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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 0-10506
BIG B, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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ALABAMA 63-06325521
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2600 MORGAN ROAD
S.E., BIRMINGHAM, ALABAMA 35023
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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(205) 424-3421
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock
$.001 Par Value
Indicate by check mark whether Big B, Inc. (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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
Big B, Inc. as of March 17, 1995, was approximately $179,082,075.
As of March 17, 1995, the number of shares of Big B, Inc. Common Stock
outstanding was 15,636,510.
DOCUMENTS INCORPORATED BY REFERENCE
(2) Part III incorporates by reference portions of the Big B, Inc. Annual
Proxy Statement for the fiscal year ended January 28, 1995 (to be filed with the
Commission on or about April 30, 1995).
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TABLE OF CONTENTS
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ITEM PAGE
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Part I 1. Business. ........................................................... 1
2. Properties. ......................................................... 8
3. Legal Proceedings. .................................................. 9
4. Submission of Matters to a Vote of Security Holders. ................ 9
Part II 5. Market for Registrant's Common Equity and Related Stockholder
Matters. .......................................................... 9
6. Selected Financial Data. ............................................ 9
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations. ............................................ 11
8. Financial Statements and Supplementary Data. ........................ 14
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure. ............................................. 28
Part III 10. Directors and Executive Officers of the Registrant. ................. 28
11. Executive Compensation. ............................................. 28
12. Security Ownership of Certain Beneficial Owners and Management. ..... 28
13. Certain Relationships and Related Transactions. ..................... 28
Part IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. ... 29
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PART I
ITEM 1. BUSINESS.
GENERAL
The Company operates a chain of 367 stores throughout a five state area in
the southeastern United States. The Company operates its drug stores under the
names "Big B Drugs" and "Drugs for Less". Also, the Company operates five home
healthcare stores under the name "Big B Home Health Care Center." The Company is
one of the largest drug store chains in this five state area with 158 stores in
Georgia, 157 in Alabama, 24 in Florida, 21 in Tennessee and seven in
Mississippi. All of the Company's stores are within a 400 mile radius of its
distribution center in Birmingham, Alabama. In addition to prescription drugs
and services, the Company's drug stores offer a broad range of health and beauty
aids, cosmetics, greeting cards, convenience foods, photo processing services
and other general merchandise. The Company intends to continue to concentrate
its future growth in this five state area to take advantage of the available
economies of scale in advertising, distribution and supervision and the
competitive advantage for the Company in marketing to third-party payment plans.
THE DRUG STORE INDUSTRY
In recent years, the drug store industry has undergone several significant
changes, including: (i) the increase in third-party payment plans for
prescription drugs, (ii) the consolidation within the drug store industry, (iii)
the aging of the United States population and (iv) the increase in competition
from non-traditional retailers of prescription and over-the-counter drugs.
During the last several years, a growing percentage of prescription drug
sales throughout the industry has been accounted for by sales to customers who
are covered by third-party payment plans. According to IMS America, in 1994,
third-party payment plan sales represented approximately 58.3% of total
prescription drug sales in the United States. In a typical third-party payment
plan, the drug store company has a contract with a third-party payor, such as an
insurance company, HMO, PPO, other managed care provider, government agency or
private employer, which agrees to pay for part or all of a customer's eligible
prescription purchases. Although third-party payment plans often provide a high
volume of prescription sales, such sales typically generate lower gross margins
than other prescription sales due principally to the highly competitive nature
of this business and recent efforts by third-party payment plans to contain
costs. The Company believes larger drug store chains, such as the Company, are
better able to service the growing third-party payment plan segment than
independent drug stores and smaller chains as a result of the larger chains'
more sophisticated technology systems, larger number of stores and greater
penetration within their markets.
As a result of the economies of scale from which larger drug store chains
benefit as well as the third-party payment plan trend, the number of independent
drug stores and smaller drug store chains has decreased as a result of
acquisitions by larger drug store chains. This trend is expected to continue
because larger chains are better positioned to handle the increased third-party
payment plan sales, purchase inventory on more advantageous terms and achieve
other economies of scale with respect to their marketing, advertising,
distribution and other expenditures. The Company believes that independent drug
stores and smaller drug store chains may provide significant acquisition
opportunities for larger drug store chains, such as the Company.
Strong demographic trends have also contributed to changes in the drug
store industry, as a significant portion of the United States population ages.
This trend has had, and is expected to continue to have, a marked effect on the
pharmacy business in the United States because consumer prescription and
over-the-counter drug usage generally increases with age. The group of persons
over age 40 is a rapidly growing segment of the U.S. population. According to
industry sources, in 1994, this segment represented approximately 39% of the
population, although it consumed approximately 58% of all prescriptions sold in
the United States. This segment is projected to increase to 43% of the
population by the year 2000. The average per person prescription usage in the
United States is approximately 3.9 prescriptions per year, which increases to
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approximately 4.1, 7.4 and 9.1 prescriptions filled per year for persons ages
40-59, 60-74 and 75 and over, respectively.
In 1993, drug store chains and independent drug stores represented
approximately 33% and 28%, respectively, of the U.S. retail pharmacy market,
which includes mass merchandisers, food stores, staff model HMOs, clinics, mail
order companies, independent pharmacies and chain pharmacies. In response to a
number of factors, including the aging of the United States population, mass
merchandisers (including discounters and deep discounters), supermarkets,
combination food and drug stores, mail order distributors, hospitals, HMOs and
other managed care providers have entered the pharmacy industry. Supermarkets,
including combination food and drug stores, and mass merchandisers each
represented approximately 9.5% of the retail pharmacy market in the United
States in 1993.
BUSINESS STRATEGY
The Company's business strategy is designed to maintain a strong pharmacy
and healthcare related business, increase the Company's market share in each
existing market and improve profitability. In implementing the Company's
business strategy, the Company intends to:
- Focus on the Company's pharmacy operations;
- Emphasize market concentration;
- Continue investment in information systems;
- Maintain a high level of customer service and convenience; and
- Continue cost-control efforts.
Focus on Pharmacy Operations. The Company's primary business focus is the
sale of prescription drugs. During fiscal 1995, the Company estimates that more
than 13.6 million prescriptions were filled by the Company, compared to an
estimated 10.2 million prescriptions in fiscal 1993. During fiscal 1995, sales
of prescription drugs generated 49.1% of the Company's net sales compared to
41.7% in fiscal 1991. Management expects that the Company's prescription drug
business will continue to represent a significant portion of the Company's sales
and profits as a result of increased participation by the Company in third-party
payment plans, the demographic trend towards an aging population and the
continued development of new pharmaceutical products.
In emphasizing its pharmacy operations, the Company intends to continue to
provide high quality service to the Company's traditional customer base and to
pursue new opportunities for pharmacy growth. For example, the Company intends
to increase its participation in third-party payment plans by aggressively
marketing itself with all types of third-party payment plans, including
insurance companies, HMOs, PPOs, other managed care providers and government
agencies. The Company believes that the number and concentration of its stores
within existing markets and the Company's experience and reputation in the drug
store industry give the Company advantages over independent drug stores, small
drug store chains, mass merchandisers and food stores in competing for the
increasing amount of third-party payment plan sales. Third-party payment plan
sales accounted for approximately 56% of the Company's prescription sales in
fiscal 1995, as compared to 25% of the Company's prescription sales in fiscal
1991.
The Company also offers employee prescription benefit programs directly to
individual employers or groups of employers as a low cost alternative for
pharmaceutical products. The pricing offered by the Company under these direct
programs is similar to the pricing arrangements offered to third-party payment
plans. Sales under these direct employer programs accounted for approximately 3%
of the Company's prescription sales in fiscal 1995, as compared to 0.8% of the
Company's prescription sales in fiscal 1994, its first year of operation. The
Company has direct contracts with employers covering over 190,000 lives.
The Company has also initiated other prescription services and programs in
an effort to increase the Company's prescription drug sales. In fiscal 1992, the
Company began a mail-order prescription drug program, which has grown from
approximately $100,000 in prescription drug sales in fiscal 1993, to $1.3
million in fiscal
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1995. In fiscal 1993, the Company began its nursing home pharmacy service, which
now provides pharmacy services to nursing homes with approximately 3,000 beds.
The Company believes there are significant opportunities for increasing
prescription drug sales through these services.
Emphasize Market Concentration. In an effort to take advantage of the
available economies of scale in advertising, distribution and supervision and
the competitive advantages for the Company in marketing to third-party payment
plans, the Company seeks to achieve and maintain a leading market share in each
market in which it operates by developing and acquiring stores at strategic
locations in those markets. The Company's first store was opened in Birmingham,
Alabama in 1968. Thereafter, the Company expanded to become the largest drug
store chain in Alabama, with its stores concentrated primarily in metropolitan
areas, including Birmingham with 60 stores, Mobile with 18 stores, Huntsville
with 16 stores and Montgomery with 15 stores. Beginning in fiscal 1990, the
Company developed a major presence in the Atlanta, Georgia metropolitan area,
the nation's 9th largest metropolitan area, by acquiring 65 drug stores in
Atlanta from the Reed Drug Company and emphasizing the development of additional
new stores in that market. In fiscal 1993, the Company acquired certain assets
of 45 stores in Atlanta from the Thrift Drug Company (a subsidiary of the J.C.
Penney Company, Inc.). As a result of these acquisitions and the new stores
developed by the Company, the Company is now the second largest drug store chain
in Atlanta, with 102 stores. The Company believes that there is opportunity for
additional expansion, and it will continue to benefit from the economies of
scale associated with expansion in its present market areas.
Invest in Information and Technology. The Company intends to continue its
investment in information systems to improve customer service, reduce operating
costs, provide information to support management decisions and enhance the
Company's competitive position with third-party payment plans. In fiscal 1995,
the Company completed the installation of point-of-sale ("POS") product scanning
equipment in all of its stores. Scanning is a system which inputs POS
information by reading the universal product code of merchandise sold with
either a hand-held or slot scanner to capture information on each specific item
or product (a stock-keeping unit or "SKU"), sales data and pricing information.
The Company's POS system allows management to analyze sales, gross profits,
inventory movement and direct product profitability by category, department and,
in certain instances, SKU. The Company believes that use of the POS system will
improve customer service by decreasing customer checkout time, provide an
opportunity to improve margins by more accurately reflecting the prices of
merchandise, improve adherence to advertised sale or promotional prices and
provide enhanced inventory control and merchandise information.
The Company's pharmacy computer system and customer account records system,
which the Company plans to upgrade beginning in the current fiscal year, is
significant to the success of its pharmacy operations. This system calculates
the prices of all prescriptions filled. The system also maintains current
customer information, including medical history and other information furnished
by the customer and a list of all prescription medicine purchased by the
customer from the Company. Each time a new prescription is filled by the
Company, the patient information is updated and the prescription is analyzed in
an attempt to assure its compatibility with other medication prescribed for the
customer. In addition, the system supplies information concerning drug purchases
to customers for income tax purposes, prepares prescription labels and receipts,
and expedites the collection of amounts due the Company under third-party
payment plans by providing on-line adjudication. On-line adjudication permits
the Company and the third-party payment plans to determine electronically at the
time of sale, customer eligibility, prescription coverage, pricing and
co-payment requirements.
The Company plans to install a new pharmacy computer system in all of its
stores at a cost of approximately $10 million. The installation and testing of
the new pharmacy computer system is scheduled to begin in a limited number of
stores in May 1995, and the Company anticipates that the new pharmacy computer
system will be installed in all stores by the end of fiscal 1996. The Company
believes that its new pharmacy computer system will benefit the Company by
providing additional support to pharmacists, meeting the increasing complexity
of third-party payment plans and enhancing the Company's competitive position
through advanced technology. The new pharmacy system is expected to provide
numerous improvements over the Company's existing pharmacy computer system,
including faster prescription processing, chain-wide prescription transfer
capability, capability of direct interfacing with physician offices for new
prescriptions and
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refill approval, better inventory control, more accurate sales information and
improved capability for on-line adjudication with third-party payment plan
claims.
Maintain Customer Service and Convenience. The Company believes that
customer service and convenience are critical to maintaining the Company's
competitive advantage. The Company will continue to emphasize service and
convenience through store location and design, merchandising programs and
operating hours geared to the needs of each store's particular market. The
Company currently has a program underway to improve the efficiency of the store
pharmacies by improving the physical design and layout of those departments and
by training and placing pharmacy technicians in the stores to assist its
pharmacists. The purpose of these efforts is to make the store pharmacists more
available to assist and consult with customers. In addition, the Company has
employee award and recognition programs which recognize excellence in customer
service, and the Company maintains incentive based compensation programs for all
levels of employees based on employee productivity. These programs are designed
to emphasize the importance of the Company's customer service philosophy.
The Company regularly remodels and remerchandises its stores to provide
modern, well-identified stores with convenient parking, and will seek to open
new stores in easily accessible, high traffic locations. The Company tailors its
merchandising to provide the product mix and selection to best serve its
customers. The drug stores are generally open every day of the year except
Christmas. A select number of strategically located stores stay open until
midnight or 24 hours a day.
Continue Cost Control. The Company will continue to emphasize cost control
at all levels of operations. The Company intends to continue to evaluate and
pursue additional cost savings which can be obtained without affecting the
Company's customer service, quality or sales growth potential. The Company
believes that enhanced computer technology being implemented by the Company will
be valuable in enabling the Company to control its costs. There can be no
assurance, however, that these additional cost reductions will be realized.
GROWTH STRATEGY
The Company has grown from 304 stores at the beginning of fiscal 1994 to
367 stores at the end of fiscal 1995. The Company's growth strategy is to
continue to increase sales through expansion, primarily in the Company's
existing markets. The Company believes it's distribution center is capable of
accommodating the Company's foreseeable future expansion. In implementing its
growth strategy, the Company intends to:
- Develop new stores;
- Acquire existing drug store chains and independent drug stores; and
- Acquire the inventory and prescription files of other drug stores for
consolidation into existing Company stores.
Develop New Stores. The Company opened 16 drug stores in fiscal 1995 and
intends to open approximately 20 to 25 new stores in fiscal 1996 and 25 to 30
new stores in fiscal 1997. The Company intends to emphasize the development of
new stores as its primary means of expansion and seeks new sites for future new
store development. Generally, the Company works with commercial retail
developers who develop the stores and lease them to the Company. Prior to
developing a new store, the Company analyzes available market, demographic and
competitive data to evaluate the suitability of the potential site. New store
site selection criteria include, among other factors, market demographics,
traffic counts, visibility, overall retail activity of the area, and lease
terms.
Acquire Existing Stores. The Company from time-to-time makes strategic
acquisitions of existing chains of stores and independent drug stores in order
to penetrate new markets or to increase the concentration in existing markets of
the Company's stores. The Company acquired 13 stores in Alabama from the Jack
Eckerd Corporation in fiscal 1989, 85 stores from The Reed Drug Company in
fiscal 1990 (including 65 stores in metropolitan Atlanta), eight stores,
primarily in Alabama, from Revco, D.S., Inc. in fiscal 1991, and certain assets
of 45 Treasury drug stores located principally in metropolitan Atlanta in fiscal
1994. The Company
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intends to continue to consider acquisition opportunities as they arise. The
Company believes that further consolidation of the drug store industry will
result in additional acquisition opportunities, both within and outside the
Company's existing markets. The Company periodically acquires individual stores
in the markets in which it operates. Such acquisitions are not, either
individually or in the aggregate, material to the Company's results of
operations in any given fiscal year. Except for individual store acquisitions,
the Company currently has no understandings, arrangements or agreements with
respect to the acquisition of any particular existing drug store locations or
drug store chains.
Consolidate Acquired Pharmacy Files. The Company has acquired the
inventory and pharmacy files of other drug stores, for the purpose of
consolidating the inventory and pharmacy files into one of the existing Company
stores located in the same vicinity. These consolidations enable the Company to
increase sales volume in its existing stores in a cost effective manner. The
Company completed 25 such consolidation acquisitions in fiscal 1994 and 31 in
fiscal 1995 and anticipates completing 25 to 30 in fiscal 1996.
The following table sets forth, for the periods indicated, certain
information concerning the Company's drug stores:
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FISCAL YEARS ENDED
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JANUARY 30, 1993 JANUARY 29, 1994 JANUARY 28, 1995
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Stores open, beginning of period........... 304 304 354
Stores added(1)............................ 6 55 16
Stores closed.............................. 6 5 3
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Stores open, end of period................. 304 354 367
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(1) In addition to stores opened or acquired by the Company, the Company
completed the acquisitions of inventory and prescription files, for
consolidation into its existing stores, of 11 stores in fiscal 1993, 25
stores in fiscal 1994, and 31 stores in fiscal 1995.
PHARMACY PRODUCTS AND SERVICES
The primary focus of the Company's business is its pharmacy operations,
which offer both brand name and generic prescription drugs. The Company strives
to improve these operations in an effort to build customer loyalty and increase
customer traffic in its stores. The Company believes that its prescription drug
business will continue to represent a significant portion of its sales and
profits due to the demographic trend towards an aging population, the continued
development of new pharmaceutical products and changing trends in the delivery
of healthcare. Prescription sales have grown to 49.1% of the Company's net sales
for fiscal 1995, as compared to 41.7% for 1991.
The Company has contracts with third-party payment plans and is actively
seeking to increase its participation in third-party payment plans. While
third-party payment plans provide an increase in the volume of prescription
sales, these sales typically generate lower gross margins than other sales due
to the highly competitive nature of pricing for this business. The Company
expects its pharmacy operations to benefit from increased sales, buying
arrangements, operating efficiencies in the filling of prescriptions expected
from new technology, the automation of reconciliation and collection of
third-party payment plan receivables, and the increased efficiency of the
distribution center. In fiscal 1995, third-party payment plans represented
approximately 56% of the Company's prescription business, compared to
approximately 25% for fiscal 1991.
The Company is also actively marketing a program under which it offers
employee prescription benefit programs directly to individual employers or
groups of employers. The pricing offered by the Company under these direct
employer programs is similar to the pricing arrangements offered to third-party
payment plans. The Company has contracts directly with employers covering over
190,000 lives.
In addition to its efforts to increase its participation in third-party
payment plans and in its direct employer programs, the Company has also
initiated other prescription services and programs to enhance its prescription
drug sales, including a mail order prescription drug program which has grown
from approximately
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$100,000 in prescription drug sales in fiscal 1993 to $1.3 million in fiscal
1995 and a nursing home pharmacy service which was started in fiscal 1992 and
now services approximately 3,000 beds.
In an effort to make the licensed pharmacists more accessible to customers
for consultation, the Company has implemented a program to train and place in
its stores pharmacy technicians to assist the licensed pharmacists. Also, the
Company is redesigning the layout of the pharmacies in its stores to increase
the efficiency of the pharmacy departments.
OTHER PRODUCTS AND SERVICES
General Merchandise. The Company's typical drug store emphasizes brand
name merchandise and offers a broad range of nonprescription medications and
general merchandise at competitive prices that are generally at or below those
of other conventional drug stores. Major year-round product lines include health
and beauty aids, cosmetics, tobacco products, convenience foods, greeting cards,
toys, small electrical appliances, electronics, photo processing services, books
and magazines, and household items. The Company's drug stores also feature
seasonal merchandise such as Christmas items, holiday greeting cards, special
candies, beach and pool supplies and other seasonal products. The Company
revises and updates the product mix in its stores to suit customer needs and
reflect retail trends.
In addition to brand name merchandise, the Company has a private label
merchandise program which includes health and beauty aids, household products
and nonprescription drugs. The Company's private label merchandise program
offers quality merchandise at prices substantially lower than comparable brand
name merchandise. The Company's private label program does not represent a
material portion of the Company's nonprescription sales.
