-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, F6ZV2AZ6vI+P1iChnQFK7wMBL9/GWrEkbQy7MFwTJPce7nLdTmM3bBNbV+BK0BRa QRFIZcPCI4VLxyPdeX4Z9Q== 0000041289-94-000005.txt : 19940926 0000041289-94-000005.hdr.sgml : 19940926 ACCESSION NUMBER: 0000041289-94-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940813 FILED AS OF DATE: 19940923 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GIANT FOOD INC CENTRAL INDEX KEY: 0000041289 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 530073545 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04434 FILM NUMBER: 94550101 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 Twenty-four Weeks ended August 13, 1994 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 59,075,589 "AC" voting 125,000 "AL" voting 125,000 59,325,589 - 1 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - AUGUST 13, 1994 AND FEBRUARY 26, 1994 Dollar amounts in thousands ASSETS August 13, February 26, 1994 1994 (Unaudited) Current assets: Cash and cash equivalents $ 134,409 $ 111,845 Short-term investments (Note 2) 85,173 116,499 Receivables 40,790 37,504 Inventories (Note 3) 191,845 217,576 Prepaid expenses 21,109 22,114 Total current assets 473,326 505,538 Property, plant and equipment 1,274,179 1,258,653 Less accumulated depreciation 558,954 544,862 715,225 713,791 Property under capital leases, net of accumulated amortization, (8/13/94, $57,348; 2/26/94, $54,679) 108,666 107,580 Other assets 39,837 30,904 $ 1,337,054 $ 1,357,813 See notes to consolidated financial statements. - 2 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - AUGUST 13, 1994 AND FEBRUARY 26, 1994 Dollar amounts in thousands LIABILITIES AND SHAREHOLDERS' EQUITY August 13, February 26, 1994 1994 (Unaudited) Current liabilities: Current portion of long-term debt $ 35,374 $ 19,145 Accounts payable 197,714 226,284 Accrued liabilities 78,636 78,476 Dividends payable 10,645 10,394 Income taxes 7,216 7,033 Total current liabilities 329,585 341,332 Long-term debt, net of current portion: Notes and mortgages 68,555 86,068 Obligations under capital leases 142,992 141,062 211,547 227,130 Other liabilities 76,023 75,922 Shareholders' equity Common stock, $1 par, all classes 60,257 60,257 Net unrealized loss on short-term investments (1,592) Retained earnings 683,543 670,034 742,208 730,291 Less class "A" stock held in treasury, at cost 22,309 16,862 719,899 713,429 $ 1,337,054 $ 1,357,813 See notes to consolidated financial statements. - 3 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME TWENTY-FOUR WEEKS ENDED AUGUST 13, 1994 AND AUGUST 14, 1993 (Unaudited) Dollar amounts in thousands except for per share data Twenty-four Weeks Twelve Weeks 1994 1993 1994 1993 Sales $ 1,656,097 $ 1,609,307 $ 826,400 $ 795,841 Cost of goods sold 1,167,749 1,127,461 583,899 558,569 Operating expenses 425,522 409,584 215,018 206,500 Interest: Notes and mortgages 3,778 4,867 1,837 2,499 Lease obligations 7,521 7,476 3,764 3,752 Income (4,324) (3,141) (2,300) (1,731) Other income (1,978) 1,598,268 1,546,247 802,218 769,589 Income before provision for income taxes 57,829 63,060 24,182 26,252 Provision for income taxes 22,744 25,782 9,511 11,648 Income before cumulative effect of change in accounting 35,085 37,278 14,671 14,604 Cumulative effect of change in accounting for deferred taxes (Note 5) 3,934 Net income $ 35,085 $ 41,212 $ 14,671 $ 14,604 Income per share before cumulative effect of change in accounting $ .59 $ .62 $ .25 $ .24 Cumulative effect per share of change in accounting for deferred taxes (Note 5) .07 Net income per share $ .59 $ .69 $ .25 $ .24 Dividends per share $ .36 $ .35 $ .18 $ .175 Average number of shares 59,476,236 59,696,218 59,399,179 59,697,673 Diluted number of shares 59,619,290 60,008,076 59,500,379 60,015,646 See notes to consolidated financial statements. - 4 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS TWENTY-FOUR WEEKS ENDED AUGUST 13, 1994 AND AUGUST 14, 1993 (Unaudited) Dollar amounts in thousands Twenty-four Weeks 1994 1993 Cash flows from operating activities: Net income $ 35,085 $ 41,212 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 41,792 40,247 Amortization of property under capital leases 2,668 2,613 Other adjustments, net 760 742 Net change in cash from changes in operating assets and liabilities, detailed below (3,644) 28,725 Net cash provided by operating activities 76,661 113,539 Cash flows from investing activities: Purchase of short-term investments (10,298) (76) Sale of short-term investments 39,000 Capital expenditures (50,972) (36,972) Other investing activities (1,947) 441 Net cash used in investing activities (24,217) (36,607) Cash flows from financing activities: Repayments of notes and mortgages (1,505) (2,504) Repayments of obligations under capital leases (1,603) (1,532) Purchases of treasury stock (5,779) Issuance of common stock 135 107 Dividends paid (21,128) (20,594) Net cash used in financing activities (29,880) (24,523) Net change in cash and cash equivalents 22,564 52,409 Cash and cash equivalents, beginning of year 111,845 184,969 Cash and cash equivalents, end of quarter $ 134,409 $ 237,378 Increase (decrease) in cash from changes in operating assets and liabilities: Accounts receivable $ (3,286) $ 223 Inventory 25,731 35,708 