-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GuixST7mUZ+3fJv98/AFXRjHQ/Y0jfGX4aNhStVtDOj09RUpU4YImXrxmpDumOPl PYCKz72nuRulTPNW/z5jOw== 0000041289-97-000006.txt : 19971216 0000041289-97-000006.hdr.sgml : 19971216 ACCESSION NUMBER: 0000041289-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971101 FILED AS OF DATE: 19971215 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GIANT FOOD INC CENTRAL INDEX KEY: 0000041289 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 530073545 STATE OF INCORPORATION: DE FISCAL YEAR END: 0222 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04434 FILM NUMBER: 97738340 BUSINESS ADDRESS: STREET 1: 6400 SHERIFF RD STREET 2: DEPT 593 CITY: LANDOVER STATE: MD ZIP: 20785 BUSINESS PHONE: 3013414100 MAIL ADDRESS: STREET 1: P O BOX 1804 DEPT 593 STREET 2: 6400 SHERIFF ROAD CITY: LANDOVER STATE: MD ZIP: 20785 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Twelve Weeks ended November 1, 1997 Commission File Number 1-4434 Giant Food Inc. (Exact name of Registrant as specified in its charter) Delaware 53-0073545 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 6300 Sheriff Road, Landover, Maryland 20785 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (301) 341-4100 NONE (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (l) 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 The number of shares outstanding of each of the registrant's classes of common stock as of this date is as follows: Title of stock Number of shares class ($l par) Outstanding "A" non-voting 59,792,125 "AC" voting 125,000 "AL" voting 125,000 60,042,125 - 1 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - NOVEMBER 1, 1997 AND FEBRUARY 22, 1997 Dollar amounts in thousands ASSETS November 1, February 22, 1997 1997 (Unaudited) Current assets: Cash and cash equivalents $ 331 $ 40,981 Short-term investments (Note 2) 124,708 137,096 Receivables 66,652 53,452 Income taxes receivable 1,060 8,501 Inventories (Note 3) 292,105 291,644 Prepaid expenses 27,471 26,202 Total current assets 512,327 557,876 Property, plant and equipment 1,560,749 1,503,725 Less accumulated depreciation 703,402 688,238 857,347 815,487 Property under capital leases, net of accumulated amortization, (11/01/97, $75,562; 2/22/97, $71,192) 107,286 106,565 Other assets 23,469 23,597 $ 1,500,429 $ 1,503,525 See notes to consolidated financial statements. - 2 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - NOVEMBER 1, 1997 AND FEBRUARY 22, 1997 Dollar amounts in thousands LIABILITIES AND SHAREHOLDERS' EQUITY November 1, February 22, 1997 1997 (Unaudited) Current liabilities: Current portion of long-term debt $ 8,089 $ 12,660 Accounts payable 273,316 248,368 Accrued liabilities 76,901 86,696 Dividends payable 11,674 11,393 Total current liabilities 369,980 359,117 Long-term debt, net of current portion: Notes and mortgages 27,369 39,039 Obligations under capital leases 146,350 144,953 173,719 183,992 Other liabilities 82,057 86,763 Shareholders' equity Common stock, $1 par, all classes 62,689 62,404 Net unrealized loss on short-term investments (309) (449) Retained earnings 818,725 819,060 881,105 881,015 Less class "A" stock held in treasury, at cost (11/01/97, 214,495 Shares: 2/22/97, 285,464 shares) 6,432 7,362 874,673 873,653 $ 1,500,429 $ 1,503,525 See notes to consolidated financial statements. - 3 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THIRTY-SIX WEEKS ENDED NOVEMBER 1, 1997 AND November 2, 1996 (Unaudited) Dollar amounts in thousands except for per share data Thirty-six Weeks Twelve Weeks 1997 1996 1997 1996 Sales $ 2,807,649 $ 2,667,028 $ 943,932 $ 896,977 Cost of goods sold 2,018,546 1,857,334 675,580 628,234 Operating expenses 725,505 694,309 246,092 236,408 Interest: Notes and mortgages 1,863 2,202 630 608 Lease obligations 11,500 11,170 3,888 3,701 Income (7,108) (9,764) (2,412) (3,061) 2,750,306 2,555,251 923,778 865,890 Income before provision for income taxes 57,343 111,777 20,154 31,087 Provision for income taxes 22,563 43,962 7,927 12,227 Net income $ 34,780 $ 67,815 $ 12,227 $ 18,860 Net income per share $ .58 $ 1.14 $ .20 $ .32 Dividends per share $ .585 .57 $ .195 $ .19 Average number of shares 60,053,799 59,711,609 60,087,458 59,831,144 See notes to consolidated financial statements. - 4 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THIRTY-SIX WEEKS ENDED NOVEMBER 1, 1997 AND NOVEMBER 2, 1996 (Unaudited) Dollar amounts in thousands Thirty-six Weeks 1997 1996 Cash flows from operating activities: Net income $ 34,780 $ 67,815 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 63,863 64,322 Amortization of property under capital leases 4,371 4,152 Other adjustments, net 1,125 1,125 Net change in cash from changes in operating assets and liabilities, detailed below 2,875 (17,017) Net cash provided by operating activities 107,014 120,397 Cash flows from investing activities: Purchase of short-term investments (105,681) (134,925) Sale of short-term investments 86,492 97,025 Maturity of short-term