Photo Processing. The Company offers overnight photo processing services
in all of its stores. During the last fiscal year, the Company began to place
increased emphasis on its photo processing services by installing one-hour photo
processing equipment in many of its stores. At present, the Company has one-hour
photo processing equipment in 25 of its stores and plans to have this equipment
in a total of 50 stores by the end of fiscal 1996 and 100 stores by the end of
fiscal 1997. The Company believes that this equipment will produce revenues for
the stores, not only as a result of photo processing sales, but also as a result
of increased sales of ancillary items, such as film and batteries, and as a
result of increased store traffic, generally. In addition, the Company has begun
offering its overnight processing service on a seven-day-a-week basis and has
begun offering a wider variety of print sizes. The Company markets its photo
processing services directly to commercial accounts in an effort to attract high
volume customers. The Company also offers frequent buyer discount programs and
other sales incentives in promoting its photo processing services.
ADVERTISING
The Company promotes its merchandise primarily through a combination of
newspaper advertising and full color inserts. The Company also uses direct mail
circulars, television advertising and radio advertising. The Company's
concentration of stores within its markets enables it to achieve economies of
scale in advertising and marketing expenditures and also enables the Company to
negotiate favorable rates for advertising time and print production. The Company
believes that its current level of advertising expenditures is appropriate to
support its existing marketing strategies.
PURCHASING AND DISTRIBUTION
The Company centrally purchases most of its merchandise, including
prescription drugs, directly from manufacturers, allowing it to take advantage
of promotional and volume discount programs that certain manufacturers offer to
retailers. During fiscal 1995, approximately 66% of the merchandise purchased by
the Company for its drug stores was received at the Company's distribution
center for redistribution to its drug stores. The balance of store merchandise
is shipped directly to the Company's drug stores from manufacturers and
distributors at prices negotiated at the corporate level. The Company does not
have any long-term contracts with suppliers and believes it has numerous
alternative sources of supply for the merchandise sold in its stores.
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Store orders are processed by computer and assembled at the distribution
center for delivery to stores. The Company contracts with a third party to
provide inventory delivery service to all stores. If this agreement was
terminated for any reason, the Company believes replacement services are
available so there would be no interruption in delivery of inventory to Company
stores. The distribution center utilizes computer and conveyor systems to
monitor the amount and location of inventory within the distribution center and
to handle the movement of items from the receiving dock, to the racks, to the
loading dock for delivery to the stores. The distribution center's computer
system also assists in planning and monitoring the utilization of distribution
center personnel. The Company's stores typically receive deliveries from the
distribution center weekly.
STORE OPERATIONS
Non-pharmacy operations are the responsibility of the Senior Vice
President -- Store Operations, who supervises the Company's two regional
managers and fifteen district managers. Each district manager is responsible for
the stores in his district and regularly visits those stores to assure quality
of merchandise presentation, appropriate staffing and adherence to the Company's
operating policies. The Company's pharmacy operations are the responsibility of
the Vice President -- Professional Relations who supervises the Company's
pharmacy operations manager and eight pharmacy district managers. The pharmacy
district managers supervise the pharmacy operations in the Company's individual
stores. In an effort to increase employee productivity, improve employee
retention, and enhance customer service, the Company utilizes an incentive
compensation plan with established goals for each level of employees, including
store clerks, under which bonuses are based on these goals. The management staff
of a typical drug store includes a manager, an assistant manager and two
pharmacists, whose incentive compensation is based upon the profitability of the
store.
STORE FORMATS
Big B Drugs. The Company's 339 Big B Drugs stores are generally located in
strip shopping centers or are freestanding and generally range in size from
approximately 7,000 to 12,000 square feet, with an average size of approximately
9,000 square feet. The typical Big B Drugs store is open every day of the year,
except Christmas, generally from 8:00 A.M. until 9:00 P.M. (10:00 A.M. until
7:00 P.M. on Sundays). Stores at selected locations are open until midnight or
on a 24 hour basis, depending upon local market needs. Big B Drugs stores
generally are operated on a self-service basis for non-pharmacy items, with
customer assistance available when required. The pharmacy departments are
staffed by registered pharmacists and in high volume stores, also by pharmacy
technicians.
Drugs for Less. The Company operates 23 deep discount drug stores under
the name "Drugs for Less." Each store contains a pharmacy and emphasizes higher
turnover merchandise such as health and beauty aids, cosmetics, tobacco
products, photo processing services, stationery, household items, greeting
cards, snacks and candies. The Company attempts to achieve higher sales volume
in its Drugs for Less stores by offering its products at every day low prices
competitive with other deep discount operations. The Drugs for Less stores range
in size from approximately 10,000 to 29,000 square feet, with an average size of
approximately 20,000 square feet, and are generally located on major traffic
arteries in the Company's larger metropolitan markets.
Big B Home Health Care Centers. The Company operates five home healthcare
stores under the name "Big B Home Health Care Center." These stores offer home
health care products for sale or rent, including oxygen concentrators,
wheelchairs, hospital beds, other convalescent equipment and accessories, and
diabetic supplies. Each store is staffed by trained technicians offering
services ranging from home delivery and set-up of equipment to completion of
necessary forms for insurance and Medicare claims. Many of the products sold by
the home healthcare stores can be purchased at the Company's drug stores, and
all of these products can be ordered by catalog through the drug stores.
REGULATION AND HEALTHCARE REFORM
The Company's pharmacists and pharmacies are required to be licensed by the
appropriate state boards of pharmacy. The Company's drug stores and its
distribution center are also registered with the Federal Drug Enforcement
Administration. Certain of the stores sell beer and wine and are subject to
various state and local
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licensing requirements. By virtue of these licenses and registration
requirements, the Company is obligated to observe certain rules and regulations,
and a violation of such rules and regulations could result in a suspension or
revocation of the licenses or registrations. Under the Omnibus Budget
Reconciliation Act of 1990, the Company's pharmacists are required to offer
counseling to customers covered by Medicaid about the medication, dosage,
delivery system, common side effects and other information deemed significant by
the pharmacists.
The Company relies on prescription drug sales for a significant portion of
its revenues and profits, and prescription drug sales represent a growing
segment of the Company's business. These revenues are affected by changes within
the healthcare industry, including changes in programs providing for
reimbursement of the cost of prescription drugs by third-party payment plans,
such as government and private plans, and regulatory changes relating to the
approval process for prescription drugs. Between October 1993 and the end of
1994, President Clinton and various U.S. Senators and Representatives introduced
in Congress a number of healthcare reform proposals. The proposals ranged from
the Clinton Administration's comprehensive healthcare reform proposal that would
have restructured the financing and delivery of healthcare services through a
combination of managed competition and mandated employer coverage of employees
to less comprehensive proposals that would have required private health
insurance to be "portable" and eliminated coverage limitations for pre-existing
health conditions. No proposal was adopted by either house of Congress. The
Company anticipates that additional healthcare reform proposals may be
introduced in the current session of Congress. It is difficult to predict
whether any proposal will be adopted or the effect on the Company of any
proposal that does become law. The Company believes, however, that distributors
of pharmaceutical products, like the Company, generally are low on the reform
priority list. A number of states in which the Company has operations have
either adopted or are considering healthcare reform proposals at the state
level. Various reform measures have been adopted in Florida and Tennessee. These
state reform laws have, in many cases, not been fully implemented. The Company
does not expect these state laws to have a material adverse effect on the
operations of the Company.
COMPETITION
The Company's business is highly competitive. In each of its markets, the
Company competes directly with a number of national, regional and local drug
store chains, independent drug stores, deep discount drug stores, supermarkets,
combination food and drug stores, discount department stores, mass merchandisers
and other retail stores and mail order operations. Certain of these competitors
have financial resources that are substantially greater than those of the
Company. Competition among drug stores generally takes the form of price
competition, store location, product selection and customer service. The Home
Health Care Center stores compete with certain chain operations and independent
single unit stores.
EMPLOYEES
As of January 28, 1995, the Company employed approximately 5,700 persons.
The Company believes that its relationship with its employees is good.
ITEM 2. PROPERTIES.
PROPERTIES
The Company owns the furniture and fixtures in each of its stores. However,
with the exception of one store owned by the Company, the Company leases the
land and buildings for all of its stores under leases with terms of typically
between 15 to 20 years and renewal provisions for additional terms. The leases
provide for the payment of either a fixed rental or a fixed rental plus a
percentage of gross sales in excess of a specified amount. Certain of the leases
also provide for the payment by the Company of increases in real estate taxes
and insurance premiums. Big B is continuing to make lease payments under leases
for certain store locations at which the Company's drug stores have been closed.
No single lease is material to the Company's operations.
The Company's distribution facility and executive offices are located in a
single 440,000 square foot facility on a 30-acre site in Birmingham, Alabama.
The Company leases the facility from the Industrial
8
<PAGE> 11
Development Board of the City of Bessemer, pursuant to a lease entered into in
connection with the issuance of industrial revenue bonds. The Company has
guaranteed to the bondholders the payment of the principal and interest on the
bonds. The lease has a primary term of 30 years, and Big B is entitled to renew
the lease for an additional 10-year term. Upon the expiration of the lease term,
Big B has the right to purchase the entire property for a nominal consideration.
Big B utilizes approximately 26,000 square feet of the facility as its corporate
headquarters and the remainder as its primary warehouse facility and
distribution center.
ITEM 3. LEGAL PROCEEDINGS.
There are no material, pending legal proceedings, other than ordinary,
routine litigation incidental to the business, to which Big B is a party or of
which any of its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Big B, Inc. did not submit any matters to a vote of its security holders
during the fourth quarter of its fiscal year ended January 28, 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded in the over-the-counter market and is
quoted on the Nasdaq National Market under the symbol BIGB. The following table
sets forth, for the fiscal periods indicated, the reported high and low closing
sale prices, as reported by the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
FISCAL 1994
First quarter (ended May 8, 1993).......................................... $11 $ 8 3/8
Second quarter (ended July 29, 1993)....................................... 10 3/16 9 1/16
Third quarter (ended October 23, 1993)..................................... 12 3/4 9 3/16
Fourth quarter (ended January 29, 1994).................................... 13 3/8 10 1/2
FISCAL 1995
First quarter (ended May 7, 1994).......................................... 12 1/2 9 7/8
Second quarter (ended July 30, 1994)....................................... 12 1/8 10 5/8
Third quarter (ended October 22, 1994)..................................... 12 1/8 10 3/8
Fourth quarter (ended January 28, 1995).................................... 14 1/2 11 1/2
FISCAL 1996
First quarter (through March 17, 1995)..................................... 15 13 1/4
</TABLE>
On March 17, 1995, the last sale price, as reported on the Nasdaq National
Market, for the Company's Common Stock was $14.125 per share. As of March 17,
1995, there were 2,392 holders of record of the Company's Common Stock.
The Company paid dividends of $.03 per share on its Common Stock for each
quarter of fiscal 1994 and $.04 per share on its Common Stock for each of the
first three quarters of fiscal 1995. The Board of Directors has approved the
payment of a dividend of $.04 per share for the fourth quarter of fiscal 1995
payable on April 7, 1995 to shareholders of record on March 24, 1995. The
Company's current revolving credit facility agreement limits the Company's
annual dividends to 50% of net income (as defined in the agreement). The Company
intends to continue its policy of paying quarterly cash dividends. Future cash
dividends, however, will be dependent upon the Company's earnings, financial
condition and other relevant factors.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected financial data for each of the
Company's most recent five fiscal years. The selected financial data in the
table are derived from the financial statements of the Company, which
9
<PAGE> 12
have been audited by Arthur Andersen LLP, independent public accountants. The
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's Financial
Statements and Notes thereto.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-------------------------------------------------------------------
FEBRUARY 2, FEBRUARY 1, JANUARY 30, JANUARY 29, JANUARY 28,
1991 1992 1993 1994 1995
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales.............................................. $ 463,689 $ 487,890 $ 502,712 $ 595,712 $ 668,205
Cost of products sold, including warehouse expense..... 328,423 341,371 349,594 412,560 460,925
----------- ----------- ----------- ----------- -----------
Gross profit........................................... 135,266 146,519 153,118 183,152 207,280
Store operating, selling and administrative expenses... 122,971 122,529 127,530 151,072 166,670
Depreciation and amortization.......................... 7,227 8,180 8,050 9,632 11,209
----------- ----------- ----------- ----------- -----------
Income from operations................................. 5,068 15,810 17,538 22,448 29,401
Loss on sale and disposition of property, net.......... 328 210 95 257 1,214
Interest expense....................................... 7,382 5,660 3,582 3,909 4,435
Interest income........................................ (81) (139) (89) (152) (23)
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes...................... (2,561) 10,079 13,950 18,434 23,775
Provision (credit) for income taxes.................... (1,096) 3,537 4,745 6,682 8,678
----------- ----------- ----------- ----------- -----------
Net income (loss)...................................... $ (1,465) $ 6,542 $ 9,205 $ 11,752 $ 15,097
========== ========== ========== ========== ==========
PER COMMON SHARE DATA:
Net income (loss)
Primary(1)........................................... $ (0.10) $ 0.43 $ 0.60 $ 0.76 $ 0.97
Fully diluted(2)..................................... $ (0.10) $ 0.43 $ 0.60 $ 0.72 $ 0.89
Dividends.............................................. $ 0.06 $ 0.06 $ 0.10 $ 0.12 $ 0.15
Weighted average number of common shares outstanding
Primary(1)........................................... 15,060,442 15,293,706 15,375,766 15,471,402 15,561,205
Fully diluted(2)..................................... 15,060,442 15,293,706 15,375,766 18,301,980 18,921,613
OPERATING DATA(3):
Number of stores at end of period...................... 310 304 304 354 367
Average net sales per store(4)......................... $ 1,496 $ 1,605 $ 1,654 $ 1,683 $ 1,821
Average gross profit per store(4)...................... $ 436 $ 482 $ 504 $ 517 $ 565
Comparable store sales percentage increase(5).......... 7.9% 4.6% 3.1% 8.3% 7.1%
Prescription sales as a percentage of net sales........ 41.7% 43.4% 44.4% 46.7% 49.1%
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 2, FEBRUARY 1, JANUARY 30, JANUARY 29, JANUARY 28,
1991 1992 1993 1994 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................ $ 73,956 $ 61,210 $ 85,277 $ 107,165 $ 120,670
Total assets........................................... 190,449 179,774 181,915 233,100 273,492
Long-term debt and capitalized lease obligations....... 56,098 31,854 40,618 63,476 74,268
Shareholders' investment............................... 67,717 74,297 82,470 93,105 106,733
</TABLE>
- ---------------
(1) Primary net income (loss) per common share was computed by dividing net
income by weighted average number of primary shares of common stock
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.
(2) Fully diluted net income (loss) 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 the income tax effects; for 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 price.
(3) For purposes of calculating operating data, stores include Big B Home Health
Care Centers.
(4) Averages are computed based on the number of stores open at the end of
period.
(5) The comparable store sales percentage increases are computed on the basis of
quarterly sales for stores that were open for full quarters in the
applicable fiscal year and the prior fiscal year.
10
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
The Company was organized in 1972 and operates a chain of 367 stores in the
southeastern United States. The Company operates 339 conventional drug stores
under the "Big B Drugs" format and 23 deep discount drug stores under the "Drugs
for Less" format. The Company also operates five home healthcare stores under
the name "Big B Home Health Care Centers." All of the Company's stores are
served by an approximately 440,000 square foot distribution center located in
Birmingham, Alabama.
The Company has increased net sales primarily in three ways. First, the
Company attempts to achieve sales growth in existing stores by monitoring
product mix, by effective promotional advertising, by marketing to third-party
payment plans and by acquiring the inventory and prescription files of
individual competitor drug stores to be consolidated into the Company's existing
stores. Comparable store sales increased 7.1% in fiscal 1995, 8.3% in fiscal
1994 and 3.1% in fiscal 1993. Second, the Company increases sales through the
opening of new stores. Generally, the Company works with commercial retail
developers who develop the stores and lease them to the Company. The Company
opened 16 new stores in fiscal 1995, ten in fiscal 1994, and six in fiscal 1993.
Third, the Company from time-to-time makes strategic acquisitions of chains of
stores in order to penetrate new markets or to increase concentration in
existing markets. The Company acquired 13 stores in Alabama from the Jack Eckerd
Corporation in fiscal 1989, 85 stores from The Reed Drug Company in fiscal 1990
(including 65 stores in metropolitan Atlanta), eight stores, primarily in
Alabama, from Revco, D.S., Inc. in fiscal 1991, and certain assets of 45
Treasury drug stores located principally in metropolitan Atlanta in fiscal 1994.
Each of these acquisitions has positively impacted the Company's results of
operations, except the Reed acquisition which, as a result of certain
inefficiencies subsequently corrected, negatively impacted fiscal 1990 and
fiscal 1991 results of operations. Historically, the Company has financed its
expansion from internally generated cash flow, the net proceeds of securities
offerings and borrowed funds.
Prescription drug sales have grown as a percentage of net sales, increasing
to 49.1% in fiscal 1995 from 46.7% in fiscal 1994 and 44.4% in fiscal 1993. The
Company believes prescription drug sales as a percentage of total sales will
continue to increase as a result of increased participation by the Company in
third-party payment plans, the demographic trend towards an aging population and
the continued development of new pharmaceutical products. The growth of
third-party payment plans (including insurance companies, HMOs, PPOs, other
managed care providers and government agencies) and the Company's direct
marketing program to employers have put increasing downward pressure on prices
for prescription drugs and, therefore, the Company's gross margin on
prescription drug sales. The Company expects the downward pressure on margins to
be offset by increased sales, buying arrangements, operating efficiencies in the
filling of prescriptions expected from new technology, the automation of
reconciliation and collection of third-party payment plan receivables, and
increased efficiencies at the Company's distribution center.
11
<PAGE> 14
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentages
of net sales represented by certain items in the Company's statements of
operations:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------
JANUARY 30, JANUARY 29, JANUARY 28,
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net sales............................................. 100.0% 100.0% 100.0%
Cost of products sold, including warehouse expense.... 69.5 69.3 69.0
----------- ----------- -----------
Gross profit........................................ 30.5 30.7 31.0
Store operating, selling and administrative
expenses............................................ 25.4 25.4 24.9
Depreciation and amortization......................... 1.6 1.6 1.7
----------- ----------- -----------
Income from operations.............................. 3.5 3.7 4.4
Loss on sale and disposition of property, net......... 0.0 0.0 0.1
Interest expense, net................................. 0.8 0.7 0.7
----------- ----------- -----------
Income before income taxes.......................... 2.7 3.0 3.6
Provision for income taxes............................ 0.9 1.1 1.3
----------- ----------- -----------
Net income.......................................... 1.8% 1.9% 2.3%
======== ======== ========
</TABLE>
Net Sales
Net sales for fiscal 1995 increased 12.2% to $668.2 million from $595.7
million in fiscal 1994. The increase in net sales for the year resulted
primarily from sales increases in existing stores. Comparable store sales
increased 7.1% during the year ended January 28, 1995. Net sales also were
positively impacted by the addition of new stores. The Company operated 354
stores at January 29, 1994, compared to 367 stores operated at January 28, 1995.
Net sales increased 18.5% to $595.7 million in fiscal 1994 from $502.7
million in fiscal 1993. The increase in net sales in fiscal 1994 was the result
of an increase in comparable store sales of 8.3% and sales attributable to 55
new stores opened or acquired, including 45 Treasury stores added in fiscal
1994.
Store Costs and Expenses
Cost of products sold, including warehouse expense, as a percentage of net
sales declined slightly to 69.0% in fiscal 1995 from 69.3% in fiscal 1994 and
69.5% in fiscal 1993. The declines in cost of products sold as a percentage of
net sales resulted primarily from improved distribution center efficiencies.
