UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 29, 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. 0-20150
ALL FOR A DOLLAR, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3078083
- ------------------------------ -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
3664 Main Street
Springfield, MA 01107
- ------------------------------- -------------------------------
(Address of principal executive (Zip Code)
offices)
(413) 733-1203
----------------------------------------------------
(Registrant's telephone number, including area code)
SAME
- ---------------------------------------------------------------
(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 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 [ ]
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 July 15, 1996
- ---------------------------- ----------------------------
Common stock, par value $.01 6,950,190
Page 1 of 13
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Sections 12,
13, or 15(d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a
court.
Yes [X] No [ ]
Page 2 of 13
<PAGE>
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - June 29, 1996
and December 30, 1995 4
Condensed Statements of Operations for quarter and
six months ended June 29, 1996 and July 1, 1995 5
Condensed Statements of Cash Flows for quarter and
six months ended June 29, 1996 and July 1, 1995 6
Notes to condensed financial statements 7-10
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 10-12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
Page 3 of 13
<PAGE>
<TABLE>
ALL FOR A DOLLAR, INC.
CONDENSED BALANCE SHEETS
June 29, 1996 and December 30, 1995
ASSETS
(UNAUDITED)
<CAPTION>
June 29, 1996 December 30, 1995
-------------- --------------
<S> <C> <C>
CURRENT ASSETS :
Cash $ 289,397 $ 2,343,966
Restricted cash - Chapter 11 settlement 242,716
Accounts receivable, less allowance for
doubtful accounts 89,414 173,678
Merchandise inventories 9,974,028 12,500,093
Prepaid expenses and other current assets 142,158 284,434
Deferred income taxes 430,000 560,000
-------------- --------------
Total current assets 10,924,997 16,104,887
PROPERTY AND EQUIPMENT, NET 1,654,818 1,938,239
DEFERRED INCOME TAXES 2,170,000 2,040,000
OTHER ASSETS 140,404 158,973
-------------- --------------
TOTAL ASSETS $ 14,890,219 $ 20,242,099
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES :
Line of credit $ 386,412 $ 1,850,000
Current portion of long-term debt 1,171,288 322,500
Accounts payable - trade 2,791,259 2,155,497
Sales tax payable 50,442 199,203
Accrued expenses 1,297,818 1,396,310
Other liabilities 1,849 2,860
Liabilities subject to settlement under
Chapter 11 proceedings 299,500
-------------- --------------
Total current liabilities 5,699,068 6,225,870
-------------- --------------
LONG-TERM DEBT 37,500 1,182,500
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY :
Common stock, $.01 par value, authorized
15,000,000 shares, issued 7,279,190
as of June 29, 1996 and December 30, 1995 72,792 72,792
Additional paid-in capital 15,961,294 15,961,294
Retained earnings (deficit) (6,080,435) (2,400,357)
Less treasury stock, 329,000 shares, at cost (800,000) (800,000)
-------------- --------------
Total stockholders' equity 9,153,651 12,833,729
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,890,219 $ 20,242,099
============== ==============
<FN>
See notes to the condensed financial statements.
</TABLE>
Page 4 of 13
<PAGE>
<TABLE>
ALL FOR A DOLLAR, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the quarter and six months ended June 29, 1996 and July 1, 1995
<CAPTION>
Quarter Ended 6 Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES $ 8,368,296 $10,282,148 $16,891,611 $19,731,664
COST OF MERCHANDISE SOLD 3,924,790 5,066,522 8,037,187 9,739,545
------------ ----------- ----------- -----------
GROSS PROFIT 4,443,506 5,215,626 8,854,424 9,992,119
------------ ----------- ----------- -----------
OPERATING EXPENSES:
Store expenses 4,372,400 4,012,374 8,591,894 8,005,484
General and administrative expenses 1,821,472 1,967,262 3,844,935 3,889,468
------------ ----------- ----------- -----------
Total operating expenses 6,193,872 5,979,636 12,436,829 11,894,952
------------ ----------- ----------- -----------
LOSS BEFORE REORGANIZATION ITEMS (1,750,366) (764,010) (3,582,405) (1,902,833)
REORGANIZATION ITEMS (6,020) (6,020)
------------ ----------- ----------- -----------
OPERATING LOSS BEFORE INTEREST EXPENSE AND INCOME TAXES (1,750,366) (757,990) (3,582,405) (1,896,813)
INTEREST (INCOME) EXPENSE 47,199 (1,297) 97,673 (1,632)
------------ ----------- ----------- -----------
LOSS BEFORE INCOME TAXES (1,797,565) (756,693) (3,680,078) (1,895,181)
PROVISION FOR INCOME TAXES 870,000
------------ ----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEMS (2,667,565) (756,693) (3,680,078) (1,895,181)
EXTRAORDINARY GAIN ON FORGIVENESS OF DEBT 6,405,452 6,405,452
------------ ----------- ----------- -----------
NET (LOSS) INCOME $ (2,667,565) $ 5,648,759 $(3,680,078) $ 4,510,271
============ =========== =========== ===========
NET (LOSS) INCOME PER SHARE $ (0.38) $ 0.81 $ (0.53) $ 0.65
============ =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 6,950,190 6,950,190 6,950,190 6,950,190
============ =========== =========== ===========
<FN>
See notes to the condensed financial statements.
