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Form 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year ended May 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 (I.R.S. Employer Identification
of incorporation or Number)
organization)
P.O. Box 2328, 418-A Battlefield Pkwy., Ft. Oglethorpe, GA 30742
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (706) 861-3347
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.10 par value
(Title of Class)
Exhibit Index on Page 12
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 | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of filing.
As of August 11, 1998, the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $189,463. (Calculated for
these purposes by multiplying the total number of outstanding shares held by
non-affiliates by available bid price information.)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
890,597 shares of Common Stock, $0.10 par value, as of August 11, 1998.
List hereunder the following documents, if incorporated by reference and the
Part of the Form 10-K into which the document is incorporated: (1) any annual
report to security holders; (2) any proxy or information statement; and (3) any
prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of
1933. The listed documents should be clearly described for identification
purposes:
(1) specified portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended May 30, 1998, incorporated by reference into Part II of this
report on Form 10-K.
(2) specified portions of the Registrant's Definitive Proxy Statement filed with
the Securities and Exchange Commission for the Registrant's Annual Meeting of
Shareholders to be held September 17, 1998 incorporated by reference into Part
III of this report on Form 10-K.
Part I
ITEM 1. BUSINESS
Incorporated in Georgia in 1968, American Consumers, Inc. (the "Company"),
operates six (6) supermarkets within a compact geographical area that comprises
Northwest Georgia, Northeast Alabama, and Southeast Tennessee.
All of the Company's supermarkets are operated under the name "Shop-Rite." All
of the Company's supermarkets are self-service and are engaged in the retail
selling of groceries including meats, fresh produce, dairy products, frozen
foods, bakery products, tobacco products, and miscellaneous other non-food
items. The Company's supermarkets feature national brand merchandise with only a
minor part of sales from controlled-label, private-label or generic merchandise.
"Controlled-label" or "private-label" merchandise is merchandise purchased from
national or local suppliers under a trade name chosen by the wholesaler
supplying the merchandise. The Company's supermarkets offer milk and certain
dairy products, as well as frozen vegetables and jellies, under the
controlled-labels "Hyde Park," "Rainbow" and "Marquee." Bread and related bakery
items are also offered as controlled-label groceries.
During the fiscal year ended May 30, 1998, Company's major supplier of staple
groceries was Fleming Co., Inc. ("Fleming") formerly, Malone & Hyde, Inc., with
its principal corporate offices in Oklahoma City, Oklahoma. For the fiscal year
ended May 30, 1998, approximately 73% of the Company's total inventory purchases
of $21,547,994 were made from Fleming. Prior years purchases from Fleming were
approximately 72%. The inventory purchases from Fleming covered all lines of the
Company's groceries. Fleming was the Company's principal supplier of tobacco
products and meat products. Purchases from Specialty Produce Company, a local
produce supplier, account for the majority of the Company's produce purchases.
Various local suppliers within the geographical area served by the Company's
supermarkets provide the Company with approximately half of its requirements of
certain perishable items, including produce, and account for approximately 27%
of the Company's total inventory purchases. The Company believes that there are
other adequate and convenient sources of groceries, including several area and
local suppliers, which could meet its needs. Accordingly, the Company is not
dependent upon any particular supplier for its requirements of groceries.
The supermarket industry is highly competitive, and the principal method of
competition has been, in previous years, the pricing of groceries. The Company's
current major competitors now include various local and three regional chains.
The nature of such price competition now includes the sale of selected items at
below cost prices as "loss-leaders" or "advertised specials", the
practice of "double couponing" or matching coupon discounts with additional cash
discounts, as well as the sale of certain main line items at prices below the
Company's wholesale cost. The Company believes that its major competitors have
been and are able to obtain preferential treatment from suppliers in the form of
advertising allowances, lower prices and other concessions not available to the
Company which put the Company at a competitive disadvantage.