Store operating, selling and administrative expenses as a percentage of net
sales declined to 24.9% in fiscal 1995 from 25.4% in fiscal years 1993 and 1994.
The decrease in fiscal 1995 was due to growth in the Company's net sales and
continued expense controls.
Depreciation and amortization as a percentage of net sales increased
slightly in fiscal 1995 to 1.7% from 1.6% in fiscal years 1994 and 1993. The
slight increase in fiscal 1995 was due to the completion of an enhanced
point-of-sale system at a cost of approximately $9.0 million and modest store
expansion.
Loss on Sale and Disposition of Property
Loss on the disposal of property was $1.2 million, $0.3 million, and $0.1
million in fiscal years 1995, 1994, and 1993, respectively. The increase in
fiscal 1995 was due to the disposal of the old register systems upon the
installation of a new point-of-sale system for all of the Company's stores. The
Company does not expect the installation of the enhanced pharmacy computer
system in fiscal 1996 to result in any significant loss on sale or disposition
of property.
12
<PAGE> 15
Interest Expense
Interest expense during the periods related primarily to a $40.3 million
6 1/2% convertible subordinated debenture offering in fiscal 1994, a revolving
credit facility and a bank line of credit. Interest expense increased to $4.4
million in fiscal 1995 from $3.9 million in fiscal 1994. This increase was due
primarily to higher short term borrowings and generally higher interest rates
during the period. Interest expense remained relatively stable in fiscal 1994 at
$3.9 million compared to fiscal 1993 at $3.6 million.
Provision for Income Taxes
The Company's effective tax rate was 37% in fiscal 1995, 36% in fiscal 1994
and 34% in fiscal 1993. The tax rate in fiscal 1995 and 1994 remained relatively
stable. The increase from fiscal 1993 to fiscal 1994 was due to the Omnibus
Budget Reconciliation Act of 1993 which increased the maximum corporate federal
income tax rate to 35%. This increased the fiscal 1994 tax provision on current
year earnings and also required an additional tax provision to properly state
the cumulative deferred tax liability at the newly enacted rate.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements relate primarily to opening and stocking
new stores, acquiring stores, and refurbishing existing stores. Capital is also
required to support inventory for the Company's existing stores. Historically,
the Company has been able to lease its store locations and has financed its
expansion and operations from internally generated cash flows, the net proceeds
of securities offerings and borrowed funds. Currently, the Company owns the land
and buildings of only one of its drug stores.
Net cash provided by operations was $13.8 million, $1.1 million, and $12.8
million in fiscal 1995, 1994 and 1993, respectively. These amounts primarily
represent net income adjusted for the non-cash charges of depreciation and
amortization, provisions for losses on receivables and provisions to value
inventories at LIFO cost. The substantial decline for fiscal 1994 resulted from
increases in inventories.
Net cash used in investing activities was $22.6 million, $19.5 million, and
$5.4 million in fiscal 1995, 1994 and 1993, respectively. These amounts
primarily reflect capital expenditures for new stores as well as continued
improvements to existing stores and the Company's distribution center. In fiscal
1994, $16.5 million of the $19.5 million represented the net cash payment for
the Treasury acquisition.
In fiscal 1995, net cash provided by financing activities was $12.4 million
and consisted of $15.6 million in net borrowings under line of credit
agreements, $.3 million in proceeds from the issuance of long-term debt, offset
by $2.3 million of dividends paid, and $1.2 million in principal payments on
long-term debt and capital lease obligations. In fiscal 1994, net cash provided
by financing activities was $17.8 million and consisted of a $40.3 million
6 1/2% convertible subordinated debenture offering, offset by $19.1 million of
net line of credit repayments, $1.8 million of dividends paid, and $1.6 million
in principal payments on long-term debt and capital lease obligations. In fiscal
1993, net cash used in financing activities was $6.6 million and consisted of
$21.9 million in principal payments on long-term debt and capital lease
obligations, $1.5 million in dividends paid, offset by $16.8 million in net
borrowings under line of credit agreements.
In fiscal 1993, certain debt was refinanced from funds borrowed under a new
revolving credit facility. At January 28, 1995, $21.7 million was outstanding
under this facility, which has a maximum borrowing capacity of $50.0 million.
The Company also had $7.0 million outstanding at January 28, 1995 under a $15.0
million unsecured bank line of credit which is renewable annually on June 1.
Borrowings under the Company's credit facilities bear interest at variable
rates. As of January 28, 1995, the interest rates under the revolving credit
facility and bank line of credit were 6.0% and 6.25% per annum, respectively.
The Company plans to open 20 to 25 new stores in fiscal year 1996 and 25 to
30 new stores in fiscal year 1997 at an anticipated aggregate capital outlay of
$8.0 to $10.0 million and $10.0 to $12.0 million, respectively. Most of the new
stores will be Big B Drugs stores. The cost of fixtures, equipment and inventory
to open a new drug store is approximately $400,000 for a Big B Drugs store and
approximately $1.1 million for a Drugs for Less store. Additionally, in fiscal
1996, the Company plans to install an enhanced pharmacy computer system at a
cost of approximately $10.0 million. The Company believes that internally
generated funds, the proceeds from this offering, and borrowings on its line of
credit and revolving credit facility will be adequate to fund the capital
requirements noted above.
13
<PAGE> 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Big B, Inc.:
We have audited the accompanying consolidated balance sheets of BIG B, INC.
(an Alabama corporation) and subsidiaries as of January 29, 1994 and January 28,
1995 and the related consolidated statements of operations, shareholders'
investment, and cash flows for each of the three fiscal years in the period
ended January 28, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Big B, Inc. and subsidiaries
as of January 29, 1994 and January 28, 1995 and the results of their operations
and their cash flows for each of the three fiscal years in the period ended
January 28, 1995 in conformity with generally accepted accounting principles.
We have also audited, in accordance with generally accepted auditing
standards, the consolidated balance sheets as of February 2, 1991, February 1,
1992, and January 30, 1993, and the related consolidated statements of
operations, shareholders' investment, and cash flows for each of the two fiscal
years in the period ended February 1, 1992 (none of which are presented herein),
and have expressed unqualified opinions on those financial statements. In our
opinion, the information set forth in "Selected Financial Data" under the
captions "Statements of Operations Data, " "Per Common Share Data" and "Balance
Sheet Data" for each of the five fiscal years in the period ended January 28,
1995, appearing on page 10, is fairly stated, in all material respects, in
relation to the financial statements from which it has been derived.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
March 10, 1995
14
<PAGE> 17
BIG B, INC.
CONSOLIDATED BALANCE SHEETS
JANUARY 29, 1994 AND JANUARY 28, 1995
<TABLE>
<CAPTION>
1994 1995
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments........................... $ 419,000 $ 4,076,000
Accounts receivable, net (Notes 1 and 2)...................... 18,332,000 20,317,000
Inventories (Notes 1 and 2)................................... 146,495,000 169,473,000
Prepaid expenses and other.................................... 5,026,000 3,750,000
Deferred income taxes, net (Notes 1 and 9).................... 2,100,000 2,146,000
------------ ------------
Total current assets.................................. 172,372,000 199,762,000
------------ ------------
PROPERTY AND EQUIPMENT (Notes 1 and 2):
Land.......................................................... 958,000 958,000
Buildings..................................................... 7,942,000 9,114,000
Store fixtures and equipment.................................. 65,874,000 81,393,000
Warehouse and office equipment................................ 11,181,000 12,692,000
Leaseholds and leasehold improvements......................... 10,902,000 11,345,000
------------ ------------
96,857,000 115,502,000
Less accumulated depreciation and amortization................ (42,130,000) (49,774,000)
------------ ------------
54,727,000 65,728,000
Investment in property under capital leases, net (Note 3)..... 969,000 1,316,000
------------ ------------
55,696,000 67,044,000
------------ ------------
OTHER ASSETS (Note 1)........................................... 5,032,000 6,686,000
------------ ------------
$233,100,000 $273,492,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current maturities of long-term debt and capitalized lease
obligations (Notes 2 and 3)................................ $ 903,000 $ 1,028,000
Notes payable to banks (Note 2)............................... 2,400,000 7,000,000
Accounts payable.............................................. 48,364,000 56,071,000
Accrued payroll and related expenses.......................... 7,214,000 7,220,000
Other accrued expenses........................................ 5,026,000 6,327,000
Accrued income taxes (Notes 1 and 9).......................... 1,300,000 1,446,000
------------ ------------
Total current liabilities............................. 65,207,000 79,092,000
------------ ------------
NONCURRENT LIABILITIES:
Long-term debt (Note 2)....................................... 62,450,000 72,986,000
Capitalized lease obligations (Note 3)........................ 1,026,000 1,282,000
Deferred income taxes, net (Notes 1 and 9).................... 5,560,000 6,653,000
Deferred compensation (Note 4)................................ 1,079,000 1,205,000
Other......................................................... 4,673,000 5,541,000
------------ ------------
74,788,000 87,667,000
------------ ------------
COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 4, 6, 7, and 8)
SHAREHOLDERS' INVESTMENT (Notes 1, 2, 5, and 6):
Common stock, $.001 par value; 40,000,000 shares authorized;
15,586,575 shares issued and outstanding in 1995 and
15,503,797 shares issued and outstanding in 1994........... 16,000 16,000
Paid-in capital............................................... 34,462,000 35,327,000
Retained earnings............................................. 58,627,000 71,390,000
------------ ------------
Total shareholders' investment........................ 93,105,000 106,733,000
------------ ------------
$233,100,000 $273,492,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
15
<PAGE> 18
BIG B, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED JANUARY 30, 1993, JANUARY 29, 1994 AND JANUARY 28,
1995
<TABLE>
<CAPTION>
1993 1994 1995
------------ ------------ ------------
(52 WEEKS) (52 WEEKS) (52 WEEKS)
<S> <C> <C> <C>
Net sales............................................ $502,712,000 $595,712,000 $668,205,000
Cost of products sold, including warehouse expense... 349,594,000 412,560,000 460,925,000
------------ ------------ ------------
Gross profit.................................... 153,118,000 183,152,000 207,280,000
Store operating, selling and administrative
expenses........................................... 127,530,000 151,072,000 166,670,000
Depreciation and amortization........................ 8,050,000 9,632,000 11,209,000
------------ ------------ ------------
Income from operations.......................... 17,538,000 22,448,000 29,401,000
Loss on sale and disposition of property, net........ 95,000 257,000 1,214,000
Interest expense..................................... 3,582,000 3,909,000 4,435,000
Interest income...................................... (89,000) (152,000) (23,000)
------------ ------------ ------------
Income before income taxes...................... 13,950,000 18,434,000 23,775,000
Provision for income taxes (Notes 1 and 9)........... 4,745,000 6,682,000 8,678,000
------------ ------------ ------------
Net income...................................... $ 9,205,000 $ 11,752,000 $ 15,097,000
=========== =========== ===========
Net income per common share (Note 1):
Primary............................................ $ 0.60 $ 0.76 $ 0.97
Fully diluted...................................... 0.60 0.72 0.89
=========== =========== ===========
Average common shares and equivalents outstanding
(Note 1):
Primary............................................ 15,375,766 15,471,402 15,561,205
Fully diluted...................................... 15,375,766 18,301,980 18,921,613
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
16
<PAGE> 19
BIG B, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
FOR THE FISCAL YEARS ENDED JANUARY 30, 1993, JANUARY 29, 1994, AND JANUARY 28,
1995
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------
NUMBER OF PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
---------- --------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, February 1, 1992.................. 7,670,321 $ 77,000 $33,234,000 $40,986,000
Net income............................... 0 0 0 9,205,000
Cash dividends ($.10 per share).......... 0 0 0 (1,537,000)
Exercise of stock options (Note 5)....... 18,089 0 245,000 0
Common stock issued to 401(k) profit
sharing plan (Note 4)................. 20,000 0 260,000 0
---------- --------- ----------- -----------
BALANCE, January 30, 1993.................. 7,708,410 77,000 33,739,000 48,654,000
Net income............................... 0 0 0 11,752,000
Cash dividends ($.12 per share).......... 0 0 0 (1,779,000)
Exercise of stock options (Note 5)....... 33,061 1,000 266,000 0
Common stock issued to 401(k) profit
sharing plan (Note 4)................. 20,000 0 395,000 0
Issuance of shares in connection with a
two-for-one stock split (Note 1)...... 7,742,326 78,000 (78,000) 0
Effect of recapitalization (Note 1)...... 0 (140,000) 140,000 0
---------- --------- ----------- -----------
BALANCE, January 29, 1994.................. 15,503,797 16,000 34,462,000 58,627,000
Net income............................... 0 0 0 15,097,000
Cash dividends ($.15 per share).......... 0 0 0 (2,334,000)
Exercise of stock options (Note 5)....... 27,778 0 267,000 0
Common stock issued to 401(k) profit
sharing plan (Note 4)................. 55,000 0 598,000 0
---------- --------- ----------- -----------
BALANCE, January 28, 1995.................. 15,586,575 $ 16,000 $35,327,000 $71,390,000
========== ========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
17
<PAGE> 20
BIG B, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED JANUARY 30, 1993, JANUARY 29, 1994, AND JANUARY 28,
1995
INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
(52 WEEKS) (52 WEEKS) (52 WEEKS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................... $ 9,205,000 $11,752,000 $15,097,000
----------- ----------- -----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................. 8,050,000 9,632,000 11,209,000
Provision (credit) for deferred income taxes.................. 3,000 (532,000) 1,047,000
Provision for losses on receivables........................... 7,266,000 6,211,000 8,713,000
Provision to value inventories at LIFO cost................... 1,368,000 1,449,000 303,000
Loss on sale and disposition of property, net................. 95,000 257,000 1,214,000
Provision for nonqualified stock options...................... 231,000 345,000 433,000
Provision for deferred compensation........................... 273,000 193,000 126,000
Recognition of deferred gains................................. (29,000) (41,000) (52,000)
Changes in assets and liabilities:
Increase in receivables..................................... (6,810,000) (12,201,000) (10,698,000)
(Increase) decrease in refundable income taxes.............. (441,000) 441,000 0
Increase in inventories..................................... (2,513,000) (33,322,000) (23,281,000)
Increase in other assets.................................... (890,000) (4,187,000) (796,000)
Increase (decrease) in accounts payable..................... (4,905,000) 15,612,000 7,707,000
Increase (decrease) in accrued income taxes................. (2,130,000) 1,300,000 146,000
Increase (decrease) in other liabilities.................... 4,009,000 4,196,000 2,659,000
----------- ----------- -----------
Total adjustments...................................... 3,577,000 (10,647,000) (1,270,000)
----------- ----------- -----------
Net cash provided by operating activities................ 12,782,000 1,105,000 13,827,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................ (5,459,000) (20,098,000) (22,685,000)
Proceeds from sale of property.................................. 18,000 580,000 109,000
----------- ----------- -----------
Net cash used in investing activities.................... (5,441,000) (19,518,000) (22,576,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt........................ 0 40,250,000 375,000
Net (repayments) borrowings under line of credit agreements..... 16,758,000 (19,058,000) 15,600,000
Principal payments under long-term debt and capital lease
obligations................................................... (21,871,000) (1,608,000) (1,235,000)
Proceeds from issuance of common stock.......................... 12,000 4,000 0
Dividends paid.................................................. (1,537,000) (1,779,000) (2,334,000)
----------- ----------- -----------
Net cash provided by (used in) financing activities...... (6,638,000) 17,809,000 12,406,000
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS.... 703,000 (604,000) 3,657,000
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF YEAR.......... 320,000 1,023,000 419,000
----------- ----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR................ $ 1,023,000 $ 419,000 $ 4,076,000
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest...................................................... $ 3,684,000 $ 3,094,000 $ 4,903,000
Income taxes, net of refunds received......................... 7,313,000 5,473,000 7,485,000
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Noncash consideration of stock issued under stock option plans
(Note 5)...................................................... $ 233,000 $ 263,000 $ 267,000
Stock issued to benefit plans................................... 260,000 395,000 598,000
Capital lease transactions...................................... 191,000 380,000 777,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
18
<PAGE> 21
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Business
Big B, Inc. and subsidiaries (the "Company") operates a chain of retail
drug stores and stores that sell and rent medical equipment for home use. The
Company's fiscal year ends on the Saturday closest to January 31 of each year.
Principles of Consolidation
The consolidated financial statements of the Company include its accounts
and the accounts of all wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Accounts Receivable
The Company uses the allowance method of accounting for uncollectible
accounts. Accounts receivable are stated net of an allowance for uncollectible
accounts of $975,000 and $987,000 as of January 28, 1995 and January 29, 1994,
respectively. A majority of the Company's accounts receivable are due from third
party providers (various insurance companies and governmental agencies) under
third party payment plans. As is industry practice, these receivables are
uncollateralized.
Inventories
Substantially all inventories are valued at last-in, first-out cost, which
is not in excess of market. Under the first-in, first-out cost method of
accounting, inventories would have been $22,080,000 and $21,777,000 higher than
reported at January 28, 1995 and January 29, 1994, respectively.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided on a
straight-line basis over the estimated service lives of depreciable assets (40
years for buildings, 10 years for store fixtures and equipment, and three to 10
years for other equipment) or, in the case of leaseholds and leasehold
improvements, 10 to 15 years or over the lives of the respective leases, if
shorter. Properties included in the financial statements under capital leases
are amortized over the related lease terms. Maintenance and repairs are charged
to expense as incurred; expenditures for renewals and betterments are
capitalized. When assets are retired or otherwise disposed of, the property
accounts are relieved of costs and accumulated depreciation and any resulting
gain or loss is credited or charged to income.
Intangibles
Other assets include an intangible estimated for "pharmacist work force in
place" that is being amortized on a straight-line basis over seven years and
goodwill that is being amortized on a straight-line basis over 40 years.
Intangibles are shown net of accumulated amortization of $1,375,000 and
$1,160,000 as of January 28, 1995 and January 29, 1994, respectively.
Insurance
The company is self insured for its health and dental programs and workers
compensation in certain states. Stop loss insurance coverage is maintained.
Management believes its reserves for claims reported and claims incurred but not
reported is adequate.
Income Taxes
Deferred income taxes for fiscal 1995 and 1994 reflect the impact of
"temporary differences" between the amounts of assets and liabilities for
financial reporting purposes and such amounts as measured by the tax laws and
regulations. Income taxes were provided in fiscal 1994 using the asset and
liability method prescribed by Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes," which
19
<PAGE> 22
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Company adopted in 1994. Income taxes provided in years prior to fiscal 1994
using the asset and liability method prescribed by SFAS No. 96 were not
restated. The effect of the change in accounting method on the financial
statements of the Company was not material.
Net Income Per Common Share
Primary net income per common share was computed by dividing net income by
the weighted average number of primary shares of common stock 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.
Shareholders' Investment Transactions
On September 7, 1993, the Company's Board of Directors declared a
two-for-one stock split in the form of a 100% stock dividend which was
distributed on October 1, 1993 to holders of record on September 17, 1993. The
par value of the additional 7,742,326 shares of common stock issued in
connection with the stock split was credited to common stock and a like amount
charged to paid-in capital. All references in the financial statements to
average common shares and equivalents outstanding and related prices, net income
per common share, dividend amounts per share, and stock option plan data have
been restated to reflect the stock split.
In November 1993, the Company's shareholders approved a Plan of
Recapitalization (the "Recapitalization"). The Recapitalization became effective
November 17, 1993. On the effective date, the number of shares authorized
increased from 20,000,000 shares to 40,000,000 shares and par value was
decreased from $.01 per share to $.001 per share. The Recapitalization
authorized the designation of the outstanding shares of $.01 par value common
stock as $.001 par value common stock until replaced by new $.001 par value
common stock through the ordinary course of reissuance through sales and other
transfers. The decrease in par value of the outstanding shares on the effective
date was charged to common stock and a like amount credited to paid-in capital.
