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 September 2, 2000
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, 418 Alamar Street, Fort Oglethorpe, GA 30742
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (706) 861-3347
418A Battlefield Pkwy., Fort Oglethorpe, GA 30742
(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 10, 2000
COMMON STOCK - $.10 PAR VALUE 834,514
NON VOTING COMMON STOCK - $.00 PAR VALUE --
NON VOTING PREFERRED STOCK - $.00 PAR VALUE --
1
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
THIRTEEN WEEKS ENDED
--------------------
September 2, August 28,
2000 1999
----------- -----------
NET SALES $ 6,400,096 $ 5,958,163
COST OF GOODS SOLD 4,892,740 4,567,914
----------- -----------
Gross Margin 1,507,356 1,390,249
OPERATING EXPENSES 1,521,012 1,441,679
----------- -----------
Operating Loss (13,656) (51,430)
OTHER INCOME (EXPENSE)
Interest income 6,711 4,620
Other income 18,570 17,382
Interest expense (5,776) (7,798)
----------- -----------
Income (Loss) Before Income Tax (Benefit) 5,849 (37,226)
INCOME TAXES (BENEFIT) 2,649 (14,887)
----------- -----------
NET INCOME (LOSS) 3,200 (22,339)
RETAINED EARNINGS:
Beginning 1,691,965 1,744,798
Redemption of common stock -- (1,898)
----------- -----------
Ending $ 1,695,165 $ 1,720,561
=========== ===========
PER SHARE:
Net income (loss) $0.004 ($0.026)
=========== ===========
Cash dividends $0.000 $0.000
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 835,618 844,042
=========== ===========
See Notes to Financial Statements
2
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 2, June 3,
2000 2000
----------- -----------
--A S S E T S--
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 1,266,095 $ 852,652
Certificate of deposit 434,887 434,887
Accounts receivable 100,133 140,593
Inventories 1,607,561 1,659,588
Prepaid expenses 22,217 53,473
----------- -----------
Total current assets 3,430,893 3,141,193
----------- -----------
PROPERTY AND EQUIPMENT - at cost
Leasehold improvements 201,253 201,253
Furniture, fixtures and equipment 2,755,840 2,755,604
----------- -----------
2,957,093 2,956,857
Less accumulated depreciation (2,477,571) (2,424,512)
----------- -----------
479,522 532,345
----------- -----------
TOTAL ASSETS $ 3,910,415 $ 3,673,538
=========== ===========
--LIABILITIES AND STOCKHOLDERS' EQUITY--
CURRENT LIABILITIES
Accounts payable $ 704,837 $ 696,560
Short-term borrowings 397,755 128,675
Obligations under capital leases, current portion 36,742 63,321
Accrued sales tax 83,938 117,954
Federal and state income taxes 2,944 3,706
Other 140,527 112,647
----------- -----------
Total current liabilities 1,366,743 1,122,863
----------- -----------
DEFERRED INCOME TAXES 11,586 12,587
----------- -----------
OBLIGATIONS UNDER CAPITAL LEASE AGREEMENTS -- 3,904
----------- -----------
DEFERRED INCOME 56,520 61,818
----------- -----------
STOCKHOLDERS' EQUITY
Nonvoting preferred stock - authorized 5,000,000
shares of no par value; no shares issued -- --
Nonvoting common stock - authorized 5,000,000
shares of no par value; no shares issued -- --
Common stock - $.10 par value; authorized 5,000,000
shares; shares issued of 835,618 in both periods presented 83,562 83,562
Additional paid-in capital 696,839 696,839
Retained earnings 1,695,165 1,691,965
----------- -----------
Total Stockholders' Equity 2,475,566 2,472,366
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,910,415 $ 3,673,538
=========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
FINANCIAL INFORMATION
AMERICAN CONSUMERS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------
September 2, August 28,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 3,200 $ (22,339)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 53,059 55,135
Deferred income taxes (1,001) (1,000)
Deferred income (5,298) (9,683)
Change in operating assets and liabilities:
Accounts receivable 40,460 10,745
Inventories 52,027 77,569
Prepaid expenses 31,256 (15,206)
Refundable income taxes -- (15,819)
Accounts payable 8,277 (86,626)
Accrued sales tax (34,016) (43,257)
Accrued income taxes (762) --
Other accrued liabilities 27,880 24,221
----------- -----------
Net cash provided by (used in) operating activities 175,082 (26,260)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property (236) (6,000)
----------- -----------
Net cash used in investing activities (236) (6,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in short-term borrowings 269,080 213,015
Principal payments on obligations under capital leases (30,483) (28,231)
Redemption of common stock -- (28,721)
----------- -----------
Net cash provided by financing activities 238,597 156,063
----------- -----------
Net increase in cash 413,443 123,803
Cash and cash equivalents at beginning of period 852,652 917,438
----------- -----------
Cash and cash equivalents at end of period $ 1,266,095 $ 1,041,241
=========== ===========
</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 fianancial statements should be read in conjunction with the
notes to the financial statements presented in the Corporation's 2000
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 the 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 is at the
discretion of the Board of Directors, which makes its decision annually at
the quarterly meeting in January. The Board voted to contribute $7,500 to
the plan for both calendar year 1999 and 1998.
