<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 0-5815
AMERICAN CONSUMERS, INC.
------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-1033765
------------------------------- ---------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
P.O. Box 2328, 418A Battlefield Pkwy., Fort Oglethorpe, GA 30742
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (706) 861-3347
N/A
----------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark 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 (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES (X) NO ( )
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 7, 1996
COMMON STOCK - $.10 PAR VALUE 924,653
NON VOTING COMMON STOCK - $.00 PAR VALUE 0
NON VOTING PREFERRED STOCK - $.00 PAR VALUE 0
Exhibit Index on Page 10
(1) PAGE 1 OF 11 PAGES
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FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONSDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
THIRTEEN WEEKS ENDED
-------------------------
August 31, September 2,
1996 1995
----------- ------------
NET SALES $7,249,545 $7,284,621
COST OF GOODS SOLD 5,678,257 5,757,988
---------- ----------
Gross Margin 1,571,288 1,526,633
OPERATING EXPENSES 1,464,809 1,473,387
---------- ----------
Operating Income 106,479 53,246
OTHER INCOME (EXPENSE)
Interest income 11,159 5,046
Other income (expense) (19,245) 11,939
Interest expense (17,968) (4,946)
------- ------
Income Before Income Taxes 80,425 65,285
PROVISION (BENEFIT) FOR INCOME TAXES 26,824 22,243
------ ------
NET INCOME 53,601 43,042
RETAINED EARNINGS:
Beginning 1,666,324 1,467,651
Cash dividends - - - - - (18,549)
Redemption of common stock - - - - - (15)
---------- ---
Ending 1,719,925 1,492,129
---------- ----------
---------- ----------
PER SHARE:
Net income $0.058 $0.046
------ -------
------ -------
Cash dividends $0.000 $0.020
------ ------
------ ------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 924,653 927,398
------- -------
------- -------
See Notes to Financial Statements
(2) PAGE 2 OF 11 PAGES
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED BALANCE SHEETS
August 31, June 1,
1996 1996
---------- ----------
--A S S E T S--
CURRENT ASSETS:
Cash $678,801 $606,399
Securities purchased under agreement
to resell 604,288 371,150
Certificate of deposit 355,932 355,932
Accounts receivable 104,047 190,225
Inventories 1,649,934 1,663,304
Prepaid expenses 24,607 55,264
---------- ----------
Total current assets 3,453,609 3,242,274
---------- ----------
PROPERTY - At cost:
Property 2,854,776 2,856,592
Less accumulated depreciation 1,626,242 1,614,687
---------- ----------
Property - Net 1,228,534 1,241,905
---------- ----------
OTHER ASSETS 18,248 18,491
---------- ----------
TOTAL ASSETS $4,700,391 $4,502,670
---------- ----------
---------- ----------
- -LIABILITIES AND STOCKHOLDERS' EQUITY- -
CURRENT LIABILITIES:
Accounts payable $861,423 $731,029
Short-term borrowings 180,000 201,000
Obligations under capital leases, current portion 133,461 109,102
Accrued sales tax 100,297 170,433
Accrued income taxes 27,324 24,067
Other accrued liabilities 185,103 161,585
---------- ----------
Total Current Liabilities 1,487,608 1,397,216
---------- ----------
DEFERRED INCOME TAX LIABILITY 52,519 40,333
---------- ----------
DEFERRED INCOME 141,299 146,598
---------- ----------
OBLIGATIONS UNDER CAPITALIZED LEASE AGREEMENTS 435,487 388,646
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 2)
STOCKHOLDERS' EQUITY:
Non voting preferred stock; authorized 5,000,000
shares of no par value; no shares issued - - - - - -
Non voting common stock; authorized 5,000,000
shares of $.10 par value; no shares issued - - - - - -
Common stock; authorized 5,000,000 shares
of $.10 par value; issued 924,653 92,465 92,465
Additional paid-in capital 771,088 771,088
Retained earnings 1,719,925 1,666,324
--------- ---------
Total Stockholders' Equity 2,583,478 2,529,877
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 4,700,391 4,502,670
--------- ---------
--------- ---------
See Notes to Financial Statements
(3) PAGE 3 OF 11 PAGES
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMER, INC.
CONSENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
-------------------------
August 31, September 2,
1996 1995
---------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $53,601 $43,042
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 75,468 37,681
Deferred income taxes 12,186 (3,840)
Loss on sale of property and equipment 32,809 - - - -
Deferred income (5,299) (5,299)
Change in operating assets and liabilities:
Accounts receivable 50,178 (15,480)
Inventories 13,370 (48,405)
Prepaid expenses 30,657 18,392
Accounts payable 130,394 117,603
Accrued sales tax (70,136) (31,433)
Accrued income taxes 3,257 22,868
Other accrued liabilities 23,518 54,822
-------- -------
Net Cash provided by (used in) operating activities 350,003 189,951
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property (2,123) (10,409)
Proceeds from disposal of property and equipment 7,000 - - - -
Other 176 913
-------- -------
Net cash used in investing activities 5,053 (9,496)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings (21,000) 3,000
Principal payments on obligations under capital leases (28,516) 0
Cash dividends 0 (18,549)
Redemption of common stock 0 (220)
-------- -------
Net cash provided by financing activities (49,516) (15,769)
-------- -------
Net increase in cash 305,540 164,686
Cash and cash equivalents at beginning of period 977,549 604,156
-------- -------
Cash and cash equivalents at end of period 1,283,089 768,842
--------- -------
--------- -------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $11,382 $4,225
-------- -------
-------- -------
Interest $17,968 $4,946
-------- -------
-------- -------
NONCASH FINANCING ACTIVITIES
Capital lease obligations incurred for use of equipment $99,716 $ ----
-------- -------
-------- -------
</TABLE>
See Notes to Financial Statements
(4) PAGE 4 OF 11 PAGES
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AMERICAN CONSUMERS, INC.