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments to be temporary cash investments.
Fair Value of Financial Instruments
The Company has evaluated fair values of its financial instruments based on
the current interest rate environment and current pricing of debt instruments
with comparable terms and has addressed the fair value of debt in the debt
disclosure (see Note 2). The carrying value of other financial instruments are
considered to approximate fair value.
Prior Year Reclassifications
Certain prior year amounts have been reclassified to conform to the current
year presentation.
20
<PAGE> 23
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. DEBT:
Long-term debt consists of the following at January 29, 1994 and January
28, 1995:
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Convertible Subordinated Debentures, interest at 6.5%,
principal due on March 15, 2003, interest payable
semiannually on each March 15 and September 15.......... $40,250,000 $40,250,000
Notes payable to commercial banks:
Revolving Credit Facility, interest at variable rates
(ranging from 5.9% to 6.1% at January 28, 1995)
payable monthly, principal due September 1996,
collateralized by receivables and inventories........ 10,700,000 21,700,000
Term loan, interest at 7.3%, payable monthly, principal
due April 1999, collateralized by certain property
and equipment........................................ 0 311,000
Industrial Development Revenue Bonds, Series B, interest
at variable rates (6.1% at January 28, 1995), principal
due on May 1, 2005, interest payable quarterly, secured
by a letter of credit................................... 8,000,000 8,000,000
Industrial Development Revenue Bonds, Series A, interest
at variable rates (5.8% at January 28, 1995), due in
quarterly installments of $175,000 plus interest through
December 1, 1999, secured by a letter of credit......... 4,200,000 3,500,000
----------- -----------
63,150,000 73,761,000
Less current maturities................................... (700,000) (775,000)
----------- -----------
$62,450,000 $72,986,000
========== ==========
</TABLE>
In March 1993, the Company issued unsecured convertible subordinated
debentures (the "Debentures"); net proceeds were $39,043,000. Proceeds of the
issuance were used to reduce existing debt, to fund the acquisition of certain
assets from certain Thrift Drug Company ("Treasury Drug") stores, to fund the
cost of conversion of the Treasury Drug stores to the "Big B" format, and to
fund the enhancement of the Company's point of sale system. The Debentures are
convertible into common stock at any time prior to redemption or final maturity,
initially at the conversion price of $12.20 per share.
The revolving credit facility consists of a $50,000,000 revolving line of
credit supported by a commercial paper program. During fiscal 1995, the Company
borrowed $36,700,000 and repaid $25,700,000 under the revolving credit facility.
The revolving credit facility and both industrial development revenue bond
agreements contain restrictive covenants which require the Company to maintain
certain financial ratios and minimum levels of tangible net worth; limit capital
expenditures, other investments, dividends, stock repurchases and additional
debt; and other covenants generally common to such agreements. The Company was
in compliance with all such covenants at January 28, 1995.
The net book value of land, building, and equipment subject to the
industrial development revenue bond agreements is approximately $10,090,000 and
$11,057,000 at January 28, 1995 and January 29, 1994, respectively.
Long-term debt maturing in each of the next five fiscal years is as
follows: $775,000 in 1996, $22,475,000 in 1997, $775,000 in 1998, $775,000 in
1999, $727,000 in 2000, and $48,234,000 thereafter.
21
<PAGE> 24
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has a $15,000,000 unsecured bank line of credit which expires
in June 1995 (subject to renewal), of which $7,000,000 was outstanding at
January 28, 1995. The interest rate on the line of credit was 6.3% at year-end.
The maximum and average amounts of borrowings outstanding under this line of
credit during fiscal 1995 were $17,800,000 and $9,808,000, respectively. The
weighted average interest rate on these borrowings during fiscal 1995 was 5.4%.
The estimated fair value of the Company's debt at January 28, 1995 was
$69,000,000.
3. CAPITALIZED AND OPERATING LEASES:
The Company has a number of leases for store properties, warehouses and
delivery equipment. See Note 7 regarding store leases with related parties. The
initial terms of the real property leases will expire within the next 20 years;
however, most of the leases have options providing for additional lease terms
from five to 25 years at terms substantially the same as the initial terms. It
is expected that the real property leases will be renewed upon expiration. The
leases for the delivery equipment are from six to ten years, and it is expected
that most will be replaced by leases on similar equipment. The Company also
rents various items of machinery and equipment on a monthly basis.
In addition to fixed minimum rentals, many of the Company's leases require
contingent rental payments. Contingent rentals for real property leases are on a
percentage of sales basis. Contingent rentals for delivery equipment are based
on the number of miles driven.
As required by the provisions of SFAS No. 13, the Company has included in
its financial statements those leases which meet the criteria for
capitalization. An analysis of the property under capital leases and the related
capitalized lease obligations included in the January 29, 1994 and January 28,
1995 balance sheets follows:
<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Property under capital leases:
Real property........................................... $ 630,000 $ 630,000
Delivery equipment...................................... 1,341,000 1,646,000
---------- ----------
1,971,000 2,276,000
Less accumulated amortization........................... (1,002,000) (960,000)
---------- ----------
$ 969,000 $1,316,000
========= =========
Capitalized lease obligations (interest at 9% to 13.5% on
real property and 10% to 23% on delivery equipment):
Current................................................. $ 203,000 $ 253,000
Noncurrent.............................................. 1,026,000 1,282,000
---------- ----------
$1,229,000 $1,535,000
========= =========
</TABLE>
22
<PAGE> 25
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a schedule of future minimum lease payments required under
capital leases, together with the present value of the lease payments, and
operating leases having initial or remaining noncancelable lease terms in excess
of one year at January 28, 1995:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
------------ ----------
<S> <C> <C>
Fiscal year ending in:
1996.................................................. $ 20,629,000 $ 642,000
1997.................................................. 20,119,000 642,000
1998.................................................. 19,092,000 585,000
1999.................................................. 17,575,000 484,000
2000.................................................. 14,701,000 280,000
Subsequent............................................ 63,648,000 557,000
------------ ----------
Total future minimum lease payments................ $155,764,000 3,190,000
===========
Less estimated executory costs included in total minimum
lease payments........................................ (923,000)
----------
Net minimum lease payments.............................. 2,267,000
Less amount representing interest....................... (732,000)
----------
Present value of net future minimum lease payments...... $1,535,000
=========
</TABLE>
Contingent rentals for the preceding capital leases and rental expense for
the operating leases are as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Contingent rentals on capital leases
Real property................................. $ 63,000 $ 19,000 $ 22,000
Delivery equipment............................ 692,000 774,000 1,059,000
----------- ----------- -----------
$ 755,000 $ 793,000 $ 1,081,000
========== ========== ==========
Rental expense for operating leases:
Real property:
Minimum rentals............................ $17,948,000 $20,241,000 $22,258,000
Contingent rentals......................... 634,000 806,000 896,000
Equipment:
Minimum rentals............................ 439,000 513,000 510,000
----------- ----------- -----------
$19,021,000 $21,560,000 $23,664,000
========== ========== ==========
</TABLE>
4. EMPLOYEE BENEFIT PLANS:
The Company sponsors a defined contribution pension plan known as the Big
B, Inc. 401(k) Profit Sharing Plan. The Plan covers substantially all employees
that meet certain service and age requirements who are not members of a
collective bargaining unit. The Company makes both an annual profit sharing
contribution and an annual 401(k) matching contribution up to specified levels
as approved, each at the discretion of the Board of Directors.
The Company has an unfunded deferred compensation agreement with its key
officers whereby they or their beneficiaries will be provided specific amounts
of annual retirement income for a period of ten years following retirement. The
Company is accruing the present value of such retirement benefits from the date
of the agreement to the normal retirement date. Assuming retirement at the
normal retirement date, the
23
<PAGE> 26
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
obligation under this agreement (approximately $8,588,000 in total for all
officers covered) would be paid over the ten year period following the date of
the officer's retirement.
Two of the Company's Stores employ union employees. The Company's union
employees are covered under a multiemployer defined benefit pension plan
administered by the union. The Company is obligated under this plan to make
monthly payments of specified amounts for each union employee as provided in the
labor contract.
The Company has an incentive plan covering store management personnel,
pharmacists and other key employees. The incentive is paid annually based on
achievement of established profit goals.
The expenses applicable to the above plans are as follows:
<TABLE>
<CAPTION>
401(K) DEFERRED
PROFIT COMPENSATION
SHARING PLAN PLAN UNION PLAN INCENTIVE PLAN
------------ ------------ ---------- --------------
<S> <C> <C> <C> <C>
Fiscal years ended:
1995........................... $2,200,000 $126,000 $9,000 $2,397,000
1994........................... 1,800,000 194,000 9,000 2,772,000
1993........................... 1,558,000 273,000 9,000 1,449,000
========= ========== ======== ==========
</TABLE>
5. STOCK OPTIONS:
The Big B, Inc. Employee Stock Option Plan (the "Plan") authorizes the
granting of stock options for the purchase of up to 1,000,000 shares of common
stock. As of January 28, 1995, a total of 824,397 shares of the Company's
authorized and unissued common stock were reserved for future grants under the
Plan and options for 104,800 shares were outstanding at that date. Options may
be granted to officers or key employees at prices determined by the Board of
Directors.
Options granted prior to fiscal 1989 were granted at a price not less than
market value on the date of the grant (incentive) and became exercisable
cumulatively at a rate of 25% each year beginning one year after the date of
grant, and expire ten years from the date of grant.
Options granted in fiscal 1992 and 1994 were granted at a price less than
market value on the date of grant (nonqualified). Options granted in fiscal 1992
became exercisable upon issuance and expired March 13, 1993. Options granted in
fiscal 1994 become exercisable 50% each in February 1994 and February 1995 with
all options expiring in May 1995. Compensation expense of $433,000, $345,000,
and $231,000 was accrued in fiscal 1995, 1994, and 1993, respectively, and
related to the difference in the estimated market value of the stock and the
nonqualified option exercise price, including the related tax bonus. Upon
exercise of stock options, the excess of the proceeds and accruals over par
value is credited to paid-in capital.
The Company received 14,122 shares, 19,451 shares, and 10,411 shares of
stock in lieu of cash for a portion of the exercise price of options exercised
in fiscal years 1995, 1994, and 1993, respectively. These shares were
immediately reissued upon the exercise of other options.
24
<PAGE> 27
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Information with respect to stock options is summarized as follows:
<TABLE>
<CAPTION>
GRANT DATE
------------------------------------------------
INCENTIVE
NONQUALIFIED ------------------------
--------------------- APRIL
MARCH 1991 MAY 1993 NOVEMBER 1983 1986
---------- -------- ------------- --------
<S> <C> <C> <C> <C>
Market price at date of grant............. $ 4.69 $ 9.38 $ 5.07 $ 7.10
========= ======== =========== ========
Average exercise price per share*......... $ 2.50 $ 5.00 $ 5.07 $ 7.10
========= ======== =========== ========
Shares under options outstanding:
Balance, February 1, 1992............... 36,187 0 17,950 38,000
Exercised............................ (23,500) 0 (5,000) 0
Canceled............................. (1,000) 0 0 (2,000)
---------- -------- ------------- --------
Balance, January 30, 1993............... 11,687 0 12,950 36,000
Granted.............................. 0 48,600 0 0
Effect of two for one stock split.... 0 48,600 11,675 32,000
Exercised............................ (11,687) 0 (23,825) (17,000)
Canceled............................. 0 0 (800) 0
---------- -------- ------------- --------
Balance, January 29, 1994............... 0 97,200 0 51,000
Exercised............................ 0 (29,900) 0 (12,000)
Canceled............................. 0 (1,500) 0 0
---------- -------- ------------- --------
Balance, January 28, 1995............... 0 65,800 0 39,000
========= ======== =========== ========
</TABLE>
- ---------------
* Exercise price per share for incentive options equals market price at grant
date, except for 14,000 shares in the April 1986 grant having a per share
exercise price of $7.80 (110% of market price at grant date).
6. STOCK REDEMPTION AGREEMENT:
The Company has agreements with two major shareholders/officers under which
the Company will, if requested, purchase (at fair market value, as defined) up
to a specified maximum amount of the Company's common stock held by them upon
their death. The Company's commitment at January 28, 1995, under these
agreements is $1,500,000. The Company carries insurance on the lives of the
individuals to provide funds with which to meet this commitment.
7. RELATED PARTY TRANSACTIONS:
The Company leases five stores from a major shareholder and one store from
the relative of a major shareholder. Future minimum lease payments under these
net operating leases with noncancelable terms in excess of one year aggregate
$1,816,000. Minimum lease payments were $266,000 in fiscal 1995, $257,000 in
fiscal 1994, and $244,000 in fiscal 1993. No excess rentals were paid in fiscal
1995, 1994, or 1993. In addition, at January 28, 1995, the Company is
contingently liable for future minimum lease payments of $1,329,000 on stores
sold to a related party in a prior year.
8. LITIGATION:
Pending legal proceedings not covered by insurance or other indemnity are
substantially limited to litigation incidental to the business in which the
Company is engaged. In the opinion of management, after consultation with
counsel, the ultimate resolution of these matters will not have a material
effect on the financial statements of the Company.
25
<PAGE> 28
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. INCOME TAXES:
Details of federal and state income tax provisions (credits) are as
follows:
<TABLE>
<CAPTION>
1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
Federal:
Current.......................................... $4,265,000 $6,581,000 $6,590,000
Deferred*........................................ 3,000 (495,000) 904,000
State:
Current.......................................... 477,000 633,000 1,041,000
Deferred*........................................ 0 (37,000) 143,000
---------- ---------- ----------
Total.................................... $4,745,000 $6,682,000 $8,678,000
========= ========= =========
* Deferred Taxes:
Depreciation and amortization.................... $ 631,000 $ 604,000 $1,229,000
Accrued liabilities.............................. (76,000) (164,000) (51,000)
Reserves for doubtful accounts................... (86,000) 2,000 5,000
Deferred compensation............................ (99,000) (81,000) (46,000)
Deferred gains................................... 0 (283,000) (64,000)
Inventory........................................ 0 (9,000) 0
Other, net....................................... (367,000) (601,000) (26,000)
---------- ---------- ----------
$ 3,000 $ (532,000) $1,047,000
========= ========= =========
</TABLE>
A reconciliation of the statutory federal income tax rate to the Company's
effective tax rate is as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------------------------------------------
1993 1994 1995
-------------------- -------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Statutory Rate....................... $4,743,000 34% $6,452,000 35% $8,321,000 35%
Increase (decrease) resulting from:
Effect of state taxes.............. 315,000 2 387,000 2 752,000 3
Other.............................. (313,000) (2) (157,000) (1) (395,000) (1)
---------- -- ---------- -- ---------- --
$4,745,000 34% $6,682,000 36% $8,678,000 37%
========= ===== ========= ===== ========= =====
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial statement
and income tax purposes, as determined under enacted tax laws and rates. The
financial effect of changes in tax laws or rates is accounted for in the period
of enactment.
26
<PAGE> 29
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Significant components of the Company's current and noncurrrent deferred tax
assets and liabilities, net as of January 29, 1994 and January 28, 1995 were as
follows:
<TABLE>
<CAPTION>
1994 1995
------------------------ ------------------------
CURRENT NONCURRENT CURRENT NONCURRENT
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Depreciation and amortization......... $ 0 $ 6,195,000 $ 0 $ 7,424,000
Other................................. 0 61,000 0 98,000
---------- ----------- ---------- -----------
Deferred tax liabilities.... 0 6,256,000 0 7,522,000
---------- ----------- ---------- -----------
Accrued liabilities................... 1,359,000 0 1,410,000 0
Reserves for doubtful accounts........ 367,000 0 362,000 0
Deferred compensation................. 0 402,000 0 448,000
Deferred gains........................ 0 283,000 0 219,000
Inventory............................. 374,000 0 374,000 0
Other................................. 0 11,000 0 202,000
---------- ----------- ---------- -----------
2,100,000 696,000 2,146,000 869,000
Less valuation allowance.............. 0 0 0 0
---------- ----------- ---------- -----------
Deferred tax assets......... 2,100,000 696,000 2,146,000 869,000
---------- ----------- ---------- -----------
Deferred tax assets
(liabilities), net........ $2,100,000 $(5,560,000) $2,146,000 $(6,653,000)
========= ========== ========= ==========
</TABLE>
27
<PAGE> 30
BIG B, INC.
SUPPLEMENTARY DATA
UNAUDITED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
NET INCOME PER
SHARE
-----------------
FULLY
NET SALES GROSS PROFIT NET INCOME PRIMARY DILUTED
--------- ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED JANUARY 28, 1995:
First quarter -- 14 weeks.................... $179,315 $54,734 $4,094 $0.26 $0.24
Second quarter -- 12 weeks................... 145,963 45,181 2,388 0.16 0.15
Third quarter -- 12 weeks.................... 150,143 46,395 1,593 0.10 0.10
Fourth quarter -- 14 weeks................... 192,784 60,970 7,022 0.45 0.40
--------- ------------ ---------- ------- -------
Total................................ $ 668,205 $207,280 $ 15,097 $0.97 $0.89
======== ========= ======== ====== =====
FISCAL YEAR ENDED JANUARY 29, 1994:
First quarter -- 14 weeks.................... $ 150,793 $ 45,754 $ 3,332 $0.22 $0.21
Second quarter -- 12 weeks................... 131,309 40,742 1,849 0.12 0.12
Third quarter -- 12 weeks.................... 133,670 39,748 1,007 0.07 0.07
Fourth quarter -- 14 weeks................... 179,940 56,908 5,564 0.35 0.32
--------- ------------ ---------- ------- -------
Total................................ $ 595,712 $183,152 $ 11,752 $0.76 $0.72
======== ========= ======== ====== =====
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information set forth under the captions "NOMINEES" and "OFFICERS,"
appearing in the Big B, Inc. Annual Proxy Statement for the fiscal year ended
January 28, 1995, is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information set forth under the captions "BOARD OF DIRECTORS" and
"COMPENSATION TO EXECUTIVE OFFICERS," appearing in the Big B, Inc. Annual Proxy
Statement for the fiscal year ended January 28, 1995, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information set forth under the captions "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT" and "NOMINEES", appearing in the Big B, Inc.
Annual Proxy Statement for the fiscal year ended January 28, 1995, is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information set forth under the captions "INTEREST OF OFFICERS,
DIRECTORS AND OTHERS IN CERTAIN TRANSACTIONS" and "TRANSACTIONS WITH BRUNO'S,
INC.", appearing in the Big B, Inc. Annual Proxy Statement for the fiscal year
ended January 28, 1995, is incorporated herein by reference.
28
<PAGE> 31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
1. Financial Statements
The following financial statements of Big B, Inc. are filed as a part of
this Annual Report:
Report of Independent Public Accountants
Consolidated Balance Sheets as of January 29, 1994, and January 28,
1995.
Consolidated Statements of Operations for Fiscal Years Ended January
30, 1993, January 29, 1994, and January 28, 1995.
Consolidated Statements of Shareholders' Investment for Fiscal Years
Ended January 30, 1993, January 29, 1994, and January 28, 1995.
Consolidated Statements of Cash Flows for Fiscal Years Ended January
30, 1993, January 29, 1994, and January 28, 1995.
Notes to Financial Statements
Unaudited Quarterly Financial Data
2. Schedules to Financial Statements
Report of Independent Public Accountants on Schedules
Schedule II -- Valuation and Qualifying Accounts
3. Exhibits
The exhibits listed on the accompanying Index of Exhibits are filed as
a part of this Annual Report.
Big B agrees to furnish to the Securities and Exchange Commission,
upon request, a copy of each instrument defining the rights of holders of
Big B's long-term debt.
