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 29, 2001
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 30, 2001
-------------------------------------- -----------------------------
Class A Common Stock, $1.00 Par Value 4,747,280
PART 1. FINANCIAL INFORMATION
Cagle's, Inc. And Subsidiary
Consolidated Balance Sheets
September 29, 2001 and March 31, 2001
(In Thousands, Except Par Value)
(Period 9/29/01 Unaudited)
09/29/01 03/31/01
------------ -------------
Assets -----------------------------------------
CURRENT ASSETS
Cash $ 143 $ 1,113
Accounts receivable, net of allowance for
doubtful accounts of $538 and $554 at
September 29, 2001 and March 31, 2001,
respectively 14,357 11,940
Inventories 39,027 35,070
Income Tax Refund Receivable 5,914 9,485
Other current assets 751 714
------------ ------------
Total current assets 60,192 58,322
------------ ------------
INVESTMENTS IN AND RECEIVABLES FROM
UNCONSOLIDATED AFFILIATES 42,377 39,097
OTHER ASSETS 1,434 1,598
PROPERTY, PLANT, AND EQUIPMENT 214,112 213,649
Less accumulated depreciation (75,193) (67,164)
------------ ------------
Property, plant, and equipment, net 138,919 146,485
------------ ------------
TOTAL ASSETS $ 242,922 $ 245,507
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY---------------
CURRENT LIABILITIES
Current maturities of long term debt $ 9,626 $ 8,501
Accounts payable 19,534 17,801
Accrued expenses 9,618 10,315
------------ ------------
Total current liabilities 38,778 36,617
------------ ------------
LONG TERM DEBT (net of current maturities) 113,803 115,429
NONCURRENT DEFERRED INCOME TAXES 11,940 13,712
OTHER NONCURRENT LIABILITIES 6,595 7,541
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 9,000
Shares and 4,748 issues and outstanding 2000 & 2001 4,749 4,748
Capital in excess of par value 4,198 4,198
Treasury stock held for options (96) (106)
Retained earnings 64,404 63,363
OCI(FAS133) (1,449) 0
------------ ------------
Total stockholders' equity 71,806 72,203
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 242,922 $ 245,502
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc., & Subsidiary
Consolidated Statements of Income
For the 13 week and 26 week ended September 29, 2001
and the 13 week and 26 week ended September 30, 2000
(Amounts in thousands, except per share data)
(Period 9/29/01 Unaudited)
13 wks 13 wks 26 wks 26 wks
ended ended ended ended
9/29/01 9/30/00 9/29/01 9/30/00
-------- -------- -------- --------
Net Sales $ 84,440 $ 72,590 $173,383 $141,774
Costs and Expenses:
Cost of Sales 82,113 69,827 171,435 137,121
Selling and Delivery 2,538 2,300 4,839 4,713
General and Administrative 2,131 2,182 4,409 4,262
-------- -------- -------- --------
Total costs and expenses 86,782 74,309 180,683 146,096
Income From Operations (2,342) (1,719) (7,300) (4,322)
Other Income(Expense):
Interest expense (2,389) (421) (5,003) (988)
Income from unconsolidated
affiliates and other income, net 2,587 3,062 5,438 5,937
-------- -------- -------- --------
Loss Before Income Taxes (2,144) 922 (6,865) 627
(Provision) Benefit For Income Taxes 772 (332) 7,906 (226)
Net Income $ (1,372) 590 1,041 401
======== ======== ======== ========
Weighted Average Shares Outstanding
-Basic 4,743 4,748 4,743 4,748
-Diluted 4,744 4,742 4,743 4,742
======== ======== ======== ========
Net Income Per Common Share
-Basic $ (.29) $ .12 $ .22 $ .08
-Diluted $ (.29) $ .12 $ .22 $ .08
Dividends Per Common Share $ .00 $ .03 $ .00 $ .06
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
Cagle's, Inc & Subsidiary Consolidated Statements of Cash Flows
For the 26 weeks ended September 29,2001 and September 30, 2000
(In Thousands) (unaudited)
9/29/01 9/30/00
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,041 $ 401
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,316 4,012
Gain on disposal of property, plant and equipment (24) 0
Changes in investment in and receivables from
unconsolidated affiliates (3,280) (2,984)
Changes in assets and liabilities:
Accounts receivables, net (2,417) 733
Income Tax Receivables 3,571 0
Inventories (3,957) 2,585
Other current assets 24 1,506
Accounts payable 1,730 2,324
Accrued expenses (718) (1,582)
Deferred Income Taxes (1,772) (694)
Other non-current liability (2,395) (300)
------------- -------------
Total Adjustments (922) 5,600
------------- -------------
Net cash provided by operating activities 119 6,001
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (583) (42,022)
------------- -------------
Net cash used in investing activities (583) (42,022)
------------- -------------
Cash Flows from financing activities:
Payments of long-term debt and capital
lease obligations (501) (2,128)
Proceeds from issuance of long-term debt 0 29,000
Dividends Paid 0 (284)
Repurchase of Common Stock (28) 0
Proceeds from exercise of Stock Options 23 0
------------- -------------
Net cash provided or (used) by financing activities (506) 26,588
------------- -------------
NET INCREASE (DECREASE) IN CASH (970) (9,433)
CASH AT BEGINNING OF PERIOD 1,113 9,526
------------- -------------
CASH AT END OF PERIOD $ 143 $ 93
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 5,253 $ 3,115
============= =============
Income Taxes (Refund) $ (9,978) $ 112
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc. & Subsidiary
Notes to Consolidated Condensed Financial Statements
June 30, 2001
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain 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 29,
2001 and March 31, 2001 and the results of their operations for the 13 weeks
and 26 weeks ended September 29,2001 and September 30,2000.