Management believes that, in recent periods, entry into the Company's trade
area by Winn Dixie and Save-A-Lot, and further expansion in the area by Food
Lion, has caused Ingle's and Bi-Lo to react by further reducing prices and
increasing advertising and promotional activities. These developments have
resulted in increased pressure on the Company's market share, sales and profits
during fiscal 1998, the effects of which are threatening the profitability of
the Company. The Company began a promotional program at the end of its 1998
fiscal year, in an effort to increase sales without an adverse effect on gross
margin. As described above, the Company's competitors are constantly conducting
sales promotions which are expensive for an operation the size of the Company to
match over long periods of time. Management believes that competitive pressures
on the Company will continue to increase over time as a result of larger
competitors, which are in a better position than the Company to withstand
prolonged price competition, opening more new stores in the Company's trade
area. A continuous effort is made to improve the gross margin and increase
profitability by obtaining the lowest cost for the Company's inventory.
Additionally, the Company seeks to retain supermarket locations in areas where
competition from larger chains is less direct.
Backlog is not a significant factor in the business of the Company.
The Company employs approximately 93 full-time employees and approximately
97 part-time and seasonal employees.
The Company believes it is in compliance with all federal, state and local
laws relating to environmental protection. No capital expenditures for equipment
relating to environmental protection are presently anticipated.
The Company is engaged in a single line of business; namely, the retail,
self-service grocery business which is not divisible into separate segments. The
following table sets forth information for the last three (3) fiscal years as to
the total sales and revenue of the Company contributed by each class of products
which contributed a significant percentage of the total retail sales and
revenues of the Company in the last three (3) fiscal years. All years presented
consisted of 52 weeks.
1998 1997 1996
---- ---- ----
Meat $ 6,201,052 $ 6,595,208 $ 6,763,852
Produce 1,846,159 1,803,984 1,915,763
Grocery & Non-
Food Items 18,872,986 19,605,801 20,606,311
ITEM 2. PROPERTIES
The executive offices of the Company are located in an 1,800 square-foot office
building on Battlefield Parkway in Fort Oglethorpe, Georgia, which the Company
holds under a lease for a term of three years, expiring in November 1998, with a
one year option to renew through November, 1999.
The Company's supermarkets are located in Ringgold, LaFayette, Chatsworth, and
Chickamauga, Georgia; Stevenson, Alabama; and Dayton, Tennessee. All of the six
locations are leased from unaffiliated landlords. These leases are presented
below:
Square Current Lease Renewal
Location Footage Term Options
- ------------ ------ ------------------- ------------
Ringgold, GA 14,400 12/01/97 - 11/30/02 1-5 yr. term
LaFayette, GA 20,500 02/26/92 - 01/31/02 3-5 yr. terms
Chatsworth, GA 24,360 04/29/88 - 04/28/03 3-5 yr. terms
Chickamauga, GA 13,840 04/07/86 - 12/31/98 3-5 yr. terms
Stevenson, AL 23,860 06/01/94 - 05/31/04 3-5 yr. terms
Dayton, TN 23,004 08/01/92 - 07/31/02 2-5 yr. terms
-------
119,964
=======
The supermarkets in Ringgold, LaFayette, and Chatsworth, Georgia; Stevenson,
Alabama; and Dayton, Tennessee, are located in strip shopping centers. The store
in Chickamauga, Georgia, is free standing.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is a party,
or of which any of its property is the subject, nor have any material legal
proceedings been terminated during the fourth quarter of the Company's fiscal
year.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
The Company's Board of Directors appoints the Company's Executive Officers for a
term of one year. The names, ages, offices held with the Company, business
experience during the past five years, and certain directorships held by each of
the Company's Executive Officers are set forth in the following table:
Name and Year Office(s) Presently
First Elected as Held, Business Experience
Executive Officer and Certain Directorships Age
- ----------------- ------------------------- ---
Michael A. Richardson Chairman of the Board of 52
1977 Directors, President, Chief
Executive Officer, member
of the Executive Committee
of the Board of Directors.
Virgil Bishop Vice-President, Director, 59
1974 member of the Executive
Committee and the Board
of Directors.
Paul R. Cook Executive Vice-President, 48
1987 Treasurer, Chief Financial
Officer, Director, member
of the Executive Committee
and the Board of Directors.
