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 28, 1999 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
(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 8, 1999
COMMON STOCK - $.10 PAR VALUE 841,634
NON VOTING COMMON STOCK - $.00 PAR VALUE 0
NON VOTING PREFERRED STOCK - $.00 PAR VALUE 0
(1)
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONSDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
THIRTEEN WEEKS ENDED
-------------------------------
August 28, August 29,
1999 1998
----------- -----------
NET SALES $ 5,958,163 $ 6,639,544
COST OF GOODS SOLD 4,567,914 5,250,300
----------- -----------
Gross Margin 1,390,249 1,389,244
OPERATING EXPENSES 1,441,679 1,455,250
----------- -----------
Operating Loss (51,430) (66,006)
OTHER INCOME (EXPENSE)
Interest income 4,620 7,671
Other income 17,382 13,937
Interest expense (7,798) (12,759)
----------- -----------
Loss Before Income Tax Benefit (37,226) (57,157)
BENEFIT FOR INCOME TAXES (14,887) (24,506)
----------- -----------
NET LOSS (22,339) (32,651)
RETAINED EARNINGS:
Beginning 1,744,798 1,803,098
----------- -----------
Redemption of common stock (1,898) -- -- --
Ending 1,720,561 1,770,447
=========== ===========
PER SHARE:
Net income ($ 0.026) ($ 0.037)
=========== ===========
Cash dividends $ 0.000 $ 0.000
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 844,042 890,597
=========== ===========
See Notes to Financial Statements
(2)
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
August 28, May 29,
1999 1999
---------- ----------
<S> <C> <C>
--A S S E T S--
CURRENT ASSETS:
Cash $1,041,241 $ 917,438
Certificate of deposit 414,520 414,520
Accounts receivable 138,776 149,521
Inventories 1,782,468 1,860,037
Prepaid expenses 28,884 13,078
Refundable income tax 43,938 28,119
---------- ----------
Total current assets 3,449,227 3,382,713
========== ==========
PROPERTY - At cost:
Property 2,944,090 2,938,099
Less accumulated depreciation 2,342,610 2,287,484
---------- ----------
Property - Net 601,480 650,615
---------- ----------
TOTAL ASSETS $4,050,707 $4,033,328
========== ==========
- -LIABILITIES AND STOCKHOLDERS' EQUITY- -
CURRENT LIABILITIES:
Accounts payable $ 566,491 $ 653,117
Short-term borrowings 519,970 306,955
Obligations under capital leases, current portion 120,015 117,414
Accrued sales tax 53,595 96,852
Other accrued liabilities 130,440 106,219
---------- ----------
Total Current Liabilities 1,390,511 1,280,557
---------- ----------
DEFERRED INCOME TAX LIABILITY 39,335 40,335
---------- ----------
DEFERRED INCOME 77,215 86,897
---------- ----------
OBLIGATIONS UNDER CAPITALIZED LEASE AGREEMENTS 37,066 67,898
---------- ----------
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 no par value; no shares issued -- --
Common stock; authorized 5,000,000 shares
of $.10 par value; issued 841,634 and 870,355 84,163 87,036
Additional paid-in capital 701,856 725,807
Retained earnings 1,720,561 1,744,798
---------- ----------
Total Stockholders' Equity 2,506,580 2,557,641
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 4,050,707 4,033,328
========== ==========
</TABLE>
See Notes to Financial Statements
(3)
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONSENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------------
August 28, August 29,
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ($ 22,339) ($ 32,651)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 55,135 67,032
Deferred income taxes (1,000) (1,000)
Deferred income (9,683) (5,299)
Change in operating assets and liabilities:
Accounts receivable 10,745 (7,473)
Inventories 77,569 40,642
Prepaid expenses (15,206) (4,119)
Refundable income taxes (15,819) (22,500)
Accounts payable (86,626) 45,893
Accrued sales tax (43,257) (34,679)
Accrued income taxes -- (19,512)
Other accrued liabilities 24,221 15,966
----------- -----------
Net Cash provided by (used in) operating activities (26,260) 42,300
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property (6,000) (2,904)
Net cash used in investing activities (6,000) (2,904)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings 213,015 (10,776)
Principal payments on obligations under capital leases (28,231) (37,809)
-----------
Redemption of common stock (28,721) --
-----------
Net cash provided by (used in) financing activities 156,063 (48,585)
----------- -----------
Net increase (decrease) in cash 123,803 (9,189)
Cash and cash equivalents at beginning of period 917,438 945,222
----------- -----------
Cash and cash equivalents at end of period 1,041,241 936,033
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period
for:
Income taxes $ 0 $ 19,512
=========== ===========
Interest $ 7,798 $ 12,759
=========== ===========
</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 1999
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 $150,000 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 $7,500
to the plan in 1999 and $10,000 in 1998.