NOTES TO FINANCIAL STATEMENTS
(1) Basis of Presentation.
The financial statements have been prepared in conformity with generally
accepted accounting principles and general practices within the industry.
The interim financial statements should be read in conjunction with the
notes to the financial statements presented in the Corporation's 1996
Annual Report to Share-holders. The quarterly financial statements reflect
all adjustments which are, in the opinion of management, necessary for a
fair presentation of the results for interim periods. The results for
interim periods are not necessarily indicative of results to be expected
for the complete fiscal year.
(2) Commitments and Contingencies.
Capital expenditures are not expected to exceed $100,000 during the current
fiscal year.
The Company adopted a retirement plan effective January 1, 1995. The plan
is a 401(k) plan administered by BISYS Qualified Plan Services.
Participation in the plan is available to all full-time employees after one
year of service and age 19. Any contribution by the Company will be at the
discretion of the Board of Directors. The Board voted to contribute
$20,000 to the plan in January 1996.
None of the Company's employees are represented by a union.
(3) Securities Purchased Under Agreement to Resell.
The Company invests excess funds in U.S. Government or U.S. Government
Agency securities which are purchased under an agreement to resell (reverse
repurchase agreement). The securities are purchased from a bank but do not
constitute deposits at the bank and are not insured by the Federal Deposit
Insurance Corporation. The bank maintains possession of the securities,
but title of ownership passes to the Company according to the terms of the
agreement. The bank repurchases the securities the business day
immediately following the Company's purchase date. The carrying amount of
securities purchased under agreement to resell approximates fair value.
Risk of market value deterioration is mitigated by the short-term nature of
the transaction and the type of securities purchased. Amounts outstanding
under the agreement were $604,288 at August 31, 1996, and $371,150 at June
1, 1996.
(5) PAGE 5 OF 11 PAGES
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED
----------------------------
August 31, September 2,
1996 1995
---------- ------------
Sales $7,249,545 $7,284,621
% Sales Increase (Decrease) (0.48) 2.63
Gross Margin % 21.67 20.96
Operating and Administrative Expense:
Amount $1,464,809 $1,473,387
% of Sales 20.21 20.23
Net Income $53,601 $43,042
Sales remained fairly consistent with the same quarter last year. At this
time last year, sales were increasing, apparently due to the acquisition of one
of the Company's major competitors by another operation, which management
believes caused more customers to shop at Company stores as a result of
temporary dislocations related to the change in ownership of the competitor. In
addition to the installation of scanning equipment to improve the Company's
pricing efficiency and its control of inventory costs, the Company continuously
seeks to improve its profitability by obtaining the lowest cost available for
its goods and by exploring other means of improving results.
Operating and administrative expense remained very consistent as a percent
of sales between the two quarters presented. The Company is no longer paying
rent on an old location because of the expiration of the lease. Increases in
operating expenses such as depreciation, due to the capital leases pertaining to
the Company's scanning equipment, and group insurance, due to the Company's
having absorbed the last premium increase rather than passing it on to
employees, have been offset by the reduction in other expenses such as the
decreased rent. Interest expense also increased as a result of the recording of
the capital leases.
Other income (expense) is a net expense for this period because it includes
a $32,809 loss on the sale of registers which were replaced in connection with
the installation of the Company's scanning equipment.
Prepaid expenses decreased from $55,264 at June 1, 1996 to $24,607 at August
31, 1996 due to the reduction of rent overages accrued at year end as those
expenses were paid.
Accounts payable increased by $130,394, from $731,029 to $861,423. This
increase is normal at the end of August. Last year accounts payable increased
$117,603 between year end and September 2, 1995.
The provision for income taxes for the quarter ended August 31, 1996 was
$26,824 and was $22,243 at September 2, 1995. The provision for income taxes
does not vary significantly from the statutory rate of 34%.
(6) PAGE 6 OF 11 PAGES
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Inflation:
Although not a current factor, the Company continues to seek ways to cope
with the threat of renewed inflation. To the extent permitted by competition,
increased costs of goods and services are reflected in increased selling prices
for the goods sold by the Company.