investments 31,799 23,588 Capital expenditures (106,049) (112,986) Other investing activities (671) (6,446) Net cash used in investing activities (94,110) (133,744) Cash flows from financing activities: Repayments of notes and mortgages (16,608) (6,792) Repayments of obligations under capital leases (3,328) (2,921) Purchases of treasury stock (4,902) Issuance of common stock 6,117 6,673 Dividends paid (34,833) (33,685) Net cash used in financing activities (53,554) (36,725) Net change in cash and cash equivalents (40,650) (50,072) Cash and cash equivalents, beginning of year 40,981 111,133 Cash and cash equivalents, end of quarter $ 331 $ 61,061 Increase (decrease) in cash from changes in operating assets and liabilities: Accounts receivable $ (3,699) $ (5,046) Inventory (461) (34,311) Prepaid expenses (3,329) (3,457) Accounts payable 24,588 41,026 Accrued expenses (10,936) (7,095) Income taxes payable (3,645) Deferred taxes 9 (4,000) Other liabilities (3,297) (489) $ 2,875 $ (17,017) See notes to consolidated financial statements. - 5 - GIANT FOOD INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THIRTY-SIX WEEKS ENDED NOVEMBER 1, 1997 AND NOVEMBER 2, 1996 (Unaudited) Dollar amounts in thousands 1. Consolidated financial statements: The accompanying unaudited interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Such results for the twelve weeks ended November 1, 1997 and November 2, 1996 are not necessarily indicative of results to be expected for the full year. 2. Short-term investments: Short-term investments consisted of: As of November 1, 1997: GROSS UNREALIZED HOLDING COST (LOSSES) FAIR VALUE U.S. Treasury securities $ 48,617 $ (200) $ 48,417 Federal agency securities 15,733 ( 65) 15,668 Corporate bonds or other 60,867 (244) 60,623 $125,217 $ (509) $124,708 As of February 22, 1997: GROSS UNREALIZED HOLDING COST (LOSSES) FAIR VALUE U.S. Treasury securities $109,775 $ (567) $109,208 Federal agency securities 26,815 (175) 26,640 Corporate bonds or other 1,248 1,248 $137,838 $ (742) $137,096 Maturities of short-term investments at November 1, 1997, were as follows: COST FAIR VALUE Due within one year $ 86,130 $ 86,112 Due after one year through five years 39,087 38,596 $125,217 $124,708 - 6 - 3. Inventories: The inventories using the LIFO method were valued at approximately 79% of the Company's inventories as at November 1, 1997 and 84% as at February 22, 1997. Under the FIFO method, these inventories would have been higher by $92,663 and $90,008, respectively. The pre-tax LIFO charge was $2,655 for the thirty-six week period ended November 2, 1996 and $3,240 for the thirty-six week period ended November 2, 1996. 4. Contingencies: From time to time, the Company is involved in legal proceedings that have arisen in the ordinary course of business. Management, after consulting with legal counsel is of the opinion that the outcome of such matters will not have a material impact on the consolidated financial position of the Company. - 7 - GIANT FOOD INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations: The following is Management's discussion and analysis of certain significant factors which have affected the Company's earnings and financial condition during the periods included in the accompanying Consolidated Balance Sheets and Consolidated Statements of Income. Results of Operations: A summary of the principal income statement percentages are tabulated below: 36 Weeks Ended 12 Weeks Ended Nov. 1, Nov. 2, Nov. 1, Nov. 2, 1997 1996 1997 1996 % % % % Gross Profit 28.11 30.36 28.43 29.96 Operating Expenses 25.84 26.03 26.07 26.36 Interest Expense: Notes & Mortgages .07 .08 .07 .07 Lease Obligations .41 .42 .41 .41 Interest (Income) ( .25) ( .36) ( .26) ( .34) Income Before Income Taxes 2.04 4.19 2.14 3.46 Provision for Income Taxes .80 1.65 .84 1.36 Net Income 1.24 2.54 1.30 2.10 Below are the differences for the periods ended November 1, 1997 compared with November 2, 1996 in thousands of dollars and percentages: Increase (Decrease) Increase (Decrease) Thirty-six Weeks Twelve Weeks $ % $ % Sales 140,621 5.3% 46,955 5.2% Gross Profit (20,591) -2.5% (391) -0.1% Operating Expenses 31,196 4.5% 9,684 4.1% Interest Expense: Notes & Mortgages (339) -15.4% 22 3.6% Lease Obligations 330 3.0% 187 5.0% Interest Income 2,656 -27.2% 649 -21.2% Income Before Income Taxes (54,434) -48.7% (10,933) -35.2% Provision for Income Taxes (21,399) -48.7% (4,300) -35.2% Net Income (33,035) -48.7% (6,633) -35.2% - 8 - GIANT FOOD INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (continued): Results of Operations (Thirty-six weeks ended November 1, 1997 vs. Thirty- six weeks ended November 2, 1996): Sales increased $140.6 million or 5.3%. The change in sales for stores in operation both years was an increase of 1.7%. The Company continues to execute a strategy of increasing it's sales volume. During the thirty-six week period the Company increased the number of items sold by 7.1% and had an increase of 4.2% in customer transactions. Gross