-----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, T7ag7+4MNE9hSEHT1Fpqor20BnQEZna852BmtFHg2wCam4PasffagPwYpTLkttJ8 KIPkubIc76iGrdtHE8uZgA== 0000041289-96-000006.txt : 19960924 0000041289-96-000006.hdr.sgml : 19960924 ACCESSION NUMBER: 0000041289-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960810 FILED AS OF DATE: 19960923 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: 96633148 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 August 10, 1996 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 59,549,763 "AC" voting 125,000 "AL" voting 125,000 59,799,763 - 1 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - AUGUST 10, 1996 AND FEBRUARY 24, 1996 Dollar amounts in thousands ASSETS August 10, February 24, 1996 1996 (Unaudited) Current assets: Cash and cash equivalents $ 105,379 $ 111,133 Short-term investments (Note 2) 145,793 134,677 Receivables 48,867 47,771 Inventories (Note 3) 210,928 225,801 Prepaid expenses 28,072 26,889 Total current assets 539,039 546,271 Property, plant and equipment 1,438,952 1,405,084 Less accumulated depreciation 638,058 643,693 800,894 761,391 Property under capital leases, net of accumulated amortization, (8/10/96, $67,786; 2/24/96, $65,018) 103,071 105,839 Other assets 37,379 33,638 $ 1,480,383 $ 1,447,139 See notes to consolidated financial statements. - 2 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - AUGUST 10, 1996 AND FEBRUARY 24, 1996 Dollar amounts in thousands LIABILITIES AND SHAREHOLDERS' EQUITY August 10, February 24, 1996 1996 (Unaudited) Current liabilities: Current portion of long-term debt $ 12,413 $ 12,156 Accounts payable 225,158 219,253 Accrued liabilities 85,562 85,763 Dividends payable 11,343 11,009 Income taxes 6,578 9,061 Total current liabilities 341,054 337,242 Long-term debt, net of current portion: Notes and mortgages 44,379 45,959 Obligations under capital leases 140,695 142,863 185,074 188,822 Other liabilities 99,122 98,318 Shareholders' equity Common stock, $1 par, all classes 60,257 60,257 Capital in excess of par value 1,617 388 Net unrealized loss on short-term investments (591) (108) Retained earnings 805,289 779,000 866,572 839,537 Less class "A" stock held in treasury, at cost (8/10/96 456,857 2/24/96, 702,782 shares) 11,439 16,780 855,133 822,757 $ 1,480,383 $ 1,447,139 See notes to consolidated financial statements. - 3 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME TWENTY-FOUR WEEKS ENDED AUGUST 10, 1996 AND AUGUST 12, 1995 (Unaudited) Dollar amounts in thousands except for per share data Twenty-four Weeks Twelve Weeks 1996 1995 1996 1995 Sales $ 1,770,051 $ 1,725,750 $ 874,424 $ 856,515 Cost of goods sold 1,229,100 1,214,067 604,617 602,458 Operating expenses 457,901 442,277 230,579 222,857 Interest: Notes and mortgages 1,593 2,480 778 1,112 Lease obligations 7,469 7,378 3,723 3,680 Income (6,703) (6,173) (3,467) (2,877) 1,689,360 1,660,029 836,230 827,230 Income before provision for income taxes 80,691 65,721 38,194 29,285 Provision for income taxes 31,736 25,850 15,022 11,520 Net income $ 48,955 $ 39,871 $ 23,172 $ 17,765 Net income per share $ .82 .67 $ .39 $ .30 Dividends per share $ .38 .37 $ .19 $ .185 Average number of shares 59,651,841 59,278,951 59,713,990 59,296,126 See notes to consolidated financial statements. - 4 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS TWENTY-FOUR WEEKS ENDED AUGUST 10, 1996 AND AUGUST 12, 1995 (Unaudited) Dollar amounts in thousands Twenty-four Weeks 1996 1995 Cash flows from operating activities: Net income $ 48,955 $ 39,871 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 41,437 41,446 Amortization of property under capital leases 2,768 2,667 Other adjustments, net 750 750 Net change in cash from changes in operating assets and liabilities, detailed below 18,039 4,042 Net cash provided by operating activities 111,949 88,776 Cash flows from investing activities: Purchase of short-term investments (73,367) (30,586) Sale of short-term investments 47,866 12,032 Maturity of short-term 13,588 10,000 Capital expenditures (81,084) (63,023) Other investing activities (4,347) (2,001) Net cash used in investing activities (97,344) (73,578) Cash flows from financing activities: Repayments of notes