Prepaid expenses 1,005 (58) Accounts payable (28,570) (14,646) Accrued expenses 160 8,169 Income taxes payable 183 (4,164) Deferred taxes 3,004 Other liabilities 1,133 489 $ (3,644) $ 28,725 See notes to consolidated financial statements. - 5 - GIANT FOOD INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TWENTY-FOUR WEEKS ENDED AUGUST 13, 1994 AND AUGUST 14, 1993 (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 twenty-four weeks ended August 13, 1994 and August 14, 1993 are not necessarily indicative of results to be expected for the full year. 2. Short-term investments: The Company adopted Statement of Financial Accounting Standards (SFAS) No. 115 "Accounting for Certain Investments in Debt and Equity Securities" as of February 27, 1994. The impact of this change in accounting principle resulted in a $672 decrease in market value of short-term investments and a decrease in shareholders' equity of $408, representing the after-tax impact of the unrealized losses on short-term investments at the date of adoption. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of securities. It is the Company's intent to maintain a liquid portfolio to take advantage of investment opportunities; therefore all securities are considered as available-for-sale and are classified as current assets. Short-term investments as of August 13, 1994 consisted of: GROSS UNREALIZED COST HOLDING LOSSES FAIR VALUE U.S. Treasury securities $ 64,374 $ 1,769 $ 62,605 Federal agency securities 23,423 855 22,568 $ 87,797 $ 2,624 $ 85,173 Maturities of short-term investments at August 13, 1994, were as follows: COST FAIR VALUE Due within one year $ 22,797 $ 22,748 Due after one year through five years 65,000 62,425 $ 87,797 $ 85,173 Prior to adopting SFAS No. 115, the Company valued its securities in accordance with the SFAS No. 12 "Accounting for Certain Marketable Securities" and related interpretations. Short-term investments were stated at cost which approximated fair value. - 6 -3. Inventories: The inventories valued using the LIFO method were approximately 84% of the Company's inventories as at August 13, 1994 and 84% as at February 26, 1994. Under the FIFO method, these inventories would have been higher by $78,220 and $76,420, respectively. The pre-tax LIFO charge was $1,092 for the twenty-four week period ended August 13, 1994 and $1,128 for the twenty-four week period ended August 14, 1993. 4. Net cash flows from operating activities reflects cash payments for interest and income taxes as follows: 24 weeks ended August 13, August 14, 1994 1993 Interest paid $12,285 $13,342 Income taxes paid 16,399 26,614 Non - cash investing and financing activities excluded from the Consolidated Statements of Cash Flows consist of $3,754 capital lease transactions for the current fiscal year and $5,747 for fiscal 1994. 5. Income taxes: The Company adopted, effective February 28, 1993, SFAS No. 109 "Accounting for Income Taxes". Upon adoption of SFAS No. 109, the Company adjusted its deferred tax accounts to reflect the current income tax rates and also adjusted the carrying amounts of certain assets acquired in a 1992 shopping center acquisition. The net effect of the adjustments was to increase income by $3,934, increase the net deferred tax liability by $1,013 and increase the bases of certain assets by $4,947. 6. The FASB issued SFAS No. 112 "Employers' Accounting for Postemployment Benefits." This standard became effective February 27, 1994. As the Company does not provide any significant postemployment benefits to administrative employees, SFAS No. 112 did not impact the Company. Union employees are covered under union-sponsored multi-employer plans. - 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: 24 Weeks Ended 12 Weeks Ended August 13, August 14, August 13, August 14, 1994 1993 1994 1993 % % % % Gross Profit 29.49 29.94 29.34 29.81 Operating Expenses 25.70 25.45 26.02 25.95 Interest Expense: Notes & Mortgages .23 .30 .22 .31 Obligations .45 .47 .45 .47 Interest (Income) ( .26) ( .20) ( .28) ( .22) Other Income ( .12) Income Before Income Taxes 3.49 3.92 2.93 3.30 Provision for Income Taxes 1.37 1.60 1.15 1.46 Income before cumulative effect of change in accounting for deferred taxes 2.12 2.32 1.78 1.84 Below are the differences between the periods ended August 13, 1994 compared with August 14, 1993 in thousands of dollars and percentages: Increase (Decrease) Increase (Decrease) Twenty-four Weeks Twelve Weeks $ % $ % Sales 46,790 2.9% 30,559 3.8% Gross Profit 6,502 1.3% 5,229 2.2% Operating Expenses 15,938 3.9% 8,518 4.1% Interest Expense: Notes & Mortgages (1,089) -22.4% (662) -26.5% Lease Obligations 45 0.6% 12 0.3% Interest Income (1,183) 37.7% (569) 32.9% Other Income 1,978 Income Before Income Taxes (5,231) -8.3% (2,070) -7.9% Provision for Income Taxes (3,038) -11.8% (2,137) -18.3% Income before cumulative effect of change in accounting for deferred taxes (2,193) -5.9% 67 0.5% - 8 - GIANT FOOD INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (continued): Results of Operations (Twenty-four weeks ended August 13, 1994 vs. twenty- four weeks ended August 14, 1993): Sales increased $46.8 million or 2.9%. The increase in sales for stores in operation in both years was .5%. This sales change was impacted