-----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, P3EJRJe/wxj36DxXDFNh8ktPOCn7MciA+19B2WQWUHbY6wTzympnMbG35cwYIYRP uD4IXhmAPb713A5PIO73Fg== 0000041289-97-000005.txt : 19970923 0000041289-97-000005.hdr.sgml : 19970923 ACCESSION NUMBER: 0000041289-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970809 FILED AS OF DATE: 19970922 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: 0222 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04434 FILM NUMBER: 97683474 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 9, 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) 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 59,867,957 "AC" voting 125,000 "AL" voting 125,000 60,117,957 - 1 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - AUGUST 9, 1997 AND FEBRUARY 22, 1997 Dollar amounts in thousands ASSETS August 9, February 22, 1997 1997 (Unaudited) Current assets: Cash and cash equivalents $ 31,471 $ 40,981 Short-term investments (Note 2) 142,262 137,096 Receivables 59,520 53,452 Income taxes receivable 6,589 8,501 Inventories (Note 3) 247,532 291,644 Prepaid expenses 26,804 26,202 Total current assets 514,178 557,876 Property, plant and equipment 1,528,045 1,503,725 Less accumulated depreciation 690,428 688,238 837,617 815,487 Property under capital leases, net of accumulated amortization, (8/09/97, $74,066; 2/22/97, $71,192) 108,784 106,565 Other assets 23,371 23,597 $ 1,483,950 $ 1,503,525 See notes to consolidated financial statements. - 2 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - AUGUST 9, 1997 AND FEBRUARY 22, 1997 Dollar amounts in thousands LIABILITIES AND SHAREHOLDERS' EQUITY August 9, February 24, 1997 1997 (Unaudited) Current liabilities: Current portion of long-term debt $ 12,944 $ 12,660 Accounts payable 229,494 248,368 Accrued liabilities 84,678 86,696 Dividends payable 11,687 11,393 Total current liabilities 338,803 359,117 Long-term debt, net of current portion: Notes and mortgages 37,518 39,039 Obligations under capital leases 147,623 144,953 185,141 183,992 Other liabilities 83,103 86,763 Shareholders' equity Common stock, $1 par, all classes 62,672 62,404 Net unrealized loss on short-term investments (399) (449) Retained earnings 818,206 819,060 880,479 881,015 Less class "A" stock held in treasury, at cost (8/09/97, 138,663 Shares: 2/22/97, 285,464 shares) 3,576 7,362 876,903 873,653 $ 1,483,950 $ 1,503,525 See notes to consolidated financial statements. - 3 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME TWENTY-FOUR WEEKS ENDED AUGUST 9, 1997 AND AUGUST 10, 1996 (Unaudited) Dollar amounts in thousands except for per share data Twenty-four Weeks Twelve Weeks 1997 1996 1997 1996 Sales $ 1,863,718 $ 1,770,051 $ 934,782 $ 874,424 Cost of goods sold 1,342,967 1,229,100 679,236 604,617 Operating expenses 479,414 457,901 241,005 230,579 Interest: Notes and mortgages 1,232 1,593 635 778 Lease obligations 7,612 7,469 3,806 3,723 Income (4,696) (6,703) (2,493) (3,467) 1,826,529 1,689,360 922,189 836,230 Income before provision for income taxes 37,189 80,691 12,593 38,194 Provision for income taxes 14,636 31,736 4,953 15,022 Net income $ 22,553 $ 48,955 $ 7,640 $ 23,172 Net income per share $ .38 .82 $ .13 $ .39 Dividends per share $ .39 .38 $ .195 $ .19 Average number of shares 60,036,970 59,651,841 60,081,801 59,713,990 See notes to consolidated financial statements. - 4 - GIANT FOOD INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS TWENTY-FOUR WEEKS ENDED AUGUST 9, 1997 AND AUGUST 10, 1996 (Unaudited) Dollar amounts in thousands Twenty-four Weeks 1997 1996 Cash flows from operating activities: Net income $ 22,553 $ 48,955 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 42,833 41,437 Amortization of property under capital leases 2,873 2,768 Other adjustments, net 750 750 Net change in cash from changes in operating assets and liabilities, detailed below 15,241 18,039 Net cash provided by operating activities 84,250 111,949 Cash flows from investing activities: Purchase of short-term investments (41,780) (73,367) Sale of short-term investments 