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 December 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 December 29, 2001
-------------------------------------- -----------------------------
Class A Common Stock, $1.00 Par Value 4,747,280
PART 1. FINANCIAL INFORMATION
Cagle's, Inc. And Subsidiary Consolidated Balance Sheets
December 29, 2001 and March 31, 2001
(In Thousands, Except Par Value)
(Period 12/29/01 Unaudited)
12/29/01 03/31/01
------------ -----------
Assets -----------------------------------------
CURRENT ASSETS
Cash $ 77 $ 1,113
Accounts receivable, net of allowance for
doubtful accounts of $459and $554 at
December 29, 2001 and March 31, 2001,
respectively 16,901 11,940
Inventories 38,734 35,070
Income Tax Refund Receivable 4,776 9,485
Other current assets 538 714
------------ ------------
Total current assets 61,026 58,322
------------ ------------
INVESTMENTS IN AND RECEIVABLES FROM
UNCONSOLIDATED AFFILIATES 42,969 39,097
OTHER ASSETS 1,528 1,598
PROPERTY, PLANT, AND EQUIPMENT 211,236 213,649
Less accumulated depreciation (76,824) (67,164)
------------ ------------
Property, plant, and equipment, net 134,412 146,485
------------ ------------
TOTAL ASSETS $ 239,935 $ 245,502
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY---------------
CURRENT LIABILITIES
Current maturities of long term debt $ 10,188 $ 8,501
Accounts payable 20,504 17,801
Accrued expenses 8,942 10,315
------------ ------------
Total current liabilities 39,634 36,617
------------ ------------
LONG TERM DEBT (net of current maturities) 114,198 115,429
NONCURRENT DEFERRED INCOME TAXES 10,064 13,712
OTHER NONCURRENT LIABILITIES 5,231 7,541
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 9,000
Shares and 4,748 issues and outstanding 4,748 4,748
Capital in excess of par value 4,198 4,198
Treasury stock held for options (96) (106)
Retained earnings 62,977 63,363
OCI(FAS133) (1,019) 0
------------ ------------
Total stockholders' equity 70,808 72,203
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 239,935 $ 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 39 week ended December 29, 2001
and the 13 week and 39 week ended December 30, 2000
(Amounts in thousands, except per share data)
(Period 12/29/01 Unaudited)
13 wks 13 wks 26wks 26wks
ended ended ended ended
12/29/01 12/30/00 12/29/01 12/30/00
-------- -------- -------- -------
Net Sales $85,560 $59,407 $258,943 $201,181
Costs and Expenses:
Cost of Sales 84,617 63,728 256,052 200,849
Selling and Delivery 2,673 2,201 7,512 6,914
General and Administrative 2,128 2,778 6,537 7,040
------- -------- -------- -------
Total costs and expenses 89,418 68,707 270,101 214,803
Income From Operations (3,858) (9,300) (11,158) (13,622)
Other Income(Expense):
Interest expense (2,056) (1,823) (7,059) (2,811)
Income from unconsolidated affiliates
and other income, net 3,563 3,181 9,001 9,118
-------- -------- ------- -------
Loss Before Income Taxes (2,351) (7,942) (9,216) (7,315)
(Provision) Benefit For Income Taxes 923 2,860 8,829 2,634
Net Income(Loss) $ (1,428) $(5,082) (387) (4,681)
======== ======== ======== ========
Weighted Average Shares Outstanding
-Basic 4,743 4,748 4,743 4,748
-Diluted 4,743 4,742 4,743 4,742
======== ======== ======== ========
Net Income Per Common Share
-Basic $ (.30) $ (1.07) $ (.08) $ (.99)
-Diluted $ (.30) $ (1.07) $ (.08) $ (.99)
Dividends Per Common Share $ .00 $ .03 $ .0 $ .09
======== ======== ======== ==========
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 December 29,2001 and December 30, 2000
(In Thousands) (unaudited)
12/29/01 12/30/00
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ (387) $ (4,681)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,416 6,662
gain on disposal of property, plant and equipment (999) 0
Changes in investment in and receivables from
unconsolidated affiliates (3,872) (3,653)
Changes in assets and liabilities:
Accounts receivables, net (4,961) 6,156
Income Tax Receivables 4,709 (617)
Inventories (3,664) (1,715)
Other current assets 176 1,400
Accounts payable 2,703 1,393
Accrued expenses (1,373) (1,252)
Deferred Income Taxes (3,648) (920)
Other non-current liability (3,329) 1,700
------------- -------------
Total Adjustments (2,842) 9,154
------------- -------------
Net cash provided by operating activities (3,229) 4,473
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (595) (57,620)
Proceeds from the sale of property, plant, equip 2,514 0
Increase in other assets (177) (364)
------------- -------------
Net cash used in investing activities 1,742 (57,984)
------------- -------------
Cash Flows from financing activities:
Payments of long-term debt and capital
lease obligations (4,254) (4,271)
Proceeds from issuance of long-term debt 4,710 49,769
Dividends Paid 0 (427)
Repurchase of Common Stock (28) 0
Proceeds from exercise of Stock Options 23 0
------------- -------------
Net cash provided or (used) by financing activities 451 45,071
------------- -------------
NET INCREASE (DECREASE) IN CASH (1,036) (8,440)
CASH AT BEGINNING OF PERIOD 1,113 9,526
------------- -------------
CASH AT END OF PERIOD $ 77 $ 1,086
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 7,449 $ 6,037
============= =============
Income Taxes (Refund) $ 10,163 $ 112
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
Cagle's, Inc. & Subsidiary
Notes to Consolidated Condensed Financial Statements
December 29, 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 39 weeks ended December 29,2001 and December 30,2000.