2. The results of operations for the 13 weeks and 26 weeks ended September
29,2001 and September 30, 2000 are not necessarily indicative of the results
expected for the full year.
3. Inventories consisted of the following:
(In Thousands)
September 29,2001 March 31, 2001
Finished Product $16,605 $14,289
Field Inventory and Breeders 16,940 15,396
Feed, Eggs, and Medication 3,811 3,780
Supplies 1,671 1,605
---------------- --------------
$39,027 $35,070
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 vary from those estimates.
5. Investments in and Receivables from Unconsolidated Affiliates.
The Company accounts for its investments in 5 unconsolidated affiliates
using the equity method. The Company's share of earnings from these
affiliates totaled $2,745,000 and $3,019,000 respectively for the 13 weeks
ended September 29, 2001 and September 30,2000 and $5,642,000 and
$5,803,000 respectively for the 26 weeks ended September 29, 2001 and
September 30,2000.
6. Accounting for derivative instruments SFAS no. 133.
The Company adopted SFAS No. 133 during the first quarter of this fiscal
year and recorded the change in fair market value of interest rate swaps
used to hedge $25,000,000 in variable rate debt in accordance with SFAS
133. The resulting charge(Loss) to equity was ($916,640). The charge to
equity for the quarter ended September 29,2001 was $531,902. There was no
effect on earnings in either quarter.
7. Certain prior year amounts have been re-classified for consistency with
current period presentation.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
September 29, 2001
Financial Condition
Lower than expected market prices for boneless breast meat, especially early in
the quarter continued to plague earnings and prevent any appreciable reduction
of the Company's debt. The low market prices also forced the company to place
a continued reliance on the revolving credit line to meet day to day
requirements. As of 9/29/01 the Company's availability under this facility was
$5,757,000. The Company closed on the sale of an idle facility on September
29, 2001, however, proceeds of the sale were not received until October. The
sale will be reflected in the financial statements of the third quarter.
Results of Operations
Revenues for the 13 week and 26 week period increased by 16.3% and 22.3%
respectively as compared to year ago amounts for the same periods. This
increase is due to approximately 5% or $3.7 mil in outside feed sales for the
quarter ended September 29, 2001 and $7.4 mil or 5.2% for the 26 week period
then ended. This was new business that did not exist a year ago and is
expected to be temporary. Additional volume accounts for the balance of the
increased revenues. The Company experienced an 18.7% increase in pounds
marketed for the 13 weeks vs. the same period of a year ago and 17.9% increase
in pounds marketed for the 26 weeks vs. the same period of a year ago.
Boneless breast meat pricing for the quarter averaged 5.9% less for the 13 week
period than for the comparable period of a year ago and 5.9% lower for the 26
week period compared to year ago levels. Dark meat(mostly export) averaged
38.3% higher for the quarter and 43.5% higher for the 26 week period.
Wings were a bright spot, averaging 80.8% higher prices for the 13 week period
compared to a year ago and 101.4% higher for the 26 week period compared to
year ago levels.
Feed cost averaged 5.7% higher than year ago prices for the 13 week period and
2.47% higher for the 26 week period compared to year ago pricing.
Selling, Delivery and Administrative Expenses
As a group these expenses increased 4.2% for the quarter compared to year ago
levels and 3% over comparable 26 week amounts and is the result of a new
distribution branch start-up along with normal personnel increases.
Interest Expense
Interest expense increased 467.5% for the 13 week period compared to year
ago levels and 406.4% for the 26 week period and is due mainly to the
capitalization of interest during last year's construction period. Rates
have averaged significantly lower for the quarter and 6 months periods.
Other Income
Other income decreased by 15.5% for the 13 week period as compared to the same
period of a year ago and decreased 8.4% for the 26 week period of a year ago.
Income Taxes
The provision for income taxes reflects the Company's taxes calculated at
statutory rates and in the case of a reported loss reflects the Company's
ability to obtain a refund of previously paid taxes. Statutory rates are
adjusted for any credits to which the company may be entitled.
Part II Other Information
Item 9 Exhibits and Reports on Form 8-K
a. Not applicable
b. No report on Form 8-K was filed during this period.
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 14, 2001 /s/ J. Douglas Cagle
Chairman and C.E.O.
Date: November 14, 2001 /s/ Kenneth R. Barkley
Sr. VP Finance/Treas/CFO