None of the Company's employees are represented by a union.
(3) The Company invests excess funds in the U.S. Government or U.S. Government
Agency securities which are purchased under an agreement to resell (reverse
re- purchase 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. No amounts were
outstanding under the agreement at August 28, 1999 or May 29, 1999.
(5)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED
----------------------------
August 28, August 29,
1999 1998
----------- -----------
Sales $ 5,958,163 $ 6,639,544
% Sales Decrease -10.26 -3.47
Gross Margin % 23.33 20.92
Operating and Administrative Expense:
Amount $ 1,441,679 $ 1,455,250
% of Sales 24.20 21.92
Net Loss ($ 22,339) ($ 32,651)
The decrease in sales of 10.26% includes sales decreases at all of the
Company's locations. Competition has increased pressure on the Company's market
share, sales and profits, and is threatening the profitability of the Company.
In an effort to help offset the loss in sales, the Company began opening on
Sunday in mid-September. The effects of this decision on overall profitability
will be more apparent at the end of the November quarter. Management believes
that competitive pressures on the Company will continue to increase over time as
a result of competitors opening more new stores in the Company's trade area. The
majority of the sales decrease is directly attributable to sales losses in two
locations where competition has opened new stores. Management is continuously
seeking to improve the gross margin and increase profitability by obtaining the
lowest cost for the Company's inventory. The gross margin has been improving
since the quarter ended August 29, 1998 due to steps taken by management in the
area of pricing. The gross margin of the quarter ended February 27, 1999 was
23.03%
Operating expenses increased from 21.92% of sales to 24.20% of sales due
primarily to the reduction in sales. The dollar value of operating expenses
actually decreased $13,571.
Interest expense decreased because of the reduction in the capitalized
lease obligation of the Company.
The benefit for income taxes for the quarter ended August 28, 1999 was
$22,339 and was $32,651 at August 29, 1998. The benefit for income taxes does
not vary significantly from the statutory rate of 34%.
Inflation:
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 Company's goods. When
the Company is forced to raise overall prices of its goods, the Company attempts
to protect its market share through competitive pricing strategies which
emphasize weekly advertised specials.
(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. The line of credit in the amount of $300,000 which has
been available from the Company's principal inventory supplier has been
terminated by mutual agreement, with the supplier's assurance that similar
financing would be available if required by the Company in the future. Long-term
borrowing generally finances capital expansion.
Short-term borrowings consist of notes payable to the following:
8/28/99 5/29/99 8/29/98
-------- -------- --------
Michael and Diana Richardson $ 99,950 $ 97,972 $146,270
Richardson Testamentary Trust 53,237 52,194 51,899
Line of Credit - Wachovia Bank 366,783 156,790 0
-------- -------- --------
Total $519,971 $306,955 $198,169
======== ======== ========
Notes to Michael and Diana Richardson and to the Richardson Trust are
unsecured, 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 2.48 to 1 at the end
of the latest quarter, August 28, 1999, as compared to 2.66 to 1 on August 29,
1998 and 2.64 to 1 at the end of the fiscal year ended May 29, 1999. Cash and
cash equivalents constituted 42.21% of the total current assets at August 28,
1999 as compared to 39.80% at August 29, 1998 and 39.38% at May 29, 1999. The
activity is detailed in the Condensed Statements of Cash Flows on page four.