</TABLE>
Page 5 of 13
<PAGE>
<TABLE>
ALL FOR A DOLLAR INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended June 29, 1996 and July 1, 1995
<CAPTION>
6 Months Ended
June 29, July 1,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (3,680,078) $ 4,510,271
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Extraordinary gain on forgiveness of debt (6,405,452)
Reorganization items (6,020)
Depreciation and amortization 562,957 613,195
Gain on disposal of assets (2,640) 25,957
Changes in operating assets and liabilities:
Accounts receivable 84,264 (203,552)
Merchandise inventories 2,526,065 (24,919)
Prepaid expenses 142,276 623,985
Other assets (17,331) 37,151
Accounts payable - trade 635,762 810,338
Sales tax payable (148,761) (293,099)
Accrued expenses (98,492) (683,056)
Other liabilities (1,011) 56,088
Liabilities subject to Chapter 11 proceedings (299,500) (143,093)
-------------- ---------------
Net cash used in operating activities (296,489) (1,082,206)
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (258,034) (70,847)
Proceeds from sale of property and equipment 17,038
-------------- ---------------
Net cash used in investing activities (240,996) (70,847)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments on line of credit (1,463,588) (706,641)
Repayments of long-term debt (356,212)
Proceeds from issuance of long-term debt 60,000 1,182,500
-------------- ---------------
Net cash (used in) provided by financing activities (1,759,800) 475,859
-------------- ---------------
NET DECREASE IN CASH (2,297,285) (677,194)
-------------- ---------------
CASH, BEGINNING OF PERIOD 2,586,682 4,687,401
-------------- ---------------
CASH, END OF PERIOD $ 289,397 $ 4,010,207
============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 100,604 $ 5.326
Income taxes 15,042 26,956
<FN>
See notes to the condensed financial statements.
</TABLE>
Page 6 of 13
<PAGE>
ALL FOR A DOLLAR, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 -BASIS FOR PRESENTATION
The consolidated financial statements include the accounts of All
For A Dollar, Inc. and its wholly-owned subsidiary, Mass
Wholesalers of Springfield, Inc. (collectively the "Company"). All
intercompany transactions have been eliminated. The consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles.
As a result of the Company's recurring losses in fiscal years ended
1994 and 1993, limited cash availability and maximum borrowing
under its existing line of credit, in part, led the Company to file
voluntary petitions under Chapter 11 of the United States
Bankruptcy Code ("Chapter 11") on June 27, 1994 as discussed in
Note 3.
The Company, while operating as a debtor-in-possession,
restructured its business, which included the closing of 50
unprofitable stores and the renegotiation of its lease agreements
on its remaining stores. This plan of reorganization was approved
by the bankruptcy court and the Company subsequently emerged from
Chapter 11 in June 1995. See Note 3.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: The Company is a retailer with 121 stores, all
of which are located in the Northeast.
Fiscal Year: The Company's fiscal year ends on the Saturday
closest to December 31. The fiscal year ended December 30, 1995,
(Fiscal 1995) included 52 weeks.
Merchandise Inventories: Inventories are stated at the lower of
cost, on a first-in, first-out (FIFO) basis, or market.
Property and Equipment: Property and equipment are stated at cost.
Depreciation is computed over the estimated useful lives of the
assets using the straight-line method. Leasehold improvements are
amortized by the straight-line method over the estimated useful
life or the term of the related lease, whichever is shorter. Cost
of fixed assets sold or retired and the related amounts of
Page 7 of 13
<PAGE>
ALL FOR A DOLLAR, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
accumulated depreciation are eliminated from the accounts in the
year of disposal and the resulting gain or loss is included in
income. Estimated useful lives used in computing depreciation are:
Furniture and fixtures ...................... 5- 9 years
Leasehold improvements ...................... 1-31 years
Data processing equipment ................... 5 years
Automobiles ................................. 5 years
Pre-opening Store Expenses: All pre-opening costs incurred in
connection with the opening of new retail stores are charged to
expense during the year that the store opens.
Other Assets: Other assets consist of security deposits and lease
acquisition costs. Lease acquisition costs of $23,156 and $51,791
as of June 29, 1996 and December 30, 1995 respectively, are stated
at cost, net of accumulated amortization. Amortization is computed
over the life of the related lease by the straight-line method and
approximated $18,190 and $17,721 for the quarters ended June 29,
1996, and July 1, 1995, respectively.