FINANCIAL CONDITION
Liquidity and Capital Resources:
The Company finances its working capital requirements principally through
its cash flow from operations and short-term borrowing. Short-term borrowing
to finance inventory purchases is provided by the Company's $800,000 line of
credit with a regional bank. An additional line of credit in the amount of
$300,000 is also available from its principal inventory supplier. Long-term
borrowing generally finances capital expansion.
Short-term borrowings as of August 31, 1996 and June 1, 1996 consists of
unsecured notes payable to a principal stockholder. Balances on notes to the
stockholder at such dates, in the amount of $180,000 and $201,000, respectively,
are payable on demand and bear interest at .25% below the base rate charged by
the regional bank which provides the Company with its line of credit to finance
inventory purchases.
The ratio of current assets to current liabilities was 2.32 to 1 at the end
of the latest quarter, August 31, 1996, as compared to 2.23 to 1 on September 2,
1995 and 2.32 to 1 at the end of the fiscal year ended June 1, 1996. Cash and
cash equivalents constituted 37.15% of the total current assets at August 31,
1996 as compared to 25.04% at September 2, 1995 and 30.15% at June 1, 1996. The
increase in cash is detailed in the Condensed Statements of Cash Flows on page
four.
During the quarter ended August 31, 1996 retained earnings increased as a
result of the Company's net income for the quarter.
(7) PAGE 7 OF 11 PAGES
<PAGE>
AMERICAN CONSUMERS, INC.
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Shareholders on September 12, 1996,
at which shareholders were asked to vote on the election of directors for the
fiscal year ending in 1997. Proxies were solicited by management in favor of
seven nominees, with no solicitation in opposition to management's nominees.
All of such nominees were elected, with the number of votes cast for, against,
or withheld as well as the number of broker non votes and abstentions as to each
nominee having been as follows:
VOTES VOTES BROKER
TOTAL CAST CAST VOTES NON
NOMINEE SHARES FOR AGAINST WITHHELD VOTES
------- ------- ------- ------- -------- ------
Michael A. Richardson 634,582 632,096 2,486 290,071 30,440
Paul R. Cook 634,582 632,316 2,266 290,071 30,440
Virgil E. Bishop 634,582 631,876 2,706 290,071 30,440
John P. Price 634,582 632,316 2,266 290,071 30,440
Thomas L. Richardson 634,582 632,316 2,266 290,071 30,440
Jerome P. Sims, Sr. 634,582 632,316 2,266 290,071 30,440
Herbert S. Willbanks 634,582 632,096 2,486 290,071 30,440
Item 6 EXHIBITS AND REPORTS OF FORM 8-K
(a) The following exhibits are filed as a part of the
report.
(11) Statement re: computation of per share earnings.
(b) During the most recent quarter, the Company has not
filed a report on Form 8-K.
(8) PAGE 8 OF 11 PAGES
<PAGE>
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.
AMERICAN CONSUMERS, INC.
(Registrant)
Date: 10/4/96 /s/ Michael A. Richardson
------------- -------------------------------------
Michael A. Richardson
CHAIRMAN
(Principal Executive Officer)
Date: 10/4/96 /s/ Paul R. Cook
------------- -------------------------------------
Paul R. Cook
EXECUTIVE VICE PRESIDENT - TREASURER
(Principal Financial Officer & Chief
Accounting Officer)
(9) PAGE 9 OF 11 PAGES
<PAGE>
EXHIBIT INDEX
Exhibit Sequential Page Number
- ------- ----------------------
(11) Statement re: computation of per share earnings 11
(10) PAGE 10 OF 11 PAGES
<PAGE>
AMERICAN CONSUMERS, INC.
NET INCOME PER COMMON SHARE
EXHIBIT 11
THIRTEEN WEEKS ENDED
-------------------------
August 31, September 2,
1996 1995
---------- ------------
Net income for computing earnings
per common share $53,601 $43,042
------- -------
------- -------
Weighted average number of common
shares outstanding during each period 924,653 927,398
------- -------
------- -------
Net income per common share $0.058 $0.046
------ ------
------ ------
(11) PAGE 11 OF 11 PAGES
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERICAN CONSUMERS, INC. FOR THE QUARTERLY PERIOD ENDED
AUGUST 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 1,034,733
<SECURITIES> 604,288
<RECEIVABLES> 104,047
<ALLOWANCES> 0
<INVENTORY> 1,649,934
<CURRENT-ASSETS> 3,453,609
<PP&E> 2,854,776
<DEPRECIATION> 1,626,242
<TOTAL-ASSETS> 4,700,391
<CURRENT-LIABILITIES> 1,487,608
<BONDS> 435,487
0
0
<COMMON> 92,465
<OTHER-SE> 2,491,013
<TOTAL-LIABILITY-AND-EQUITY> 4,700,391
<SALES> 7,249,545
<TOTAL-REVENUES> 7,249,545
<CGS> 5,678,257
<TOTAL-COSTS> 5,678,257
<OTHER-EXPENSES> 1,464,809
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,968
<INCOME-PRETAX> 80,425
<INCOME-TAX> 26,824
<INCOME-CONTINUING> 53,601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,601
<EPS-PRIMARY> 0.058
<EPS-DILUTED> 0.058
</TABLE>
