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 12, 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 59,084,930
"AC" voting 125,000
"AL" voting 125,000
59,334,930
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - AUGUST 12, 1995 AND FEBRUARY 25, 1995
Dollar amounts in thousands
ASSETS
August 12, February 25,
1995 1995
(Unaudited)
Current assets:
Cash and cash equivalents $ 133,140 $ 157,045
Short-term investments (Note 2) 103,180 92,757
Receivables 45,502 43,867
Inventories (Note 3) 213,015 237,978
Prepaid expenses 24,185 24,692
Total current assets 519,022 556,339
Property, plant and equipment 1,333,679 1,329,399
Less accumulated depreciation 594,684 609,214
738,995 720,185
Property under capital leases, net
of accumulated amortization, (8/12/95,
$62,543; 2/25/95, $59,876) 102,835 105,502
Other assets 38,702 34,684
$ 1,399,554 $ 1,416,710
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - AUGUST 12, 1995 AND FEBRUARY 25, 1995
Dollar amounts in thousands
LIABILITIES AND SHAREHOLDERS' EQUITY
August 12, February 25,
1995 1995
(Unaudited)
Current liabilities:
Current portion of long-term debt $ 12,334 $ 28,136
Accounts payable 217,710 225,829
Accrued liabilities 80,739 85,309
Dividends payable 10,965 10,663
Income taxes 10,482 16,808
Total current liabilities 332,230 366,745
Long-term debt, net of current portion:
Notes and mortgages 56,261 57,805
Obligations under capital leases 139,021 140,946
195,282 198,751
Other liabilities 95,715 95,758
Shareholders' equity
Common stock, $1 par, all classes 60,257 60,257
Net unrealized loss on short-term investments (514) (1,648)
Retained earnings 738,592 720,784
798,335 779,393
Less class "A" stock held in
treasury, at cost (8/12/95 921,690
2/25/95, 1,002,464 shares) 22,008 23,937
776,327 755,456
$ 1,399,554 $ 1,416,710
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
TWENTY-FOUR WEEKS ENDED AUGUST 12, 1995 AND AUGUST 13, 1994
(Unaudited)
Dollar amounts in thousands
except for per share data
Twenty-four Weeks Twelve Weeks
1995 1994 1995 1994
Sales $ 1,725,750 $ 1,656,097 $ 856,515 $ 826,400
Cost of goods sold 1,214,067 1,167,749 602,458 583,899
Operating expenses 442,277 425,522 222,857 215,018
Interest:
Notes and mortgages 2,480 3,778 1,112 1,837
Lease obligations 7,378 7,521 3,680 3,764
Income (6,173) (4,324) (2,877) (2,300)
Other income (1,978)
1,660,029 1,598,268 827,230 802,218
Income before provision
for income taxes 65,721 57,829 29,285 24,182
Provision for income
taxes 25,850 22,744 11,520 9,511
Net income $ 39,871 $ 35,085 $ 17,765 $ 14,671
Net income per share $ .67 .59 $ .30 $ .25
Dividends per share .37 .36 $ .185 $ .18
Average number
of shares 59,278,951 59,476,236 59,296,126 59,399,179
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
TWENTY-FOUR WEEKS ENDED AUGUST 12, 1995 AND AUGUST 13, 1994
(Unaudited)
Dollar amounts in thousands
Twenty-four Weeks
1995 1994
Cash flows from operating activities:
Net income $ 39,871 $ 35,085
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 41,446 41,792
Amortization of property under capital leases 2,667 2,668
Other adjustments, net (1,251) 760
Net change in cash from changes in operating
assets and liabilities, detailed below 4,042 (3,644)
Net cash provided by operating activities 86,775 76,661
Cash flows from investing activities:
Purchase of short-term investments (30,586) (12,245)
Sale of short-term investments 12,032 39,000
Maturity of short-term 10,000
Capital expenditures (63,023) (50,972)
Net cash used in investing activities (71,577) (24,217)
Cash flows from financing activities:
Repayments of notes and mortgages (17,513) (1,505)
Repayments of obligations under capital leases (1,758) (1,603)
Purchases of treasury stock (5,779)
Issuance of common stock 1,817 135
Dividends paid (21,649) (21,128)
Net cash used in financing activities (39,103) (29,880)
Net change in cash and cash equivalents (23,905) 22,564
Cash and cash equivalents, beginning of year 157,045 111,845
Cash and cash equivalents, end of quarter $ 133,140 $ 134,409
Increase (decrease) in cash from changes in
operating assets and liabilities:
Accounts receivable $ (1,635) $ (3,286)
Inventory 24,963 25,731
Prepaid expenses 507 1,005
Accounts payable (8,119) (28,570)
Accrued expenses (4,570) 160
