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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d) of
The Securities and Exchange Act of 1934
Quarter Ended May 07, 1994 Commission File No. 2-72154
BIG B, INC.
STATE OF INCORPORATION Alabama I.R.S. EMPLOYER I.D. NO. 63-0632551
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ADDRESS OF PRINCIPAL EXECUTIVE OFFICE
2600 Morgan Road S.E., Bessemer, Alabama 35023
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REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE
Area Code 205 424-3421
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OUTSTANDING COMMON STOCK AS OF MAY 7, 1994 IS 15,562,060
Indicate by check 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 ( )
<PAGE> 2
COMMISSION FILE NO. 2-72154
BIG B, INC.
Index
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS: PAGE NO.
- - - - - --------------------- --------
<S> <C>
Condensed Balance Sheets as of May 07, 1994
and January 29, 1994 2
Condensed Statements of Income and Retained Earnings
for the Fourteen Week Periods Ended May 07, 1994
and May 08, 1993 3
Condensed Statements of Cash Flows for the
Fourteen Week Periods Ended May 07, 1994
and May 08, 1993 4
Notes to Condensed Financial Statements 5
Management's Discussion and Analysis of
the Results of Operations and Financial
Condition 6
Other Information and Signatures 7
</TABLE>
<PAGE> 3
BIG B, INC.
CONDENSED BALANCE SHEETS
AS OF MAY 7, 1994, AND JANUARY 29, 1994
(Unaudited)
<TABLE>
<CAPTION>
May 7 Jan. 29
----- -------
1994 1994
(In Thousands)
<S> <C> <C>
ASSETS
- - - - - ------
Current Assets -
Cash and Temporary Cash Investments $ 433 $ 419
Receivables 14,657 18,332
Inventories at LIFO 163,287 146,495
Prepaid Expenses 8,715 7,516
Deferred Income Taxes 2,100 2,100
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Total Current Assets $189,192 $174,862
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Property, Equipment, and Investments
in Property Under Capital Leases,
Net $ 58,516 $ 55,696
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Other Assets 2,481 2,542
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$250,189 $233,100
======= =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- - - - - ----------------------------------------
Current Liabilities -
Current Portion of Long-Term Debt and
Capitalized Lease Obligations $ 975 $ 903
Accounts Payable 44,268 55,578
Short Term Bank Loan 12,000 2,400
Accrued Income Taxes Payable 1,562 1,300
Accrued Expenses 8,728 5,026
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Total Current Liabilities $ 67,533 $ 65,207
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Non-Current Liabilites -
Long-Term Debt and Capitalized
Lease Obilgations $ 73,546 $ 63,476
Deferred Income Taxes 5,560 5,560
Deferred Compensation 1,116 1,079
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$ 80,222 $ 70,115
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Deferred Gains $ 601 $ 615
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Deferred Income $ 4,458 $ 4,058
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Shareholders' Investment -
Common Stock ($.001 par value
40,000,000 Shares Authorized;
15,562,060 issued and outstanding) $ 16 $ 16
Paid-in capital 35,103 34,462
Retained earnings 62,256 58,627
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$ 97,375 $ 93,105
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$250,189 $233,100
======= =======
</TABLE>
See notes to condensed financial statements.
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<PAGE> 4
BIG B, INC.
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE FOURTEEN WEEK PERIODS ENDED MAY 07, 1994
AND MAY 08, 1993
(Unaudited)
<TABLE>
<CAPTION>
FOURTEEN WEEKS ENDED
--------------------
(In Thousands Except
Per Share Amounts)
<S> <C> <C>
5-07-94 5-08-93
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Net Sales $179,315 $150,793
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Cost and Expenses:
Cost of Products Sold $124,581 $105,039
Store Operating, Selling and
Administrative Expenses 44,234 37,630
Depreciation and Amortization 2,891 2,275
Interest Expense 1,068 826
Interest Income (8) (99)
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$172,766 $145,671
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Income Before Taxes $ 6,549 $ 5,122
Provision for Income Taxes 2,455 1,790
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Net Income $ 4,094 $ 3,332
Retained Earnings, Beginning of
Period 58,627 48,654
Dividend Paid (465) (386)
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Retained Earnings, End of Period $ 62,256 $ 51,600
======= =======
Net Income Per Common Share (Note 1)
Primary $ 0.26 $ 0.21
Fully Diluted $ 0.24 $ 0.21
==== ====
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE> 5
BIG B, INC.
