-----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, Mx0ls0CUVCR1HNfIKo4afLeK03qiwV0unuVJGSaYcUbAp0+pnpPym4Iy6wGFxKA0 RRbM0Ep5jgjwUm420sYEHw== 0000041289-96-000007.txt : 19970225 0000041289-96-000007.hdr.sgml : 19970225 ACCESSION NUMBER: 0000041289-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961102 FILED AS OF DATE: 19961213 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: 96680387 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 2, 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 59,618,231 "AC" voting 125,000 "AL" voting 125,000 59,868,231 - 1 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - NOVEMBER 2, 1996 AND FEBRUARY 24, 1996 Dollar amounts in thousands ASSETS November 2, February 24, 1996 1996 (Unaudited) Current assets: Cash and cash equivalents $ 61,061 $ 111,133 Short-term investments (Note 2) 148,836 134,677 Receivables 52,817 47,771 Inventories (Note 3) 260,112 225,801 Prepaid expenses 30,346 26,889 Total current assets 553,172 546,271 Property, plant and equipment 1,468,100 1,405,084 Less accumulated depreciation 657,720 643,693 810,380 761,391 Property under capital leases, net of accumulated amortization, (11/02/96, $69,170; 2/24/96, $65,018) 101,687 105,839 Other assets 38,633 33,638 $ 1,503,872 $ 1,447,139 See notes to consolidated financial statements. - 2 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - NOVEMBER 2, 1996 AND FEBRUARY 24, 1996 Dollar amounts in thousands LIABILITIES AND SHAREHOLDERS' EQUITY November 2, February 24, 1996 1996 (Unaudited) Current liabilities: Current portion of long-term debt $ 12,445 $ 12,156 Accounts payable 260,279 219,253 Accrued liabilities 78,668 85,763 Dividends payable 11,346 11,009 Income taxes 3,880 9,061 Total current liabilities 366,618 337,242 Long-term debt, net of current portion: Notes and mortgages 39,211 45,959 Obligations under capital leases 139,609 142,863 178,820 188,822 Other liabilities 93,769 98,318 Shareholders' equity Common stock, $1 par, all classes 60,257 60,257 Capital in excess of par value 1,945 388 Net unrealized loss on short-term investments (201) (108) Retained earnings 812,792 779,000 874,793 839,537 Less class "A" stock held in treasury, at cost (11/02/96 388,389 2/24/96, 702,782 shares) 10,128 16,780 864,665 822,757 $ 1,503,872 $ 1,447,139 See notes to consolidated financial statements. - 3 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THIRTY-SIX WEEKS ENDED NOVEMBER 2, 1996 AND NOVEMBER 4, 1995 (Unaudited) Dollar amounts in thousands except for per share data Thirty-six Weeks Twelve Weeks 1996 1995 1996 1995 Sales $ 2,667,028 $ 2,596,416 $ 896,977 $ 870,666 Cost of goods sold 1,857,334 1,825,897 628,234 611,830 Operating expenses 694,309 670,845 236,408 228,568 Interest: Notes and mortgages 2,202 3,720 608 1,240 Lease obligations 11,170 11,079 3,701 3,701 Income (9,764) (9,551) (3,061) (3,378) 2,555,251 2,501,990 865,890 841,961 Income before provision for income taxes 111,777 94,426 31,087 28,705 Provision for income taxes 43,962 37,135 12,227 11,285 Net income $ 67,815 $ 57,291 $ 18,860 $ 17,420 Net income per share $ 1.14 .97 $ .32 $ .30 Dividends per share $ .57 .555 $ .19 $ .185 Average number of shares 59,711,609 59,307,748 59,831,144 59,365,343 See notes to consolidated financial statements. - 4 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THIRTY-SIX WEEKS ENDED NOVEMBER 2, 1996 AND NOVEMBER 4, 1995 (Unaudited) Dollar amounts in thousands Thirty-six Weeks 1996 1995 Cash flows from operating activities: Net income $ 67,815 $ 57,291 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 64,322 64,389 Amortization of property under capital leases 4,152 4,022 Other adjustments, net 1,125 1,125 Net change in cash from changes in operating assets and liabilities, detailed below (17,017) 2,004 Net cash provided by operating activities 120,397 128,831 Cash flows from investing