auditor's report on supplemental
schedules.
SCHEDULE II
CHASE GENERAL CORPORATION AND ITS SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
JUNE 30, 2000, 1999, AND 1998
COLUMN A COLUMN B COLUMN C ADDITIONS COLUMN D COLUMN E
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AT END
DESCRIPTION OF PERIOD AND EXPENSES DEDUCTIONS* OF PERIOD
Valuation accounts
deducted from assets
to which they apply for
doubtful accounts
receivable:
June 30, 2000 $11,516 $20,603 $20,726 $11,393
June 30, 1999 11,604 (4,012) 3,924 11,516
June 30, 1998 12,714 15,311 16,421 11,604
* 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.
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: 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 Accounting
/s/ Barry M. Yantis Officer) and Director 9/25/2000
Barry M. Yantis Date
/s/ Brian A. Yantis Vice-President, Secretary and Director 9/25/2000
Brian A. Yantis Date