Income Taxes: The Company utilizes the liability method of
accounting for income taxes as required by Financial Accounting
Standards Board No. 109, "Accounting for Income Taxes".
Net Income <Loss> Per Share: Net income <loss> per share is
computed using the weighted average number of common shares
outstanding during the year.
Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported revenues and expenses during the year. Actual results
could differ from those estimates.
NOTE 3 - PROCEEDINGS UNDER CHAPTER 11
As previously discussed in Note 1, the Company filed voluntary
petitions for reorganization under Chapter 11 with the United
States Bankruptcy Court for the Western District of Massachusetts
on June 27, 1994. In Chapter 11 cases, substantially all
liabilities (and stock interests) as of the date of the filing of
the petitions for reorganization are subject to a "Plan of
Reorganization" to be voted upon by the Company's impaired
creditors and stockholders and confirmed by the Bankruptcy Court.
Page 8 of 13
<PAGE>
ALL FOR A DOLLAR, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 3 - PROCEEDINGS UNDER CHAPTER 11 (cont.)
In June 1995, the Bankruptcy Court confirmed the Company's plan of
reorganization and the Company subsequently emerged from Chapter
11. The confirmed plan provided for the following:
Administrative and priority claims - All administrative and
priority claims are to be paid in full. Any administrative
claims that are in the nature of post-petition trade payables
are to be paid in accordance with terms agreed upon with each
individual creditor.
Line of credit - The secured claim of the bank from which the
Company has available a line of credit, will be paid in
accordance with the terms of a stipulation entered into between
the Company and the bank and approved by the Bankruptcy Court
in November 1994. Under the stipulation, the bank's line of
credit is to be treated as due on demand with periodic
reductions through December, 1996. The bank will retain a
first priority interest in all of the assets of the debtor.
Trade and other unsecured claims - General unsecured claims are
to be paid a single cash settlement of 35% of the amount of
their claim.
Common Stock - The holders of equity interests in the Company
will retain their stock.
Leases - The plan identifies all leases and executory contracts
that are to be assumed. All creditors having leases or
executory contracts with the Company that are not so identified
will be deemed rejected. The allowed claims of creditors that
are a party to rejected leases or executory contracts will be
treated as unsecured claims.
Funding for the Plan - The Company's funding of the plan will
come from two sources. First, based upon the terms of the plan
of reorganization as well as other operational changes it is
expected that the Company's daily cash requirements will be
further minimized. Second, the Company has obtained financing
in the amount of $1,505,000 from a related party in June 1995.
As part of the loan agreement the lender received warrants
permitting the purchase of 1,195,400 shares of common stock
with an exercise price of fifty cents per share.
To date the Company has settled all the claims in respect to its
Chapter 11 filing in accordance with the plan of reorganization.
The bankruptcy court on March 11, 1996 issued the final decree
closing the Chapter 11 case.
Page 9 of 13
<PAGE>
ALL FOR A DOLLAR, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 3 - PROCEEDINGS UNDER CHAPTER 11 (cont.)
The principal categories of claims classified in the consolidated
balance sheet as of December 30, 1995 as "Liabilities subject to
settlement under Chapter 11 Proceedings" are identified below.
The amounts still outstanding as of December 30, 1995 were settled
in the first quarter ended March 30, 1996.
Liabilities Subject to Settlement
Under Chapter 11 Proceedings
Trade and expense payables $ 64,206
Litigation 235,294
$ 299,500
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<TABLE>
Results of Operations
The following table sets forth, as a percentage of net sales,
certain items appearing in the Company's unaudited Condensed
Statements of Operations:
<CAPTION>
Six Months Ended
June 29 July 1
1996 1995
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of merchandise sold 47.6 49.4
Gross profit 52.4 50.6
Store expenses 50.9 40.6
General and administrative expenses 22.7 19.7
Loss before reorganization items,
interest expense & income taxes <21.2> ( 9.7)
Interest expense .6
Loss before extraordinary items <21.8> ( 9.7)
Extraordinary gain on forgiveness of
debt 32.5
Net income (loss) <21.8> 22.8
</TABLE>
The Company's aggregate net sales for the quarter and six
months ended June 29, 1996, decreased by $1,913,852 and $2,840,053
over the comparable periods of 1995 representing decreases of 18.6%
and 14.4%, respectively. These decreases in aggregate net sales
resulted principally from unusually inclement winter weather in the
first quarter and merchandising constraints created as a result of
an inadequate credit facility in the second quarter. Sales for
Page 10 of 13
<PAGE>
stores that were open for more than 24 months (comparable store
sales) decreased by approximately 24.2% and 18.0% for the quarter
and six months ended, respectively. One hundred and seven of the
Company's 121 stores open at June 29, 1996 had been open more than
24 months. Sales from wholesale operations decreased to $91,576 or
1.1% of sales in the quarter ended June 29, 1996 from $321,000, or
3.1% of sales in the corresponding period of 1995.
