<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 March 1, 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)
<TABLE>
<S> <C>
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
(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)
</TABLE>
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.
<TABLE>
Class Outstanding at April 4, 1997
<S> <C>
COMMON STOCK - $.10 PAR VALUE 922,222
NON VOTING COMMON STOCK - $.00 PAR VALUE 0
NON VOTING PREFERRED STOCK - $.00 PAR VALUE 0
</TABLE>
Exhibit Index on Page 10
(1) PAGE 1 OF 11 PAGES
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
-------------------- ----------------------
March 1, March 2, March 1, March 2,
1997 1996 1997 1996
------- ------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $7,048,867 $7,582,683 $21,008,687 $22,084,742
COST OF GOODS SOLD 5,517,995 5,906,488 $16,479,854 17,403,821
---------- ---------- ----------- -----------
Gross Margin 1,530,872 1,676,195 4,528,833 4,680,921
OPERATING EXPENSES 1,477,627 1,547,320 4,382,302 4,476,194
---------- ---------- ----------- -----------
Operating Income 53,245 128,875 146,531 204,727
OTHER INCOME (EXPENSE)
Interest income 10,086 5,186 31,129 17,348
Other income 14,076 13,964 41,704 39,060
Loss on sale of
assets -- (15,705) (31,095) (21,497)
Interest expense (18,235) (5,025) (55,262) (14,657)
---------- ---------- ----------- -----------
Income Before Income
Taxes 59,172 127,295 133,007 224,981
PROVISION FOR
INCOME TAXES 25,383 50,427 50,009 79,560
---------- ---------- ----------- -----------
NET INCOME 33,789 76,868 82,998 145,421
RETAINED EARNINGS:
Beginning 1,659,893 1,499,023 1,666,324 1,467,651
Cash dividends -- -- (55,479) (37,093)
Redemption of
common stock -- (24) (161) (112)
---------- ---------- ----------- -----------
Ending 1,693,682 1,575,867 1,693,682 1,575,867
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
PER SHARE:
Net income $0.037 $0.083 $0.090 $0.157
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Cash dividends $0.000 $0.000 $0.060 $0.040
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 922,222 927,011 923,352 926,760
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
See Notes to Financial Statements
(2) PAGES 2 OF 11 PAGES
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 1, June 1,
1997 1996
-------- -------
<S> <C> <C>
--A S S E T S--
CURRENT ASSETS:
Cash $ 599,875 $ 606,399
Securities purchased under agreement
to resell 457,434 371,150
Certificate of deposit 365,033 355,932
Accounts receivable 138,092 190,225
Refundable income taxes 27,568 --
Inventories 1,695,733 1,663,304
Prepaid expenses 23,358 55,264
---------- ----------
Total current assets 3,307,093 3,242,274
---------- ----------
PROPERTY - At cost:
Property 2,866,379 2,856,592
Less accumulated depreciation 1,759,727 1,614,687
---------- ----------
Property - Net 1,106,652 1,241,905
---------- ----------
OTHER ASSETS 17,106 18,491
---------- ----------
TOTAL ASSETS $4,430,851 $4,502,670
---------- ----------
---------- ----------
- -LIABILITIES AND STOCKHOLDERS' EQUITY- -
CURRENT LIABILITIES:
Accounts payable $ 762,139 $ 731,029
Note payable to principal stockholder 193,000 201,000
Obligations under capital leases, current portion 141,009 109,102
Accrued sales tax 73,882 170,433
Accrued income taxes -- 24,067
Other accrued liabilities 159,902 161,585
---------- ----------
Total Current Liabilities 1,329,932 1,397,216
---------- ----------
DEFERRED INCOME TAX LIABILITY 51,518 40,333
---------- ----------
DEFERRED INCOME 130,702 146,598
---------- ----------
OBLIGATIONS UNDER CAPITALIZED LEASE AGREEMENTS 363,735 388,646
---------- ----------
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 940,234 92,222 92,465
Additional paid-in capital 769,060 771,088
Retained earnings 1,693,682 1,666,324
---------- ----------
Total Stockholders' Equity 2,554,964 2,529,877
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $4,430,851 $4,502,670
---------- ----------
---------- ----------
</TABLE>
See Notes to Financial Statements
(3) PAGE 3 OF 11 PAGES
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMER, INC.