During the quarter ended August 28, 1999 retained earnings decreased as a
result of the Company's net loss for the quarter.
Year 2000
The Year 2000 issue results from computer programs being written using two
digits rather than four to define the applicable year. As the year 2000
approaches, systems using such programs may be unable to accurately process
certain date-based information. To the extent that the Company's software
applications contain source code that is unable to interpret appropriately the
upcoming calendar year 2000 and beyond, some level of modification or
replacement of such applications will be necessary to avoid system failures and
the temporary inability to process transactions or engage in other normal
business activities.
During fiscal 1998, the Company began evaluating both its information
technology systems and other systems and equipment in order to identify and
adjust date sensitive systems for Year 2000 compliance. The Company's assessment
in its information technology ("IT") area is approximately 85% complete and its
assessment in the non-information technology ("Non-IT") area is approximately
80% complete. The Company currently expects to complete its primary remediation
efforts (including acquisition and installation of any necessary new equipment
and
(7)
<PAGE>
software) by November 15, 1999, leaving approximately 45 days for testing and
verification of any new systems prior to January 1, 2000.
The total operating expenditures to address the Company's Year 2000 issues
are estimated to be approximately $12,000. Approximately $7,000 of these costs
have been incurred through the end of the quarter ended August 28, 1999. In
addition, the Company expects to incur additional capital expenditures of
approximately $24,000 for new equipment during the second quarter of fiscal
2000.
The Company's IT issues fall into two principal areas: compliance of the
Company's corporate accounting and other record-keeping hardware and software
and compliance of the electronic scanning equipment and related software
utilized for inventory control and the processing of retail customer
transactions in each of the Company's six grocery stores. The Company has
received documentation from the provider of the software utilized in the
Company's corporate accounting and record-keeping functions, certifying the Year
2000 compliant status of all of such software. The Company anticipates replacing
all of the hardware employed in such functions with new hardware that is
certified as Year 2000 compliant by no later than November 15, 1999, at an
estimated cost not to exceed $18,000. Under the terms of the Company's lease of
its electronic scanning equipment form Fleming Companies, Inc., Fleming will be
responsible for testing such equipment for Year 2000 compliance and making any
necessary modifications or replacements. Based on its discussions with Fleming,
the Company also anticipates that this process will be completed by no later
than November 15, 1999.
The risks of Year 2000 issues from a Non-IT standpoint are principally as
follows: electrical outages resulting in breakdown of point of sales systems,
lighting and refrigeration equipment and the loss of utility service. In
addition, certain store equipment may have imbedded chips or microprocessors
that are not Year 2000 compliant. The Company is in the process of identifying
such equipment and either replacing the affected chips or microprocessors or
purchasing new equipment that is compliant. The events noted above could
severely affect Company operations. The Company plans to mitigate the potential
effect of such issues by preparing a contigency plan as discussed below.
Significant risk also arises out of the possible failure of vendors to
respond to Year 2000 issues. The Company's only significant vendor is its
primary inventory supplier, Fleming Companies, Inc. The Company has had
discussions with representatives of Fleming to determine the state of its
readiness and to review its Year 2000 contigency plans. The Company believes
that Fleming is making adequate progress toward Year 2000 compliance for all of
its systems that could impact on Fleming's relationship with the Company, and
does not expect that the Company's business will suffer any material adverse
effects as a result of non-compliance by any of Fleming's systems.
With respect to contigencies, a program is being developed to identify the
additional resources that will be necessary to fully run the Company when and if
it is affected by the foregoing risk factors. During the first six months of
fiscal 2000, the Company will continue to expand its contigency plans and
detailed procedures in order to mitigate the effects of the Year 2000 issues
that might affect the Company.
The Company believes that it has allocated sufficient resources to resolve
all significant Year 2000 issues in a timely manner. Accordingly, the Company
plans to be fully Year 2000 complaint (including the completion of all necessary
testing procedures) by November 30, 1999.