18,703 47,866 Maturity of short-term 17,993 13,588 Capital expenditures (65,216) (81,084) Other investing activities (271) (4,347) Net cash used in investing activities (70,571) (97,344) Cash flows from financing activities: Repayments of notes and mortgages (1,481) (1,544) Repayments of obligations under capital leases (2,178) (1,947) Purchases of treasury stock Issuance of common stock 3,583 5,464 Dividends paid (23,113) (22,332) Net cash used in financing activities (23,189) (20,359) Net change in cash and cash equivalents (9,510) (5,754) Cash and cash equivalents, beginning of year 40,981 111,133 Cash and cash equivalents, end of quarter $ 31,471 $ 105,379 Increase (decrease) in cash from changes in operating assets and liabilities: Accounts receivable $ (6,068) $ (1,096) Inventory 44,112 14,873 Income Taxes Receivable 2,383 Prepaid expenses (602) (1,183) Accounts payable (18,874) 5,905 Accrued expenses (2,018) (201) Income taxes payable (1,377) Other liabilities (3,692) 1,118 $ 15,241 $ 18,039 See notes to consolidated financial statements. - 5 - GIANT FOOD INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TWENTY-FOUR WEEKS ENDED AUGUST 9, 1997 AND AUGUST 10, 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 August 9, 1997 and August 10, 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 August 9, 1997: GROSS UNREALIZED HOLDING COST (LOSSES) FAIR VALUE U.S. Treasury securities $104,745 $ (487) $104,258 Federal agency securities 26,757 (124) 26,633 Corporate bonds or other 11,407 (36) 11,371 $142,909 $ (647) $142,262 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 August 9, 1997, were as follows: COST FAIR VALUE Due within one year $ 76,542 $ 76,519 Due after one year through five years 66,367 65,743 $142,909 $142,262 - 6 - 3. Inventories: The inventories using the LIFO method were valued at approximately 81% of the Company's inventories as at August 9, 1997 and 83% as at February 22, 1997. Under the FIFO method, these inventories would have been higher by $91,778 and $90,008, respectively. The pre-tax LIFO charge was $1,770 for the twenty-four week period ended August 9, 1997 and $2,160 for the twenty-four week period ended August 10, 1996. 4. New Accounting Standards: During 1997, the Financial Accounting Standards Board has issued Statements of Financial Accounting Standards No. 128, "Earnings per Share"; No. 129, "Disclosure of Information about Capital Structure"; No. 130, "Reporting Comprehensive Income"; and No. 131, "Disclosures about Segments of an Enterprise and Related Information." These Statements address presentation and disclosure matters and will have no impact on the Company's financial position or results of operations. These statements become effective during the Company's fiscal years 1998 and 1999 and will be adopted as applicable. 5. 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. 6. Cash Flows: Net cash flows from operating activities reflects cash payments for interest and income taxes as follows: 24 weeks ended August 9, August 10, 1997 1996 Interest paid $ 9,939 $10,141 Income taxes paid 12,870 33,113 Non-cash investing and financing activities include capital leases of $5,100 during the twenty-four weeks ended August 10, 1996. - 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 9, August 10, August 9, August 10, 1997 1996 1997 1996 % % % % Gross Profit 27.94 30.56 27.34 30.86 Operating Expenses 25.72 25.87 25.78 26.37 Interest Expense: Notes & Mortgages .07 .09 .07 .09 Lease Obligations .40 .42 .41 .43 Interest (Income) ( .25) ( .38) ( .27) ( .40) Income Before Income Taxes 2.00 4.56 1.35 4.37 Provision for Income Taxes .79 1.79 .53 1.72 Net Income 1.21 2.77 .82 2.65 Below are the differences for the periods ended August 9, 1997 compared with August 10, 1996 in thousands of dollars and percentages: Increase (Decrease) Increase (Decrease) Twenty-four Weeks Twelve Weeks $ % $ % Sales 93,667 5.3% 60,358 6.9% Gross Profit (20,200) -3.7% (14,261) -5.3% Operating Expenses 21,513 4.7% 10,426 4.5% Interest Expense: Notes & Mortgages (361) -22.6% (143) -18.4% Lease