DUCKWALL ALCO STORES INC - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 3, 2002

( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-20269

DUCKWALL-ALCO STORES, INC.

(Exact name of registrant as specified in its charter)

Kansas 48-0201080

(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification No.)

401 Cottage Street

Abilene, Kansas 67410-2832

(Address of principal executive offices) (Zip Code)

Registrant's telephone number including area code: (785) 263-3350

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:

4,259,195 shares of common stock, $.0001 par value (the issuer's only class of common stock), were outstanding as of November 3, 2002.

Duckwall-ALCO Stores, Inc.
And Subsidiaries
Consolidated Balance Sheets
(Dollars in Thousands)


Assets

	November 3,	February 3,
	2002	2002
	(Unaudited)
Current assets:
Cash and cash equivalents	$3,004	$3,219
Receivables	2,180	1,663
Inventories	142,639	125,165
Prepaid expenses	2,500	959

Total current assets	150,323	131,006

Property and equipment	83,203	78,521
Less accumulated depreciation	52,557	48,723

Net property and equipment	30,646	29,798

Property under capital leases	20,407	20,407
Less accumulated amortization	16,654	16,226

Net property under capital leases	3,753	4,181

Other non-current assets	258	15
Deferred income taxes	286	286

Total assets	$185,266	$165,286


See accompanying notes to unaudited consolidated financial statements.

Duckwall-ALCO Stores, Inc.
And Subsidiaries
Consolidated Balance Sheets
(Dollars in Thousands)


Liabilities and Stockholders' Equity



	November 3,	February 3,
	2002	2002
Current liabilities:	(Unaudited)
Current maturities of:
Long term debt	$492	$469
Capital lease obligations	703	703
Accounts payable	33,957	24,511
Notes payable under revolving loan	0	18,137
Income taxes payable	500	3,677
Accrued salaries and commissions	5,435	4,289
Accrued taxes other than income	4,657	4,080
Other current liabilities	2,872	2,581
Deferred income taxes	1,340	1,458

Total current liabilities	49,956	59,905

Notes payable under revolving loan	27,060	0
Long term debt - less current maturities	661	1,032
Capital lease obligations - less current maturities	5,569	6,096
Other noncurrent liabilities	2,148	1,947
Deferred revenue	857	716

Total liabilities	86,251	69,696

Stockholders' equity:
Common stock, $.0001 par value, authorized
20,000,000 shares; issued and outstanding
4,259,195 shares and 4,149,599 shares respectively	1	1
Additional paid-in capital	48,748	47,609
Retained earnings	50,266	47,996
Accumulated other comprehensive income (loss), net of income taxes	0	(16)
Total stockholders' equity	99,015	95,590

Total liabilities and stockholders' equity	$185,266	$165,286

See accompanying notes to unaudited consolidated financial statements.

Duckwall-ALCO Stores, Inc.
And Subsidiaries
Consolidated Statements of Operations
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)

	For the Thirteen Week Periods Ended		For the Thirty-Nine Week Periods Ended
	November 3, 2002	October 28, 2001	November 3, 2002	October 28, 2001

Net sales	$93,381	$94,807	$293,628	$288,364
Cost of sales	60,563	62,265	194,104	192,994
Gross margin	32,818	32,542	99,524	95,370

Selling, general and administrative	29,894	29,515	89,646	86,198
Depreciation and amortization	1,778	1,623	5,082	4,738
Provision for asset impairment and store closure	0	0	6	(8)
Total operating expenses	31,672	31,138	94,734	90,928

Income from operations	1,146	1,404	4,790	4,442
Interest expense	405	738	1,205	2,216
Earnings before income taxes	741	666	3,585	2,226
Income tax expense	272	254	1,316	848
Net earnings	$469	$412	$2,269	$1,378

Earnings per share - basic	$0.11	$0.10	$0.54	$0.33
Earnings per share - diluted	$0.11	$0.10	$0.52	$0.33


See accompanying notes to unaudited consolidated financial statements.

Duckwall-ALCO Stores, Inc.
And Subsidiaries
Consolidated Statements of Cash Flows
Dollars in Thousands
(Unaudited)
	For the Thirty-Nine Week
	Periods Ended
	November 3, 2002	October 28, 2001
Cash Flows From Operating Activities:
Net earnings	$2,269	$1,378
Adjustments to reconcile net earnings to net cash provided
by (used in) operating activities

Amortization of debt financing costs	57	53
Depreciation and amortization	5,082	4,738
Loss on disposal and impairment of assets	0	61
(Increase) in inventories	(17,474)	(19,097)
Increase in accounts payable	9,446	10,720
(Increase) decrease in receivables	(517)	454
Increase in prepaid expenses	(1,541)	(318)
Increase in accrued taxes other than income	577	913
Increase (decrease) in accrued salaries and commissions	1,146	(1,055)
(Decrease) in income taxes payable	(3,177)	(249)
(Decrease) in deferred income taxes	(118)	0
Increase in deferred revenue	141	0
Increase (decrease) in other liabilities	508	(318)
Net cash used in operating activities	(3,601)	(2,720)

Cash Flows From Investing Activities:
Proceeds from sale of property	1,034	722
Capital expenditures	(6,535)	(4,957)
Net cash used in investing activities	(5,501)	(4,235)

Cash Flows From Financing Activities:
Proceeds from exercise of stock options	1,139	0
Repurchase of common stock	0	(1,654)
Increase in revolving loan	8,923	4,936
Principal payments on long term notes	(348)	(452)
Principal payments on capital leases	(527)	(513)
Debt issue costs	(300)	0
Net cash provided by financing activities	8,887	2,317

Net decrease in cash and cash equivalents	(215)	(4,638)
Cash and cash equivalents at beginning of period	3,219	7,851
Cash and cash equivalents at end of period