Director of Capital Bank,
Fort Oglethorpe, Georgia
since May 1993.
James E. Floyd Vice-President, member of 54
1991 the Executive Committee
(ex-officio). From 1966 to
1991, Mr. Floyd was
Grocery Supervisor for
the Company.
Reba S. Southern Secretary, member of the 45
1991 Executive Committee (ex-
officio). From 1972 to 1991,
Mrs. Southern was Administra-
tive Assistant for the Company.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is incorporated herein by reference to
page 4 of the Company's Annual Report to security holders for the fiscal year
ended May 30, 1998.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated herein by reference to
page 3 of the Company's Annual Report to security holders for the fiscal year
ended May 30, 1998.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is incorporated herein by reference to
pages 5 through 7 of the Company's annual report to security holders for the
fiscal year ended May 30, 1998.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated herein by reference to
pages 8 through 19 of the Company's annual report to security holders for the
fiscal year ended May 30, 1998.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information concerning the Company's Executive Officers is set forth in Part I
of this report on Form 10-K under the caption "Executive Officers of the
Company." The remaining information required by this Item is incorporated herein
by reference to the Company's definitive proxy statement filed with the
Securities and Exchange Commission pursuant to Regulation 14A for the Company's
Annual Meeting of Shareholders to be held September 17, 1998, under the heading
"INFORMATION ABOUT NOMINEES FOR DIRECTOR" and "SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the
Company's definitive proxy statement filed with the Securities and Exchange
Commission pursuant to Regulation 14A
for the Company's Annual Meeting of Shareholders to be held September 17, 1998,
under the headings "EXECUTIVE COMPENSATION" and "COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference to the
Company's definitive proxy statement filed with the Securities and Exchange
Commission pursuant to Regulation 14A for the Company's Annual Meeting of
Shareholders to be held September 17, 1998, under the heading "PRINCIPAL
SHAREHOLDERS."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference to the
Company's definitive proxy statement filed with the Securities and Exchange
Commission pursuant to Regulation 14A for the Company's Annual Meeting of
Shareholders to be held September 17, 1998, under the headings "COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" AND "CERTAIN TRANSACTIONS."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. The following Financial Statements included in the Company's 1998
Annual Report to the security holders for the fiscal year ended May
30, 1998, are incorporated by reference in Item 8 hereof:
- Report of Independent Accountants
- Balance Sheets - May 30, 1998 and May 31, 1997
- Statements of Income and Retained Earnings - Fiscal Years Ended
May 30, 1998; May 31, 1997 and June 1, 1996
- Statements of Cash Flows - Fiscal Years Ended May 30, 1998; May
31, 1997 and June 1, 1996
- Notes to Financial Statements
2. None of the schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are
required under the related instructions, or else are inapplicable to
the Company, and therefore no such schedules have been filed.
3. The following exhibits are either incorporated by reference or
attached to and made a part of this report:
Exhibit 3 Articles of Incorporation and By-Laws. Incorporated by
reference to Exhibit 3 to Form 10-K for the year ended May
29, 1993.
Exhibit 10(a) Line of Credit Loan Agreement, related Note and Security
Agreement dated as of August 1992 by and between the Company
and Wachovia Bank of Georgia, N.A. Incorporated by reference
to Exhibit 10(a) to Form 10-K for the year ended May 29,
1993.
Exhibit 10(b) Financial Management Account Investment/ Commercial
Loan Access Agreement dated October 1, 1993, Amending Line
of Credit Loan Agreement dated as of August 1992 by and
between the Company and Wachovia Bank of Georgia, N.A.
Incorporated by reference to Exhibit 10(b) to Form 10-K for
the year ended June 3, 1995.
Exhibit 10(c) Addendum to Financial Management Account Investment/
Commercial Loan Access Agreement between the Company and
Wachovia Bank of Georgia, N.A., dated July 6, 1994.
Incorporated by reference to Exhibit 10(c) to Form 10-K for
the year ended June 3, 1995.
