-----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, WL/Eot9jpbdQggk3OshvAhD/SX/7NdcdSvq6Ka2H41fUWUBHb6nZ1X0VPe8zrw+z sxRcrbKKmi4C1fKeJKpfBQ== 0000041289-97-000004.txt : 19970630 0000041289-97-000004.hdr.sgml : 19970630 ACCESSION NUMBER: 0000041289-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970517 FILED AS OF DATE: 19970627 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: 97630911 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 May 17, 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) 6400 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 59,771,600 "AC" voting 125,000 "AL" voting 125,000 60,021,600 - 1 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - MAY 17, 1997 AND FEBRUARY 22, 1997 Dollar amounts in thousands ASSETS May 17, February 22, 1997 1997 (Unaudited) Current assets: Cash and cash equivalents $ 51,567 $ 40,981 Short-term investments (Note 2) 134,230 137,096 Receivables 59,102 53,452 Income taxes receivable 506 8,501 Inventories (Note 3) 270,689 291,644 Prepaid expenses 27,883 26,202 Total current assets 543,977 557,876 Property, plant and equipment 1,530,516 1,503,725 Less accumulated depreciation 709,358 688,238 821,158 815,487 Property under capital leases, net of accumulated amortization, (5/17/97, $72,629; 2/22/97, $71,192) 105,128 106,565 Other assets 23,564 23,597 $ 1,493,827 $ 1,503,525 See notes to consolidated financial statements. - 2 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - MAY 17, 1997 AND FEBRUARY 22, 1997 Dollar amounts in thousands LIABILITIES AND SHAREHOLDERS' EQUITY May 17, February 22, 1997 1997 (Unaudited) Current liabilities: Current portion of long-term debt $ 12,802 $ 12,660 Accounts payable 238,613 248,368 Accrued liabilities 85,408 86,696 Dividends payable 11,700 11,393 Total current liabilities 348,523 359,117 Long-term debt, net of current portion: Notes and mortgages 38,861 39,039 Obligations under capital leases 143,742 144,953 182,603 183,992 Other liabilities 84,695 86,763 Shareholders' equity Common stock, $1 par, all classes 62,486 62,404 Net unrealized loss on short-term investments (676) (449) Retained earnings 822,272 819,060 884,082 881,015 Less class "A" stock held in treasury, at cost (5/17/97, 235,020 Shares: 2/22/97, 285,464 shares) 6,076 7,362 878,006 873,653 $ 1,493,827 $ 1,503,525 See notes to consolidated financial statements. - 3 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME TWELVE WEEKS ENDED MAY 17, 1997 AND MAY 18, 1996 (Unaudited) Dollar amounts in thousands except for per share data Twelve Weeks 1997 1996 Sales $ 928,936 $ 895,627 Cost of goods sold 663,731 624,483 Operating expenses 238,409 227,322 Interest: Notes and mortgages 598 815 Lease obligations 3,806 3,746 Income (2,204) (3,236) 904,340 853,130 Income before provision for income taxes 24,596 42,497 Provision for income taxes 9,684 16,714 Net income $ 14,912 $ 25,783 Net income per share $ .25 $ .43 Dividends per share $ .195 $ .19 Average number of shares 59,992,139 59,589,692 See notes to consolidated financial statements. - 4 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS TWELVE WEEKS ENDED MAY 17, 1997 AND MAY 18, 1996 (Unaudited) Dollar amounts in thousands Twelve Weeks 1997 1996 Cash flows from operating activities: Net income $ 14,912 $ 25,783 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 21,237 20,623 Amortization of property under capital leases 1,437 1,384 Other adjustments, net 375 375 Net change in cash from changes in operating assets and liabilities, detailed below 8,811 23,426 Net cash provided by operating activities 46,772 71,591 Cash flows from investing activities: Purchase of short-term investments (11,714) (34,168) Maturity of short-term investments 4,220 13,588 Sale of short-term investments 9,986 24,734 Capital expenditures (27,029) (31,133) Other investing activities (221) (2,316) Net cash used in investing activities (24,758) (29,295) Cash flows from financing activities: Repayments of notes and mortgages (158) (139) Repayments of obligations under capital