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 July 30, 1994 Commission File No. 2-72154
BIG B, INC.
STATE OF INCORPORATION: I.R.S. EMPLOYER I.D. NO.
Alabama 63-0632551
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE:
2600 Morgan Road S.E., Bessemer, Alabama 35023
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE:
Area Code 205 424-3421
OUTSTANDING COMMON STOCK AS OF JULY 30, 1994 IS 15,572,350
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>
COMMISSION FILE NO. 2-72154
BIG B, INC.
Index
FINANCIAL STATEMENTS: PAGE NO.
--------------------- --------
Condensed Consolidated Balance Sheets as of
July 30, 1994 and January 29, 1994 2
Condensed Consolidated Statements of Income and
Retained Earnings for the Twenty-six and Twelve
Week Periods Ended July 30, 1994
and July 29, 1993 3
Condensed Consolidated Statements of Cash Flows for the
Twenty-six and Twelve Week Periods Ended
July 30, 1994 and July 29, 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 8
-1-
<PAGE>
BIG B, INC.
CONDENSED BALANCE SHEETS
AS OF JULY 30, 1994, AND JANUARY 29, 1994
JULY 30 JAN. 29
1994 1994
(In Thousands)
ASSETS
------
Current Assets -
Cash and Temporary Cash Investments $ 441 $ 419
Receivables 16,597 18,332
Inventories at LIFO 164,150 146,495
Prepaid Expenses 10,026 7,516
Refundable Income Taxes 2,100 2,100
-------- --------
Total Current Assets $193,314 $174,862
-------- --------
Property, Equipment, and Investments
in Property Under Capital Leases,
Net $ 60,888 $ 55,696
-------- --------
Other Assets 2,423 2,542
-------- --------
$256,625 $233,100
======== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities -
Current Portion of Long-Term Debt and
Capitalized Lease Obligations $ 985 $ 903
Accounts Payable 50,555 55,578
Short Term Bank Loan 11,100 2,400
Accrued Expenses 9,737 5,026
Accrued Income Taxes Payable 0 1,300
-------- --------
Total Current Liabilities $ 72,377 $ 65,207
-------- --------
Non-Current Liabilities -
Long-Term Debt and Capitalized
Lease Obligations $ 73,296 $ 63,476
Deferred Income Taxes 5,610 5,560
Deferred Compensation 1,137 1,079
-------- --------
$ 80,043 $ 70,115
-------- --------
Deferred Gains $ 589 $ 615
-------- --------
Deferred Income $ 4,358 $ 4,058
-------- --------
Shareholders' Investment -
Common Stock ($.001 par value
40,000,000 Shares Authorized;
15,572,350 issued and outstanding) $ 16 $ 16
Paid-in capital 35,220 34,462
Retained earnings 64,022 58,627
-------- --------
$ 99,258 $ 93,105
-------- --------
$256,625 $233,100
======== ========
<PAGE>
BIG B, INC.
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE TWENTY-SIX AND TWELVE WEEK PERIODS ENDED
JULY 30, 1994 AND JULY 29, 1993
(Unaudited)
(Note 2)
Twenty-Six Weeks Ended Twelve Weeks Ended
---------------------- ------------------
7-30-94 7-29-93 7-30-94 7-29-93
---------------- ----------------
Net Sales $325,278$282,097 $145,963$131,304
---------------- ----------------
Cost and Expenses:
Cost of Products Sold $225,363$195,601 $100,782$ 90,562
Store Operating, Selling and
Administrative Expenses 81,925 72,499 37,691 34,869
Depreciation and Amortization 5,414 4,470 2,523 2,195
Interest Expense 2,219 1,701 1,151 875
Interest Income (15) (145) (7) (46)
---------------- -----------------
$314,906$274,126 $142,140$128,455
---------------- -----------------
Income (Loss) Before Taxes $ 10,372$ 7,971 $ 3,823$ 2,849
Provision for Income Taxes 3,890 2,790 1,435 1,000
---------------- -----------------
Net Income (Loss) $ 6,482$ 5,181 $ 2,388$ 1,849
Retained Earnings, Beginning of
Period 58,627 48,654 62,256 51,600
Dividend Paid (1,087) (850) (622) (464)
---------------- -----------------
Retained Earnings, End of Period $ 64,022$ 52,985 $ 64,022$ 52,985
================ =================
Net Income Per Common Share
(Note 1) $0.39 $0.34 $0.15 $0.12
Fully Diluted ================ =================
Primary $0.42 $0.34 $0.16 $0.12
================ =================
See accompanying notes to condensed financial statements.
-3-
<PAGE>
BIG B, INC.
