Back to GetFilings.com
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 29, 1999
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 [X]
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 10, 1999, the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $165,311. (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.
842,294 shares of Common Stock, $0.10 par value, as of August 10, 1999.
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 29, 1999, 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 16, 1999 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 "Best Yet," "Rainbow" and "Marquee." Bread and related bakery
items are also offered as controlled-label groceries.
During the fiscal year ended May 29, 1999, the Company's major supplier of
staple groceries was Fleming Co., Inc. ("Fleming"), with its principal corporate
offices in Oklahoma City, Oklahoma. For the fiscal year ended May 29, 1999,
approximately 74% of the Company's total inventory purchases of $20,267,610 were
made from Fleming. Prior years purchases from Fleming were approximately 73%.
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 26% 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, in previous years, the
principal method of competition has been the pricing of groceries. The Company's
current major competitors now include various local and four 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, loyalty card programs, 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 and Wal-Mart in addition to the presence of Ingle's and Bi-Lo, have created
a situation of ongoing price competition and increasingly expensive advertising
and promotional activities which place an operation the size of the Company at a
significant competitive disadvantage. These developments have resulted in
increased pressure on the Company's market share, sales and profits during
fiscal 1999, 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.
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 began an effort in the third quarter of fiscal 1998 to
increase gross margin by increasing retail prices on certain items, to the
extent permitted by competition. This effort has succeeded in producing a slight
increase in the Company's gross margin, but may also have an adverse effect on
overall sales.
Backlog is not a significant factor in the Company's business.
The Company employs approximately 81 full-time employees and approximately
98 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.
1999 1998 1997
----------- ----------- -----------
Meat $ 5,858,943 $ 6,201,052 $ 6,595,208
Produce 1,771,291 1,846,159 1,803,984
Grocery & Non-
Food Items 17,852,328 18,872,986 19,605,801
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
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 01/01/96 - 12/31/04 2-5 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 53
1977 Directors, President, Chief
Executive Officer, member
of the Executive Committee
of the Board of Directors.
Virgil Bishop Vice-President, Director, 60
1974 member of the Executive
Committee of the Board
of Directors.
Paul R. Cook Executive Vice-President, 49
1987 Treasurer, Chief Financial
Officer, Director, member
of the Executive Committee
of the Board of Directors.
Director of Capital Bank,
Fort Oglethorpe, Georgia
since May 1993.
James E. Floyd Vice-President, member of 55
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 46
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 29, 1999.
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 29, 1999.
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 9 of the Company's annual report to security holders for the
fiscal year ended May 29, 1999.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated herein by reference to
pages 10 through 21 of the Company's annual report to security holders for the
fiscal year ended May 29, 1999.
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 16, 1999, 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 16, 1999,
under the headings "DIRECTORS' FEES AND ATTENDANCE," "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 16, 1999, under the headings "PRINCIPAL
SHAREHOLDERS" and "INFORMATION ABOUT NOMINEES FOR DIRECTOR."
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 16, 1999, 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 1999
Annual Report to the security holders for the fiscal year ended May
29, 1999, are incorporated by reference in Item 8 hereof:
- Report of Independent Accountants
- Balance Sheets - May 29, 1999 and May 30, 1998
- Statements of Income and Retained Earnings - Fiscal Years Ended
May 29, 1999; May 30, 1998 and May 31, 1997
- Statements of Cash Flows - Fiscal Years Ended May 29, 1999; May
30, 1998 and May 31, 1997
- 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 Executive offices.
Incorporated by reference to Exhibit 10(l) to Form 10-K for
the year ended May 29, 1993.
Exhibit 10(m) 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(n) Collateral Substitution Agreement, together with related
Collateral Assignment of Deposit, between the
Company and Wachovia Bank of Georgia, N.A., dated November
16, 1998. Incorporated by referenced to Exhibit 10(c) to
Form 10-Q for the quarterly period ended November 28, 1998.
Exhibit 10(o) Commitment Letter dated November 16, 1998 between the
Company and Wachovia Bank of Georgia, N.A. Incorporated by
referenced to Exhibit 10(d) to Form 10-Q for the quarterly
period ended November 28, 1998.
Exhibit 13 Annual Report to Shareholders for the Fiscal Year ended May
29, 1999.
Exhibit 23 Consent of Messrs. Hazlett, Lewis & Bieter.
Exhibit 27 Financial Data Schedule (EDGAR version 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 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 24, 1999 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 24, 1999
- ------------------------ President and Chief
Michael A. Richardson Executive Officer
s/Paul R. Cook Executive Vice- August 24, 1999
- ------------------------ President, Chief
Paul R. Cook Financial Officer,
Treasurer (Chief
Accounting Officer) and
Director
s/Virgil E. Bishop Vice-President and August 24, 1999
- ------------------------ Director
Virgil E. Bishop
s/John P. Price Director August 24, 1999
- ------------------------
John P. Price
Director August __, 1999
- ------------------------
Thomas L. Richardson
s/Jerome P. Sims Director August 24, 1999
- ------------------------
Jerome P. Sims, Sr.
s/ Andrew V. Douglas Director August 24, 1999
- ------------------------
Andrew V. Douglas