<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d) of
The Securities and Exchange Act of 1934
Quarter Ended May 11, 1996 Commission File No. 2-72154
BIG B, INC.
STATE OF INCORPORATION: Alabama I.R.S. EMPLOYER I.D. NO.: 63-0632551
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE:
2600 Morgan Road S.E., Bessemer, Alabama 35023
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE:
Area Code 205 424-3421
OUTSTANDING COMMON STOCK AS OF MAY 11, 1996 IS 18,566,720
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days.
YES (X) NO ( )
<PAGE> 2
COMMISSION FILE NO. 2-72154
BIG B, INC.
Index
<TABLE>
<S> <C>
FINANCIAL STATEMENTS: PAGE NO.
Condensed Balance Sheets as of
May 11, 1996 and February 03, 1996 3
Condensed Statements of Income and Retained
Earnings for the Fourteen Week Periods
Ended May 11, 1996 and May 06, 1995 5
Condensed Statements of Cash Flows for the
Fourteen Week Periods Ended May 11, 1996
and May 06, 1995 6
Notes to Condensed Financial Statements 8
Management's Discussion and Analysis of
the Results of Operations and Financial
Condition 9
Other Information and Signatures 11
</TABLE>
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<PAGE> 3
BIG B, INC.
CONDENSED BALANCE SHEETS
AS OF MAY 11, 1996 AND FEBRUARY 03, 1996
(Unaudited)
<TABLE>
<CAPTION>
MAY 11 FEB 03
------ ------
1996 1996
(In Thousands)
<S> <C> <C>
ASSETS
Current Assets -
Cash and Temporary Cash Investments $ 498 $ 491
Receivables 19,563 22,659
Inventories at LIFO 188,044 179,400
Prepaid Expenses 5,053 6,330
Refundable Income Taxes 3,037 3,037
Deferred Income Taxes 2,539 2,539
--------- ---------
Total Current Assets $218,734 $214,456
--------- ---------
Property, Equipment, and Investments
in Property Under Capital Leases, Net $ 73,394 $ 76,225
--------- ---------
Other Assets 8,572 8,155
--------- ---------
$300,700 $298,836
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities -
Current Portion of Long-Term Debt and
Capitalized Lease Obligations $ 1,057 $ 1,057
Accounts Payable 45,971 49,525
Short Term Bank Loan 11,400 4,700
Accrued Expenses 15,982 13,170
Accrued Income Taxes Payable 0 0
--------- ---------
Total Current Liabilities $ 74,410 $ 68,452
--------- ---------
Non-Current Liabilities -
Long-Term Debt and Capitalized
Lease Obligations $ 68,640 $ 73,171
Deferred Income Taxes 5,279 5,169
Deferred Compensation 1,851 1,780
Other 4,288 5,016
--------- ---------
$ 80,058 $ 85,136
--------- ---------
</TABLE>
See notes to condensed financial statements.
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<PAGE> 4
BIG B, INC.
CONDENSED BALANCE SHEETS
AS OF MAY 11, 1996 AND FEBRUARY 03, 1996
(Unaudited)
(CONTINUED)
<TABLE>
<CAPTION>
MAY 11 FEB 03
------ ------
1996 1996
(In Thousands)
<S> <C> <C>
Shareholders' Investment -
Common stock, $.001 par value; 100,000,000 shares
authorized, 18,592,130 shares issued and
outstanding at May 11, 1996 $ 19 $ 19
Paid-in capital 74,750 74,626
Retained earnings 71,463 70,603
--------- ---------
$146,232 $145,248
--------- ---------
$300,700 $298,836
========= =========
</TABLE>
See notes to condensed financial statements.
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<PAGE> 5
BIG B, INC.
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE FOURTEEN WEEK PERIODS ENDED
MAY 11, 1996 AND MAY 06, 1995
(Unaudited)
<TABLE>
<CAPTION>
FOURTEEN WEEKS ENDED
(In Thousands Except
Per Share Amounts)
5-11-96 5-06-95
------------- -------------
<S> <C> <C>
Net Sales $ 208,783 $ 195,183
------------- -------------
Cost and Expenses:
Cost of Products Sold $ 147,092 $ 136,101
Store Operating, Selling and
Administrative Expenses 53,823 46,897
Depreciation and Amortization 3,423 3,141
Interest Expense 1,585 1,355
Interest Income (4) (8)
------------- -------------
$ 205,919 $ 187,486
------------- -------------
Income Before Taxes $ 2,864 $ 7,697
Provision for Income Taxes 1,075 2,890
------------- -------------
Net Income $ 1,789 $ 4,807
Retained Earnings, Beginning of
Period 70,603 71,390
Dividend Paid (929) (625)
------------- -------------
Retained Earnings, End of Period $ 71,463 $ 75,572
============= =============
Net Income Per Common Share (Note 1)
Primary $ 0.10 $ 0.31
Fully Diluted $ 0.10 $ 0.28
============= =============
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE> 6 <TABLE> <CAPTION> BIG B, INC.
CONDENSED STATEMENTS OF CASH FLOWS FOR THE
FOURTEEN WEEK PERIODS ENDED MAY 11, 1996 AND MAY 06, 1995
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS
(Unaudited)
May 11, 1996 May 06, 1995
------------ ------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,789 $ 4,807
---------- ----------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization 3,423 3,141
Provision for deferred income taxes 110 35
Provision for losses on receivables 1,085 2,963
Provision to value inventories at LIFO cost 450 400
Loss on sale of property 92 39
Provision for deferred compensation 71 38
(Recognition) of other non-current liability (728) (2,111)
Change in assets and liabilities:
(Increase) Decrease in accounts receivable 2,011 (5,152)
(Increase) in other assets (500) (73)
(Increase) in inventories (9,094) (5,818)
(Increase) Decrease in prepaid expenses 3,277 (183)
(Decrease) in accounts payable (3,554) (12,628)
Increase in accrued income taxes 0 699
Increase (Decrease) in accrued expenses 2,812 (96)
---------- ----------
Total adjustments (545) $ (18,746)
---------- ----------
Net cash provided by (used in) operating activities 1,244 $ (13,939)
---------- ----------
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE> 7 <TABLE> <CAPTION> BIG B, INC.
