-----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, Cp7CBdn3WBynQburKSCv0epjL88rT6gQ9AjeOcKSnkyFWRRhpZUR5M+cYJkpf+OS hiHxwvj1hQffz46K4P0gZg== 0000041289-95-000010.txt : 19951214 0000041289-95-000010.hdr.sgml : 19951214 ACCESSION NUMBER: 0000041289-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951104 FILED AS OF DATE: 19951213 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: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04434 FILM NUMBER: 95601234 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 Thirty-six Weeks ended November 4, 1995 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 59,160,529 "AC" voting 125,000 "AL" voting 125,000 59,410,529 - 1 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - NOVEMBER 4, 1995 AND FEBRUARY 25, 1995 Dollar amounts in thousands ASSETS November 4, February 25, 1995 1995 (Unaudited) Current assets: Cash and cash equivalents $ 102,044 $ 157,045 Short-term investments (Note 2) 119,037 92,757 Receivables 46,975 43,867 Inventories (Note 3) 240,725 237,978 Prepaid expenses 26,231 24,692 Total current assets 535,012 556,339 Property, plant and equipment 1,375,049 1,329,399 Less accumulated depreciation 615,674 609,214 759,375 720,185 Property under capital leases, net of accumulated amortization, (11/04/95, $63,898; 2/25/95, $59,876) 101,480 105,502 Other assets 31,254 34,684 $ 1,427,121 $ 1,416,710 See notes to consolidated financial statements. - 2 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - NOVEMBER 4, 1995 AND FEBRUARY 25, 1995 Dollar amounts in thousands LIABILITIES AND SHAREHOLDERS' EQUITY November 4, February 25, 1995 1995 (Unaudited) Current liabilities: Current portion of long-term debt $ 12,350 $ 28,136 Accounts payable 251,339 225,829 Accrued liabilities 78,138 85,309 Dividends payable 10,988 10,663 Income taxes 8,366 16,808 Total current liabilities 361,181 366,745 Long-term debt, net of current portion: Notes and mortgages 46,112 57,805 Obligations under capital leases 138,121 140,946 184,233 198,751 Other liabilities 96,247 95,758 Shareholders' equity Common stock, $1 par, all classes 60,257 60,257 Capital in excess of par value 384 Net unrealized loss on short-term investments (124) (1,648) Retained earnings 745,148 720,784 805,665 779,393 Less class "A" stock held in treasury, at cost (11/04/95, 846,091 2/25/95, 1,002,464 shares) 20,205 23,937 785,460 755,456 $ 1,427,121 $ 1,416,710 See notes to consolidated financial statements. - 3 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THIRTY-SIX WEEKS ENDED NOVEMBER 4, 1995 AND NOVEMBER 5, 1994 (Unaudited) Dollar amounts in thousands except for per share data Thirty-six Weeks Twelve Weeks 1995 1994 1995 1994 Sales $ 2,596,416 $ 2,490,877 $ 870,666 $ 834,780 Cost of goods sold 1,825,897 1,752,322 611,830 584,573 Operating expenses 670,845 641,723 228,568 216,201 Interest: Notes and mortgages 3,720 5,986 1,240 2,208 Lease obligations 11,079 11,260 3,701 3,739 Income (9,551) (6,859) (3,378) (2,535) Other income (1,978) 2,501,990 2,402,454 841,961 804,186 Income before provision for income taxes 94,426 88,423 28,705 30,594 Provision for income taxes 37,135 34,777 11,285 12,033 Net income $ 57,291 $ 53,646 $ 17,420 $ 18,561 Net income per share $ .97 $ .90 $ .30 $ .31 Dividends per share $ .555 $ .54 $ .185 $ .18 Average number of shares 59,307,748 59,422,994 59,365,343 59,317,176 See notes to consolidated financial statements. - 4 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THIRTY-SIX WEEKS ENDED NOVEMBER 4, 1995 AND NOVEMBER 5, 1994 (Unaudited) Dollar amounts in thousands Thirty-six Weeks 1995 1994 Cash flows from operating activities: Net income $ 57,291 $ 53,646 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 64,389 63,463 Amortization of property under capital leases 4,022 4,008 Other adjustments, net 1,125 (357) Net change in cash from changes in operating assets and liabilities, detailed below 2,004 (7,133) Net cash provided by operating activities 128,831 113,627 Cash flows from investing activities: Purchase of short-term investments (50,734) (21,298) Sale of short-term investments 16,966 39,054 Maturity of short-term investments 10,000 5,000 Capital expenditures (96,953) (75,050) Other investing activities (4,321) (626) Net cash used in investing activities (125,042) (52,920) Cash flows from financing activities: Repayments of notes and mortgages (27,646) (19,497) Repayments of obligations under capital leases (2,658) (2,410) Purchases of treasury stock (7,237) Issuance of common stock 4,116 282 Dividends paid (32,602) (31,814) Net cash used in financing activities (58,790) (60,676) Net change in cash and cash equivalents (55,001) 31 Cash and cash equivalents, beginning of year 157,045 111,845 Cash and cash equivalents, end of quarter $ 102,044 $ 111,876 Increase (decrease) in cash from changes in operating assets and liabilities: Accounts receivable $ (3,108) $ (4,300) Inventory (2,747) (13,720) Prepaid expenses (1,539) 533 Accounts payable 25,510 10,136 Accrued expenses (7,171) (2,886) Income taxes payable (8,442) 695 Other liabilities (499) 2,409 $ 2,004 $ (7,133) See notes to consolidated financial statements. - 5 - GIANT FOOD INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THIRTY-SIX WEEKS ENDED NOVEMBER 4, 1995 AND NOVEMBER 5, 1994 (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 thirty-six weeks ended November 4, 1995 and November 5, 1994 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 4, 1995: GROSS UNREALIZED HOLDING COST (LOSSES) FAIR VALUE U.S. Treasury securities $ 85,595 $ (105) $ 85,490 Federal agency securities 22,779 (116) 22,663 Corporate bonds or other 10,886 (2) 10,884 $119,260 $ (223) $119,037 As of February 25, 1995: GROSS UNREALIZED HOLDING COST (LOSSES) GAINS FAIR VALUE U.S. Treasury securities $ 71,052 $(1,767) $ 69,285 Federal agency securities 18,788 (984) 17,804 Corporate bonds or other 5,653 15 5,668 $ 95,493 $(2,736) $ 92,757 Maturities of short-term investments at November 4, 1995, were as follows: COST FAIR VALUE Due within one year $ 57,611 $ 57,610 Due after one year through five years 61,649 61,427 $119,260 $119,037 - 6 - 3. Inventories: The inventories using the LIFO method were valued at approximately 84% of the Company's inventories as at November 4, 1995 and 83% as at February 25, 1995. Under the FIFO method, these inventories would have been higher by $83,667 and $80,967, respectively. The pre-tax LIFO charge was $2,700 for both the thirty-six week period ended November 4, 1995 and November 5, 1994. 4. Net cash flows from operating activities reflects cash payments for interest and income taxes as follows: 36 weeks ended November 4, November 5, 1995 1994 Interest paid $16,340 $18,874 Income taxes paid 45,577 34,020 Non - cash investing and financing activities for the thirty-six weeks ending November 5, 1994 excluded from the Consolidated Statements of Cash Flows the recording of a capital lease aggregating $3,754. - 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 November 4, November 5, November 4, November 5, 1995 1994 1995 1994 % % % % Gross Profit 29.68 29.65 29.73 29.97 Operating Expenses 25.84 25.77 26.25 25.90 Interest Expense: Notes & Mortgages .14 .24 .14 .26 Lease Obligations .43 .45 .43 .45 Interest (Income) ( .37) ( .28) ( .39) ( .30) Other Income ( .08) Income Before Income Taxes 3.64 3.55 3.30 3.66 Provision for Income Taxes 1.43 1.40 1.30 1.44 Net Income 2.21 2.15 2.00 2.22 Below are the differences for the periods ended November 4, 1995 compared with November 5, 1994 in thousands of dollars and percentages: Increase (Decrease) Increase (Decrease) Thirty-six Weeks Twelve Weeks $ % $ % Sales 105,539 4.2% 35,886 4.3% Gross Profit 31,965 4.3% 8,629 3.4% Operating Expenses 29,123 4.5% 12,367 5.7% Interest Expense: Notes & Mortgages (2,266) -37.9% (968) -43.8% Lease Obligations (181) -1.6% (38) -1.0% Interest Income (2,692) 39.2% (843) 33.2% Other Income (1,978) Income Before Income Taxes 6,003 6.8% (1,889) -6.2% Provision for Income Taxes 2,358 6.8% (748) -6.2% Net Income 3,645 6.8% (1,141) -6.2% - 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 4, 1995 vs. thirty- six weeks ended November 5, 1994): Sales increased $105.5 million or 4.2%. The increase in sales for stores in operation in both years was 2.2%. This same store sales change was somewhat impacted by new units drawing sales away from existing units. Without cannibalization same store sales would have increased 2.5%. Gross profit increased $32.0 million. Gross profit as a percent of sales was 29.68% compared to 29.65% for the prior year. The gross profit percentage increase resulted principally from lower, as a percent of sales, cost from the distribution activity. Operating expenses increased from 25.77% of sales to 25.84%. The Company's