activities: Purchase of short-term investments (134,925) (50,734) Sale of short-term investments 97,025 16,966 Maturity of short-term 23,588 10,000 Capital expenditures (112,986) (96,953) Other investing activities (6,446) (4,321) Net cash used in investing activities (133,744) (125,042) Cash flows from financing activities: Repayments of notes and mortgages (6,791) (27,646) Repayments of obligations under capital leases (2,921) (2,658) Purchases of treasury stock Issuance of common stock 6,673 4,116 Dividends paid (33,686) (32,602) Net cash used in financing activities (36,725) (58,790) Net change in cash and cash equivalents (50,072) (55,001) Cash and cash equivalents, beginning of year 111,133 157,045 Cash and cash equivalents, end of quarter $ 61,061 $ 102,044 Increase (decrease) in cash from changes in operating assets and liabilities: Accounts receivable $ (5,046) $ (3,108) Inventory (34,311) (2,747) Prepaid expenses (3,457) (1,539) Accounts payable 41,026 25,510 Accrued expenses (7,095) (7,171) Income taxes payable (3,645) (8,442) Deferred taxes (4,000) Other liabilities (489) (499) $ (17,017) $ 2,004 See notes to consolidated financial statements. - 5 - GIANT FOOD INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THIRTY-SIX WEEKS ENDED NOVEMBER 2, 1996 AND NOVEMBER 4, 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 November 2, 1996 and November 4, 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 November 2, 1996: GROSS UNREALIZED HOLDING COST (LOSSES) FAIR VALUE U.S. Treasury securities $122,836 $ (275) $122,561 Federal agency securities 25,302 (56) 25,246 Corporate bonds or other 1,029 1,029 $149,167 $ (331) $148,836 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 November 2, 1996, were as follows: COST FAIR VALUE Due within one year $ 59,216 $ 59,558 Due after one year through five years 89,951 89,278 $149,167 $148,836 - 6 - 3. Inventories: The inventories using the LIFO method were valued at approximately 81% of the Company's inventories as at November 2, 1996 and 84% as at February 24, 1996. Under the FIFO method, these inventories would have been higher by $88,953 and $85,713, respectively. The pre-tax LIFO charge was $3,240 for the thirty-six week period ended November 2, 1996 and $2,700 for the thirty-six week period ended November 4, 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: 36 weeks ended November 2, November 4, 1996 1995 Interest paid $15,160 $16,340 Income taxes paid 51,607 45,577 - 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 2, November 4, November 2, November 4, 1996 1995 1996 1995 % % % % Gross Profit 30.36 29.68 29.96 29.73 Operating Expenses 26.03 25.84 26.36 26.25 Interest Expense: Notes & Mortgages .08 .14 .07 .14 Lease Obligations .42 .43 .41 .43 Interest (Income) ( .36) ( .37) ( .34) ( .39) Income Before Income Taxes 4.19 3.64 3.46 3.30 Provision for Income Taxes 1.65 1.43 1.36 1.30 Net Income 2.54 2.21 2.10 2.00 Below are the differences for the periods ended November 2, 1996 compared with November 4, 1995 in thousands of dollars and percentages: Increase (Decrease) Increase (Decrease) Thirty-six Weeks Twelve Weeks $ % $ % Sales 70,612 2.7% 26,311 3.0% Gross Profit 39,175 5.1% 9,907 3.8% Operating Expenses 23,464 3.5% 7,840 3.4% Interest Expense: Notes & Mortgages (1,518) -40.8% (632) -51.0% Lease Obligations 91 .8% 0 .0% Interest Income (213) 2.2% 317 -9.4% Income Before Income Taxes 17,351 18.4% 2,382 8.3% Provision for Income Taxes 6,827 18.4% 942 8.3% Net Income 10,524 18.4% 1,440 8.3% - 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 2, 1996 vs. thirty- six weeks ended November 4, 1995): Sales increased $70.6 million or 2.7%. The change in sales for stores in operation both years was a decrease of .24%. Same store sales were affected by the soft economy and the cannibalization from six food-drug stores which were opened between November 