BIG B WILL FURNISH TO EACH SHAREHOLDER, UPON WRITTEN REQUEST, COPIES
OF THE EXHIBITS REFERRED TO ABOVE AT A COST OF TEN CENTS PER PAGE. REQUESTS
SHOULD BE ADDRESSED TO: JAMES A. BRUNO, CORPORATE SECRETARY, BIG B, INC.,
POST OFFICE BOX 10168, BIRMINGHAM, ALABAMA 35202.
(b) No Form 8-K was filed by Big B, Inc. during the last quarter of
the fiscal year ended January 28, 1995.
(c) Exhibits. See Item 14(a)(3) above and the separate Exhibit Index
attached hereto.
(d) Financial Statement Schedules. See Item 14(a)(2) above.
29
<PAGE> 32
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Big B, Inc.:
We have audited the accompanying consolidated balance sheets of Big B, Inc.
(an Alabama corporation) and subsidiaries as of January 29, 1994 and January 28,
1995 and the related consolidated statements of operations, shareholders'
investment, and cash flows for each of the three fiscal years in the period
ended January 28, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Big B, Inc. and subsidiaries
as of January 29, 1994 and January 28, 1995 and the results of their operations
and their cash flows for each of the three fiscal years in the period ended
January 28, 1995 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The following Schedule II is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic consolidated
financial statements. This information has been subjected to the auditing
procedures applied in our audits of the basic consolidated financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
March 10, 1995
30
<PAGE> 33
BIG B, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO WRITE-OFFS, BALANCE AT
BEGINNING COSTS AND NET OF END OF
DESCRIPTION OF PERIOD EXPENSES RECOVERIES PERIOD
- ------------------------------------------------ ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Fiscal year ended January 30, 1993............ $ 783,000 $7,266,000 $ 7,030,000 $1,019,000
Fiscal year ended January 29, 1994............ 1,019,000 6,211,000 6,243,000 987,000
Fiscal year ended January 28, 1995............ 987,000 8,713,000 8,725,000 975,000
========= ========= ========= =========
</TABLE>
31
<PAGE> 34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Big B, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
BIG B, INC.
Date: March 21, 1995 By /s/ ARTHUR M. JONES, SR.
------------------------------------------
Arthur M. Jones, Sr.,
President
Date: March 21, 1995 By /s/ MICHAEL J. TORTORICE
------------------------------------------
Michael J. Tortorice,
Principal Financial and
Accounting Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Big B, Inc.
and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
March 21, 1995 /s/ JOSEPH S. BRUNO
---------------------------------------------
Joseph S. Bruno
Chairman Emeritus of
the Board of Directors
March 21, 1995 /s/ ANTHONY J. BRUNO
---------------------------------------------
Anthony J. Bruno
Chairman of the Board of Directors
and Chief Executive Officer
(Principal Executive Officer)
March 21, 1995 /s/ ARTHUR M. JONES, SR.
---------------------------------------------
Arthur M. Jones, Sr.
President, Chief Operating
Officer and Director
March 21, 1995 /s/ MICHAEL J. TORTORICE
---------------------------------------------
Michael J. Tortorice
Vice President and Treasurer
(Principal Financial Officer)
March 21, 1995 /s/ VINCENT J. BRUNO
---------------------------------------------
Vincent J. Bruno
Senior Vice President
and Director
March 21, 1995 /s/ ISAAC L. ALDERMAN
---------------------------------------------
Isaac L. Alderman
Director
</TABLE>
32
<PAGE> 35
<TABLE>
<S> <C>
March 21, 1995 /s/ RICHARD COHN
---------------------------------------------
Richard Cohn
Director
March 21, 1995 /s/ JAMES A. BRUNO
---------------------------------------------
James A. Bruno
Secretary and Director
March 21, 1995 /s/ CHARLES A. MCCALLUM, D.M.D., M.D.
---------------------------------------------
Charles A. McCallum, D.M.D., M.D.
Director
</TABLE>
33
<PAGE> 36
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
- ------ ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
3(a) -- Certificate of Incorporation of the Company, as amended.
3(b) -- By-Laws of the Company, as amended.
4(a) -- Specimen of Common Stock Certificate of the Company.
4(b) -- Form of First Mortgage Industrial Revenue Bond (Big B Project),
Series 1984, dated December 20, 1984, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No. 4(b)
to the Form 10-K Annual Report of the Company dated April 29,
1985.
4(c) -- Specimen of The Industrial Development Board of the City of
Bessemer Taxable Adjustable Mode Industrial Development Revenue
Bond (Big B, Inc. Project), Series 1990, dated May 17, 1990,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 4(c) to the Form 10-K Annual Report of
the Company dated April 15, 1992.
10(a) -- Restated Redemption Agreement dated May 18, 1983, between the
Company and Anthony Bruno, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(b) to the Form
10-K Annual Report of the Company dated April 26, 1984, and
amendment dated January 2, 1985, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(b) to the Form 10-K Annual Report of the Company dated April
29, 1985.
10(b) -- Lease Agreement dated April 12, 1983, between the Company and
Joseph S. Bruno and Theresa L. Bruno (jointly), covering the
Talladega, Alabama, drug store premises, incorporated by
reference (pursuant to the provisions of Rule 12(b)-32) to
Exhibit No. 10(f) to the Form 10-K Annual Report of the Company
dated April 26, 1984.
10(c) -- Lease Agreement dated April 12, 1983, between the Company and
Joseph S. Bruno and Theresa L. Bruno (jointly), covering the
Pensacola, Florida, drug store premises, incorporated by
reference (pursuant to the provisions of Rule 12(b)-32) to
Exhibit No. 10(g) to the Form 10-K Annual Report of the Company
dated April 26, 1984.
10(d) -- Lease Agreement dated August 11, 1983, between the Company and
Joseph S. Bruno and Theresa L. Bruno (jointly), covering the
Birmingham (Cahaba Heights), Alabama, drug store premises,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(h) to the Form 10-K Annual Report of
the Company dated April 26, 1984.
10(e) -- Lease Agreement dated August 11, 1983, between the Company and
Joseph S. Bruno and Theresa L. Bruno (jointly), covering the
Gadsden, Alabama, drug store premises, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(i) to the Form 10-K Annual Report of the Company dated April
26, 1984.
10(f) -- Redemption Agreement dated January 2, 1985, between the Company
and Vincent J. Bruno, incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(m) to the Form
10-K Annual Report of the Company dated April 29, 1985.
</TABLE>
34
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
- ------ ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
10(g) -- Split Dollar Insurance Agreement dated March 8, 1985, between the
Company and Marianne Bruno and Donna Marie Lambert, as Trustees
of the Anthony Bruno Family Trust dated February 5, 1981,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(n) to the Form 10-K Annual Report of
the Company dated April 29, 1985.
10(h) -- Split Dollar Insurance Agreement dated March 8, 1985, between the
Company and Arthur M. Jones, Sr., incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(o) to the Form 10-K Annual Report of the Company dated April
29, 1985.
10(i) -- Split Dollar Insurance Agreement dated March 8, 1985, between the
Company and Bobby Little, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(p) to the Form
10-K Annual Report of the Company dated April 29, 1985.
10(j) -- Split Dollar Insurance Agreement dated April 25, 1985, between
the Company and Anthony J. Bruno and Lee John Bruno, as Trustees
of the Vincent J. Bruno Family Trust dated June 30, 1983,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(q) to the Form 10-K Annual Report of
the Company dated April 29, 1985.
10(k) -- Split Dollar Insurance Agreement dated August 23, 1988, between
the Company and S. Steven Taylor, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(o) to the Form 10-K Annual Report of the Company dated April
25, 1989.
10(l) -- Split Dollar Insurance Agreement dated August 23, 1988, between
the Company and Eugene A. Beckmann, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(p) to the Form 10-K Annual Report of the Company dated April
25, 1989.
10(m) -- Split Dollar Insurance Agreement dated August 23, 1988, between
the Company and Michael J. Tortorice, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(q) to the Form 10-K Annual Report of the Company dated April
25, 1989.
10(n) -- Split Dollar Insurance Agreement dated August 23, 1988, between
the Company and James A. Bruno, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(r) to the Form 10-K Annual Report of the Company dated April
25, 1989.
10(o) -- Collateral Assignment, dated March 8, 1985, of the policy to the
Company by Marianne Bruno and Donna Marie Lambert, as Trustees of
the Anthony Bruno Family Trust dated February 5, 1981,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(r) to the Form 10-K Annual Report of
the Company dated April 29, 1985.
10(p) -- Collateral Assignment, dated March 8, 1985, of the policy to the
Company by Arthur M. Jones, Sr., incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(s) to the Form 10-K Annual Report of the Company dated April
29, 1985.
</TABLE>
35
<PAGE> 38
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
- ------ ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
10(q) -- Collateral Assignment, dated March 8, 1985, of the policy to the
Company by Bobby Little, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(t) to the Form
10-K Annual Report of the Company dated April 29, 1985.
10(r) -- Collateral Assignment, dated April 25, 1985, of the policy to the
Company by John Bruno, as Trustee of the Vincent J. Bruno Family
Trust dated June 30, 1983, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(u) to the Form
10-K Annual Report of the Company dated April 29, 1985.
10(s) -- Collateral Assignment, dated August 23, 1988, of the policy to
the Company by S. Steven Taylor, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(w) to the Form 10-K Annual Report of the Company dated April
25, 1989.
10(t) -- Collateral Assignment, dated August 23, 1988, of the policy to
the Company by Eugene A. Beckmann, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(x) to the Form 10-K Annual Report of the Company dated April
25, 1989.
10(u) -- Collateral Assignment, dated August 23, 1988, of the policy to
the Company by Michael J. Tortorice, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(y) to the Form 10-K Annual Report of the Company dated April
25, 1989.
10(v) -- Collateral Assignment, dated August 23, 1988, of the policy to
the Company by James A. Bruno, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(z) to the Form 10-K Annual Report of the Company dated April
25, 1989.
10(w) -- Lease Agreement between The Industrial Development Board of the
City of Bessemer and Big B, Inc., dated as of December 1, 1984,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(v) to the Form 10-K Annual Report of
the Company dated April 29, 1985.
10(x) -- Big B, Inc. Capital Accumulation Plan, dated January 22, 1987,
and amendments thereto dated April 30, 1987, December 30, 1987
and March 21, 1988, incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(bb) to the Form
10-K Annual Report of the Company dated April 25, 1989.
10(y) -- Big B, Inc. Profit Sharing Retirement Plan, dated January 20,
1983, and amendments thereto dated December 22, 1983, April 13,
1984, May 16, 1984, March 5, 1987 and March 21, 1988,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(cc) to the Form 10-K Annual Report of
the Company dated April 25, 1989.
10(z) -- Lease Agreement dated October 31, 1987, between the Company and
Joseph S. Bruno and Theresa L. Bruno (jointly) covering the
Clanton, Alabama, drug store premises, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(w) to the Form 10-K Annual Report of the Company dated April
29, 1988.
</TABLE>
36
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
- ------ ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
10(aa) -- Sublease Agreement dated as of March 9, 1988, between Piggly
Wiggly Southern, Inc., a Georgia Corporation, and The Reed Drug
Company, a Georgia Corporation, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(gg) to the Form 10-K Annual Report of the Company dated April
25, 1989.
10(bb) -- Supplemental Mortgage and Trust Indenture between the Industrial
Development Board of the City of Bessemer and First Alabama Bank,
dated as of May 1, 1990, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(gg) to the
Form 10-K Annual Report of the Company dated April 30, 1991.
10(cc) -- Amended Lease Agreement between The Industrial Development Board
of the City of Bessemer and Big B, Inc., dated as of May 1, 1990,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(hh) to the Form 10-K Annual Report of
the Company dated April 30, 1991.
10(dd) -- Second Amended and Restated Big B, Inc. Employee Stock Option
Plan incorporated by reference (pursuant to the provisions of
Rule 12(b)-32) to Exhibit No. 10(ii) to the Form 10-K Annual
Report of the Company dated April 30, 1991.
10(ee) -- Split Dollar Insurance Agreement dated August 15, 1990, between
the Company and Timothy N. Burelle incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(jj) to the Form 10-K Annual Report of the Company dated April
30, 1991.
10(ff) -- Collateral Assignment, dated August 15, 1990, of the policy to
the Company by Timothy N. Burelle incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(kk) to the Form 10-K Annual Report of the Company dated April
30, 1991.
10(gg) -- Indenture of Trust between The Industrial Development Board of
the City of Bessemer and First-Citizens Bank & Trust Company,
dated as of May 1, 1990, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(kk) to the
Form 10-K Annual Report of the Company dated April 15, 1992.
10(hh) -- Bond Guaranty Agreement between the Company and First-Citizens
Bank & Trust Company dated as of May 1, 1990, incorporated by
reference (pursuant to the provisions of Rule 12(b)-32) to
Exhibit No. 10(ll) to the Form 10-K Annual Report of the Company
dated April 15, 1992.
10(ii) -- Plan Merger Agreement, dated effective as of August 1, 1990,
merging the Big B, Inc. Profit Sharing Retirement Plan and Trust
into the Big B, Inc. Capital Accumulation Plan and Trust,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(mm) to the Form 10-K Annual Report of
the Company dated April 15, 1992.
10(jj) -- Amendment to Second Amended and Restated Big B, Inc. Employee
Stock Option Plan adopted by the Board of Directors on March 14,
1991, and the Shareholders on May 28, 1991, incorporated by
reference (pursuant to the provisions of Rule 12(b)-32) to
Exhibit No. 10(nn) to the Form 10-K Annual Report of the Company
dated April 15, 1992.
</TABLE>
37
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
- ------ ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
10(kk) -- Lease Agreement dated September 23, 1981, between the Company and
Nancy M. Bruno (sister-in-law of Joseph Bruno and Anthony J.
Bruno), covering the Hoover, Alabama, drug store premises,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(oo) to the Form 10-K Annual Report of
the Company dated April 15, 1992.
10(ll) -- Extension and Amendment to Lease Agreement, dated August 19,
1991, between the Company and Nancy M. Bruno (sister-in-law of
Joseph Bruno and Anthony J. Bruno), covering the Hoover, Alabama,
drug store premises, incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(pp) to the Form
10-K Annual Report of the Company dated April 15, 1992.
10(mm) -- Letter of Credit and Reimbursement Agreement between Big B, Inc.,
and NationsBank of Georgia, National Association, dated as of
August 1, 1992, incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(qq) to the Form
10-K Annual Report of the Company dated April 29, 1993.
10(nn) -- Employment and Deferred Compensation Agreement dated August 25,
1992, by and between Big B, Inc. and Anthony J. Bruno,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(rr) to the Form 10-K Annual Report of
the Company dated April 29, 1993.
10(oo) -- Employment and Deferred Compensation Agreement dated August 25,
1992, by and between Big B, Inc. and Arthur M. Jones, Sr.,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(ss) to the Form 10-K Annual Report of
the Company dated April 29, 1993.
10(pp) -- Employment and Deferred Compensation Agreement dated August 25,
1992, by and between Big B, Inc. and Vincent J. Bruno,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(tt) to the Form 10-K Annual Report of
the Company dated April 29, 1993.
10(qq) -- Employment and Deferred Compensation Agreement dated August 25,
1992, by and between Big B, Inc. and Bobby W. Little,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(uu) to the Form 10-K Annual Report of
the Company dated April 29, 1993.
10(rr) -- Employment and Deferred Compensation Agreement dated August 25,
1992, by and between Big B, Inc. and James A. Bruno, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32) to
Exhibit No. 10(vv) to the Form 10-K Annual Report of the Company
dated April 29, 1993.
10(ss) -- Employment and Deferred Compensation Agreement dated August 25,
1992, by and between Big B, Inc. and Eugene A. Beckmann,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(ww) to the Form 10-K Annual Report of
the Company dated April 29, 1993.
</TABLE>
38
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
- ------ ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
10(tt) -- Employment and Deferred Compensation Agreement dated August 25,
1992, by and between Big B, Inc. and S. Steven Taylor,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(xx) to the Form 10-K Annual Report of
the Company dated April 29, 1993.
10(uu) -- Employment and Deferred Compensation Agreement dated August 25,
1992, by and between Big B, Inc. and Timothy N. Burelle,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(yy) to the Form 10-K Annual Report of
the Company dated April 29, 1993.
10(vv) -- Employment and Deferred Compensation Agreement dated August 25,
1992, by and between Big B, Inc. and Michael J. Tortorice,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(zz) to the Form 10-K Annual Report of
the Company dated April 29, 1993.
10(ww) -- Lease Agreement dated September 1, 1992, between The Industrial
Development Board of the City of Bessemer and Big B, Inc.,
incorporated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(aaa) to the Form 10-K Annual Report
of the Company dated April 29, 1993.
10(xx) -- Second Amendment to Credit Agreement and First Amendment to
Promissory Note by and among Big B, Inc., The First National Bank
of Chicago, as depositary, and Nations Bank of Georgia, National
Association, dated as of February 8, 1993, incorporated by
reference (pursuant to the provisions of Rule 12(b)-32) to
Exhibit No. 10(bbb) to the Form 10-K Annual Report of the Company
dated April 29, 1993.
10(yy) -- Second Amendment to Second Amended and Restated Big B, Inc.
Employee Stock Option Plan, incorporated by reference (pursuant
to the provisions of Rule 12(b)-32) to Exhibit No. 10(ccc) to the
Form 10-K Annual Report of the Company dated April 27, 1994.
11 -- Statement of Per Share Earnings
13 -- Big B, Inc. Annual Report to Shareholders for the Fiscal Year
Ended January 28, 1995. Such Annual Report shall not be deemed to
be filed with the Securities and Exchange Commission as a part of
this Form 10-K Annual Report or otherwise subject to the
liabilities of Section 18 of the Securities Exchange Act of 1934,
as amended (except for the specific portions thereof which are
incorporated by reference in this Form 10-K Annual Report).
23(a) -- Consent of independent public accountants to the incorporation
(by reference to this Form 10-K Annual Report) of report with
respect to the Company's certified financial statements for the
fiscal year ended January 28, 1995, into the Company's previously
filed Registration Statement No. 2-83230.
27 -- Financial Data Schedule (for SEC use only).
</TABLE>
39
<PAGE> 1
EXHIBIT 3(a)
STATE OF ALABAMA )
JEFFERSON COUNTY )
ARTICLES OF AMENDMENT TO ARTICLES (CERTIFICATE)
OF INCORPORATION
OF
BIG B, INC.
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, as
President and Secretary of BIG B, Inc., a corporation organized and existing
under the laws of the State of Alabama, hereby certify that, in accordance with
Code of Alabama 1975, Sections 10-2A-110 and 10-2A-113, the Articles
(Certificate) of Incorporation were amended on the 17th day of November, 1993,
by a vote of the Shareholders of the Corporation, pursuant to a resolution
adopted by the Board of Directors of the Corporation and voted upon by the
Shareholders of the Corporation, the vote being 9,203,648 for, 174,627 against
and 111,651 abstaining, out of a total of 15,484,652 shares issued and
outstanding and entitled to vote thereon, as follows:
The first paragraph of ITEM IV of the Articles
(Certificate) of Incorporation is hereby deleted in its
entirety, and there is substituted in lieu thereof the
following:
"The total number of shares which the Corporation
shall have authority to issue is Forty Million (40,000,000)
shares of Common Stock of the par value of $0.001 per share,
constituting a total authorized capital of $40,000 and
consisting of such one class only."
"The Corporation shall issue one share of the
One-Tenth of One Cent ($.001) par value Common Stock of the
Corporation in exchange
<PAGE> 2
for and in cancellation of each one share of the presently
outstanding One Cent ($.01) par value Common Stock of the
Corporation."
