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 October 22, 1994 Commission
File No. 2-72154
BIG B, INC.
STATE OF INCORPORATION Alabama I.R.S. EMPLOYER I.D. NO. 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 OCTOBER 22, 1994 IS 15,579,900
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
October 22, 1994 and January 29, 1994 2
Condensed Consolidated Statements of Income and
Retained Earnings for the Thirty-eight and
Twelve Week Periods Ended October 22, 1994
and October 23, 1993 3
Condensed Consolidated Statements of Cash Flows for the
Thirty-eight and Twelve Week Periods Ended
October 22, 1994 and October 23, 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
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<PAGE>
BIG B, INC.
CONDENSED BALANCE SHEETS
AS OF OCTOBER 22, 1994, AND JANUARY 29, 1994
(Unaudited)
OCT. 22 JAN. 29
1994 1994
(In Thousands)
ASSETS
Current Assets -
Cash and Temporary Cash Investments $ 456 $ 419
Receivables 20,567 18,332
Inventories at LIFO 177,222 146,495
Prepaid Expenses 8,081 7,516
Refundable Income Taxes 2,100 2,100
------- -------
Total Current Assets $208,426 $174,862
------- -------
Property, Equipment, and Investments
in Property Under Capital Leases, Net $ 60,866 $ 55,696
------- -------
Other Assets 2,529 2,542
------- -------
$271,821 $233,100
======= =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities -
Current Portion of Long-Term Debt and
Capitalized Lease Obligations $ 985 $ 903
Accounts Payable 60,662 55,578
Short Term Bank Loan 14,900 2,400
Accrued Expenses 10,137 5,026
Accrued Income Taxes Payable 685 1,300
------- -------
Total Current Liabilities $ 87,369 $ 65,207
------- -------
Non-Current Liabilites -
Long-Term Debt and Capitalized
Lease Obilgations $ 73,413 $ 63,476
Deferred Income Taxes 5,635 5,560
Deferred Compensation 1,158 1,079
------- -------
$ 80,206 $ 70,115
------- -------
Deferred Gains $ 577 $ 615
------- -------
Deferred Income $ 3,378 $ 4,058
------- -------
Shareholders' Investment -
Common Stock ($.001 par value
40,000,000 Shares Authorized;
15,579,900 issued and outstanding) $ 16 $ 16
Paid-in capital 35,285 34,462
Retained earnings 64,990 58,627
------- -------
$100,291 $ 93,105
------- -------
$271,821 $233,100
======= =======
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<PAGE>
BIG B, INC.
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THIRTY-EIGHT AND TWELVE WEEK PERIODS ENDED
OCTOBER 22, 1994 AND OCTOBER 23, 1993
(Unaudited)
(Note 2)
Thirty-Eight Weeks Ended Four Weeks Ended
10-22-94 10-23-94 10-22-94 10-23-93
Net Sales $475,421 $415,767 $150,143 $133,670
------- ------- ------- -------
Cost and Expenses:
Cost of Products Sold $329,081 $289,235 $103,748 $ 93,922
Store Operating, Selling and
Administrative Expenses 121,736 107,411 39,811 34,618
Depreciation and Amortization 8,298 6,995 2,884 2,531
Interest Expense 3,503 2,755 1,284 1,054
Interest Income (17) (147) (2) (2)
------- ------- ------- -------
$462,601 $406,249 $147,725 $132,123
------- ------- ------- -------
Income (Loss) Before Taxes $ 12,820 $ 9,518 $ 2,418 $ 1,547
Provision for Income Taxes 4,745 3,330 855 540
------- ------- ------- -------
Net Income (Loss) $ 8,075 $ 6,188 $ 1,563 $ 1,007
Retained Earnings, Beginning of
Period 58,627 48,654 64,022 52,985
Dividend Paid (1,712) (1,314) (595) (464)
------- ------- ------- -------
Retained Earnings, End of Period$64,990 $ 53,528 $ 64,990 $ 53,528
======= ======= ======= =======
Net Income Per Common Share(Note 1)$0.49$ 0.40 $ 0.10 $ 0.07
Fully Diluted ======= ======= ======= =======
Primary $ 0.52 $ 0.40 $ 0.10 $ 0.07
======= ======= ======= =======
See accompanying notes to condensed financial statements.