leases (1,089) (974) Issuance of common stock 1,212 1,930 Dividends paid (11,393) (11,009) Net cash used in financing activities (11,428) (10,192) Net change in cash and cash equivalents 10,586 32,104 Cash and cash equivalents, beginning of year 40,981 111,133 Cash and cash equivalents, end of quarter $ 51,567 $ 143,237 Increase (decrease) in cash from changes in operating assets and liabilities: Accounts receivable $ (5,650) $ (2,034) Inventory 20,955 6,660 Income taxes receivable 8,151 Prepaid expenses (1,681) (617) Accounts payable (9,755) 8,186 Accrued expenses (1,289) (1,282) Income taxes payable 7,281 Other liabilities (1,921) 5,232 $ 8,811 $ 23,426 See notes to consolidated financial statements. - 5 - GIANT FOOD INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TWELVE WEEKS ENDED MAY 17, 1997 AND MAY 18, 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 May 17, 1997 and May 18, 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 May 17, 1997: GROSS UNREALIZED HOLDING COST (LOSSES) FAIR VALUE U.S. Treasury securities $107,282 $ (889) $106,393 Federal agency securities 26,775 (223) 26,552 Corporate bonds & other 1,287 ( 2) 1,285 $135,344 $(1,114) $134,230 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 May 17, 1997, were as follows: COST FAIR VALUE Due within one year $ 67,966 $ 67,878 Due after one year through five years 67,378 66,352 $135,344 $134,230 - 6 - 3. Inventories: The inventories valued using the LIFO method were approximately 81% of the Company's inventories as at May 17, 1997 and 83% as at February 22, 1997. Under the FIFO method, these inventories would have been higher by $90,893 and $90,008, respectively. The pre-tax LIFO charge was $885 for the twelve week period ended May 17, 1997 and $1,080 for the twelve week period ended May 18, 1996. 4. In February 1997, the Finanacial Accounting Standers Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share", which is effective for periods ending after December 15, 1997, including interim periods. The new standard requires disclosure of basis and diluted earnings per share for income from continuing operations and net income. The Company intends to adopt this standard in the fourth quarter of its fiscal year ending February 28, 1998. Adoption of this new standard will not have a material impact on the Company's computation of earnings per share. 5. Contingencies: From time to time, the Comapny is involved in legal proceedings that have arisen in the ordinary course of business. Management, after consulting with legal counsel, is of the option that the outcome of such matters will not have a material impact on the consolidated financial position of the Company. 6. Net cash flows from operating activities reflects cash payments for interest and income taxes as follows: 12 weeks ended May 17, May 18, 1997 1996 Interest paid $ 4,875 $ 5,074 Income taxes paid 1,836 9,433 - 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: 12 Weeks Ended 12 Weeks Ended May 17, 1997 May 18, 1996 % % Gross Profit 28.55 30.27 Operating Expenses 25.66 25.38 Interest Expense-Notes & Mortgages .06 .09 Interest Expense-Lease Obligations .41 .41 Interest (Income) ( .23) ( .36) Income Before Income Taxes 2.65 4.75 Provision for Income Taxes 1.04 1.87 Net Income 1.61 2.88 Below are the differences for the periods ended May 17, 1997 compared with May 18, 1996 in thousands of dollars and percentages: Increase (Decrease) Twelve Weeks $ % Sales 33,309 3.7% Gross Profit (5,939) -2.2% Operating Expenses 11,087 4.9% Interest Expense-Notes & Mortgages (217) -26.7% Interest Expense-Lease Obligations 60 1.6% Interest Income 1,032 -31.9% Income Before Income Taxes (17,901) -42.1% Provision for Income Taxes (7,030) -42.1% Net Income (10,871) -42.2% - 8 - GIANT FOOD INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (continued): Results of Operations (Twelve weeks ended May 17, 1997 vs. twelve weeks ended May 18, 1996): Sales increased $33.3 million or 3.7%, from $895.6 million for the twelve weeks ended May 18, 1996 to $928.9 