The above Amendment effects a change in the amount of stated
capital of the Corporation. The stated capital of the Corporation is currently
$200,000. This Amendment will decrease the stated capital of the Corporation
to $40,000. The manner in which this change is effected is as follows:
The par value shall be decreased from One Cent ($.01) per
share to One-Tenth of One Cent ($.001) per share, and subsequently the total
authorized capital stock of Two Hundred Thousand Dollars ($200,000), divided
into twenty million (20,000,000) shares of One Cent ($.01) par value Common
Stock, will be changed to a total authorized capital stock of Forty Thousand
Dollars ($40,000.00), divided into Forty Million (40,000,000) shares of
One-Tenth of One Cent ($.001) par value Common Stock.
The above Amendment provides for an exchange of issued shares.
The manner in which this exchange is to be effected is as follows:
The Corporation shall issue one share of the One-Tenth of One
Cent ($.001) par value Common Stock of the Corporation in exchange for and in
cancellation of each one share of the presently outstanding One Cent ($.01) par
value common shares of the Corporation.
We further certify that the within Articles of Amendment are
being filed in the Office of the Judge of Probate of Jefferson County, Alabama,
for the purpose of effecting such amendment in accordance with the requirements
of Code of Alabama 1975, Section 10-2A-114.
IN WITNESS WHEREOF, we have hereunto set our hands and seals
this 17th day of November, 1993.
/s/ Arthur M. Jones, Sr. (SEAL)
Arthur M. Jones, Sr.,
President
2
<PAGE> 3
/s/ James A. Bruno (SEAL)
James A. Bruno,
Secretary
VERIFICATION
I, the undersigned, as President of Big B, Inc., do hereby
verify that the above and foregoing instrument represents Articles of Amendment
to the Articles (Certificate) of Incorporation of Big B, Inc., an Alabama
corporation, duly approved and adopted by the holders of a majority of the
shares entitled to vote thereon, and that the statements therein are true and
correct.
This 17th day of November, 1993.
/s/ Arthur M. Jones, Sr.
Arthur M. Jones, Sr.,
President
Sworn to and subscribed before me on this 17th day of November, 1993.
/s/ Kay E. Ellis
Notary Public
My Commission Expires: 1/12/96
3
<PAGE> 4
STATE OF ALABAMA
JEFFERSON COUNTY
ARTICLES OF AMENDMENT TO ARTICLES (CERTIFICATE)
OF INCORPORATION
OF
BIG B, INC.
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, as
President and Secretary of Big B, Inc., a corporation organized and existing
under the laws of the State of Alabama, hereby certify that, in accordance with
Code of Alabama 1975, Sections 10-2A-110 and 10-2A-113, the Articles
(Certificate) of Incorporation were amended on the 20th day of May, 1988, by a
vote of the Shareholders of the Corporation, the vote being 4,376,014 for,
96,190 against, and 6,378 abstained, with a total of 7,393,003 shares of Common
Stock issued and outstanding, with a total of 7,393,003 shares of Common Stock
entitled to vote thereon, as follows:
The first and second paragraphs of ARTICLE IV of the Articles
(Certificate) of Incorporation are hereby deleted in their entirety, and there
is substituted in lieu thereof the following:
"The total number of shares which the Corporation
shall have authority to issue is 20,000,000 shares of Common
Stock of the par value of $0.01 per share, constituting a
total authorized capital of $200,000, and consisting of such
one class of Common Stock only."
We further certify that the within Articles of Amendment are
being filed in the Office of the Judge of Probate of Jefferson County, Alabama,
for the purpose of effecting such amendment in
4
<PAGE> 5
accordance with the requirements of Code of Alabama 1975, Section 10-2A-114.
IN WITNESS WHEREOF, we have hereunto set our hands and seals
this 20th day of May, 1988.
/s/ Anthony J. Bruno (SEAL)
Anthony J. Bruno,
President
/s/ Arthur M. Jones, Sr. (SEAL)
Arthur M. Jones, Sr.,
Secretary
5
<PAGE> 6
VERIFICATION
I, the undersigned, as President of Big B, Inc., do hereby
verify that the above and foregoing instrument represents Articles of Amendment
to the Articles (Certificate) of Incorporation of Big B, Inc., an Alabama
corporation, duly approved and adopted by holders of a majority of the shares
entitled to vote thereon, and that the statements contained therein are true
and correct.
This 20th day of May, 1988.
/s/ Anthony J. Bruno
Anthony J. Bruno,
President
Sworn to and subscribed before me on this 20th day of May, 1988.
/s/ Janice K. Hunt
Notary Public
My Commission Expires:
6-3-89
6
<PAGE> 7
This instrument was prepared
by Carol G. Caldwell, Esq.
2222 Arlington Avenue South
Birmingham, Alabama 35205
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
ARTICLES OF AMENDMENT TO ARTICLES (CERTIFICATE)
OF INCORPORATION
OF
BIG B, INC.
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, as
President and Secretary of Big B, Inc., a corporation organized and existing
under the laws of the State of Alabama (the "Corporation"), hereby certify
that, in accordance with Code of Alabama, 1975, Sections 1O-2A-110 and
10-2A-113, the Articles (Certificate) of Incorporation of the Corporation were
amended on the 22nd day of May, 1984, by a vote of the Shareholders of the
Corporation, the vote being 4,153,612 for, 9,329 against and 8,269 abstain, out
of a total of 6,563,828 shares of Common Stock issued and outstanding, with a
total of 6,563,828 shares of Common Stock entitled to vote thereon, as follows:
The first paragraph of Article IV of the Articles
(Certificate) of Incorporation of the Corporation is hereby deleted in its
entirety, and there is substituted in lieu thereof the following:
<PAGE> 8
"The total number of shares which the Corporation shall have
authority to issue is 12,000,000 shares of Common Stock of the
par value of $0.01 per share, constituting a total authorized
capital of $120,000, and consisting of such one class of
Common Stock only.
"The Corporation shall issue one share of the One Cent ($0.01)
par value Common Stock of the Corporation in exchange for and
in cancellation of each one share of the presently outstanding
Five Cents ($0.05) par value common shares of the
Corporation."
The above Amendment effects a change in the amount of stated
capital of the Corporation. The stated capital of the Corporation is currently
$328,191.40. This Amendment will decrease the stated capital of the
Corporation to $65,638.28. The manner in which this change is effected is as
follows:
The total authorized capital stock of Six Hundred Thousand
Dollars ($600,000.00), divided into twelve million (12,000,000) shares of Five
Cents ($0.05) par value Common Stock, will be changed to a total authorized
capital stock of One Hundred Twenty Thousand Dollars ($120,000.00), divided
into twelve million (12,000,000) shares of One Cent ($0.01) par value Common
Stock.
The above Amendment provides for an exchange of issued shares.
The manner in which this exchange is to be effected is as follows:
The Corporation shall issue one share of the One Cent ($0.01)
par value Common Stock of the Corporation in exchange for and in cancellation
of each one share of the presently outstanding Five Cents ($0.05) par value
common shares of the Corporation.
2
<PAGE> 9
We further certify that the within Articles of Amendment are
being filed in the Office of the Judge of Probate of Jefferson County, Alabama,
for the purpose of effecting such amendment in accordance with the requirements
of Code of Alabama 1975, Section 10-2A-114.
IN WITNESS WHEREOF, we have hereunto set our hands and seals
this 22nd day of May, 1984.
/s/ Anthony J. Bruno (SEAL)
Anthony J. Bruno,
President
/s/ Arthur M. Jones, Sr. (SEAL)
Arthur M. Jones, Sr.,
Secretary
3
<PAGE> 10
VERIFICATION
I, the undersigned, as President of Big B, Inc., do hereby
verify that the above and foregoing instrument represents Articles of Amendment
to the Articles (Certificate) of Incorporation of Big B, Inc., an Alabama
corporation, duly approved and adopted by the holders of a majority of the
shares entitled to vote thereon, and that the statements contained therein are
true and correct.
This 22nd day of May, 1984.
/s/ Anthony J. Bruno (SEAL)
Anthony J. Bruno,
President
Sworn to and subscribed before me on this 22nd day of May,
1984.
/s/ Susan deVille Perkins
Notary Public
My Commission expires: 3/13/88
4
<PAGE> 11
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
ARTICLES OF AMENDMENT TO ARTICLES (CERTIFICATE)
OF INCORPORATION
OF
BIG B, INC.
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, as
President and Secretary of Big B, Inc., a corporation organized and existing
under the laws of the State of Alabama, hereby certify that, in accordance with
Code of Alabama, 1975, Sections 10-2A-110 and 10-2A-113, the Articles
(Certificate) of Incorporation were amended on the 30th day of August, 1983, by
a vote of the Shareholders of the Corporation, the vote being 2,180,969 for,
678 against and 1,030 abstain, out of a total of 3,281,914 shares issued and
outstanding, with a total of 3,281,914 shares entitled to vote thereon, as
follows:
The first paragraph of ARTICLE IV of the Articles
(Certificate) of Incorporation is hereby deleted in its entirety, and there is
substituted in lieu thereof the following:
"The total number of shares which the Corporation shall have
authority to issue is 12,000,000 of Common of the par value of $0.05 per share,
constituting a total authorized capital of $600,000 and consisting of such one
class only. Each presently outstanding share of capital stock of the
Corporation shall be split on a two for one basis, and, in furtherance thereof,
the Corporation shall issue two shares of the Five Cents ($0.05) par value
common shares of the Corporation in exchange for and in cancellation of each
one share of the presently outstanding Ten Cents ($0.10) par value common
shares of the Corporation."
<PAGE> 12
The above Amendment provides for an exchange of issued shares.
The manner in which the same shall be effected is as follows:
Each presently outstanding share of capital stock of the
Corporation shall be split on a two for one basis, and, in furtherance thereof,
the Corporation shall issue two shares of the Five Cents ($0.05) par value
common shares of the Corporation in exchange for and in cancellation of each
one share of the presently outstanding Ten Cents ($0.10) par value common
shares of the Corporation.
We further certify that the within Articles of Amendment are
being filed in the Office of the Judge of Probate of Jefferson County, Alabama,
for the purpose of effecting such amendment in accordance with the requirements
of Code of Alabama, 1975, Section 10-2A-114.
IN WITNESS WHEREOF, we have hereunto set our hands and seals
this 30th day of August, 1983.
/s/ Anthony J. Bruno (SEAL)
Anthony J. Bruno,
President
/s/ Arthur M. Jones, Sr. (SEAL)
Arthur M. Jones, Sr.,
Secretary
2
<PAGE> 13
VERIFICATION
I, the undersigned, as President of Big B, Inc., do hereby
verify that the above and foregoing instrument represents Articles of Amendment
to the Articles (Certificate) of Incorporation of Big B, Inc., an Alabama
corporation, duly approved and adopted by the holders of a majority of the
shares entitled to vote thereon, and that the statements contained therein are
true and correct.
This 30th day of August, 1983.
/s/ Anthony J. Bruno (SEAL)
Anthony J. Bruno, President
Sworn to and subscribed before me on this 30th day of August,
1983.
/s/ Kathleen B. Polk
Notary Public
My commission expires: 9/10/86
3
<PAGE> 14
This instrument was prepared by Donald
B. Henderson, Jr. 2222
Arlington Avenue South
Birmingham, Alabama 35205
ARTICLES OF CORRECTION
OF
BIG B, INC.
KNOW ALL MEN BY THESE PRESENTS: That, I, Anthony J. Bruno, as
President of Big B, Inc., a corporation organized and existing under the laws
of the State of Alabama, hereby certify that, in accordance with Code of
Alabama of 1975, Section 10-2A-95, the Articles of Amendment to (Articles)
Certificate of Incorporation, was filed in the Office of the Judge of Probate
of Jefferson County, Alabama, on April 20, 1981. Item III of said Articles of
Amendment which effected a change in the amount of stated capital of the
Corporation, failed to state the manner in which the change is effected. Item
III of the Articles of Amendment to (Articles) Certificate of Incorporation is
hereby corrected to read as follows:
"The first paragraph of ARTICLE IV is hereby deleted in its
entirety and there is substituted in lieu thereof the
following:
'The total number of shares which the Corporation shall have
the authority to issue is twelve million (12,000,000) shares
of Common of the par value of ten cents ($.10) per share,
constituting a total authorized capital of One Million Two
Hundred Thousand Dollars ($1,200,000) and consisting of such
one class only.'
The above constitutes an increase in the amount of the stated
capital of the Corporation from 500 shares of Common of a par
<PAGE> 15
value of $10.00 per share, amounting in the aggregate to
$5,000 to 12,000,000 shares of Common of a par value of ten
cents per share, amounting in the aggregating to $1,200,000."
I further certify that the within Articles of Correction is
being filed in the Office of the Judge of Probate of Jefferson County, Alabama,
for the purpose of correcting an omission in the Articles of Amendment to
(Articles) of Incorporation as originally filed in said Office, in accordance
with the requirements of the laws of the State of Alabama.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
15th day of June, 1981.
/s/ Anthony J. Bruno (SEAL)
Anthony J. Bruno,
President
2
<PAGE> 16
STATE OF ALABAMA )
JEFFERSON COUNTY )
I, the undersigned, a Notary Public in and for said County and
said State, hereby certify that Anthony J Bruno, whose name as President of Big
B, Inc., an Alabama Corporation, is signed to the foregoing Certificate of
Correction, and who is known to me, acknowledged before me on this day that,
being informed of the contents of said Certificate, he, as such officer and
with full authority executed the same voluntarily for and as the act of said
Corporation.
Given under my hand and official seal this the 15th day of
June, 1981.
/s/ Linda S. Blake
Notary Public
My Commission Expires: 4/3/84
3
<PAGE> 17
This Instrument was prepared
by Donald B. Henderson, Jr.
2222 Arlington Avenue South
Birmingham, Alabama 35205
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
ARTICLES OF AMENDMENT TO (ARTICLES) CERTIFICATE OF INCORPORATION
OF
BIG "B" DISCOUNT DRUGS, INC.
************
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, as
President and Secretary of Big "B" Discount Drugs, Inc., a corporation
organized and existing under the laws of the State of Alabama, hereby certify
that, in accordance with the provisions of Sections 69 and 72 of the Alabama
Business Corporation Act effective January I, 1981 (Sections 10-2A-110 and
10-2A-113 of the Code of Alabama), the (Articles) Certificate of Incorporation
was amended by the unanimous consent of the Directors and the sole Shareholder
on the 7th day of April, 1981, as follows:
I
ARTICLE I of the Certificate of Incorporation is hereby
deleted in its entirety, and there is substituted in lieu thereof the
following:
"ARTICLE I
The name of the Corporation shall be Big B, Inc., and any and
all references to Big "B" Discount Drugs, Inc. shall hereafter be deemed to
refer to Big B, Inc."
<PAGE> 18
II
Subparagraph (a) of ARTICLE II is hereby deleted in its
entirety, and there is substituted in lieu thereof the following:
"(a) To carry on the business of a drug store and other retail
businesses, and to manufacture, buy, sell and deal in all kinds of drugs,
medicines, chemicals, oils, paints and patent and other medicines, sanitary
appliances, tobaccos, cigars, and other goods and merchandise used in and
pertaining to the said business, and to deal in and carry on a general
merchandise business and do all acts and things reasonable and necessary for
the conduct of such business."
III
The first paragraph of ARTICLE IV is hereby deleted in its
entirety and there is substituted in lieu thereof the following:
"The total number of shares which the Corporation shall have
the authority to issue is twelve million (12,000,000) shares of Common of the
par value of ten cents (10c.) per share, constituting a total authorized
capital of One Million Two Hundred Thousand Dollars ($1,200,000) and consisting
of such one class only."
IV
There shall be added to the Certificate of Incorporation a new
ARTICLE VII-A which shall read as follows:
2
<PAGE> 19
"ARTICLE VII-A
NUMBER OF DIRECTORS
The number of Directors constituting the Board of Directors
shall be not less than three (3) and not more than twelve (12)."
V
There shall be added to the Certificate of Incorporation a new
ARTICLE XVIII which shall read as follows:
"ARTICLE XVIII
DENIAL OF PREEMPTIVE RIGHTS
No holder of shares of any class of this Corporation shall, as
such holder, have any preemptive rights in, or preemptive rights to purchase or
subscribe to, any shares of this Corporation, or any bonds, debentures or other
securities or obligations convertible into or exchangeable with any shares of
this Corporation, other than such rights of conversion or exchange and such
rights under options or warrants or purchase or subscription arrangements, as
shall be expressly granted by the Board of Directors or shareholders at such
prices and upon such other terms and conditions as the Board of Directors, in
its discretion, or the shareholders may fix or designate."
We further certify that the within Articles of Amendment are
being filed in the Office of the Judge of Probate of Jefferson County, Alabama,
for the purpose of effecting such amendment in
3
<PAGE> 20
accordance with the requirements of Section 73 of said Act (Section 10-2A-114
of the Code of Alabama).
IN WITNESS WHEREOF, we have hereunto set our hands and seals
this 7th day of April, 1981.
/s/ Anthony J. Bruno (SEAL)
Anthony J. Bruno,
President
/s/ Arthur Jones (SEAL)
Arthur Jones,
Secretary
4
<PAGE> 21
VERIFICATION
I, the undersigned, as President of Big "B" Discount Drugs,
Inc., do hereby verify that the above and foregoing instrument represents
Articles of Amendment to the (Articles) Certificate of Incorporation of Big "B"
Discount Drugs, Inc., an Alabama corporation, duly approved and adopted by the
unanimous consent of the Directors and the sole Shareholder of the Corporation
and that the statements contained therein are true and correct.
This 7th day of April, 1981.
/s/ Anthony J. Bruno (SEAL)
Anthony J. Bruno,
President
Sworn to and subscribed before me on this 7th day of April, 1981.
/s/ Mary Elaine Murray
Notary Public
My commission expires: 10/22/84
5
<PAGE> 22
STATE OF ALABAMA
I, Don Siegelman, Secretary of State, of the State of Alabama, having
custody of the Great and Principal Seal of said State, do hereby certify that
pursuant to the provisions of Section 8 of Act No. 80-633 the corporate name,
Big B, Inc., is reserved as available based only upon an examination of the
corporation records on file in this office for the exclusive use of Big B, Inc.
for a period of one hundred twenty days from this date. (In the case of a
domestic corporation, the name of the county in which the corporation was or is
proposed to be incorporated is Jefferson.) I further certify that as set out
in the application for reservation of a corporate name the Secretary of State's
office does not assume any responsibility for the availability of the corporate
name requested nor for any duplication which might occur.
In Testimony Whereof, I have hereunto
set my hand and affixed the Great
Seal of the State, at the Capitol,
in the City of Montgomery, on this
day.
April 15, 1981
Date
/s/ Don Siegelman
Don Siegelman, Secretary of State
<PAGE> 23
ARTICLES OF CORRECTION
OF
BIG "B" DISCOUNT DRUGS, INC.
KNOW ALL MEN BY THESE PRESENTS: That, I, Anthony J. Bruno, as
President of Big "B" Discount Drugs, Inc., a corporation organized and existing
under the laws of the State of Alabama, hereby certify that, in accordance with
Code of Alabama of 1975, Section 1O-2A-95, the Certificate of Incorporation, as
amended, was filed in the Office of the Judge of Probate of Jefferson County,
Alabama, on July 25, 1972, and included an error in the designation of the
incorporators. The Certificate of Incorporation is hereby corrected as
follows:
Wherever, in the Certificate of Incorporation the name
"Bruno's Inc." appears as an incorporator, such name or reference shall be
deemed to be or refer to "Linda S. Blake".
I further certify that the within Articles of Correction is
being filed in the Office of the Judge of Probate of Jefferson County, Alabama,
for the purpose of correcting an error in the Certificate of Incorporation as
originally filed in said Office, in accordance with the requirements of the
laws of the State of Alabama.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
7th day of April, 1981.