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
March 1, March 2,
CASH FLOWS FROM OPERATING ACTIVITIES 1997 1996
-------- --------
<S> <C> <C>
Net income $ 82,998 $145,421
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 232,425 120,228
Deferred income taxes 11,185 (2,000)
(Gain) loss on sale of property 31,095 22,075
Deferred income (15,896) (15,896)
Change in operating assets and liabilities:
Certificate of Deposit (9,101) (9,612)
Accounts receivable 52,133 26,909
Refundable income taxes (27,568) --
Inventories (32,429) (65,517)
Prepaid expenses 31,906 (2,228)
Accounts payable 31,110 109,843
Accrued sales tax (96,551) 10,051
Accrued income taxes (24,067) 15,471
Other accrued liabilities (1,684) 68,111
---------- ---------
Net Cash provided by (used in) operating activities 265,556 422,856
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property (37,550) (63,560)
Proceeds from disposal of property 9,000 4,648
Other 1,385 16,435
---------- ---------
Net cash used in investing activities (27,165) (42,477)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings (8,000) 3,000
Principal payments on obligations under capital leases (92,721) --
Cash dividends (55,479) (37,093)
Redemption of common stock (2,431) (1,691)
---------- ---------
Net cash provided by (used in) financing activities (158,631) (35,784)
---------- ---------
Net increase (decrease) in cash 79,760 344,595
Cash and cash equivalents at beginning of period 977,549 604,156
---------- ---------
Cash and cash equivalents at end of period $1,057,309 $948,751
---------- ---------
---------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 93,672 $ 68,929
---------- ---------
---------- ---------
Interest $ 55,262 $ 14,657
---------- ---------
---------- ---------
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 1996
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 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, which will make such decisions
annually at its quarterly meeting in January. At the Board Meeting in
January 1997, the Board voted to contribute $15,000 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.
(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 $457,434 at March 1, 1997, 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
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
-------------------- -----------------------
March 1, March 2, March 1, March 2,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $7,048,867 $7,582,683 $21,008,687 $22,084,742
% Sales Increase (Decrease) (7.04) 4.32 (4.87) 3.93
Gross Margin % 21.72 22.11 21.56 21.20
Operating and Administrative
Expense:
Amount 1,477,627 1,547,320 4,382,302 4,476,194
% of Sales 20.96 20.41 20.86 20.27
Net Income 33,789 76,868 82,998 145,421
</TABLE>
Overall, sales decreased 7.04% from sales for the same quarter last year.
This decrease is attributable to decreased sales at five of the Company's six
stores. Management believes that this decrease is primarily due to (1) the
opening of a new competitor at one location and (2) increased competition
experienced by two of the Company's other locations due to the presence of a
Wal-Mart Super Center in their area. Management believes that the store
location which was impacted by the opening of a new competitor (which
represented the most significant component of the overall sales decrease) may
regain a portion of its lost volume once the competitor has completed the
initial phase of heavy sales promotions typically associated with the opening of
a new location in the grocery store industry. The Company's prior experience
indicates that this promotional phase typically lasts for approximately one year
following the introduction of the new location. 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 and administrative expense increased as a percent of sales between
the quarter and year to date periods presented. 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, are the reasons
for the increased expense. Interest expense also increased as a result of the
recording of the capital leases. These increases in fixed charge components of
the Company's operating expenses have also resulted in an increase in the
Company's overall proportion of fixed expenses relative to total expenses, as
reflected in the results for both the quarter and year to date periods
presented.