by new units drawing sales away from existing units. Without this phenomenon, cannibalization, same store sales would have increased 1.3% Gross profit increased $6.5 million. Gross profit as a percent of sales was 29.49% compared to 29.94% for the prior year. The gross profit reflects the static economy and the competitive environment. Operating expenses increased from 25.45% of sales to 25.69%, caused by increases in contracted union benefits and payrolls. Another factor was the expense of the new units, including the first store in the Delaware. Interest expense - notes and mortgages decreased by $1.1 million because of repayment of mortgages. Interest income increased by $1.2 million because of higher yields. The Company realized other income of $2. million from the sale of its interest in a partnership that operated automatic teller machines in its stores. The new owner has contracted with the Company to pay fees on future ATM transactions. Income before provision for income taxes and the cumulative effect of the change in accounting for deferred taxes were down $5.2 million, a decrease of 8.3%. The effective tax rate was 39.3% for the current period and 40.9% for the prior year's fiscal period. Net income was 2.12% of sales for the current period compared with 2.32% for the same period of the prior year (before the cumulative effect of the change in accounting for deferred taxes). The adoption of SFAS No. 109, "Accounting for Income Taxes" on February 28, 1993 resulted in an adjustment of the carrying value of assets acquired and the recognition of additional income of $3.9 million, equal to 7 cents per share. This adjustment increased net income to 2.56%, as percent of sales, for the prior year's comparable period. - 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 August 13, 1994 vs. twelve weeks ended August 14, 1993): Sales increased $30.6 million or 3.8%. The increase in sales for stores in operation in both years was 1.4%. This sales change was impacted by new units drawing sales away from existing units. Without this phenomenon, cannibalization, same store sales would have increased 2.3% Gross profit increased $5.2 million. Gross profit as a percent of sales was 29.34% compared to 29.81% for the prior year. The current level of 29.34% is below the prior quarter of the current year, which was 29.63%, reflecting the competitive environment, and the entry into a new territory, Delaware. Operating expenses increased from 25.95% of sales to 26.02%. This was caused principally by increases in union benefits. Another factor was the occupancy costs of new units. Interest expense - notes and mortgages decreased by $662 thousand because of repayment of mortgages. Interest income increased by $569 thousand because of higher yields. Pre-tax earnings were down $2.1 million, a decrease of 7.9%. The effective tax rate was 39.3% for the current period and 44.4% for the prior year's fiscal period. The prior year's provision for income taxes included the effect of the retroactive change in Federal income tax rates. Net income was 1.78% of sales for the current quarter compared with 1.84% 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 $20.5 million from February 26, 1994. The contributing factor for this decrease is the reclassification of $16.0 million in mortgages from long-term to current. This obligation, due April 1995, was assumed with the purchase of a shopping center in 1991. At August 13, 1994 the working capital ratios was 1.44 to 1, compared to 1.48 at February 26, 1994. Including LIFO reserves of $78.2 million at August 13, 1994, the working capital ratio was 1.67 to 1. At August 13, 1994, cash and cash equivalents was $134.4 million and short-term investments were $85.2 million compared with $111.8 million and $116.5 million respectively as of February 26, 1994. Effective February 27, 1994 the Company adopted SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities". The impact of this change in accounting principle resulted in a $.672 million decrease in short-term investments. (See note 2) 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. The Company has a $50 million revolving credit facility available. It has had no short-term bank borrowings for more than sixteen years. CAPITALIZATION: Shareholders' equity as a percentage of capitalization was 74.5% on August 13, 1994, compared to 74.3% on February 26, 1994 and 74.3% on August 14, 1993. - 11 - GIANT FOOD INC. AND SUBSIDIARIES OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K: The Company did not file any reports on Form 8-K during the twelve weeks ended August 13, 1994. 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 September 23, 1994 By /s/ Israel Cohen Israel Cohen Chairman of the Board Chief Executive Officer Date September 23, 1994 By /s/ David B Sykes David B Sykes Senior Vice President Finance, Treasurer Chief Financial Officer and Principal Accounting Officer - 12 - EX-27 2
5 QTR-2 FEB-25-1995 AUG-13-1994 134409000 85173000 40790000 0 191845000 473326000 1274179000 558954000 1337054000 329585000 211547000 60257000 0 0 659642000 1337054000 1656097000 1656097000 1167749000 1598268000 0 0 11299000 57829000 22744000 35085000 0 0 0 35085000 .59 .59
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