1995 and January 1996. Eliminating the cannibalization effect, same store sales would have been up .71% for the thirty-six weeks. Gross profit increased $39.2 million. Gross profit as a percent of sales was 30.36% compared to 29.68% for the prior year. The gross profit % increase resulted primarily through improved product mix and increases in buying performance. Operating expenses increased from 25.84% of sales to 26.03%. The principal reason are the occupancy costs associated with ten new stores opened since November 4, 1995, which includes five units in the New Jersey/Delaware/ Pennsylvania area. Interest expense - notes and mortgages decreased by $1.5 million because of lower debt. Interest income increased by $.2 million because of higher balances of investable cash and short term investments. Pre-tax earnings increased $17.4 million, an increase of 18.4%. The effective tax rate was 39.3% for both the current and prior year. Net income was 2.54% of sales for the current period compared with 2.21% 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 2, 1996 vs. twelve weeks ended November 4, 1995): Sales increased $26.3 million or 3.0%. The sales for stores in operation in both years was a decrease of .48%. This same store sales change was impacted by new units drawing sales away from existing units. Without cannibalization same store sales would have increased .71%. Gross profit increased $9.9 million. Gross profit as a percent of sales was 29.96% compared to 29.73% for the prior year. The current quarter gross profit of 29.96% was down from the most recent quarter's 30.86%. The decline was caused by increased promotional activities. Operating expenses were 26.36% of sales in the current year compared to 26.25% in the prior year. Occupancy costs as discussed previously were the principal cause of the increase. Interest expense - notes and mortgages decreased by $632 thousand because of lower debt. Interest income decreased by $317 thousand because of lower investable cash balances and short term investments. Pre-tax earnings were up $2.4 million, an increase of 8.3%. The effective tax rate was 39.3% for both the current and prior year. Net income was 2.10% of sales for the current quarter compared with 2.00% 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 $22.5 million from February 24, 1996. At November 2, 1996 working capital ratio was 1.51 to 1, compared to 1.61 to 1 at February 24, 1996. Including LIFO reserves of $89.0 million at November 2, 1996, the working capital ratio was 1.75 to 1. At November 2, 1996, cash and cash equivalents were $61.1 million and short-term investments were $148.8 million totaling $209.9 million compared with $245.8 million as at February 24, 1996. During the twelve months ended November 2, 1996 notes and mortgage debt was reduced by $7.4 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 the opening of one new food-drug store in the balance of the current fiscal year. The Company is currently planning at least ten new stores in the next fiscal year of which three are already under construction. 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 81.9% on November 2, 1996, compared to 80.4% on February 24, 1996 and 81.0% on November 4, 1995. - 11 - GIANT FOOD INC. AND SUBSIDIARIES OTHER INFORMATION 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 December 13, 1996 By /s/ Pete Manos Pete Manos President and Chief Executive Officer Date December 13, 1996 By /s/ Anthony E. Dahm Anthony E. Dahm Controller and Chief Accounting Officer - 12 - EX-27 2
5 9-MOS FEB-24-1996 NOV-02-1996 61061000 148836000 52817000 0 260112000 553172000 1468100000 657720000 1503872000 366618000 178820000 0 0 60257000 804408000 1503872000 2667028000 2667028000 1857334000 2555251000 0 0 13372000 111777000 43962000 67815000 0 0 0 67815000 1.14 1.12
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