/s/ Anthony J. Bruno (SEAL)
Anthony J. Bruno,
President
2
<PAGE> 24
STATE OF ALABAMA )
JEFFERSON COUNTY )
I, the undersigned, a Notary Public in and for said County and
said State, hereby certify that Anthony J. Bruno, whose name as President of
Big "B" Discount Drugs, Inc., an Alabama Corporation, is signed to the
foregoing Certificate of Correction, and who is known to me, acknowledged
before me on this day that being informed of the contents of said Certificate,
he, as such officer and with full authority executed the same voluntarily for
and as the act of said Corporation.
Given under my hand and official seal this the 7th day of
April, 1981.
/s/ Mary Elaine Murray
Notary Public
My Commission Expires: 10/22/84
(SEAL)
3
<PAGE> 25
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF INCORPORATION OF
BIG "B" DISCOUNT DRUGS, INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, Anthony Bruno, as President, and Arthur "Mac" Jones,
as Secretary, of Big "B" Discount Drugs, Inc., a corporation organized and
existing under the laws of the State of Alabama, hereby certify that, in
accordance with the provisions of Section 20 of the "Alabama Business
Corporation Act", being Act No. 414, enacted by the Legislature of Alabama,
Regular Session 1959, on November 13, 1959, the Certificate of Incorporation
was amended by the written consent of all of the directors and stockholders of
the corporation, as follows:
The first paragraph of Article IV of the Certificate of
Incorporation is hereby deleted in its entirety, and there is
substituted in lieu and instead thereof the following:
"ARTICLE IV
The amount of the total authorized capital stock of this
corporation shall be $5,000 divided into 500 shares of common
stock of the par value of $10.00 per share."
We further certify that the foregoing amendment to the
Certificate of Incorporation was duly adopted in accordance with the provisions
of Section 20 of the "Alabama Business Corporation Act", being Act No. 414, as
enacted by the Legislature of Alabama, Regular Session 1959, on November 13,
1959, and that the within Certificate is being filed in the Office of the Judge
of Probate of Jefferson County, Alabama, for the purpose of effecting such
<PAGE> 26
amendment in accordance with the requirements of the State of Alabama.
IN WITNESS WHEREOF, we have hereunto set our hands and seals
this 1st day of July, 1977.
/s/ Anthony J. Bruno (SEAL)
President
/s/ Arthur M. Jones (SEAL)
Secretary
2
<PAGE> 27
CERTIFICATE OF INCORPORATION
OF
BIG "B" DISCOUNT DRUGS, INC.
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned
incorporators, do hereby associate ourselves together for the purpose of
forming a corporation under the laws of the State of Alabama, and do declare:
ARTICLE I
The name of the corporation shall be Big "B" Discount Drugs,
Inc.
ARTICLE II
The objects for which this corporation is formed are:
(a) To carry on the business of a drug store and to
manufacture, buy, sell and deal in all kinds of drugs, medicines, chemicals,
oils, paints and patent and other medicines, sanitary appliances, tobaccos,
cigars, and other goods and merchandise used in and pertaining to the said
business, and to deal in and carry on a general merchandise business and do all
acts and things reasonable and necessary for the conduct of such business.
(b) To manufacture, purchase, acquire, hold, maintain,
improve, construct, pledge, hypothecate, exchange, sell, invest and deal in and
otherwise dispose of, alone or in syndicate or otherwise in conjunction with
others, commodities, merchandise and other personal property of every kind,
character, and description whatsoever and wheresoever situated, and any
interest therein.
(c) To purchase, acquire, lease, own, hold, sell, convey or
mortgage and otherwise deal in real estate, property, tenements, and
hereditaments, as well as any interest therein, and directly or through the
ownership of stock in any corporation, to maintain and improve the same by
erecting, constructing, rebuilding, repairing, equipping, any and all kinds of
buildings and other structures and erections, and to install therein such
furniture and appliances which at any time may be necessary to the conduct
thereof.
<PAGE> 28
(d) To acquire bonds or stocks of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation; to pay for the same in cash, the stock or
other securities of the corporation or otherwise; to hold, or in any manner
dispose of the whole or any part of the property so acquired; to conduct in any
lawful manner the whole or any part of the business so acquired, and to
exercise all the powers necessary or convenient in and about the conduct and
management of any such business.
(e) To acquire, hold, use, sell, assign, lease, grant
licenses in respect of, mortgage or otherwise dispose of letters patent of the
United States of America or any foreign country, patent rights, licenses and
privileges, inventions, improvements and processes, copyrights, trademarks and
trade names, relating to or useful in connection with any business of this
corporation.
(f) To acquire by purchase, subscription, contract,
underwriting or otherwise, to hold for investment or otherwise, to pledge,
hypothecate, exchange, sell, deal in and with and dispose of or to turn to
account or to realize upon, alone or in syndicate or otherwise in conjunction
with others, stocks, securities and investments of every kind and description,
including, but not by way of limitation, shares, stocks, scrip, notes, bonds,
debentures, rights, participating certificates, certificates of interest,
mortgages, acceptances, commercial paper and choses in action, evidence of
indebtedness and other obligations of every kind and description (all of which
is hereinafter sometimes called "securities") of any private, public or
quasi-public corporation, association, partnership, common law trust,
syndicate, firm or individual or of any combinations, organizations or entities
whatsoever, irrespective of their form or the names by which they may be
described; and, while the owner or holder of any such securities, to exercise
all the rights, powers and privileges of ownership in respect thereto; and, to
the extent now or hereafter permitted by law, to aid by loan, guarantee or
otherwise those issuing, creating or responsible for any such securities.
(g) To borrow and lend money and to give or take security
therefor by way of mortgage, pledge, transfer or assignment of real or personal
property, of every nature and description.
(h) To enter into, make and perform contracts of every
kind for any lawful purpose without limit as to amount with any person, firm,
association or corporation, town, city, county, state, territory, government or
governmental subdivision.
(i) To draw, make, accept, endorse, discount, execute and
to issue promissory notes, drafts, bills of exchange, warrants, debentures and
other negotiable or transferable instruments.
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<PAGE> 29
(j) To issue bonds, debentures or obligations of this
corporation from time to time, for any of the objects or purposes of the
corporation, and to secure the same by mortgage, pledge, deed of trust or
otherwise.
(k) To have one or more offices to carry on all or any of
its operations and business and, without restriction or limit as to amount, to
purchase or otherwise acquire, hold, own, mortgage, pledge, sell, assign and
transfer, convey or otherwise dispose of, invest, trade, deal in and deal with
goods, wares and merchandise, and real and personal property of every class and
description in any of the states, districts, territories or colonies of the
United States, and in any and all foreign countries, subject to the laws of
such state, district, territory, colony and country.
(l) To purchase or otherwise acquire its own shares of
stock (so far as may be permitted by law) and its bonds, debentures, notes,
scrip or other securities, or evidence of indebtedness, and to hold, sell,
transfer, or reissue the same.
(m) To enter into any plan or project for the assistance
and welfare of its employees.
(n) To enter into any legal arrangements for sharing of
profits, union of interests, reciprocal concessions or cooperation with any
person, partnership, corporation, association, combination, organization,
entity or body whatsoever domestic or foreign, carrying on or proposing to
carry on any business which this corporation is authorized to carry on, or any
business or transaction deemed necessary, convenient or incidental to carrying
out any of the objects of this corporation.
(o) To assume, guarantee or become surety for the payment
and performance of any and all debts and obligations of another or others, and
to guarantee the payment of dividends upon any security or securities.
(p) To do all and everything necessary and proper for the
accomplishment of the objects herein enumerated or necessary or incidental to
the protection and benefit of the corporation, and in general, to carry on any
lawful business necessary or incidental to the protection and benefit of the
corporation, and in general, to carry on any lawful business necessary or
incidental to the attainment of the purposes of the corporation, whether such
business is similar in nature to the objects and powers hereinabove set forth
or otherwise; but nothing herein contained is to be construed as authorizing
this corporation to carry on the business of banking or that of a trust company
or that of the business of insurance in any of its branches.
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<PAGE> 30
The foregoing clauses shall be construed as objects and
purposes of the corporation, in addition to those powers specifically conferred
upon the corporation by law, and it is hereby expressly provided that the
foregoing specific enumeration of powers shall not be held to limit or restrict
in any manner the powers of the corporation otherwise granted by law.
ARTICLE III
The location of the principal office of the corporation shall
be at 2620 West 13th Street, Birmingham, Alabama 35208.
ARTICLE IV
The amount of the total authorized capital stock of this
corporation shall be One Thousand Dollars ($1,000.00), divided into one hundred
(100) shares of Common Stock, of the par value of Ten Dollars ($10.00) per
share.
The amount of the total authorized capital stock with which
this corporation shall begin business shall be One Thousand Dollars
($1,000.00), divided into one hundred (100) shares of Common Stock of the par
value of Ten Dollars ($10.00) per share, all of said stock being issued as
shown by the subscription list hereto attached and marked Exhibit "A" and being
paid for by cash or the transfer to the corporation of property having a cash
market value equal to or in excess of the total par value of said stock.
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<PAGE> 31
ARTICLE V
The name and address of the officer and agent designated by
the incorporators to receive subscriptions to the capital stock of this
corporation is Joseph Bruno, 2620 West 13th Street, Birmingham, Alabama 35208.
ARTICLE VI
The names and post office addresses of the incorporators and
the number of shares subscribed and paid for by each are, respectively, as
follows:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES ADDRESS
---- ---------------- -------
<S> <C> <C>
Bruno's, Inc. 98 2620 W. 13th Street
Birmingham, Alabama 35208
Celeste Carroll 1 2030 - 1st Avenue, North
Birmingham, Alabama 35203
Sue Parnell 1 2030 - 1st Avenue, North
Birmingham, Alabama 35203
</TABLE>
ARTICLE VII
The names and post office addresses of the officers of the
corporation chosen for the first year are as follows:
<TABLE>
<CAPTION>
NAME OFFICE ADDRESS
---- ------ -------
<S> <C> <C>
Joseph Bruno President 2620 W. 13th Street
Birmingham, Alabama 35208
Angelo Bruno Vice President 2620 West 13th Street
Birmingham, Alabama 35208
James C. Baldone Secretary 2620 West 13th Street
Birmingham, Alabama 35208
J. L. Gordon Treasurer 2620 West 13th Street
Birmingham, Alabama 35208
</TABLE>
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<PAGE> 32
ARTICLE VIII
The names and post office addresses of the Directors of the
corporation chosen for the first year are as follows:
<TABLE>
<CAPTION>
NAME OFFICE ADDRESS
---- ------ -------
<S> <C> <C>
Joseph Bruno Director 2620 W. 13th Street
Birmingham, Alabama 35208
Angelo Bruno Director 2620 West 13th Street
Birmingham, Alabama 35208
James C. Baldone Director 2620 West 13th Street
Birmingham, Alabama 35208
J. L. Gordon Director 2620 West 13th Street
Birmingham, Alabama 35208
</TABLE>
Notwithstanding any contrary provisions contained in this
Certificate of Incorporation, the stockholders holding the majority of
outstanding Common Stock of the corporation may remove all or any of the
Directors of the corporation, before the expiration of their term, at any
regular or special stockholders' meeting.
ARTICLE IX
The duration of this corporation shall be perpetual.
ARTICLE X
The corporate powers shall be exercised by the Board of
Directors, except as otherwise provided by statute, by this Certificate of
Incorporation, or by By-Laws hereafter adopted, and any amendments to the
foregoing.
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<PAGE> 33
In furtherance, and not in limitation, of the powers conferred
by statute, the Board of Directors is expressly authorized:
(a) To make and alter the By-Laws of this corporation,
but By-Laws so made by the Directors may be altered or
repealed by the Directors or Stockholders;
(b) To fix and determine and to vary the amount of
working capital of the corporation; to determine whether any,
and if any, what part of any, accumulated profits shall be
declared and paid as dividends, to determine the date or dates
for the declaration and payment of dividends; to direct and
determine the use and disposition of any surplus or net
profits over and above the capital stock paid in;
(c) To make, from time to time (so far as may be
permitted by Law), temporary secured or unsecured loans when,
in the judgment of the Board of Directors, the money so loaned
is not at the time required in the conduct of the business of
the corporation.
The corporation may, in its By-Laws, confer powers upon its
Board of Directors in addition to the foregoing and in addition to the powers
and authorities expressly conferred upon it by statute.
ARTICLE XI
This corporation may from time to time issue its shares of
stock for such consideration (but not less than par so long as the corporation
be solvent), as may be fixed from time to time by the Board of Directors, and
may receive in payment thereof, in whole or in part, cash, labor done, personal
property, or real property, or leases thereof. In the absence of actual fraud
in the
7
<PAGE> 34
transaction, the judgment of the Board of Directors as to the value of such
labor, property, real estate or leases thereof, shall be conclusive. Any and
all shares so issued for which the consideration so fixed shall have been paid
or delivered shall be deemed fully paid stock and shall not be liable to any
further call or assessment thereon, and the holders of such shares shall not be
liable for any further payment in respect thereof.
This corporation may, from time to time, lawfully enter into
any agreement to which all, or less than all, the holders of record of the
issued and outstanding shares of its capital stock shall be parties restricting
the transfer of any or all shares of its capital stock represented by
certificates there for.
ARTICLE XII
Any and every statute of the State of Alabama hereafter
enacted whereby the rights, powers and privileges of the stockholders of
corporations organized under the general laws of the State of Alabama are
increased, diminished or in any way affected, or whereby effect is given to the
action taken by any part less than all of the stockholders of any such
corporation, shall apply to this corporation and shall be binding upon not only
this corporation but upon every stockholder thereof, to the same extent as if
such statute had been in force at the date of the making and filing of this
Certificate of Incorporation.
ARTICLE XIII
8
<PAGE> 35
The corporation shall have a lien on its shares of stock for
any debt or liability incurred to it by a stockholder, before notice of a
transfer or levy on such shares.
ARTICLE XIV
The corporation shall have the right to purchase, take,
receive or otherwise acquire, hold, own, pledge, transfer or otherwise dispose
of its own shares, but purchases of its own shares, whether direct or indirect,
shall be made only to the extent of earned surplus or capital surplus available
there for.
ARTICLE XV
All persons who shall acquire stock in this corporation shall
acquire it subject to the provisions of this Certificate of Incorporation, as
the same from time to time may hereafter be amended. So far as not otherwise
expressly provided by the laws of the State of Alabama, the corporation shall
be entitled to treat the person or entity in whose name any share of its stock
is registered as the owner thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in said share on the part
of any other person, whether or not the corporation shall have notice thereof.
9
<PAGE> 36
ARTICLE XVI
The President or any Vice President shall have authority to
execute all deeds, mortgages, bonds and other contracts requiring a seal, under
the seal of the corporation, and the Secretary or any Assistant Secretary shall
have authority to affix said seal to instruments requiring it, and attest the
same.
ARTICLE XVII
Every person (and the heirs, executors and administrators of
such person) who is or was an officer, director or employee of the corporation,
or of any other corporation which he served as such at the request of the
corporation, and of which the corporation directly or indirectly is a
stockholder or creditor, or in which, or in the stocks, bonds, securities or
other obligations of which it is in any way interested, may in accordance with
the second paragraph of this Article be indemnified by the corporation against
any and all liability and reasonable expense that may be incurred by him in
connection with or resulting from any claim, action, suit or proceeding
(whether brought by or in the right of the corporation or such other company or
otherwise), civil or criminal, or in connection with an appeal relating
thereto, in which he may become involved, as a party or otherwise, by reason of
his being or having been an officer, director or employee of the corporation or
such other corporation, or by reason of any action taken or not taken by him in
such capacity, whether he continues to be such officer, director or employee at
the time such liability or
10
<PAGE> 37
expense shall have been incurred, provided he acted in good faith in what he
reasonably believed to be the best interests of the corporation or such other
corporation, as the case may be, and, in addition, in any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
As used herein the terms "liability" and "expense" shall include, but shall not
be limited to, counsel fees and disbursements and amounts of judgments, fines
or penalties against, and amounts paid and settlements by or for such person.
The termination of any claim, action, suit or proceeding, civil or criminal by
judgment, settlement (whether with or without court approval) or conviction
shall not create a presumption that such person does not meet the standards of
conduct set forth herein.
Any indemnification hereunder shall be made at the discretion
of the corporation, but only if the Board of Directors (with no director who is
a party to or interested in such claim, action, suit or proceeding,
Participating) shall find that such person has met the standards of conduct set
forth in the preceding paragraph. If two-thirds or more of the Board of
Directors are parties to or interested in such claim, action, suit or
proceeding, the regular counsel for the corporation shall determine whether
such person has met such standards.
Expenses incurred with respect to any such claim, action, suit
or proceeding may be advanced by the Corporation prior to the final disposition
thereof upon receipt of an undertaking by or on behalf of such Person to repay
such amount unless it shall
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<PAGE> 38
ultimately be determined that he is entitled to indemnification hereunder.
The rights of indemnification provided in this Article shall
be in addition to any rights to which any such person may otherwise be entitled
under any by-law, agreement, vote of Stockholders, or otherwise.
IN WITNESS WHEREOF, we have hereunto set our hands and seals
on this 25th day of July, 1972.
/s/ Celeste Carroll (SEAL)
Celeste Carroll
/s/ Sue Parnell (SEAL)
Sue Parnell
BRUNO'S, INC.
By /s/ Joseph Bruno
Attest: Its President
/s/ James C. Baldone
Its Secretary
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<PAGE> 39
EXHIBIT "A"
All of the shares of stock subscribed for by the subscribers
listed below are issued and hereby declared to be fully paid stock:
<TABLE>
<CAPTION>
NAME NO. OF SHARES AMOUNT ADDRESS
- ---- ------------- ------ -------
<S> <C> <C>
Bruno's, Inc. 98 $980.00 Birmingham, Alabama
Celeste Carroll 1 $ 10.00 Birmingham, Alabama
Sue Parnell 1 $ 10.00 Birmingham, Alabama
</TABLE>
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
Before me, the undersigned Notary Public in and for said
County in said State, personally appeared Joseph Bruno, who, being by me first
duly sworn, deposes and says that he is the agent of Big "B" Discount Drugs,
Inc., designated by the incorporators to receive subscriptions to the capital
stock of said corporation; that the foregoing is a true and correct list of the
subscriptions to the capital stock of said corporation, together with the
number of shares subscribed for by each and the amount paid therefor, and that
all of said subscriptions have been paid for in cash.
/s/ Joseph Bruno
Joseph Bruno
Sworn to and subscribed before me, this 25th day of July, 1972.
/s/ Paschal P. Vacca
Notary Public
<PAGE> 1
EXHIBIT 3(b)
AMENDMENT TO
BY-LAWS OF
BIG B, INC.
Section 2 of Article II shall be deleted in its entirety, and
there shall be substituted in lieu thereof the following:
"Section 2. Number, Tenure and Qualifications. The number of
Directors which shall constitute the whole Board of Directors shall be fixed
from time to time by a resolution of the Board of Directors or shareholders
(any such resolution of either the Board of Directors or shareholders being
subject to any later resolution or either of them). However, in no event shall
the number of Directors be fewer than three (3) or more than twelve (12). The
members of the Board of Directors shall be elected annually by the shareholders
at the annual meeting of shareholders, or at a special meeting of the
shareholders held pursuant to the laws of the State of Alabama, and shall hold
office at the pleasure of the of the shareholders and until their respective
successors are elected. Directors need not be residents of the State of
Alabama or shareholders of the Corporation. The property of the Corporation
shall be managed by the Board of Directors."
The above Amendment to the By-Laws was approved by resolution
of the Board on the 21st day of August, 1984.