profit decreased $20.6 million. Gross profit as a percent of sales was 28.11% compared to 30.36% for the prior year. The gross profit % decrease resulted primarily from special promotions that the Company used to increase its growth. Operating expenses decreased from 26.03% of sales to 25.84%. This is a result of the Company's continued commitment to the long-term effort of lowering its overall cost structure while maintaining expected levels of customer service. The Company's labor situation has increased in stability. The Company reached an agreement with it's warehouse associates on November 10, 1997. With this agreement in place the Company has contracts in place with the major unions relating to store and distribution activities until the year 2000. Interest expense - notes and mortgages decreased by $.3 million because of lower debt. Interest income decreased by $2.7 million because of lower balances of investable cash and short term investments. Pre-tax earnings decreased $54.4 million, a decrease of 48.7%. The effective tax rate was 39.3% for both the current and prior year. Net income was 1.24% of sales for the current period compared with 2.54% for the same period of the prior year. - 9 - GIANT FOOD INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (continued): Results of Operations (Twelve weeks ended November 1, 1997 vs. twelve weeks ended November 2, 1996): Sales increased $47.0 million or 5.2%. The sales for stores in operation in both years was an increase of 2.1%. Gross profit decreased slightly by $.4 million. Gross profit as a percent of sales was 28.43% compared to 29.96% for the prior year and 27.34% from the most recent quarter. The gross profit % decrease resulted from special promotional programs which coupled with the 5.2% increase in sales generated approximately the same dollar amount of gross profit. Operating expenses were 26.07% of sales in the current year compared to 26.36% in the prior year, the lower percentage is primarily due to the effect of expenses, in terms of dollars increasing at a lesser percentage than the 5.2% increase in sales. Interest expense - notes and mortgages increased by $22 thousand. Interest income decreased by $649 thousand because of lower investable cash balances and short term investments. Pre-tax earnings decreased $10.9 million, a decrease of 35.2%. The effective tax rate was 39.3% for both the current and prior year. Net income was 1.30% of sales for the current quarter compared with 2.10% for the same period of the prior year. - 10 - GIANT FOOD INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (continued): LIQUIDITY: Working capital decreased $56.4 million from February 22, 1997. At November 1, 1997 working capital ratio was 1.38 to 1, compared to 1.55 to 1 at February 22, 1997. Including LIFO reserves of $92.7 million at November 1, 1997, the working capital ratio was 1.64 to 1. At November 1, 1997, cash and cash equivalents were $.4 million and short-term investments were $124.6 million totaling $125.0 million compared with $178.1 million as at February 22, 1997. During the twelve months ended November 1, 1997 notes and mortgage debt was reduced by $16.6 million. The lower cash balance is in part the effect of building merchandise inventory levels for the upcoming holiday period and as a safeguard to a possible work stoppage in the warehouse operation. The Company anticipates that the cash balance, will increase, but not return to historical levels. It is estimated that cash, cash equivalents and short-term investments, together with cash flow from operations will be adequate to complete planned capital expenditures, debt reduction and dividend requirements. Capital expenditures include opening of six additional food-drug stores in the balance of the current fiscal year. CAPITALIZATION: Shareholders' equity as a percentage of capitalization was 83.4% on November 1, 1997, compared to 82.6% on February 22, 1997 and 82.9% on November 2, 1996. - 11 - GIANT FOOD INC. AND SUBSIDIARIES OTHER INFORMATION Item 5. Other Information: On November 5, 1997, the Company's board of directors authorized the future repurchase of up to 2,350,000 Class "A" common shares from time to time on the open market. This authorization superseded an earlier repurchase authorization under which authority to purchase additional shares remained. Item 6. Exhibits and reports on Form 8-K: SIGNATURE 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. Giant Food Inc. (Registrant) Date November 15, 1997 By Pete Manos President and Chief Executive Officer Date November 23, 1997 By Mark Berey Senior Vice President - Finance and Chief Financial Officer - 12 - EX-27 2
5 9-MOS FEB-28-1998 NOV-01-1997 331000 124708000 66652000 0 292105000 512327000 1560749000 703402000 1500429000 369980000 173719000 0 0 62689000 811984000 1500429000 2807649000 2807649000 2018546000 2750306000 0 0 13363000 57343000 22563000 34780000 0 0 0 34780000 .57 .57
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