and mortgages (1,544) (17,513) Repayments of obligations under capital leases (1,947) (1,758) Purchases of treasury stock Issuance of common stock 5,464 1,817 Dividends paid (22,332) (21,649) Net cash used in financing activities (20,359) (39,103) Net change in cash and cash equivalents (5,754) (23,905) Cash and cash equivalents, beginning of year 111,133 157,045 Cash and cash equivalents, end of quarter $ 105,379 $ 133,140 Increase (decrease) in cash from changes in operating assets and liabilities: Accounts receivable $ (1,096) $ (1,635) Inventory 14,873 24,963 Prepaid expenses (1,183) 507 Accounts payable 5,905 (8,119) Accrued expenses (201) (4,570) Income taxes payable (1,377) (6,326) Deferred taxes (1,086) Other liabilities 1,118 308 $ 18,039 $ 4,042 See notes to consolidated financial statements. - 5 - GIANT FOOD INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TWENTY-FOUR WEEKS ENDED AUGUST 10, 1996 AND AUGUST 12, 1995 (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 August 10, 1996 and August 12, 1995 are not necessarily indicative of results to be expected for the full year. 2. Short-term investments: Short-term investments consisted of: As of August 10, 1996: GROSS UNREALIZED HOLDING COST (LOSSES) FAIR VALUE U.S. Treasury securities $117,214 $ (810) $116,404 Federal agency securities 24,552 (164) 24,388 Corporate bonds or other 5,001 5,001 $146,767 $ (974) $145,793 As of February 24, 1996: GROSS UNREALIZED HOLDING COST (LOSSES) FAIR VALUE U.S. Treasury securities $111,021 $ (168) $110,853 Federal agency securities 22,920 (9) 22,911 Corporate bonds or other 913 913 $134,854 $ (177) $134,677 Maturities of short-term investments at August 10, 1996, were as follows: COST FAIR VALUE Due within one year $ 58,249 $ 58,394 Due after one year through five years 88,518 87,399 $146,767 $145,793 - 6 - 3. Inventories: The inventories using the LIFO method were valued at approximately 81% of the Company's inventories as at August 10, 1996 and 84% as at February 24, 1996. Under the FIFO method, these inventories would have been higher by $87,873 and $85,713, respectively. The pre-tax LIFO charge was $2,160 for the twenty-four week period ended August 10, 1996 and $1,800 for the twenty-four week period ended August 12, 1995. 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. 5. Net cash flows from operating activities reflects cash payments for interest and income taxes as follows: 24 weeks ended August 10, August 12, 1996 1995 Interest paid $10,141 $10,806 Income taxes paid 33,113 17,750 - 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 10, August 12, August 10, August 12, 1996 1995 1996 1995 % % % % Gross Profit 30.56 29.65 30.86 29.66 Operating Expenses 25.87 25.63 26.37 26.02 Interest Expense: Notes & Mortgages .09 .14 .09 .13 Lease Obligations .42 .43 .43 .43 Interest (Income) ( .38) ( .36) ( .40) ( .34) Income Before Income Taxes 4.56 3.81 4.37 3.42 Provision for Income Taxes 1.79 1.50 1.72 1.35 Net Income 2.77 2.31 2.65 2.07 Below are the differences for the periods ended August 10, 1996 compared with August 12, 1995 in thousands of dollars and percentages: Increase (Decrease) Increase (Decrease) Twenty-four Weeks Twelve Weeks $ % $ % Sales 44,301 2.6% 17,909 2.1% Gross Profit 29,268 5.7% 15,750 6.2% Operating Expenses 15,624 3.5% 7,722 3.5% Interest Expense: Notes & Mortgages (887) -35.8% (334) -30.0% Lease Obligations 91 1.2% 43 1.2% Interest Income (530) 8.6% (590) 20.5% Income Before Income Taxes 14,970 22.8% 8,909 30.4% Provision for Income Taxes 5,886 22.8% 3,502 30.4% Net Income 9,084 22.8% 5,407 30.4% - 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 10, 1996 vs. twenty- four weeks ended August 12, 1995): Sales increased $44.3 million or 2.6%. The change in sales for stores in operation both years was a decrease of .1%. Same store sales were affected by the soft economy and the cannibalization from four food-drug stores which were opened between November 1995 and January 1996. Eliminating the cannibalization effect, same store sales would have been up .7% for the twenty-four weeks. Gross profit increased $29.2 million. Gross profit as a percent of sales was 30.56% compared to 29.65% for the prior year. The gross profit % increase resulted primarily through improved product mix and increases in buying performance. Operating expenses increased from 25.63% of sales to 25.87%. The principal reason are the occupancy costs associated with eight new stores opened since August 12, 1995, which includes four units in the New Jersey - Delaware area. Interest expense - notes and mortgages decreased by $.9 million because of lower debt. Interest income increased by $.5 million because of higher balances of investable cash and short term investments. Pre-tax earnings increased $15.0 million, an increase of 22.8%. The effective tax rate was 39.3% for both the current and prior year. Net income was 2.77% of sales for the current period compared with 2.31% 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 August 10, 1996 vs. twelve weeks ended August 12, 1995): Sales increased $17.9 million or 2.1%. The sales for stores in operation in both years was a decrease of .4%. This same store sales change was impacted by new units drawing sales away from existing units. Without cannibalization same store sales would have increased .4%. Gross profit increased $15.8 million. Gross profit as a percent of sales was 30.86% compared to 29.66% for the prior year and 30.27% from the most recent quarter. The gross profit % increase resulted from increases in buying performance and improved product mix. Operating expenses were 26.37% of sales in the current year compared to 26.02% in the prior year. Occupancy costs as discussed previously were the principal cause of the increase. During this quarter a negotiated contract was completed with the balance of the retail clerks. This contract is in effect for the store associates through March, 2000. Interest expense - notes and mortgages decreased by $334 thousand because of lower debt. Interest income increased by $590 thousand because of higher investable cash balances and short term investments. Pre-tax earnings were up $8.9 million, an increase of 30.4%. The effective tax rate was 39.3% for both the current and prior year. Net income was 2.65% of sales for the current quarter compared with 2.07% 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 $11.0 million from February 24, 1996. At August 10, 1996 working capital ratio was 1.58 to 1, compared to 1.61 to 1 at February 24, 1996. Including LIFO reserves of $87.9 million at August 10, 1996, the working capital ratio was 1.84 to 1. At August 10, 1996, cash and cash equivalents were $105.4 million and short-term investments were $145.8 million totaling $251.2 million compared with $245.8 million as at February 24, 1996. During the twelve months ended August 10, 1996 notes and mortgage debt was reduced by $12.3 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, debt reduction and dividend requirements. Capital expenditures include opening of five additional food-drug stores in the balance of the current fiscal year. The Company has a $50 million revolving credit facility, a $10 million credit line and has not had any short-term bank borrowings for more than seventeen years. CAPITALIZATION: Shareholders' equity as a percentage of capitalization was 81.2% on August 10, 1996, compared to 80.4% on February 24, 1996 and 79.9% on August 12, 1995. - 11 - GIANT FOOD INC. AND SUBSIDIARIES OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K: The Company filed a Form 8-K on August 19, 1996. On August 6, 1996 the Estate of Israel Cohen sold two million shares of Giant Food Inc. Class A common stock (non-voting) to J. Sainsbury (USA) Holdings, Inc., a subsidiary of J. Sainsbury plc. The transaction was undertaken to enable the Estate to facilitate its tax planning. 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, 1996 By /s/ Pete Manos Pete Manos President and Chief Executive Officer Date September 23, 1996 By /s/ Anthony E. Dahm Anthony E. Dahm Controller and Chief Accounting Officer - 12 - EX-27 2
5 6-MOS FEB-22-1997 AUG-10-1996 105379000 145793000 48867000 0 210928000 539039000 1438952000 638058000 1480383000 341054000 0 0 0 61874000 793259000 1480383000 1770051000 1770051000 1229100000 457901000 0 0 2359000 80691000 31736000 0 0 0 0 48955000 .82 .81
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