1
<PAGE> 2
BY-LAWS
OF
BIG B, INC.
*****************
ARTICLE I
SHAREHOLDERS
Section 1. Place and Time for Annual Meeting. - The annual
meeting of the shareholders shall be held at the registered office of the
Corporation in Birmingham, Alabama, unless otherwise specified in appropriate
notice. The meeting shall be held at such time as shall be determined by the
Board of Directors of the Corporation within a period of four (4) months
following the close of the Corporation's year for reporting federal income
taxes. The annual meeting shall be held for the purpose of electing Directors
and for the transaction of such other business as may come before the meeting.
Failure to elect the Board of Directors at the annual meeting shall not cause a
dissolution of the Corporation, but the Directors thereof shall continue to
hold office until their successors are elected and qualified. A special
meeting for the purpose of holding such election shall be called as soon
thereafter as convenient.
Section 2. Special Meeting. - Special meetings of the
shareholders, for any purpose unless otherwise prescribed by statute, may be
called by the President or by the Board of Directors and shall be called by the
President at the request of
2
<PAGE> 3
the holders of not less than one-tenth of all shares entitled to vote at the
meeting.
Section 3. Notice of Meeting. - Written or printed notice
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes of the meeting, shall be delivered not less
than ten (10) nor more than fifty (50) days before the date of the meeting,
either personally or by mail, to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to have been given when
deposited in the United States mail, addressed to the shareholder at his
address as it appears on the stock transfer books of the Corporation, with
postage thereon prepaid. Notwithstanding the provisions of this section, the
stock or bonded indebtedness of the Corporation shall not be increased at a
meeting unless notice of such meeting shall have been given as may be required
by Section 234 of the Constitution of Alabama as the same may be amended from
time to time.
Section 4. Closing of Transfer Books and Fixing Record Date.
- - For the purpose of determining shareholders entitled to notice of or to vote
at any meeting of the shareholders, or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case, fifty (50) days. If the stock
transfer books shall be closed for the purpose of
3
<PAGE> 4
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the stock transfer books, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
(50) days and in case of a meeting of shareholders not less than ten (10) days
prior to the date on which the particular action requiring such determination
of shareholders is to be taken. If the stock transfer books are not closed and
no record date is fixed for the determination of shareholders entitled to
receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
Section 5. Voting List. - The officer or agent having charge
of the stock transfer books for shares of the Corporation shall make, at least
ten (10) days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order with the address of and the number of shares
4
<PAGE> 5
held by each, which list, for a period of ten (10) days prior to such meeting,
shall be kept on file at the registered office of the Corporation and shall be
subject to inspection by any shareholder making written request therefor at any
time during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
Section 6. Quorum. - A majority of the outstanding shares of
the Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of the shareholders, but in no event shall a
quorum consist of less than one-third of the shares entitled to vote at the
meeting. No business may be transacted without a quorum. Any business may be
transacted at any meeting of the shareholders at which a quorum is present,
except that no business at a special meeting of shareholders shall be
transacted unless notice thereof is given as required by the provisions of
Section 3 hereof. If a quorum is present, the affirmative vote of the majority
of the shares represented at the meeting and entitled to vote on the subject
matter shall be the act of the shareholders, except, however that pursuant to
Section 237 of the constitution of Alabama, the Corporation shall have no
authority to issue any class of preferred
5
<PAGE> 6
shares without the consent of the owners of two-thirds of all of the
shareholders of the Corporation.
Section 7. Proxies. - A shareholder may vote either in
person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. The proxy shall be voted only for the meeting
specified in said proxy and in no event shall a proxy be valid after eleven
(11) months from the date of its execution, unless otherwise provided in the
proxy. A proxy is revocable at the pleasure of the shareholder executing it
and is revocable by the transfer of shares by the shareholder executing it.
Section 8. Voting of Shares. - Each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to
a vote at a meeting of shareholders, except to the extent that the voting
rights of the shares are limited or denied by statute, by the Articles of
Incorporation or any amendments thereto, or by the certificate representing
such shares.
Section 9. Unanimous Consent. - Any action required or
permitted to be taken at any meeting of the shareholders may be taken without a
meeting, if prior to such action a written consent thereto is signed by all the
shareholders entitled to vote thereon, and if such written consent is filed
with the minutes of proceedings of the shareholders.
Section 10. Conduct of Meeting. - The following rules shall
apply to the conduct of shareholders' meetings:
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<PAGE> 7
(a) The Chairman of the meeting shall have absolute authority
over matters of procedure, and there shall be no appeal from the ruling of the
Chairman. If the Chairman, in his absolute discretion, deems it advisable to
dispense with the rules of parliamentary procedure as to any one meeting of the
shareholders, or part thereof, the Chairman shall so state and shall clearly
state the rules under which the meeting or the appropriate part thereof shall
be conducted.
(b) If disorder should arise which prevents continuation of
the legitimate business of the meeting, the Chairman may quit the chair and
announce the adjournment of the meeting; and upon his so doing, the meeting is
immediately adjourned.
(c) The Chairman may ask or require that anyone not a bona
fide shareholder or proxy leave a meeting.
(d) A resolution or motion shall be considered for vote only
if proposed by a shareholder or duly authorized proxy, and seconded by an
individual who is a shareholder or duly authorized proxy, other than the
individual who proposed the resolution or motion.
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers. - The business and affairs of the
Corporation shall be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. -The number of
Directors constituting the Board of Directors shall be not less than three and
not more than twelve (12), who shall be
7
<PAGE> 8
elected annually by the shareholders at their annual meeting and shall hold
office at the pleasure of the shareholders and until respective successors are
elected. Directors need not be residents of the State of Alabama or
shareholders of the Corporation.
Section 3. Regular Meeting. - A regular meeting of the Board
of Directors shall be held immediately after, and at the same place as, the
annual meeting of the shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
Section 4. Special Meetings. - Special meetings of the Board
of Directors may be called by or at the request of the President or any two
Directors.
Section 5. Notice. - Notice of meetings, both regular and
special, shall be given not less than two (2) days in advance of said meeting.
Such notice may be by mail, telegram, telephone or may be verbal. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail so addressed, with postage thereon prepaid. If notice is given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any Director may waive notice of any
meeting. The attendance of a Director at a meeting shall constitute a waiver
of notice of such meeting, except where a Director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. The business to be transacted, or
the purpose
8
<PAGE> 9
of, any regular or special meeting of the Board of Directors need not be
specified in the notice or waiver of notice of such meeting.
Section 6. Quorum. - A majority of the Board of Directors
shall constitute a quorum for the transaction of business. The act of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors. If a quorum is present when a
meeting is convened, the Directors present may continue to do business, taking
action by a vote of the quorum, until adjournment, notwithstanding the
withdrawal of enough Directors to leave less than a quorum, or the refusal of
any Director present to vote.
Section 7. Vacancies and Removal. - Any vacancy occurring in
the Board of Directors may be filled for the unexpired term by the remaining
Directors by the shareholders at any meeting of the Board of Directors or the
shareholders. Any directorship to be filled by reason of an increase in the
number of Directors shall be filled by election at an annual or special meeting
of the shareholders called for that purpose. The shareholders may remove any
Director or the entire Board of Directors, with or without cause, at a meeting
of the shareholders expressly called for that purpose, by a majority vote of
the holders of stock present at said meeting.
Section 8. Compensation. - By resolution of the Board of
Directors, the Directors may be paid their expenses, if any, of attendance at
each meeting of the Board of Directors, and may be paid a fixed sum for
attendance at each meeting of the Board of
9
<PAGE> 10
Directors or a stated salary as a Director. No such payment shall preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor. The Board of Directors shall fix the compensation of
the officers of the Corporation.
Section 9. Eligibility. - A Director who has a personal
interest in a matter before a Directors' meeting will, by reason of such
personal interest, lose his eligibility for quorum purposes in order to take
action prerequisite to the submission of the matter for shareholder approval or
for any other purposes, and such Director shall be disqualified because of such
personal interest from voting on such matter in which he has a personal
interest.
Section 10. Committees. The Board of Directors shall have
power, by resolution or resolutions passed by a majority of the Board, to
designate one or more committees, each committee to consist of two or more
Directors of the Corporation, which to the extent provided in the resolutions
shall have and may, during the intervals between the meetings of the Board,
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution of the Board of Directors.
Section 11. Unanimous Consent. Any action required or
permitted to be taken at any meeting of the Board of Directors may
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<PAGE> 11
be taken without a meeting, if prior to such action a written consent thereto
is signed by all members of the Board, and if such written consent is filed
with the minutes of proceedings of the Board of Directors.
ARTICLE III
OFFICERS
Section 1. Number. - The officers of the Corporation shall
be a President, one or more Vice Presidents, a Secretary and a Treasurer, each
of whom shall be elected by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or appointed by
the Board of Directors. Any number of offices may be held by the same person.
Section 2. Election and Term of Office. - The officers of
the Corporation shall be elected annually by the Board of Directors at the
regular meeting of the Board held pursuant to Article II, Section 3, of these
By-Laws. Such officers shall hold office at the pleasure of the Board of
Directors and until their successors are elected and qualified. In its
discretion, the Board of Directors by a vote of a majority thereof may leave
unfilled for such period as it may fix by resolution any offices except those
of President, Treasurer and Secretary.
Section 3. Vacancies and Removal. - Vacancies in any office
arising from any cause may be filled by the Board of Directors at any regular
or special meeting. The Board of
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<PAGE> 12
Directors may remove any officer, with or without cause, at any time by an
affirmative vote of a majority of the Board.
Section 4. President. - The President shall be the principal
executive officer of the Corporation and shall have in his charge the general
direction and promotion of its affairs with authority to do such acts and to
make such contracts as are necessary or proper to carry on the business of the
Corporation. He shall preside over all official meetings of the Corporation
provided no one has been specifically elected to the office of Chairman of the
Board, and shall also perform those duties which usually devolve upon a
president of a Corporation under the laws of the State of Alabama. The
President may, during the absence of any officer, delegate said officer's
duties to any other officer or director.
Section 5. Vice-President. - The Vice-President in the
absence or disability of the President shall perform the duties of the
President and shall perform such other duties as may be delegated to him from
time to time by the Board of Directors or by the President.
Section 6. Secretary. - The Secretary shall issue notices of
all meetings of shareholders and all meetings of the Board of Directors, shall
keep the minutes of all such meetings, shall have charge of the seal of the
Corporation, shall serve as custodian for all corporate records, and shall make
such reports and perform such duties as are incident to his office or which may
be delegated to him by the President or Board of Directors.
12
<PAGE> 13
Section 7. Treasurer. - The Treasurer shall render to the
President and Board of Directors at such times as may be requested an account
of all transactions as Treasurer and of the financial condition of the
Corporation. The Treasurer shall perform such other duties as are incident to
the office or as may be delegated to that office by the President or by the
Board of Directors.
Section 8. Salaries. - The salaries of the officers shall be
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director or shareholder of the Corporation.
ARTICLE IV
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. - The Board of Directors may authorize
any officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the Corporation, and
such authority may be general or confined to specific instances.
Section 2. Loans. - No loans shall be contracted on behalf of
the Corporation and no evidences of indebtedness shall be issued in its name
nor shall any loan be made to any Director of the Corporation unless authorized
by a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
13
<PAGE> 14
Section 3. Checks, Drafts, etc. - All checks, drafts or
other orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the Corporation shall be signed by such officer or
officers, agent or agents of the Corporation and in such manner as shall from
time to time be determined by resolution of the Board of Directors.
Section 4. Deposits. - All funds of the corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the Board
of Directors may select.
ARTICLE V
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section I. Certificates. - Ownership of the capital shares
of the Corporation shall be represented by certificates, in such form as shall
be determined by the Board of Directors. Each certificate shall be signed by
two of the officers of the Corporation and the seal of the Corporation shall be
affixed thereon. A record of such certificates shall be kept.
Section 2. Cancellation. - All certificates transferred on
the books of the Corporation shall be surrendered and cancelled. No new
certificates shall be issued until the former certificate, or certificates, for
the same number of shares have been surrendered and cancelled except in case of
lost or destroyed certificates when new certificates therefor may be issued
under such conditions as the Board of Directors may prescribe.
14
<PAGE> 15
Section 3. Transfer of Shares. - Transfer of shares of the
Corporation shall be made only on the stock transfer books of the Corporation
by the holder of record thereof or by his legal representatives, who shall
furnish proper evidence of his authority in writing, upon the surrender for
cancellation of the certificate for such shares.
ARTICLE VI
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE VII
AMENDMENTS
These By-Laws may be altered, amended or repealed and new
By-Laws may be adopted by the Board of Directors at any regular or special
meeting of the Board of Directors, provided, however, the Board of Directors
may not alter, amend or repeal Section 6 of Article I establishing what
constitutes a quorum at shareholders' meetings.
15
<PAGE> 16
ARTICLE VIII
EMERGENCY BY-LAWS
The Emergency By-Laws provided in this Article shall be
operative during any emergency in the conduct of the business of the
Corporation resulting from an attack on the United States or any nuclear or
atomic disaster or during the existence of any catastrophe or other similar
emergency condition, as a result of which a quorum of the Board of Directors or
a standing committee thereof cannot readily be convened for action,
notwithstanding any different provision in these By-Laws or in the Articles of
Incorporation of the Corporation or in the Alabama Business Corporation Act.
To the extent not inconsistent with the provisions of this Article, the By-Laws
provided in all other Articles shall remain in effect during such emergency and
upon its termination the Emergency By-Laws shall cease to be operative.
During any such emergency:
(a) A meeting of the Board of Directors may be called by any
officer or Director of the Corporation. Notice of the time and place of the
meeting shall be given by the person calling the meeting to such of the
Directors as it may be feasible to reach by any available means of
communication. Such notice shall be given at such time in advance of the
meeting as circumstances permit in the judgment of the person calling the
meeting.
(b) At any such meeting of the Board of Directors, a quorum
shall consist of such number of Directors as are present at such meeting.
16
<PAGE> 17
(c) The Board of Directors, either before or during any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, either before or during any such
emergency, may, effective in the emergency, change the head office or designate
several alternative head offices or regional offices, or authorize the officers
so to do.
No officer, Director or employee acting in accordance with
these Emergency By-Laws shall be liable except for willful misconduct.
These Emergency By-Laws shall be subject to repeal or change
by further action of the Board of Directors or by action of the shareholders,
but no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action taken prior to the time of such repeal or
change. Any amendment of these Emergency By-Laws may make any further or
different provision that may be practical and necessary for the circumstances
of the emergency.
ARTICLE IX
MISCELLANEOUS
The Alabama Business Corporation Act effective January 1,
1981, provides that the number of Directors to be elected by the shareholders
of the Corporation may be one or more. In the event
17
<PAGE> 18
the Board of Directors shall consist of only one Director, or in the event
there shall be only one shareholder of the Corporation, then all references to
more than one Director or shareholder or a majority of Directors or
shareholders shall be inapplicable, such references in such events being deemed
to refer to the sole Director or sole shareholder. In the event there shall be
only one shareholder who shall be the sole Director of the Corporation, then
upon the death of such shareholder, the personal representatives of the estate
of such deceased shareholder shall elect a successor Director.
In the event the Board of Directors shall consist of only two
Directors, then all references in these By-Laws to a majority of the Directors
shall be inapplicable.
18
<PAGE> 1
<TABLE>
<S> <C> <C>
EXHIBIT 4(a)
BIG B INC.
[logo]
COMMON STOCK COMMON STOCK
NUMBER SHARES
19288
INCORPORATED UNDER THE LAWS OF THE STATE OF ALABAMA
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT CUSIP 088891 10 6
***SPECIMEN CERTIFICATE***
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF THE PAR of which are on file with the Transfer Agent,
VALUE OF $.01 EACH OF THE COMMON STOCK of BIG B, INC., to all provisions of which the holder hereof by
transferable on the books of the Corporation by the acceptance of this Certificate assents. This
holders hereof in person or by duly authorized attorney certificate is not valid until countersigned by
upon surrender of this certificate properly endorsed. the Transfer Agent.
This Certificate and the shares represented hereby are
issued and shall be held subject to all provisions of WITNESS the facsimile seal of the Corporation
the Corporation's Articles of Incorporation and By-laws and the facsimile signatures of its duly
and any amendments thereto, copies authorized officers.
Dated
(Seal)
Arthur M. Jones, Sr. Anthony J. Bruno
Secretary President
Countersigned
FIRST ALABAMA BANK OF BIRMINGHAM
Transfer Agent
By
Authorized Officer
</TABLE>
<PAGE> 2
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C>
TEN COM --as tenants in common UNIF GIFT MIN ACT -- ........Custodian.........
(Cust) (Minor)
under Uniform Gifts to Minors
TEN ENT --as tenants by the entireties
JT TEN --as joint tenants with right of
survivorship and not as tenants Act............
in common (State)
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received, ____________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________
/ /
______________________
______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
______________________________________________________________________________
______________________________________________________________________________
_______________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ________________________________________
______________________________________________________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated ________________________________
_____________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE, IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT, OR ANY
CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 11
Big B, Inc.
Statement of Per Share Earnings
<TABLE>
<CAPTION>
Fiscal Years Ended
------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Primary:
Net income $ 9,205,000 $ 11,752,000 $ 15,097,000
Weighted average number
of common shares
outstanding(1) 15,375,766 15,471,402 15,561,205
Net income per common share $ 0.60 $ 0.76 $ 0.97
============ ============ ============
Assuming full dilution:
Earnings - net income $ 9,205,000 $ 11,752,000 $ 15,097,000
Add after tax interest expense
applicable to 6 1/2%
convertible subordinated
debentures 0 1,387,000 1,661,000
------------ ------------ ------------
Net income as adjusted $ 9,205,000 $ 13,139,000 $ 16,758,000
============ ============ ============
Shares - (1)
Weighted average number of
common shares outstanding 15,375,766 15,471,402 15,561,205
Assuming conversion of 6 1/2%
convertible subordinated
debentures 0 2,755,359 3,299,180
Assuming exercise of options reduced
by the number of shares which
could have been purchased
with the proceeds from
exercise of such options 0 75,219 61,228
Weighted average number of
common shares outstanding ------------ ------------ ------------
as adjusted 15,375,766 18,301,980 18,921,613
============ ============ ============
Net income per common share
assuming full dilution $ 0.60 $ 0.72 $ 0.89
============ ============ ============
</TABLE>
(1) See note 1 to consolidated financial statements.
<PAGE> 1
EXHIBIT 23(A)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included in this Form 10-K, into the Company's previously filed
Registration Statement File No. 2-83230.
Arthur Andersen LLP
Birmingham, Alabama
March 20, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF BIG B, INC. FOR THE YEAR ENDED JANUARY 28, 1995, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-30-1994
<PERIOD-END> JAN-28-1995
<CASH> 4,076
<SECURITIES> 0
<RECEIVABLES> 21,292
<ALLOWANCES> 975
<INVENTORY> 169,473
<CURRENT-ASSETS> 199,762
<PP&E> 116,818
<DEPRECIATION> 49,774
<TOTAL-ASSETS> 273,492
<CURRENT-LIABILITIES> 79,092
<BONDS> 52,061
<COMMON> 16
0
0
<OTHER-SE> 106,717
<TOTAL-LIABILITY-AND-EQUITY> 273,492
<SALES> 668,205
<TOTAL-REVENUES> 668,205
<CGS> 460,925
<TOTAL-COSTS> 460,925
<OTHER-EXPENSES> 12,400
<LOSS-PROVISION> 8,713
<INTEREST-EXPENSE> 4,435
<INCOME-PRETAX> 23,775
<INCOME-TAX> 8,678
<INCOME-CONTINUING> 15,097
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,097
<EPS-PRIMARY> 0.97
<EPS-DILUTED> 0.89
</TABLE>