(8)
<PAGE>
Forward-Looking Statements
Information provided by the Company, including written or oral statements
made by its representatives, may contain "forward-looking information" as
defined in Section 21E of the Securities Exchange Act of 1934, as amended. All
statements, other than statements of historical facts, which addresses
activities, events or developments that the Company expects or anticipates will
or may occur in the future, including such things as expansion and growth of the
Company's business, the effects of future competition, future capital
expenditures and the Company's business strategy, are forward-looking
statements. In reviewing such information it should be kept in mind that actual
results may differ materially from those projected or suggested in such
forward-looking statements. This forward-looking information is based on various
factors and was derived utilizing numerous assumptions. Many of these factors
have previously been identified in filings of statements made by or on behalf of
the Company, including filings with the Securities and Exchange Commission of
Forms 10-Q, 10-K and 8-K. Important assumptions and other important factors that
could cause actual results to differ materially from those set forth in the
forward-looking statements include: changes in the general economy or in the
Company's primary markets, changes in consumer spending, competitive factors,
the nature and extent of continued consolidation in the grocery store industry,
changes in the rate of inflation, changes in state or federal legislation or
regulation, adverse determinations with respect to any litigation or other
claims, inability to develop new stores or complete remodels as rapidly as
planned, stability of product costs, supply or quality control problems with the
Company's vendors, issues and uncertainties related to Year 2000, and other
issues detailed from time-to-time in the Company's filings with the Securities
and Exchange Commission.
[This space intentionally left blank]
(9)
<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 16, 1999,
at which shareholders were asked to vote on the election of directors for the
fiscal year ending in 2000. 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>
TOTAL VOTES VOTES BROKER
SHARES CAST CAST VOTES NON
NOMINEE VOTED FOR AGAINST WITHHELD VOTES
------- ----- --- ------- -------- -----
<S> <C> <C> <C> <C> <C>
Michael A. Richardson 616,466.9 614,046.9 2,420.0 225,826.9 3,656.8
Paul R. Cook 616,466.9 616,466.9 -- -- -- 225,826.9 3,656.8
Virgil E. Bishop 616,466.9 616,466.9 -- -- -- 225,826.9 3,656.8
John P. Price 616,466.9 616,020.3 446.6 225,826.9 3,656.8
Thomas L. Richardson 616,466.9 616,020.3 446.6 225,826.9 3,656.8
Jerome P. Sims, Sr. 616,466.9 616,020.3 446.6 225,826.9 3,656.8
Andrew V. Douglas 616,466.9 616,466.9 -- -- -- 225,826.9 3,656.8
</TABLE>
Item 6 EXHIBITS AND REPORTS OF FORM 8-K
(a) The following exhibits are filed as a part of the report.
(10.1) Lease Agreement for the Company's Executive Offices.
(11) Statement re: computation of per share earnings.
(27) Financial Data Schedule (EDGAR version only)
(b) During the most recent quarter, the Company has not filed a report on
Form 8-K.
(10)
<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)
/s/ Michael A. Richardson/
Date: 10/8/99 -------------------------------------------------
Michael A. Richardson
CHAIRMAN
(Principal Executive Officer)
/s/ Paul R. Cook
Date: 10/8/99 -------------------------------------------------
Paul R. Cook
EXECUTIVE VICE PRESIDENT - TREASURER
(Principal Financial Officer & Chief Accounting
Officer)
(11)
Commercial Lease
This lease is made between David R. Kelley, herein called Lessor, and
American Consumers, INC. d/b/a/ Shop Rite, herein called Lessee.
Lessee hereby offers to lease from lessor the premises situated in the City
of Form Oglethorpe, County of Catoosa, State of Georgia, described as 418 A
Battlefield Parkway, Fort Oglethorpe, GA 30742, upon the following TERMS and
CONDITIONS:
1. Term and Rent. Lessor demises the above premises for a term of three (3)
years, commencing December 1, 1999 and terminating on November 30, 2002 or
sooner as provided herein at the annual rental of Ten Thousand One Hundred
Seventy Six Dollars ($ 10,176.00), payable in equal installments in advance
on the first day of each month for that month's rental, during the term of
this lease. All rental payments shall be made to Lessor, at P O Box 71545
Chattanooga, Tennessee 37407 (Unless notified in writing of an address
change).