None of the Company's employees are represented by a union.
(3) Securities Purchases 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. There were no funds
invested at the balance sheet dates presented.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED
----------------------------------
September 2, August 28,
2000 1999
------------- -------------
Sales $ 6,400,096 $ 5,958,163
% Sales Increase (Decrease) 7.24% -10.26%
Gross Margin % 23.55% 23.33%
Operating and Administrative
Expense:
Amount
1,521,012 1,441,679
% of Sales 23.77% 24.20%
Net Income (Loss)
3,200 (22,339)
Management believes that the increase in sales is attributable to marketing
advantages which the Company gained as a result of its decision to switch
wholesalers during the last quarter of fiscal 2000. In addition to obtaining
more favorable wholesale pricing for the Company's overall inventory purchases,
the Company also gained access to improved lines of generic grocery items which
we are able to price more competitively versus national brands. This change,
which management believes has, so far, increased overall traffic in the
Company's grocery stores, was made to enable the Company to compete more
effectively in an effort to combat increased pressures placed on the Company's
market share and sales by other chains opening stores in the Company's trade
area. Management believes that these competitive pressures, which have been
threatening the profitability of the Company, will continue to increase over
time as a result of competitors opening more new stores in the Company's trade
area. In response to these developments, management continuously seeks to
improve the gross margin and increase profitability by obtaining the lowest cost
for the Company's inventory.
Operating and administrative expenses decreased as a percent of sales from
24.20% for the quarter ended August 28, 1999 to 23.77% for the quarter ended
September 2, 2000, due primarily to the increase in sales.
Income Taxes:
The provision (benefit) for income taxes for the quarters ended above do
not vary significantly from the Federal statutory rate of 34% and state rates of
5% - 6%. Taxes are recorded as a current liability in each of the periods
presented.
Inflation:
Although currently not a 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 borrowings. Short-term borrowing to
finance inventory purchases is provided by the Company's $600,000 line of credit
from its lead bank, Wachovia Bank, Dalton, Georgia. Short-term borrowings as of
the end of specific quarters are presented below:
9/2/00 6/3/00 8/28/99
-------- -------- --------
Michael and Diana Richardson $ 59,662 $ 62,239 $ 99,950
Matthew Richardson 57,811 56,480 53,237
Line of Credit-Wachovia Bank 280,282 9,956 366,783
-------- -------- --------
Total $397,755 $128,675 $519,970
======== ======== ========
Notes to Michael and Diana Richardson and to Matthew Richardson are
unsecured, payable on demand and bear interest at .25% below the base rate
charged by Wachovia Bank which provides the Company with its line of credit.
Management believes that the Company's current sources of short-term
financing are adequate to meet the Company's anticipated needs for working
capital to fund operations. The Company's existing leases for the cash register
and scanning equipment used in its grocery stores are all due to expire during
the current fiscal year. The Company currently is evaluating the decision of
whether to purchase this equipment as the leases expire or lease new replacement
equipment on similar terms. A decision to purchase the Company's existing leased
equipment would require additional bank financing, which management believes
that the Company would be able to obtain on commercially reasonable terms.
The ratio of current assets to current liabilities was 2.51 to 1 at the end
of the latest quarter, September 2, 2000, as compared to 2.48 to 1 on August 28,
1999 and 2.80 to 1 at the end of the fiscal year ended on June 3, 2000. Cash and
cash equivalents constituted 49.58% of the total current assets at September 2,
2000 as compared to 42.21% at Auguts 28, 1999 and 40.99% at June 3, 2000.
During the quarter ended September 2, 2000 retained earnings increased as a
result of the Company's net income for the quarter.
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 address 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 previously have been
identified in filings or 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 of the Company's primary
markets,
7
<PAGE>
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,
and other issues and uncertainties detailed from time to time in the Company's
filings with the Securities and Exchange Commission.
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 21, 2000,
at which shareholders were asked to vote on the election of directors for the
fiscal year ending in 2001. Proxies were solicited by management in favor of
seven nominees, with no solicitaion in opposition to management's nominees. All
of such nominees were elected, with the number of votes case 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 605,177 604,517 660 226,780 3,661
Paul R. Cook 605,177 604,517 660 226,780 3,661
Virgil E. Bishop 605,177 604,737 440 226,780 3,661
John P. Price 605,177 604,297 880 226,780 3,661
Thomas L. Richardson 605,177 604,737 440 226,780 3,661
Jerome P. Sims, Sr. 605,177 604,355 822 226,780 3,661
Andrew V. Douglas 605,177 604,737 440 226,780 3,661
</TABLE>
Item 6 EXHIBITS AND REPORTS OF FORM 8-K
(a) The following exhibits are filed as a part of the report.
(10.1) Commitment letter dated September 30, 2000 between
the Company and Wachovia Bank, N.A.
(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
current 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)
Date: 10/16/2000 /s/ Michael A. Richardson
-------------------------------------------
Michael A. Richardson
CHAIRMAN
(Principal Executive Officer)
Date: 10/16/2000 /s/ Paul R. Cook
-------------------------------------------
Paul R. Cook
EXECUTIVE VICE PRESISENT AND TREASURER
(Principal Financial Officer & Chief
Accounting Officer)
9