Obligations 143 1.9% 83 2.2% Interest Income 2,007 -29.9% 974 -28.4% Income Before Income Taxes (43,502) -53.9% (25,601) -67.0% Provision for Income Taxes (17,100) -53.9% (10,069) -67.0% Net Income (26,402) -53.9% (15,532) -67.0% - 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 9, 1997 vs. twenty- four weeks ended August 10, 1996): Sales increased $93.7 million or 5.3%. The change in sales for stores in operation both years was an increase of 1.6%. The Company continued to execute a strategy of increasing it's sales volume. During the 24 week period the Company increased the number of items sold by 8.7% while showing an increase in customer transactions of 4.6%. Gross profit decreased $20.2 million. The sales promotions that were instrumental in increasing customer counts and items sold had the effect of lowering the gross profit percentage to 27.94% compared to 30.56% for the prior year. Operating expenses as a percent of sales, decreased from 25.87% of sales in the prior year to 25.72%. The current year expense increased $21.5 million, 4.7%. The increase was primarily in store payroll in order to provide the additional services needed for the increase in the Company's business. Interest expense - notes and mortgages decreased by $.4 million because of lower debt. Interest income decreased by $2.0 million because of lower balances of investable cash and short term investments. Pre-tax earnings decreased $43.5 million, a decrease of 53.9%. The effective tax rate was 39.4% for the current year and 39.3% for the prior year. Net income was 1.21% of sales for the current period compared with 2.77% 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 9, 1997 vs. twelve weeks ended August 10, 1996): Sales increased $60.4 million or 6.9%. The sales for stores in operation in both years was an increase of 2.4%. The twelve week contained an increase in items sold of 11.8% and customer transactions increased 6.3%. Gross profit decreased $14.3 million. Gross profit as a percent of sales was 27.34% compared to 30.86% for the prior year and 28.55% from the most recent quarter due to the reasons cited in the 24 week analysis. Operating expenses were 25.78% of sales in the current year compared to 26.37% in the prior year. The increase in expenses of $10.4 million or 4.5% was well below the 6.9% sales gain. Interest expense - notes and mortgages decreased by $134 thousand because of lower debt. Interest income decreased by $974 thousand because of lower investable cash balances and short term investments. Pre-tax earnings were down $25.6 million, a decrease of 67.0%. The effective tax rate was 39.3% for both the current and prior year. Net income was .82% of sales for the current quarter compared with 2.65% 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 $23.4 million from February 22, 1997. At August 9, 1997 working capital ratio was 1.52 to 1, compared to 1.55 to 1 at February 22, 1997. Including LIFO reserves of $91.8 million at August 9, 1997, the working capital ratio was 1.79 to 1. At August 9, 1997, cash and cash equivalents were $31.5 million and short-term investments were $142.2 million totaling $173.7 million compared with $178.1 million as at February 22, 1997. During the twelve months ended August 9, 1997 notes and mortgage debt was reduced by $1.5 million. CAPITALIZATION: Shareholders' equity as a percentage of capitalization was 82.6% on August 9, 1997, compared to 82.6% on February 22, 1997 and 81.2% on August 10, 1996. - 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 September 22, 1997 By Pete Manos President and Chief Executive Officer Date September 22, 1997 By Mark H. Berey Senior Vice President of Finance, Treasurer and Chief Financial Officer - 12 - EX-27 2
5 6-MOS FEB-28-1998 AUG-9-1997 31471000 142262000 66109000 0 247532000 514178000 1528045000 690428000 1483950000 338803000 185141000 0 0 62672000 814231000 1483950000 1863718000 1863718000 1342967000 1826529000 0 0 8844000 37189000 14636000 22553000 0 0 0 22553000 .38 .37
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