CONDENSED STATEMENTS OF CASH FLOWS FOR THE
FOURTEEN WEEK PERIODS ENDED MAY 11, 1996 AND MAY 06, 1995
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS
(Unaudited)
(CONTINUED)
May 11, 1996 May 06, 1995
------------ ------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 9 8
Capital expenditures (2,610) (4,906)
---------- ----------
Net cash used in investing activities $ (2,601) $ (4,898)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt --- ---
Net borrowings (repayments)under line of credit agreement 6,700 (7,000)
Principal payments under long-term debt and capital lease obligations (4,531) (269)
Proceeds from issuance of common stock 124 38,277
Dividends paid $ (929) $ (465)
---------- ----------
Net cash provided by financing activities $ 1,364 $ 30,383
---------- ----------
NET INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS 7 11,546
CASH AND TEMPORARY INVESTMENTS AT BEGINNING OF PERIOD 491 4,076
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 498 $ 15,622
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 2,104 $ 2,252
Income taxes (9) 2,156
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE> 8 BIG B, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MAY 11, 1996 AND MAY 06, 1995
1. Net income per common share for all periods was computed by dividing
net income by the average weighted number of shares outstanding during
the periods. Outstanding stock options are common stock equivalents
but were excluded from the primary net income per common share
computations as their effect was not material. Fully diluted net
income per common share was determined on the assumption that all
convertible subordinated debentures were converted and all stock
options outstanding were exercised. Conversion was assumed during the
portion of each period that the debentures and the options were
outstanding. For the debentures, net income was adjusted for
interest, net of income tax effects; for the stock options,
outstanding shares were decreased by the number of shares that could
have been purchased with the proceeds from the exercise, using the end
of the period market price.
For the quarter ending May 11, 1996, fully diluted net income per
common share is considered to be the same as primary net income per
common share since the effect of certain potentially dilutive
securities would be anti-dilutive.
2. In the opinion of management, all adjustments have been made which are
necessary to reflect a fair statement of the results of operations of
the interim period.
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<PAGE> 9 BIG B, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OPERATING RESULTS
Net Sales
Sales for the fourteen week period increased 7.0% to $208.8 million
from $192.2 million in the prior year. The increase in net sales for the
period resulted primarily from sales increases in existing stores. The
company operated 387 stores at May 11, 1996, compared to 367 stores
operated at May 06, 1995.
Store Cost and Expense
Cost of products sold, including warehouse expense, as a percentage of
net sales, increased to 70.5% in the period from 69.7% in the prior year.
The increase in cost of products sold as a percentage of net sales in the
period resulted primarily from the continued increase in third-party
prescription sales with lower gross margins than non third-party
prescription sales. Management anticipates that further declines in
pharmacy margins, as a result of increased third-party sales, will be at a
level which will not significantly impact net income and will be
substantially offset by additional sales volume and gross profit dollars
generated from the increased third-party sales, improved purchasing
arrangements for pharmaceutical products, continued contract negotiations
with third-party payors, the marketing of value added pharmacy services,
and the use of point-of-sale data to improve gross margins for non-pharmacy
sales.
Store operating, selling and administrative expenses as a percentage
of net sales increased to 25.8% from 24.0% in the prior year. The increase
was due to higher operating expenses of store systems and higher
advertising cost in the period.
Depreciation and amortization as a percentage of net sales remained
steady at 1.6% in both periods.
Interest expense as a percentage of net sales increased to 0.8% from
0.7% in the prior year. This increase was due primarily to higher short
term borrowings and generally higher interest rates during the period.
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
two of its drug stores.
- 9 -
<PAGE> 10
The Company plans to open 25 to 30 new stores in both fiscal 1997 and
fiscal 1998 at an anticipated aggregate capital outlay of $10 million to
$12 million in each fiscal year. 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. The Company
believes that internally generated funds and borrowings on its line of
credit and revolving credit facility will be adequate to fund the capital
requirements noted above.
- 10 -
<PAGE> 11 BIG B, INC.
OTHER INFORMATION
The Company was not required to file and did not file any report on
Form 8-K during the fourteen weeks ended May 11, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BIG B, INC.
REGISTRANT
DATE: June 24, 1996
/s/ Michael J. Tortorice
Vice President of Finance*
*Both duly authorized officer and principal financial officer.
- 11 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BIG B, INC. FOR THE QUARTER ENDED MAY 11,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000352720
<NAME> BIG B, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-1-1997
<PERIOD-START> FEB-4-1996
<PERIOD-END> MAY-11-1996
<CASH> 498
<SECURITIES> 0
<RECEIVABLES> 21797
<ALLOWANCES> 2234
<INVENTORY> 188044
<CURRENT-ASSETS> 218734
<PP&E> 123556
<DEPRECIATION> 50162
<TOTAL-ASSETS> 300700
<CURRENT-LIABILITIES> 74410
<BONDS> 51091
0
0
<COMMON> 19
<OTHER-SE> 146213
<TOTAL-LIABILITY-AND-EQUITY> 300700
<SALES> 208783
<TOTAL-REVENUES> 208783
<CGS> 147092
<TOTAL-COSTS> 200915
<OTHER-EXPENSES> 3423
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1585
<INCOME-PRETAX> 2864
<INCOME-TAX> 1075
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1789
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