2. The results of operations for the 13 weeks and 39 weeks ended December
29,2001 and December 30, 2000 are not necessarily indicative of the results
expected for the full year.
3. Inventories consisted of the following:
(In Thousands)
December 29,2001 March 31, 2001
Finished Product $16,516 $14,289
Field Inventory and Breeders 15,562 15,356
Feed, Eggs, and Medication 5,130 3,780
Supplies 1,526 1,605
---------------- --------------
$38,734 $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 $3,037,000 and $3,067,000 respectively for the 13 weeks
ended December 29, 2001 and December 30,2000 and $8,679,000 and
$8,870,000 respectively for the 39 week periods ended the same dates.
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 and forth
quarter ended December 29, 2001, a gain of $429,996. There was an effect
on earnings of $253,465 (expensed) for the quarter ended December 29, 2001
as a result of SFAS no. 133 compliance.
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
December 29, 2001
Financial Condition
Weak demand for boneless skinless breast meat and tenders and the resulting
low market prices, seasonal inventory increases combined with continuing
inefficiencies associate with the new processing facility in Perry, Ga.
resulted in losses for the quarter. The continued losses continued to
strain the Company's liquidity as additional utilization of a revolving
credit facility was required to fund operational requirements; increased
inventory and accounts receivable levels. The sale of an idle facility is
reflected in the results of the quarter and resulted in a gain of $968,991
and cash of $2.5 million. In addition, the Company received a subordinated
note for $1 million for the balance of the sale price. The additional gain
reflected by the $1 million note is deferred until the note is paid.
During the quarter ended December 29, 2001 the Company sold its Macon
processing facility which had ceased production in June of 2001. The
Company received a first mortgage on the plant for the selling price of
$6.8 million and the sale will be reported on the installment basis as the
mortgage is paid. There was no impact on the financial statements as of
December 29, 2001.
Results of Operations
Revenues for the 13 week and 39 week periods ended December 29, 2001 increased
by 44.02% and 28.71% as compared to corresponding periods of a year ago. This
increase is attributed to the additional production, approximately 29% more
eviscerated pounds for the 39 week period ended December 29, 2001 compared to a
year ago and 36.16% more pounds in the 13 week period ended December 29, 2001
as compared to the 13 weeks ended December 30, 2000.
Market prices continued to challenge as most items remained at depressed
levels, wings and leg quarters being the exceptions. Boneless, skinless
breast meat and tenders, the major volume items remained at historically
low levels with strike prices substantially lower, than the nationally
quoted markets, both for the 13 week period and the 39 week period as
compared to the same period of a year ago.
Cost was adversely affected by a slight increase in feed cost which was 6.87%
higher on average for the 13 week period compared to year ago levels and 3.5%
higher for the 39 week period than from the corresponding period of a year ago.
Selling, Delivery and Administrative Expenses
There was no significant change in these expenses as a class, however legal
expenses continue to be a burden associated with ongoing litigation.
Interest Expense
Interest expense increased 12.8% for the 13 weeks period as compared to the
same period of a year ago and is attributed to higher borrowing levels. The
increase for the 39 week period ended December 29, 2001 was 151% however
during the 39 week period ended December 30, 2000 $3,124,000 of interest was
capitalized and not reflected in interest expense. While rates have dropped
significantly the Company's debt include $52,000,000 at fixed rates either as
fixed rate debt or of variable rate debt through the use of interest rate swaps.
Other Income
Other income for the quarter ended December 31, 2001 exceeded that of the same
period of a year ago by 12% and includes the gain recorded from the sale of the
idle further processing plant. The earnings impact(expense) of $253,000 from
FAS133 is also included in this category). For the 39 week period ended
December 31, 2001 other income was not materially changed.
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: February 12, 2002 /s/ J. Douglas Cagle
Chairman and C.E.O.
Date: February 12, 2002 /s/ Kenneth R. Barkley
Sr. VP Finance/Treas/CFO