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 March 2, 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
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(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 April 4, 1996
COMMON STOCK - $.10 PAR VALUE 925,753
NON VOTING COMMON STOCK - $.00 PAR VALUE 0
NON VOTING PREFERRED STOCK - $.00 PAR VALUE 0
Exhibit Index on Page 10
(1)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
------------------------- -----------------------
March 2, February 25, March 2, February 25,
1996 1995 1996 1995
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
NET SALES $7,582,683 $ 7,269,009 $22,084,742 $21,250,060
COST OF GOODS SOLD 5,906,488 5,769,937 17,403,821 16,872,486
----------- ----------- ------------ ------------
Gross Margin 1,676,195 1,499,072 4,680,921 4,377,574
OPERATING EXPENSES 1,547,320 1,428,533 4,476,194 4,186,862
----------- ----------- ------------ ------------
Operating Income 128,875 70,539 204,727 190,712
OTHER INCOME (EXPENSE)
Interest income 5,186 6,648 17,348 20,659
Other income 13,964 14,114 39,060 37,346
Loss on sale of assets (15,705) - - - - (21,497) - - - -
Interest expense (5,025) (4,435) (14,657) (12,819)
---------- ------------ ------------ ------------
Income Before Income 127,295 86,866 224,981 235,898
Taxes
PROVISION (BENEFIT) FOR
INCOME TAXES 50,427 32,686 79,560 84,786
---------- ----------- ----------- -----------
NET INCOME 76,868 54,180 145,421 151,112
RETAINED EARNINGS:
Beginning 1,499,023 1,429,652 1,467,651 1,371,264
Cash dividends - - - - - (18,569) (37,093) (56,210)
Redemption of common (24) (52) (112) (955)
stock
----------- ------------ ----------- -----------
Ending $1,575,867 $ 1,465,211 $ 1,575,867 $ 1,465,211
=========== =========== =========== ===========
PER SHARE:
Net income $0.083 $0.058 $0.157 $0.162
====== ====== ====== ======
Cash dividends $0.000 $0.020 $0.040 $0.061
====== ====== ====== ======
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 927,011 937,548 926,760 935,684
======= ======= ======= =======
</TABLE>
See Notes to Financial Statements
(2)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED BALANCE SHEETS
March 2, June 3,
1996 1995
---------- ----------
- - ASSETS- -
<S> <C> <C>
CURRENT ASSETS:
Cash $ 477,672 $ 416,456
Securities purchased under agreement
to resell 471,079 187,700
Certificate of deposit 346,633 337,021
Accounts receivable 211,614 238,523
Inventories 1,664,952 1,599,435
Prepaid expenses 82,852 80,624
--------- ---------
Total current assets 3,254,802 2,859,759
--------- ---------
PROPERTY - At cost:
Property 2,306,875 2,295,587
Less accumulated depreciation 1,552,832 1,458,153
--------- ---------
Property - Net 754,043 837,434
--------- ---------
OTHER ASSETS 20,167 39,442
--------- ---------
TOTAL ASSETS $4,029,012 $3,736,635
========== ==========
- -LIABILITIES AND STOCKHOLDERS' EQUITY- -
CURRENT LIABILITIES:
Accounts payable $ 828,211 $ 718,368
Notes payable to principal stockholder 201,000 198,000
Accrued sales tax 179,044 168,993
Accrued income taxes 15,471 - - -
Other accrued liabilities 191,023 122,912
--------- ---------
Total Current Liabilities 1,414,749 1,208,273
--------- ---------
DEFERRED INCOME TAX LIABILITY 21,919 26,759
--------- ---------
DEFERRED INCOME 151,897 167,793
--------- ---------
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 940,234 92,575 92,744
Additional paid-in capital 772,005 773,415
Retained earnings 1,575,867 1,467,651
--------- ---------
Total Stockholders' Equity 2,440,447 2,333,810
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $4,029,012 $3,736,635
========== ==========
</TABLE>
See Notes to Financial Statements
(3)
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
THIRTY-NINE WEEKS ENDED
-------------------------
March 2, February 25,
1996 1995
---------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 145,421 $ 151,112
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 120,228 131,599
Deferred income taxes (2,000) (1,500)
(Gain) loss on sale of property 22,075 (3,090)
Deferred income (15,896) (16,251)
Change in operating assets and liabilities:
Certificate of deposit (9,612) (7,365)
Accounts receivable 26,909 7,344
Inventories (65,517) (55,161)
Prepaid expenses (2,228) (12,258)
Accounts payable 109,843 (17,166)
Accrued sales tax 10,051 (29,649)
Accrued income taxes 15,471 (117,174)