CONDENSED STATEMENTS OF CASH FLOWS FOR THE
FOURTEEN WEEK PERIODS ENDED MAY 07, 1994 AND MAY 08, 1993
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS
(Unaudited)
<TABLE>
<CAPTION>
May 07, 1994 May 08, 1993
------------ ------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 4,094 $ 3,332
-------- --------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization 2,891 2,275
Provision for deferred income taxes --- 20
Provision for losses on receivables 1,871 1,288
Provision to value inventories at LIFO cost 500 550
(Gain) on sale of property (9) (5)
Provision for deferred compensation 37 51
Provision for deferred income 400 1,400
Recognition of deferred gains (14) (8)
Change in assets and liabilities:
(Increase) Decrease in accounts receivable 1,804 (1,581)
(Increase) in other assets (59) (144)
Increase in inventories (17,292) (29,146)
Decrease in refundable income taxes --- 441
(Increase) in prepaid expenses (1,199) (1,755)
Increase (Decrease) in accounts payable (11,310) 2,854
Increase in accrued income taxes 262 1,152
Increase in accrued expenses 4,300 455
-------- --------
Total adjustments $ (17,818) $ (22,153)
-------- --------
Net cash provided by (used in)
operating activities $ (13,724) $ (18,821)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 20 9
Capital expenditures (5,602) (4,573)
-------- --------
Net cash used in investing activities $ (5,582) $ (4,564)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 10,375 40,250
Net borrowings under line of credit agreement 9,600 1,500
Principal payments under long-term debt and
capital lease obligations (233) (18,646)
Proceeds from issuance of common stock 43 26
Dividends paid $ (465) $ (386)
-------- --------
Net cash provided by financing activities $ 19,320 $ 22,744
-------- --------
NET INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS 14 (641)
CASH AND TEMPORARY INVESTMENTS AT BEGINNING OF PERIOD 419 1,023
-------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 433 $ 382
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 2,193 $ 541
Income taxes 1,729 176
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE> 6
BIG B, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MAY 07, 1994 AND MAY 08, 1993
1. Net income per common share for all periods was computed by dividing net
income by the average weighted number of shares outstanding during the
periods. Outstanding stock options are common stock equivalents but
were excluded from the primary net income per common share computations
as their effect was not material. Fully diluted net income per common
share was determined on the assumption that all convertible subordinated
debentures were converted and all stock options outstanding were
exercised. Conversion was assumed during the portion of each period
that the debentures and the options were outstanding. For the
debentures, net income was adjusted for interest, net of income tax
effects; for the stock options, outstanding shares were decreased by the
number of shares that could have been purchased with the proceeds from
the exercise, using the end of the period market price.
2. In the opinion of management, all adjustments have been made which are
necessary to reflect a fair statement of the results of operations of
the interim period.
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<PAGE> 7
BIG B, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OPERATING RESULTS
Net Sales
Sales for the fourteen week period increased 18.9% over the prior year.
The increase in net sales was primarily the result of increased sales in
existing stores (8.2%) and sales in the forty-five (45) acquired Treasury Drug
stores.
Store Cost and Expense
As a percentage of net sales, cost of products sold declined slightly to
69.5% from 69.7% in the prior year. The decline in cost of products sold as a
percentage of net sales was a result of higher gross margins in stores and
efficiencies in distribution center operations.
Store operating, selling and administrative expenses as a percentage of
net sales declined slightly to 24.7% from 24.9% in the prior year. The decline
was due to higher start up expense in the forty-five (45) acquired Treasury
Drug stores in the prior year.
Depreciation and amortization as a percentage of net sales increased to
1.6% from 1.5% in the prior year. This increase as a percent of net sales was
the result of the increase in total store count open during the period coupled
with the installation of an enhanced point of sale system.
Interest expense as a percentage of net sales remained steady at .6% in
both periods.
The Company's effective tax rate was 36.2% in fiscal 1994. The increase
from fiscal 1994 to fiscal 1995 is due to the 1993 Tax Act which increased the
maximum corporate Federal income tax rate to 35%. This increased the fiscal
1995 tax provision on current year earnings.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements relate primarily to opening and
stocking new store, acquiring stores, refurbishing existing stores and
supporting inventory for the Company's existing stores. The cost of opening a
new Big B Drugs store requires approximately $400,000 and a Drugs for Less
store requires approximately $1.1 million for fixtures, equipment, and
inventory. Historically, the Company has been able to lease its store
locations and currently owns the land and building of only one of its drug
stores. The Company plans to open 15 to 20 new stores in fiscal 1995 and
fiscal 1996 at an anticipated aggregate capital outlay of $8.0 to $10.0 million
each fiscal year. Additionally in fiscal 1995, the Company plans to complete
installations of an enhanced point of sale system at a cost of approximately
$4.5 million.
The Company believes that internally generated funds, and borrowings on
its $50.00 million revolving credit facility ($20.7 million outstanding at May
07, 1994) and $15 million line of credit ($12.0 million outstanding at May 07,
1994) will be adequate to meet the projected capital expenditures noted above.
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<PAGE> 8
BIG B, INC.
OTHER INFORMATION
The Company was not required to file and did not file any report on Form
8-K during the fourteen weeks ended May 07, 1994.
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.
BIG B, INC.
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REGISTRANT
June 15, 1994
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DATE
/s/ Michael J. Tortorice
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Michael J. Tortorice
Vice President of Finance*
*Both duly authorized officer and principal financial officer.
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