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<PAGE>
BIG B, INC.
CONDENSED STATEMENTS OF CASH FLOWS FOR THE
THIRTY-EIGHT WEEK PERIOD ENDED OCTOBER 22, 1994, AND OCTOBER 23, 1993
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS
(Unaudited)
Oct. 22, 1994 Oct. 23, 1993
CASH FLOWS FROM OPERATING ACTIVITIES: (In Thousands)
Net Income $ 8,075 $ 6,188
------- -------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities -
Depreciation and amortization 8,298 6,995
Provision for deferred income taxes 75 60
Provision for losses on receivables 5,902 3,727
Provision to value inventories at LIFO cost 1,400 1,200
Loss on sale of property 348 5
Provision for deferred compensation 79 139
Provision for deferred income (680) 118
Recognition of deferred gains (38) (30)
Change in assets and liabilities:
Increase in accounts receivable (8,137) (4,253)
Increase in other assets (317) (402)
Increase in inventories (32,127) (46,676)
Decrease in refundable income taxes --- 441
Increase in prepaid expenses (143) (3,482)
Increase in accounts payable 5,084 15,235
Decrease in accrued income taxes (615) 0
Increase in accrued expenses 5,891 1,157
------- -------
Total adjustments $(14,980) $(25,766)
------- -------
Net cash provided by (used in)
operating activities $ (6,905) $(19,578)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 27 478
Capital expenditures (13,581) (13,673)
-------- -------
Net cash used in investing activities$(13,554) $(13,195)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 10,375 49,250
Net borrowings (repayments) under line of
credit agreement 12,500 3,700
Principal payments under long-term debt and
capital lease obligations (710) (19,542)
Proceeds from issuance of common stock 43 64
Dividends paid $ (1,712) $ (1,314)
-------- --------
Net cash provided by financing activities$ 20,496 $ 32,158
------- -------
NET INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS37 (615)
CASH AND TEMPORARY INVESTMENTS AT BEGINNING OF PERIOD 419 1,023
-------- -------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD$ 456$ 408
======== =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 4,155 $ 2,448
Income taxes 5,285 3,917
See accompanying notes to condensed financial statements.
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<PAGE>
BIG B, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
OCTOBER 22, 1994 AND OCTOBER 23, 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>
BIG B, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OPERATING RESULTS
Net Sales
Sales for the thirty-eight week period incresed 14.3% over
the prior year and increased 12.3% during the most recent quarter
over the prior year. The increase in sales was primarily the
result of incresed 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 declined to
69.2% from 69.6% for the thirty-eight week period and declined to
69.1% from 70.3% for the most recent twelve week period. This
decrease as a percent of sales was a result of higher gross
margins in stores and continued improved distribution center
efficiencies.
Store operating, selling and administrative expenses as a
percentage of net sales during the thirty-eight week period
decreased to 25.6% from 25.8% and increased to 26.5% from 25.9%
in the most recent twelve week period. The decrease as a percent
of net sales for the thirty-eight week period was due to higher
start up expenses in the forty-five (45) acquired Treasury Drug
stores in the prior year. The increase in the most recent twelve
week period was the result of higher operating expenses and
advertising cost.
Depreciation and amortization as a percentage of net sales
incresed 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.
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<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 October 22, 1994) and $15 million line of
credit ($14.9 million outstanding at October 22, 1994) will be
adequate to meet the projected capital expenditures noted above.
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<PAGE>
PART II -- OTHER INFORMATION
Item 5. Other Information
The Company was not required to file and did not file
any report on Form 8-K during the twelve weeks ended October 22,
1994.
Item 6. Exhibits
27 Financial Data Schedule
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
December 5, 1994
DATE
/s/ Michael J. Tortorice
Michael J. Tortorice
Vice President of Finance*
* Both duly authorized officer and principal financial officer.
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