<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 30, 1997
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
incorporation or organization) Identification Number)
P.O. Box 2328, 418A Battlefield Pkwy., Fort Oglethorpe, GA 30742
-----------------------------------------------------------------
(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, 1997
COMMON STOCK - $.10 PAR VALUE 921,507
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
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONSDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------------
<S> <C> <C>
AUGUST 30, AUGUST 31
1997 1996
------------ ------------
NET SALES........................................ $ 6,877,871 $ 7,249,545
COST OF GOODS SOLD............................... 5,389,213 5,678,257
------------ ------------
Gross Margin..................................... 1,488,658 1,571,288
OPERATING EXPENSES............................... 1,455,123 1,464,809
------------ ------------
Operating Income................................. 33,535 106,479
OTHER INCOME (EXPENSE)
Interest income................................. 6,851 11,159
Other income (expense).......................... 13,403 19,245
Interest expense................................ (15,345) (17,968)
------------ ------------
Income Before Income Taxes....................... 38,444 80,425
PROVISION (BENEFIT) FOR INCOME TAXES............. 11,095 26,824
------------ ------------
NET INCOME....................................... 27,349 53,601
RETAINED EARNINGS:
Beginning....................................... 1,719,552 1,666,324
Cash dividends.................................. -- --
Redemption of common stock...................... -- --
------------ ------------
Ending.......................................... 1,746,901 1,719,925
------------ ------------
------------ ------------
PER SHARE:
Net Income...................................... $ 0.030 $ 0.058
------------ ------------
------------ ------------
Cash dividends.................................. $ 0.000 $ 0.000
------------ ------------
------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING.... 921,507 924,653
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(2) PAGE 2 OF 11 PAGES
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 30, MAY 31,
1997 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................. $ 896,413 $ 669,594
Securities purchased under agreement to resell... 56,272 190,878
Certificate of deposit........................... 374,396 374,396
Accounts receivable.............................. 293,901 146,751
Inventories...................................... 1,732,803 1,737,809
Prepaid expenses................................. 18,962 21,286
Refundable income tax............................ 67,853 80,953
----------- -----------
Total current assets............................ 3,440,600 3,221,667
----------- -----------
PROPERTY--AT COST:
Property......................................... 2,876,851 2,873,014
Less accumulated depreciation.................... 1,873,403 1,803,230
----------- -----------
Property--net................................... 1,003,448 1,069,784
----------- -----------
OTHER ASSETS...................................... 10,000 10,000
----------- -----------
TOTAL ASSETS...................................... $ 4,454,048 $ 4,301,451
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................. $ 866,595 $ 718,216
Short-term borrowings............................ 131,000 129,000
Obligations under capital leases, current portion 148,210 144,926
Accrued sales tax................................ 125,729 113,308
Other accrued liabilities........................ 119,920 119,793
----------- -----------
Total Current Liabilities....................... 1,391,454 1,221,243
----------- -----------
DEFERRED INCOME TAX LIABILITY..................... 46,270 48,270
----------- -----------
DEFERRED INCOME................................... 120,104 125,403
----------- -----------
OBLIGATIONS UNDER CAPITALIZED LEASE AGREEMENTS.... 288,705 326,369
----------- -----------
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 921,507................ 92,150 92,150
Additional paid-in capital........................ 768,464 768,464
Retained earnings................................. 1,746,901 1,719,552
--------- ---------
Total Stockholders' Equity....................... 2,607,515 2,580,166
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY........... 4,454,048 4,301,451
--------- ---------
--------- ---------
</TABLE>
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
-----------------------
<S> <C> <C>
AUGUST 30, AUGUST 31,
1997 1996
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................... $ 27,349 $ 53,601
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization...................... 70,172 75,468
Deferred income taxes.............................. (2,000) 12,186
Loss on sale of property and equipment............. -- 32,809
Deferred income.................................... (5,299) (5,299)
Change in operating assets and liabilities:
Accounts receivable............................... (147,150) 50,178
Inventories....................................... 5,006 13,370
Prepaid expenses.................................. 2,324 30,657
Refundable income taxes........................... 13,100 --
Accounts payable.................................. 148,379 130,394
Accrued sales tax................................. 12,421 (70,136)
Accrued income taxes.............................. -- 3,257
Other accrued liabilities......................... 4,127 23,518
----------- ----------
Net cash provided by operating activities............ 128,429 350,003
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property................................ (3,836) (2,123)
Proceeds from disposal of property and equipment.... -- 7,000
Other............................................... -- 176
----------- ----------
Net cash provided by (used in) investing activities. (3,836) 5,053
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings..... 2,000 (21,000)
Principal payments on obligations under capital leases (34,380) (28,516)
----------- ----------
Net cash used in financing activities............... (32,380) (49,516)
----------- ----------
Net increase in cash.................................. 92,213 305,540
Cash and cash equivalents at beginning of period...... 860,472 977,549
----------- ----------
Cash and cash equivalents at end of period............ 952,685 1,283,089
----------- ----------
----------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes........................................ $ 994 $ 11,382
--------- ----------
--------- ----------
Interest............................................ $ 15,344 $ 17,968
--------- ----------
--------- ----------
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
<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 1997
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. 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 $15,000 to the plan in 1997 and $20,000 in 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 the U.S. Government for 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 $56,272 at
August 30, 1997, and $190,878 at May 31, 1997.