Other accrued liabilities 68,111 21,425
------- -------
Net cash provided by (used in) operating activities 422,856 51,866
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property (63,560) (95,782)
Proceeds from disposal of property 4,648 3,090
Other 16,435 (4,313)
-------- --------
Net cash used in investing activities (42,477) (97,005)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in short-term borrowings 3,000 5,000
Cash dividends (37,093) (56,210)
Redemption of common stock (1,691) (14,462)
-------- --------
Net cash provided by (used in) financing activities (35,784) (65,672)
-------- --------
Net increase (decrease) in cash 344,595 (110,811)
Cash and cash equivalents at beginning of period 604,156 974,716
------- -------
Cash and cash equivalents at end of period $ 948,751 $ 863,905
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 68,929 $ 206,385
====== =======
Interest $ 14,657 $ 12,819
====== ======
</TABLE>
See Notes to Financial Statements
(4)
<PAGE>
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 1994 Annual Report to Shareholders. 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. All such adjustments are of
a normal recurring nature. The results for the interim periods
are not necessarily indicative of results to be expected for the
complete fiscal year.
(2) Commitments and Contingencies.
The Company has begun the process of installing direct store
delivery equipment and replacing cash registers with registers
capable of scanning at the checkout in each of its stores.
Annual lease payments on the delivery and scanning equipment,
when fully installed in all stores are expected to aggregate
approximately $200,000 per year. At March 2, 1996, registers at
four of the six stores had been replaced, with direct store
delivery equipment being installed in three of the six stores.
The new front-end equipment will also allow the acceptance
of certain credit cards and acceptance of electronic
authorization and transfers associated with food stamps and WIC
related benefits. The equipment will also facilitate the
Company's collection of sales tax in its Georgia stores when the
State of Georgia implements exemption of certain items from sales
tax. Other capital expenditures for asset additions are not
expected to exceed $100,000 during the next 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, which will make such decisions annually at
its quarterly meeting in January. At the Board Meeting in
January 1996, the Board voted to contribute $20,000 to the plan
on behalf of plan participants. The expense for this
contribution is included in the accompanying financial
statements.
None of the Company's employees are represented by a union.
(5)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
--------------------- ------------------------
March 2, February 25, March 2, February 25,
1996 1995 1996 1995
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Sales $7,582,683 $7,269,009 $22,084,742 $21,250,060
% Sales Increase 4.32 1.70 3.93 (1.01)
(Decrease)
Gross Margin % 22.11 20.62 21.20 20.60
Operating and
Administrative
Expense:
Amount 1,547,320 1,428,533 4,476,194 4,186,862
% of Sales 20.41 19.65 20.27 19.70
Net Income $ 76,868 $ 54,180 $ 145,421 $ 151,112
</TABLE>
Overall, sales increased 4.32% from sales for the same quarter last year.
This increase is attributable to increased sales at five of the Company's six
stores. Management believes this increase is due, in part, to favorable
customer response to an advertising program which the Company has implemented
and to favorable competition with the successor to one of the Company's major
competitors. In addition to other means of improving results, the Company
seeks to improve its profitability by obtaining the lowest cost available
for its goods.
Operating and administrative expenses have increased slightly over the
same period last year, thereby increasing such expenses as a percentage of
sales. This increase is due to an increase in advertising expense incurred
through the ad group to which the Company belongs. Also, an increase in
rent was incurred in the past quarter for leases on the registers and back
door equipment being installed in all stores. Operating and administrative
expense for the quarter ended March 2, 1996 also includes the initial
contribution to the 401(k) plan of $20,000.