Exhibit 10(d) Letter Agreement dated December 5, 1994 amending
Financial Management Account Investment/Commercial Loan
Access Agreement between the Company and Wachovia Bank of
Georgia, N.A. Incorporated by reference to Exhibit 10(d) to
Form 10-K for the year ended June 3, 1995.
Exhibit 10(e) Note and Security Agreement dated December 5, 1997,
together with related Commitment Letter dated December 3,
1997, between the Company and Wachovia Bank of Georgia, N.A.
Incorporated by reference to Exhibits 10(c) (Note and
Security Agmt.) and 10(d) (Commitment Letter) to Form 10-Q
for the quarterly period ended November 29, 1997.
Exhibit 10(f) Lease for the Company's Ringgold, Georgia location.
Incorporated by reference to Exhibit 10(e) to Form 10-K for
the year ended May 29, 1993.
Exhibit 10(g) Lease Agreement for the Company's LaFayette, Georgia
location. Incorporated by reference to Exhibit 10(f) to Form
10-K for the year ended May 29, 1993.
Exhibit 10(h) Lease Agreement for the Company's Chatsworth, Georgia
location. Incorporated by reference to Exhibit 10(g) to Form
10-K for the year ended May 29, 1993.
Exhibit 10(i) Lease Agreement for the Company's Chickamauga, Georgia
location. Incorporated by reference to Exhibit 10(h) to Form
10-K for the year ended May 29, 1993.
Exhibit 10(j) Renewal Lease Agreement for the Company's Stevenson,
Alabama location. Incorporated by reference to Exhibit 10(h)
to Form 10-K for the year ended May 28, 1994.
Exhibit 10(k) Lease Agreement for the Company's Dayton, Tennessee
location. Incorporated by referenced to Exhibit 10(j) to
Form 10-K for the year ended May 29, 1993.
Exhibit 10(l) Lease Agreement for the Company's Trenton, Georgia
location. Incorporated by reference to Exhibit 10(k) to Form
10-K for the year ended May 29, 1993.
Exhibit 10(m) Lease Agreement for the Company's Executive offices.
Incorporated by reference to Exhibit 10(l) to Form 10-K for
the year ended May 29, 1993.
Exhibit 10(n) Equipment Lease and Master License Agreement dated
March 31, 1995 between the Company and Fleming Companies,
Inc. pertaining to the equipment and software for the
Company's electronic cash registers and scanning equipment.
Incorporated by reference to Exhibit 10(n) to Form 10-K for
the year ended June 1, 1996.
Exhibit 10(o) Collateral Substitution Agreement, together with
related Collateral Assignment of Deposit, between the
Company and Wachovia Bank of Georgia, N.A., dated May 19,
1997. Incorporated by referenced to Exhibit 10(o) to Form
10-K for the year ended May 31, 1997.
Exhibit 13 Annual Report to Shareholders for the Fiscal Year ended
May 30, 1998.
Exhibit 23 Consent of Messrs. Hazlett, Lewis & Bieter.
Exhibit 27 Financial Data Schedule (EDGAR only)
(b) The Company has not filed any report on Form 8-K during the
last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the 9 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.
Date: August 17, 1998 By: s/Michael A. Richardson
-----------------------
Michael A. Richardson
Chairman of the Board,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- ----------------------- ---------------------- ---------------
s/Michael A. Richardson Chairman of the Board, August 17, 1998
- ------------------------ President and Chief
Michael A. Richardson Executive Officer
s/Paul R. Cook Executive Vice- August 17, 1998
- ------------------------ President, Chief
Paul R. Cook Financial Officer,
Treasurer (Chief
Accounting Officer) and
Director
s/Virgil E. Bishop Vice-President and August 17, 1998
- ------------------------ Director
Virgil E. Bishop
s/John P. Price Director August 20, 1998
- ------------------------
John P. Price
s/Thomas L. Richardson Director August 20, 1998
- ------------------------
Thomas L. Richardson
s/Jerome P. Sims Director August 20, 1998
- ------------------------
Jerome P. Sims, Sr.
s/Andrew V. Douglas Director August 17, 1998
- ------------------------
Andrew V. Douglas