2. Use. Lessee shall use and occupy the premises for corporate offices. The
premises shall be used for no other purpose. Lessor represents that the
premises may lawfully be used for such purpose.
3. Care and Maintenance of Premises. Lessee acknowledges that the premises are
in good order and repair, unless otherwise indicated herein. Lessee shall
at his own expense and at all times, maintain the premises in good and safe
condition, including plate glass, electrical wiring, plumbing, heating
installations, and any other system or equipment on the premises and shall
surrender the same, at termination hereof, in as good condition as
received, normal ware and tear excepted. Lessee shall be responsible for
all repairs required, excepting the roof, exterior walls, and structural
foundations, which shall be maintained by Lessor.
4. Alterations. Lessee shall not, without first obtaining the written consent
of Lessor, make any alterations, additions, or improvements, in, to or
about the premises.
5. Ordinances and Statutes. Lessee shall comply at all statutes, ordinances
and requirements of all municipal, state and federal authorities now in
force, or which may hereafter be in force, pertaining to the premises,
occasioned by or affecting the use thereof by Lessee.
6. Assignment and Subletting. Lessee shall not assign this lease or sublet any
portion of the premises without prior written consent of the Lessor, which
shall not be unreasonably withheld. Any such assignment or subletting
without consent shall be void and, at the option of the Lessor, may
terminate this lease.
7. Utilities. All applications and connections for necessary utility services
on the demised premises shall be made in the name of Lessee only, and
Lessee shall be solely liable for utility charges as they become due,
including those for gas, electricity, and telephone service.
8. Entry and Inspection. Lessee shall permit Lessor or Lessor's agent to enter
upon the premises at reasonable times upon reasonable notice, for the
purpose of inspecting the same, and will permit Lessor at any time within
sixty (60) days prior to expiration of this lease, to place upon the
premises any usual "To Let" or "For Lease" signs, and permit persons
desiring to lease the same to inspect the premises thereafter.
9. Indemnification of Lessor. Lessor shall not be for any damage or injury to
Lessee, or any other person, or to any property, occurring on the demised
premises or any part thereof, and Lessee agrees to hold Lessor harmless
from any claim for damages, no matter how caused.
10. Insurance. Lessee, at his expense, shall maintain public liability
insurance including bodily injury and property damage insuring Lessee for a
minimum of One Million Dollars ($1,000,000.00 U.S. Currency). Proof of such
insurance shall be furnished to the Lessor at the time this lease is
executed.
11. Eminent Domain. If the premises or any part thereof or any estate therein,
or any other part of the building materially affecting the Lessee's use of
the premises, shall be taken by eminent domain, this lease shall terminate
on the date when title vests pursuant to such taking. The rent, and any
additional rent, shall be apportioned as of the termination date, and any
rent paid for any period beyond that date shall be repaid to Lessee. Lessee
shall not be entitled to any part of the award for such taking or any
payment in lieu thereof, but Lessee may file a claim for any taking of
fixtures and improvements owned by Lessee, and for moving expenses.
12. Destruction of Premises. In the event of a partial destruction of the
premises during the term hereof, from any cause, Lessor shall forthwith
repair same, provided that such repairs can be made within sixty (60) days
under existing governmental laws and regulations, but such partial
destruction shall not terminate this lease, except that Lessee shall be
entitled to a proportionate reduction of rent while such repairs are being
made, based upon the extent to which the making of such repairs shall
interfere with the business of Lessee on the premises. If such repairs
cannot be made within said sixty (60) days, Lessor, at his option, may make
the same within a reasonable time, this lease continuing in effect with the
rent proportionately abated as aforesaid, and in the event Lessor shall not
elect to make such repairs which cannot be made within sixty
<PAGE>
(60) days, this lease may be terminated at the option of either party. In
the event that the building in which the demised premises may be situated
is destroyed to an extent of not less than one-third of the replacement
costs thereof, Lessor may elect to terminate this lease whether the demised
premises injured or not. A total destruction of the building in which the
premises may be situated shall terminate this lease.