Cost of merchandise sold, as a percentage of net sales, for the
quarter and six months ended June 29, 1996 were 46.9% and 47.6%,
respectively, compared to 49.3% and 49.4% for the comparable
periods of 1995. Some fluctuation in gross profit margins may be
expected due in part to the fixed sales price of each unit in the
Company's stores and the many factors that affect the Company's
purchases for sale.
Store expenses during the quarter and six months ended June 29,
1996 increased by $360,026 and $586,410 respectively, over the
comparable periods of 1995. The increases for these periods are
attributable to the opening of ten new stores during the first six
months compared to one a year ago. As a percentage of net sales,
store expenses increased for the quarter and six months ended June
29, 1996 to 52.2% and 50.9%, respectively, from 39.0% and 40.6% for
the comparable periods of 1995. These increases in percentage are
primarily due to the increase in expenses associated with the new
stores combined with a lower sales base.
General and administrative expenses for the quarter and six
months ended June 29, 1996 decreased by $145,790 and $44,533 over
the comparable periods of 1995. These decreases reflect measures
taken to cut costs and improve efficiencies. As a percentage of
net sales, general and administrative expenses for the quarter and
six months ended June 29, 1996 increased to 21.8% and 22.7% from
19.1% and 19.7% for the comparable periods of 1995; which is
attributable to decreases in comparable store sales.
Interest expense increased to $47,199 and $97,673 respectively,
for the quarter and six months ended June 29, 1996, as a result of
increased utilization of the line of credit and related party
borrowings.
LIQUIDITY AND CAPITAL RESOURCES
The Company has continued to realize operating losses since
emerging from Chapter 11 bankruptcy on June 30. 1995 which has
created a lack of liquidity. This lack of liquidity has resulted
in a substantial portion of its trade accounts payable to become in
arrears. In an effort to achieve better operating results, the
Company's Board of Directors has determined to reposition the
Company in the marketplace by converting from a "dollar store"
format where most items are priced at one dollar to a multi-price
close-out retail format where items are sold at prices exceeding
one dollar.
On July 11, 1996, the Company entered into an agreement (the
"Agreement") with Universal International, Inc. ("Universal")
whereby Universal will assist the Company in the conversion of
Page 11 of 13
<PAGE>
between four and six stores to the new format. Universal will
assist the Company in sourcing products and the Company will pay
for such products on a cash basis. Additional, Universal will
assist the Company in obtaining a new credit facility.
The Company intends to close approximately 25 of its stores and
to liquidate certain of its inventory to raise cash to finance its
new inventory. Pursuant to a separate agreement with a subsidiary
of Universal, the Company has engaged the subsidiary to conduct a
liquidation of the inventory of certain of its stores.
The Company believes the restructuring of the business with
assistance from Universal, when combined with the negotiation of a
new credit facility, and expected continued improvements in
operations, will provide sufficient liquidity to sustain its
working capital needs.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
(b) A Form 8-K dated August 6, 1996 was filed.
Such Form 8-K reported in item 5 that the Company entered
into an Agreement with Universal International, Inc. to assist
in the conversion of between four and six All For A Dollar
stores from a one dollar format to a multi-price close-out
retail format; to conduct a inventory liquidation sale and
help evaluate, develop and manage a strategic store closing
program in order to reduce the number of under-performing
All For A Dollar stores.
Page 12 of 13
<PAGE>
ALL FOR A DOLLAR, INC.
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.
ALL FOR A DOLLAR, INC.
By: /s/Roger A. Slate
-----------------
Roger A. Slate
President/
Chief Executive Officer
(principal operating
officer)
/s/Donald A. Molta
------------------
Donald A. Molta
Vice President/
Chief Finance Officer
(principal financial and
accounting officer)
Date: August 9, 1996
Page 13 of 13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 289397
<SECURITIES> 0
<RECEIVABLES> 89414
<ALLOWANCES> 0
<INVENTORY> 9974028
<CURRENT-ASSETS> 10924997
<PP&E> 6484561
<DEPRECIATION> 4829743
<TOTAL-ASSETS> 14890219
<CURRENT-LIABILITIES> 5699068
<BONDS> 0
0
0
<COMMON> 72792
<OTHER-SE> 9080859
<TOTAL-LIABILITY-AND-EQUITY> 14890219
<SALES> 16891611
<TOTAL-REVENUES> 16891611
<CGS> 8037187
<TOTAL-COSTS> 8037187
<OTHER-EXPENSES> 12436829
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 97673
<INCOME-PRETAX> (3680078)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3680078)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3680078)
<EPS-PRIMARY> (0.53)
<EPS-DILUTED> (0.53)
</TABLE>