Other assets decreased due to the investment in an alternate supplier
maturing and being redeemed during the quarter. Accounts payable are higher
than at year-end, due mainly to the higher inventory being carried now as
opposed to inventory carried at year-end.
Other accrued liabilities increased due to an increase in accrued payroll
and bonuses at the end of the current quarter.
Income Taxes:
The provision for income taxes for the quarter ended March 2, 1996 was
$50,427 and $32,686 for the quarter ended February 25, 1995. The provision
for income taxes does not vary significantly from the statutory rate of 34%.
Inflation:
Although not a current significant 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 to the Company are reflected
in increased selling prices for the goods sold by the Company.
(6)
<PAGE>
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 has not been necessary for several years but generally finances
capital expansion.
Short-term borrowings consist of unsecured notes payable to a principal
stockholder. The notes to stockholder, in the sum of $201,000 and $198,000
as of March 2, 1996 and as of June 3, 1995 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 2.30 to 1 at
the end of the latest quarter, March 2, 1996, as compared to 2.28 to 1 on
February 25, 1995 and 2.37 to 1 at the end of the fiscal year ended June 3,
1995. Cash and cash equivalents constituted 29.15% of the total current
assets at March 2, 1996 as compared to 28.89% at February 25, 1995 and
21.13% at June 3, 1995.
During the quarter ended March 2, 1996 retained earnings increased as
a result of the Company's net income for the quarter.
(7)
<PAGE>
AMERICAN CONSUMERS, INC.
PART II OTHER INFORMATION
Item 6 EXHIBITS AND REPORTS ON 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 did not
file a report on Form 8-K.
(8)
<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)
April 22, 1996 /s/ Michael A. Richardson
Date: ________________ ___________________________________
Michael A. Richardson
CHAIRMAN
(Principal Executive Officer)
April 22, 1996 /s/ Paul R. Cook
Date: ________________ ______________________________
Paul R. Cook
EXECUTIVE VICE PRESIDENT - TREASURER
(Principal Financial Officer & Chief
Accounting Officer)
(9)
<TABLE>
<CAPTION>
AMERICAN CONSUMERS, INC.
NET INCOME PER COMMON SHARE
EXHIBIT 11
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
------------------------ -------------------------
March 2, February 25, March 2, February 25,
1996 1995 1996 1995
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net income for
computing earnings
per common share $76,868 $54,180 $145,421 $151,112
======= ======= ======== ========
Weighted average number
of common shares
outstanding during
each period 927,011 937,548 926,760 935,684
======= ======= ======= =======
Net income per common $0.083 $0.058 $0.157 $0.162
share ====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERICAN CONSUMERS, INC. FOR THE QUARTERLY PERIOD
ENDED MARCH 2, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-03-1995
<PERIOD-END> MAR-02-1996
<CASH> 1,295,384
<SECURITIES> 0
<RECEIVABLES> 211,614
<ALLOWANCES> 0
<INVENTORY> 1,664,952
<CURRENT-ASSETS> 3,254,802
<PP&E> 2,306,875
<DEPRECIATION> 1,552,832
<TOTAL-ASSETS> 4,029,012
<CURRENT-LIABILITIES> 1,414,749
<BONDS> 0
0
0
<COMMON> 92,575
<OTHER-SE> 2,347,872
<TOTAL-LIABILITY-AND-EQUITY> 4,029,012
<SALES> 22,084,742
<TOTAL-REVENUES> 22,084,742
<CGS> 17,403,821
<TOTAL-COSTS> 17,403,821
<OTHER-EXPENSES> 4,476,194
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,657
<INCOME-PRETAX> 224,981
<INCOME-TAX> 79,560
<INCOME-CONTINUING> 145,421
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,421
<EPS-PRIMARY> 0.157
<EPS-DILUTED> 0.157
</TABLE>