million for the twelve weeks ended May 17, 1997. Stores in operation both years showed an increase of .7%, which is the greatest increase in same store sales over the last five fiscal quarters. Gross profit decreased as a percentage of sales from 30.27% in the twelve weeks ended May 18, 1996 to 28.55% in the twelve weeks ended May 17, 1997. The decrease in gross margin reflects promotional activity to recover market share after the five week truck drivers" strike in the prior quarter. The promotional activity generated an increase in customers transactions of 2.9% over the same quarter last year. The number of items sold in the 12 weeks ended May 17, 1997 increased by 5.7% over the same quarter in the prior year. Operating expenses were $227.3 million and $238.4 million for the twelve weeks ended May 18, 1996 and May 17,1997, respectively. The operating expenses increased as a percentage of sales from 25.38% to 25.66% for the same periods. The increase in operating expenses as a percentage of sales reflects the cost of payroll to maintain service levels during the quarter with added item volume. Another factor is the higher occupancy cost, as a percentage of sales, relating to the nine new stores opened in the latest 52 week period. Interest income decreased by $1.0 million. The decrease was the result of lower cash and short-term investments. Interest expense on notes and mortgages decreased by $217 thousand because of a reduction of debt due to scheduled payments. Pre-tax earnings decreased $17.9 million, a decrease of 42.1%. The effective tax rate was 39.4% for the current period and 39.3% for prior period. Net income decreased from $25.8 million for the twelve weeks ended May 18, 1996 to $14.9 million for the twelve weeks ended May 17, 1997. Net Income was 1.61% of sales for the current quarter compared with 2.88% 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): LIQUIDITY: Cash flow from operations and the amounts held in cash, cash equivalents and short-term investments are the Company's principal source of liquidity. The Company believes that these sources will be adequate to meet its anticipated capital expenditures, dividends and debt service requirements for the balance of fiscal 1998. Planned capital expenditures include the announced plans for opening ten more stores in the current fiscal year, of which six are in the Washington/Baltimore area and four are in Pennsylvania. The lower cash and short-term investment amount is the result of high inventory levels caused by the establishment of alternative channels of distribution to supply the Company's stores during the five week truck drivers" strike. The inventory has decreased by $21.0 million in the last twelve weeks. The company anticipates further decreases in the coming quarter. Working capital decreased $3.3 million from February 22, 1997. As of May 17, 1997 working capital ratio was 1.56 to 1, compared to 1.55 to 1 on February 22, 1997. Including LIFO reserves of $90.9 million as of May 17, 1997, the working capital ratio was 1.82 to 1. As of May 17, 1997, cash and cash equivalents were $51.6 million and short-term investments were $134.2 million totaling $185.8 million compared with $178.1 million on February 22, 1997. CAPITALIZATION: Shareholders' equity as a percentage of capitalization was 82.8% on May 17, 1997, compared to 82.6% on February 22, 1997 and 80.8% on May 18, 1996. - 10 - 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 May 17, 1997. 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 June 26, 1997 By /s/ Pete Manos Pete L. Manos President and Chief Executive Officer Date June 26, 1997 By /s/ Anthony Dahm Anthony Dahm Controller and Chief Accounting Officer - 11 - EX-27 2
5 3-MOS FEB-28-1998 MAY-17-1997 51567000 134230000 59608000 0 270689000 543977000 1530516000 709358000 1493827000 348523000 182603000 0 0 62486000 815520000 1493827000 928936000 928936000 663731000 904340000 0 0 4404000 24596000 9684000 14912000 0 0 0 14912000 .25 .25
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