expense control cost programs resulted in a lower payroll and related benefit cost offset by increased cost for electronic payment plans and, occupancy cost. As Giant has moved into the northern territory it has incurred substantial pre-opening and promotional costs. Interest expense - notes and mortgages decreased by $2.3 million because of lower debt. The Company has reduced this debt by $27.8 million in the 52 weeks ended November 4, 1995. Interest income increased by $2.7 million because of higher yields. In the prior year the Company realized other income of $2 million from the sale of its interest in a partnership that operates automatic teller machines in its stores. Pre-tax earnings increased $6.0 million, an increase of 6.8%. The effective tax rate was 39.3% for both the current and prior year. Net income was 2.21% of sales for the current period compared with 2.15% 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 4, 1995 vs. twelve weeks ended November 5, 1994): Sales increased $35.9 million or 4.3%. The increase in sales for stores in operation in both years was 2.4%. This same store sales change was somewhat impacted by new units drawing sales away from existing units. Without cannibalization same store sales would have increased 2.5%. Gross profit increased $8.6 million. Gross profit as a percent of sales was 29.73% compared to 29.97% for the prior year. The gross profit percentage continues at the same level that was realized in the 1st and 2nd reporting periods of the current year when the gross profit percentage was 29.64 and 29.66 respectively. The Company's gross profit has been affected by the promotional activity in the three stores operating in the northern territory. Operating expenses were 26.25% compared to 25.90% in the prior year. The increase in expenses was due principally to the fourth year union wage increase that took place in September and to new store pre-opening and advertising expenses incurred in the northern territory. Interest expense - notes and mortgages decreased by $968 thousand because of lower debt. Interest income increased by $843 thousand because of higher yields. Pre-tax earnings were down $1.9 million, a decrease of 6.2%. The effective tax rate was 39.3% for both the current and prior year. Net income was 2.00% of sales for the current quarter compared with 2.22% 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 $15.8 million from February 25, 1995. At November 4, 1995 working capital ratio was 1.48 to 1, compared to 1.52 to 1 at February 25, 1995. Including LIFO reserves of $83.7 million at November 4, 1995, the working capital ratio was 1.71 to 1. At November 4, 1995, cash and cash equivalents were $102 million and short-term investments were $119 million totaling $221 million compared with $250 million as at February 25, 1995. During the twelve months ended November 4, 1995 notes and mortgage debt was reduced by $27.8 million. 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, scheduled debt reduction and dividend requirements. Capital expenditures include the announced plans for starting or opening 18 stores. Four stores have been opened by November 4, 1995 and two additional units will be opened by mid December 1995. The Company has a $50 million revolving credit facility, a $10 million credit line, and has had no short-term bank borrowings for more than sixteen years. CAPITALIZATION: Shareholders' equity as a percentage of capitalization was 81.0% on November 4, 1995, compared to 79.2% on February 25, 1995 and 78.4% on November 5, 1994. - 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 November 4, 1995. On November 28, 1995 the Company file Form 8-K due to changes in control of registrant. On November 22, 1995, Israel Cohen, the Chief Executive Officer and the Chairman of the Board of Directors of Registrant, died of complications associated with Non-Hodgkin's Lymphoma. Included in the 8-K were the News Release dated November 23, 1995 and Article Seven of the Last Will And Testament of Israel Cohen. 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 December 13, 1995 By /s/ Pete Manos Pete Manos President and Chief Executive Officer Date December 13, 1995 By /s/ David B Sykes David B Sykes Senior Vice President Finance, Treasurer Chief Financial Officer and Principal Accounting Officer - 12 - EX-27 2
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