FREDS INC

CIK:0000724571|SEC Filings

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 04, 2019	May 05, 2018
Income Statement [Abstract]
Net sales	$ 318,951	$ 336,399
Cost of goods sold	244,352	247,329
Gross profit	74,599	89,070
Depreciation and amortization	5,055	8,300
Impairment expense	297
Selling, general and administrative expenses	96,036	100,941
Total selling, general and administrative expenses	101,388	109,241
Operating loss	(26,789)	(20,171)
Interest expense	2,754	1,988
Loss before income taxes	(29,543)	(22,159)
Provision for income taxes	0	(196)
Loss from continuing operations	(29,543)	(21,963)
Loss from discontinued operations, net of tax	(4,397)	(48)
Net loss	$ (33,940)	$ (22,011)
Net loss per share - basic
Continuing operations	$ (0.84)	$ (0.60)
Discontinued operations	(0.12)	0.00
Total loss per common share - basic	(0.96)	(0.60)
Net loss per share - diluted
Continuing operations	(0.84)	(0.60)
Discontinued operations	(0.12)	0.00
Total loss per common share - diluted	$ (0.96)	$ (0.60)
Weighted average common shares outstanding
Basic	35,211,000	36,485,000
Diluted	35,211,000	36,485,000

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 04, 2019	May 05, 2018
Cash flows from operating activities:
Net loss	$ (29,543)	$ (21,963)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization	5,104	8,314
Net gain on asset disposition	310	13
Asset impairments	284
Stock-based compensation	522	1,246
(Recovery) for uncollectible receivables	1,010	(330)
LIFO reserve increase	(1,509)	(530)
Deferred income tax benefit	(15)
Amortization of debt issuance costs	225	123
(Increase) decrease in operating assets:
Trade and non-trade receivables	(519)	5,734
Inventories	26,566	(13,316)
Other assets	(93,814)	(475)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses	24,567	8,869
Income taxes receivable	10	1,197
Other noncurrent liabilities	52,636	(1,638)
Net cash used in operating activities of continuing operations	(14,166)	(12,756)
Cash flows from investing activities of continuing operations:
Capital expenditures	(1,444)	(2,468)
Proceeds from asset dispositions	90
Net cash provided by (used in) investing activities of continuing operations	(1,354)	(2,468)
Cash flows from financing activities of continuing operations:
Payments of indebtedness and capital lease obligations	(17)	(16)
Proceeds from revolving line of credit	215,211	228,043
Payments on revolving line of credit	(193,186)	(219,460)
Debt issuance costs	(260)	(256)
Proceeds (payments) from exercise of stock options and employee stock purchase plan		(31)
Transfer (to) from discontinued operations	(4,397)	6,767
Net cash (used in ) provided by financing activities of continuing operations	17,351	15,047
Decrease in cash and cash equivalents	1,831	(177)
Cash flow from discontinued operations
Cash flows from operating activities of discontinued operations, net	(4,397)	6,449
Cash flows from financing activities of discontinued operations, net	4,397	(6,767)
Net increase (decrease) in cash and cash equivalents	1,831	(495)
Cash and cash equivalents, beginning of year	5,353	6,573
Net increase (decrease) in cash and cash equivalents	1,831	(495)
Cash and cash equivalents, end of year	7,184	6,078
Supplemental disclosures of cash flow information:
Interest paid	$ 1,114	6,297
Income taxes refunded		$ (1,721)

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands	May 04, 2019	Feb. 02, 2019
Current assets:
Cash and cash equivalents	$ 7,184	$ 5,353
Inventories	221,460	246,517
Receivables, less allowance for doubtful accounts of $2,369 and $1,360, respectively	23,243	22,970
Other non-trade receivables	29,645	30,412
Prepaid expenses and other current assets	6,924	10,074
Total current assets	288,455	315,327
Property and equipment, less accumulated depreciation and amortization	64,186	66,346
Noncurrent assets held for sale	4,839	4,839
Intangible assets, net	19,279	21,463
Other noncurrent assets, net	98,016	1,050
Total assets	474,774	409,025
Current liabilities:
Accounts payable	105,897	97,107
Current portion of indebtedness	80,631	58,641
Accrued expenses and other	74,129	58,352
Total current liabilities	260,657	214,100
Long-term portion of indebtedness	14,429	14,446
Other noncurrent liabilities	105,081	15,015
Total liabilities	380,167	243,560
Commitments and contingencies (see Note 8- Leases, Note 9-Legal Contingencies and Note 10-Indebtedness)
Shareholders’ equity:
Treasury Stock, at cost; 3,800,000 shares at May 4, 2019 and 3,800,000 shares at February 2, 2019.	(10,823)	(10,823)
Retained earnings	(22,830)	48,547
Accumulated other comprehensive income	555	559
Total shareholders’ equity	94,607	165,465
Total liabilities and shareholders’ equity	474,774	409,025
Nonvoting Preferred Stock [Member]
Shareholders’ equity:
Preferred stock
Voting Series C Junior Preferred Stock [Member]
Shareholders’ equity:
Preferred stock
Common Class A [Member]
Shareholders’ equity:
Common stock	$ 127,705	$ 127,182