(5) PAGE 5 OF 11 PAGES
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------------
<S> <C> <C>
AUGUST 30, AUGUST 31,
1997 1996
------------ ------------
Sales............................................... $ 6,877,871 $ 7,249,545
% Sales Increase (Decrease)......................... -5.13 -0.48
Gross Margin %...................................... 21.64 21.67
Operating and Administrative Expense:
Amount............................................. $ 1,488,658 $ 1,464,809
% of Sales......................................... 21.64 20.21
Net Income.......................................... $ 27,349 $ 53,601
</TABLE>
Overall, sales decreased 5.13% from sales for the same quarter last year.
This decrease is due primarily to decreased sales at one of the Company's six
locations, where a competitor opened a store in September of 1996 within
three miles of the Company's store. Sales at the Company's other five stores
were down less than one percent. Management is seeking to regain market share
through sales promotions and increased advertising. In addition to the
installation of scanning equipment, which has improved 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 containing the expansion of its labor costs. The Company will
also continue to explore other means of improving results, including
consideration of the possible acquisition of additional store locations in
areas where some of the Company's larger competitors have not yet established
a significant presence. At present, the Company has no definite plans for any
such acquisition.
Operating expenses increased from 20.21% of sales to 21.64% of sales due
primarily to the reduction in sales. The dollar value of the increase was only
$23,849.
Interest income is down from $11,159 to $6,851 because of the reduction in
the Company's cash flow, and subsequent reduction in the utilization of the
Company's cash management system.
Accounts receivable are higher than normal at $293,901 at August 30, 1997,
compared to $146,751 at year end May 31, 1997, due to a larger receivable from
our ad group and an accounting error in which a check was issued to the wrong
vendor and not cleared up until the first week of September.
Accounts payable increased from $718,216 to $866,595 or $148,379. This
increase is normal at the end of August. Last year accounts payable increased
$130,394 between year end and August 31, 1996.
Income Taxes:
The provision for income taxes for the quarter ended August 30, 1997 was
$11,095 and was $26,824 at August 31, 1996. The provision for income taxes
does not vary significantly from the statutory rate of 34%.
(6) PAGE 6 OF 11 PAGES
<PAGE>
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 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 30, 1997 and August 31, 1996 consist
of unsecured notes payable to a principal stockholder. Notes to the
stockholder, in the amount of $131,000 and $129,000 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 2.47 to 1 at the end
of the latest quarter, August 30, 1997, as compared to 2.32 to 1 on August 31,
1996 and 2.64 to 1 at the end of the fiscal year ended May 31, 1997. Cash and
cash equivalents constituted 27.69% of the total current assets at August 30,
1997 as compared to 37.15% at August 31, 1996 and 26.71% at May 31, 1997. The
activity is detailed in the Condensed Statements of Cash Flows on page four.
During the quarter ended August 30, 1997 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 18, 1997,
at which shareholders were asked to vote on the election of directors for the
fiscal year ending in 1998. 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:
<TABLE>
<CAPTION>
VOTES VOTES BROKER
TOTAL CAST CAST VOTES NON
NOMINEE SHARES FOR AGAINST WITHHELD VOTES
- --------------------------------------------------- ---------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Michael A. Richardson.............................. 664,394.2 663,074.2 1,320.0 252,112.8 4,480.0
Paul R. Cook....................................... 664,394.2 663,074.2 1,320.0 252,112.8 4,480.0
Virgil E. Bishop................................... 664,394.2 662,854.2 1,540.0 252,112.8 4.480.0
John P. Price...................................... 664,394.2 663,074.2 1,320.0 252,112.8 4,480.0
Thomas L. Richardson............................... 664,394.2 663,074.2 1,320.0 252,112.8 4,480.0
Jerome P. Sims, Sr................................. 664,394.2 663,074.2 1,320.0 252,112.8 4,480.0
Herbert S. Willbanks............................... 664,394.2 662,854.2 1,540.0 252,112.8 4,480.0
</TABLE>
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.
(27) Financial Data Schedule (EDGAR filing only)
(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: 10/7/97 /s/ Michael A. Richardson
-------------------------------------
Michael A. Richardson
CHAIRMAN
(Principal Executive Officer)
Date: 10/7/97 /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
(11) Statement re: computation of per share earnings
(27) Financial Data Schedule
(10)
<PAGE>
AMERICAN CONSUMERS, INC.
NET INCOME PER COMMON SHARE
EXHIBIT 11
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------
<S> <C> <C>
AUGUST 30, AUGUST 31,
1997 1996
----------- -----------
Net income for computing earnings per common share... $ 27,349 $ 53,601
----------- -----------
----------- -----------
Weighted average number of common shares
outstanding during each period..................... 921,507 924,653
----------- -----------
----------- -----------
Net income per common share.......................... $ 0.030 $ 0.058
----------- -----------
----------- -----------
</TABLE>
(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 30,1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> AUG-30-1997
<CASH> 1,270,809
<SECURITIES> 56,272
<RECEIVABLES> 293,901
<ALLOWANCES> 0
<INVENTORY> 1,732,803
<CURRENT-ASSETS> 3,440,600
<PP&E> 2,876,851
<DEPRECIATION> 1,873,403
<TOTAL-ASSETS> 4,454,048
<CURRENT-LIABILITIES> 1,391,454
<BONDS> 0
0
0
<COMMON> 92,150
<OTHER-SE> 2,515,365
<TOTAL-LIABILITY-AND-EQUITY> 4,454,048
<SALES> 6,877,871
<TOTAL-REVENUES> 6,877,871
<CGS> 5,389,213
<TOTAL-COSTS> 5,389,213
<OTHER-EXPENSES> 1,455,123
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,345
<INCOME-PRETAX> 38,444
<INCOME-TAX> 11,095
<INCOME-CONTINUING> 27,349
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,349
<EPS-PRIMARY> 0.030
<EPS-DILUTED> 0.030
</TABLE>