Refundable income taxes at March 1, 1997 are a result of estimated taxes
paid exceeding the liability due. At June 1, 1996 a liability of $24,067 was
recorded.
(6) PAGE 6 OF 11 PAGES
<PAGE>
Inventories, up $84,111 from June 1, is consistent for this time of year.
At December 2, 1995 inventories were $1,763,656.
Accrued sales taxes have decreased due to the State of Georgia reducing the
sales tax rate on food by two percent, resulting in a smaller monthly liability
for the Company.
Income Taxes:
The provision for income taxes for the quarter ended March 1, 1997 was
$25,383 and $50,427 for the quarter ended March 2, 1996. 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.
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. No borrowings were
outstanding under either of these lines during the periods presented. Long-term
borrowing generally finances capital expansion.
Accounts payable consist of trade debt paid in the ordinary course of the
Company's business. Short-term borrowings consist of unsecured notes payable to
a principal stockholder. The notes to stockholder, in the sum of $193,000 and
$201,000 as of March 1, 1997 and as of June 1, 1996 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.
The ratio of current assets to current liabilities was 2.49 to 1 at the end
of the latest quarter, March 1, 1997 as compared to 2.30 to 1 on March 2, 1996
and 2.32 to 1 at the end of the fiscal year ended June 2, 1996. Cash and cash
equivalents constituted 31.97% of the total current assets at March 1, 1997 as
compared to 29.15% at March 2, 1996 and 30.15% at June 1, 1996.
During the quarter ended March 1, 1997 retained earnings decreased as a
result of the Company's net loss for the quarter.
(7) PAGE 7 OF 11 PAGES
<PAGE>
AMERICAN CONSUMERS, INC.
PART II OTHER INFORMATION
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.
EXH 27 - Financial Data Schedule
(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: 4/10/97 /s/ Michael A. Richardson
-------------------------------------
Michael A. Richardson
CHAIRMAN
(Principal Executive Officer)
Date: 4/10/97 /s/ Paul R. Cook
-------------------------------------
Paul R. Cook
EXECUTIVE VICE PRESIDENT - TREASURER
(Principal Financial Officer & Chief
Accounting Officer)
(9) PAGE 9 OF 11 PAGES
<PAGE>
AMERICAN CONSUMERS, INC.
NET INCOME PER COMMON SHARE
EXHIBIT 11
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
-------------------- -----------------------
March 1, March 2, March 1, March 2,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income for computing earnings
per common share $ 33,789 $ 76,868 $ 82,998 $145,421
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average number of
common shares outstanding
during each period 922,222 927,011 923,352 926,760
-------- -------- -------- --------
-------- -------- -------- --------
Net income per common share $ 0.037 $ 0.083 $ 0.090 $ 0.157
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
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 MARCH 1, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-01-1996
<PERIOD-END> MAR-01-1997
<CASH> 964,908
<SECURITIES> 457,434
<RECEIVABLES> 138,092
<ALLOWANCES> 0
<INVENTORY> 1,695,733
<CURRENT-ASSETS> 3,307,093
<PP&E> 2,866,379
<DEPRECIATION> 1,759,727
<TOTAL-ASSETS> 4,430,851
<CURRENT-LIABILITIES> 1,329,932
<BONDS> 0
0
0
<COMMON> 92,222
<OTHER-SE> 2,462,742
<TOTAL-LIABILITY-AND-EQUITY> 4,430,851
<SALES> 21,008,687
<TOTAL-REVENUES> 21,008,687
<CGS> 16,479,854
<TOTAL-COSTS> 16,479,854
<OTHER-EXPENSES> 4,382,302
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,262
<INCOME-PRETAX> 133,007
<INCOME-TAX> 50,009
<INCOME-CONTINUING> 82,998
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82,998
<EPS-PRIMARY> 0.090
<EPS-DILUTED> 0.090
</TABLE>