13. Lessor's Remedies on Default. If Lessee defaults in the payment of rent, or
any additional rent, or defaults in the performance of any of the other
covenants or conditions hereof, Lessor may give Lessee notice of such
default and if Lessee does not cure any such default within ten (10) days
after giving such notice (or if such other default is of such a nature that
it cannot be completely cured within such period, if Lessee does not
commence such curing within such ten (10) days and thereafter proceed with
reasonable diligence and in good faith to cure such default), then Lessor
may terminate this lease on not less than ten (10) days notice to Lessee.
On the date specified in such notice the term of this lease shall
terminate, and Lessee shall then quit and surrender the premises to Lessor,
but Lessee shall remain liable as hereinafter provided. If this lease shall
have been terminated by Lessor, Lessor may at any time thereafter resume
possession of the premises by any lawful means and remove Lessee or other
occupants and their effect. No failure to enforce any term shall be deemed
a waiver.
14. Attorney's Fees. In case suit should be brought for recovery of the
premises, or for any sum due hereunder, or because of any act which may
arise out of the possession of the premises by either party, the prevailing
party shall be entitled to all costs incurred in connection with such
action, including a reasonable attorney's fee.
15. Notices. Any notice which either party may or is required to give, shall be
given by mailing the same, postage prepaid, to Lessee at the premises, or
Lessor at the address shown below, or at such other place as my be
designated by the parties from time to time.
16. Heirs, Assigns, Successors. This lease is binding upon and inures to the
benefit of the heirs, assigns, and successors in interest to the parties.
17. Option to Renew. Provided that Lessee is not in default in the performance
of this lease, Lessee shall have the option to renew the lease for an
addition term of twelve (12) months commencing at the expiration of the
initial lease term. All of the terms and conditions of the lease shall
apply during the renewal term except that the monthly rent shall be the sum
of Eight Hundred Eighty Dollars ($880.00). The option shall be exercised by
written notice given to Lessor not less than thirty (30) days prior to the
expiration of the initial lease term. If notice is not given in the manner
provided herein within the time specified, this option shall expire.
18. Subordination. This lease is and shall be subordinated to all existing and
future liens and encumbrances against the property.
19. Entire Agreement. The foregoing construes the entire agreement between the
parties and may be modified only by writing signed by both parties.
Signed this 30 day of Sept , 1999.
American Consumers, Inc. David R. Kelley
---------------------------------- ----------------------------------
By Lessee: By Lessor:
/s/ Michael A. Richardson /s/ David R. Kelley
---------------------------------- -----------------------------------
AMERICAN CONSUMERS, INC.
NET INCOME PER COMMON SHARE
EXHIBIT 11
THIRTEEN WEEKS ENDED
--------------------------
August 28, August 29,
1999 1998
---------- ----------
Net loss for computing loss
per common share ($ 22,339) ($ 32,651)
========== =========
Weighted average number of common
shares outstanding during each period 844,042 890,597
========== =========
Net income per common share ($ 0.026) ($ 0.037)
========== =========
<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
AUGUST 28, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-29-1999
<PERIOD-END> AUG-28-1999
<CASH> 1,455,761
<SECURITIES> 0
<RECEIVABLES> 138,776
<ALLOWANCES> 0
<INVENTORY> 1,782,468
<CURRENT-ASSETS> 3,449,227
<PP&E> 2,944,090
<DEPRECIATION> 2,342,610
<TOTAL-ASSETS> 4,050,707
<CURRENT-LIABILITIES> 1,390,511
<BONDS> 0
0
0
<COMMON> 84,163
<OTHER-SE> 2,422,417
<TOTAL-LIABILITY-AND-EQUITY> 4,050,707
<SALES> 5,958,163
<TOTAL-REVENUES> 5,958,163
<CGS> 4,567,914
<TOTAL-COSTS> 4,567,914
<OTHER-EXPENSES> 1,441,679
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,798
<INCOME-PRETAX> (37,226)
<INCOME-TAX> (14,887)
<INCOME-CONTINUING> (22,339)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,339)
<EPS-BASIC> (0.026)
<EPS-DILUTED> (0.026)
</TABLE>