CONDENSED STATEMENTS OF CASH FLOWS FOR THE
TWENTY-SIX WEEK PERIODS ENDED JULY 30, 1994 AND JULY 31,
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS
(Unaudited)
July 30, 1994 July 31, 1993
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 6,482 $ 5,181
---------- -----------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities -
Depreciation and amortization 5,414 4,470
Provision for deferred income taxes 50 40
Provision for losses on receivables 3,767 2,424
Provision to value inventories at LIFO cost 1,000 850
(Gain) Loss on sale of property 80 (42)
Provision for deferred compensation 58 95
Provision for deferred income 300 225
Recognition of deferred gains (26) 156
Change in assets and liabilities:
(Increase) Decrease in accounts receiv (2,032) 167
Increase in other assets (110) (199)
Increase in inventories (18,655) (37,056)
Decrease in refundable income taxes - 441
Increase in prepaid expenses (1,757) (2,816)
Increase (Decrease) in accounts payable (5,023) 4,008
Decrease in accrued income taxes (1,300) ---
Increase in accrued expenses 5,425 774
---------- ----------
Total adjustments $ (12,809) $ (26,463)
--------- ----------
Net cash provided by (used in)
operating activities $ (6,327) $ (21,282)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 220 222
Capital expenditures (11,231) (9,292)
---------- ----------
Net cash used in investing activities $ (11,209) $ (9,070)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 10,375 43,250
Net borrowings under line of credit agreement 8,700 5,800
Principal payments under long-term debt and
capital lease obligations (473) (19,131)
Proceeds from issuance of common stock 43 652
Dividends paid $ (1,087) (850)
---------- ----------
Net cash provided by financing activities 17,558 (29,721)
---------- ----------
NET INCREASE (DECREASE) IN CASH
AND TEMPORARY CASH INVESTMENTS 22 (631)
CASH AND TEMPORARY INVESTMENTS
AT BEGINNING OF PERIOD 419 1,023
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS
AT END OF PERIOD $ 441 $ 392
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 2,222 $ 1,191
Income taxes 3,091 3,122
See accompanying notes to condensed financial statements.
-4-
<PAGE>
BIG B, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 30, 1994 AND JULY 29, 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.
-5-
<PAGE>
BIG B, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OPERATING RESULTS
Net Sales
---------
Sales for the twenty-six week period increased 15.3% over
the prior year and increased 11.2% during the most recent quarter
over the prior year. The increase in sales was primarily the
result of increased sales in existing stores and increased sales
in the forty-five (45) acquired Treasury Drug Stores.
Store Cost and Expense
----------------------
As a percent of net sales, cost of products sold remained
steady at 69.2% for the twenty-six week period and increased
slightly to 69.1% from 68.8% for the most recent twelve week
period. This increase as a percent of net sales in the most
recent quarter was the result of lower gross margins in stores
operated.
Store operating, selling and administrative expenses as a
percentage of net sales during the twenty-six week period
increased to 26.2% from 25.8% and decreased to 25.8% from 26.7%
in the most recent twelve week period. This increase as a
percent of net sales was primarily the result of a larger number
of stores open for the full period in the current year. The
decrease as a percent of net sales for the most recent twelve
weeks was due to higher start up expenses in the forty-five (45)
acquired Treasury Drug stores in the prior year.
Depreciation and amortization as a percentage of net sales
increased slightly in both the twenty-six and twelve week
periods. This increase as a percentage 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
sales system.
Interest expense as a percentage of net sales increased
slightly in both the twenty-six and twelve week periods. This
increase was due primarily to higher short term borrowings and
generally higher interest rates during the 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.
-6-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements relate primarily to
opening and stocking new stores, 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 has completed
installation 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 July 30, 1994) and $15 million line of
credit ($11.1 million outstanding at July 30, 1994) will be
adequate to meet the projected capital expenditures noted above.
-7-
<PAGE>
BIG B, INC.
OTHER INFORMATION
The Company was not required to file and did not file any
report on Form 8-K during the twelve weeks ended July 30, 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.
REGISTRANT
September 12, 1994
DATE
/s/ Michael J. Tortorice
Michael J. Tortorice
Vice President of Finance*
*Both duly authorized officer and principal financial officer.
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-30-1994
<PERIOD-END> JUL-30-1994
<CASH> 441
<SECURITIES> 0
<RECEIVABLES> 15897
<ALLOWANCES> 700
<INVENTORY> 164150
<CURRENT-ASSETS> 193314
<PP&E> 107870
<DEPRECIATION> 46982
<TOTAL-ASSETS> 256525
<CURRENT-LIABILITIES> 72377
<BONDS> 50555
<COMMON> 16
0
0
<OTHER-SE> 99242
<TOTAL-LIABILITY-AND-EQUITY> 256625
<SALES> 325278
<TOTAL-REVENUES> 325278
<CGS> 225363
<TOTAL-COSTS> 307273
<OTHER-EXPENSES> 5414
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2219
<INCOME-PRETAX> 10372
<INCOME-TAX> 3890
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6482
<EPS-PRIMARY> .42
<EPS-DILUTED> .39
</TABLE>