Income taxes payable (6,326) 183
Deferred taxes (1,086)
Other liabilities 308 1,133
$ 4,042 $ (3,644)
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWENTY-FOUR WEEKS ENDED AUGUST 12, 1995 AND AUGUST 13, 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 twelve weeks ended August 12, 1995 and August 13,
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 August 12, 1995:
GROSS
UNREALIZED HOLDING
COST (LOSSES) FAIR VALUE
U.S. Treasury securities $ 80,192 $ (672) $ 79,520
Federal agency securities 18,174 (153) 18,021
Corporate bonds or other 5,680 (41) 5,639
$104,046 $ (866) $103,180
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 August 12, 1995, were as
follows:
COST FAIR VALUE
Due within one year $ 37,397 $ 37,653
Due after one year through five years 66,649 65,527
$104,046 $103,180
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3. Inventories:
The inventories using the LIFO method were valued at approximately 84%
of the Company's inventories as at August 12, 1995 and 83% as at
February 25, 1995. Under the FIFO method, these inventories would have
been higher by $82,767 and $80,967, respectively. The pre-tax LIFO
charge was $1,800 for both the twenty-four week period ended August 12,
1995 and August 13, 1994.
4. Net cash flows from operating activities reflects cash payments for
interest and income taxes as follows:
24 weeks ended
August 12, August 13,
1995 1994
Interest paid $10,806 $12,285
Income taxes paid 17,750 16,399
Non - cash investing and financing activities for the twenty-four
weeks ending August 13, 1994 excluded from the Consolidated Statements
of Cash Flows the of recording of a capital lease aggregating $3,754.
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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 12, August 13, August 12, August 13,
1995 1994 1995 1994
% % % %
Gross Profit 29.65 29.49 29.66 29.34
Operating Expenses 25.63 25.70 26.02 26.02
Interest Expense:
Notes & Mortgages .14 .23 .13 .22
Lease Obligations .43 .45 .43 .45
Interest (Income) ( .36) ( .26) ( .34) ( .28)
Other Income ( .12)
Income Before Income Taxes 3.81 3.49 3.42 2.93
Provision for Income Taxes 1.50 1.37 1.35 1.15
Net Income 2.31 2.12 2.07 1.78
Below are the differences for the periods ended August 12, 1995
compared with August 13, 1994 in thousands of dollars and percentages:
Increase (Decrease) Increase (Decrease)
Twenty-four Weeks Twelve Weeks
$ % $ %
Sales 69,653 4.2% 30,116 3.6%
Gross Profit 23,335 4.8% 11,556 4.8%
Operating Expenses 16,755 3.9% 7,839 3.6%
Interest Expense:
Notes & Mortgages (1,298) -34.4% (725) -39.5%
Lease Obligations (143) -1.9% (84) -2.2%
Interest Income (1,849) 42.8% (577) 25.1%
Other Income (1,978)
Income Before Income Taxes 7,892 13.6% 5,103 21.1%
Provision for Income Taxes 3,106 13.6% 2,009 21.1%
Net Income 4,786 13.6% 3,094 21.1%
- 8 -<PAGE>
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 12, 1995 vs. twenty-
four weeks ended August 13, 1994):
Sales increased $69.7 million or 4.2%. The increase in sales for
stores in operation in both years was 2.1%. This same store sales change
was impacted by new units drawing sales away from existing units. Without
cannibalization same store sales would have increased 2.5%.
Gross profit increased $23.3 million. Gross profit as a percent of
sales was 29.65% compared to 29.49% for the prior year. The gross profit %
increase resulted principally from more profits from processing and
manufacturing, and lesser distribution costs.
Operating expenses decreased from 25.70% of sales to 25.63%.
Increases in payroll and related benefits percentage was below the sales
percentage increase resulting in the lower expense in terms of percent to
sales.
Interest expense - notes and mortgages decreased by $1.3 million
because of lower debt. Interest income increased by $1.8 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 $7.9 million, an increase of 13.6%. The
effective tax rate was 39.3% for both the current and prior year.
Net income was 2.31% of sales for the current period compared with
2.12% for the same period of the prior year.
- 9 -<PAGE>
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 12, 1995 vs. twelve weeks
ended August 13, 1994):
Sales increased $30.1 million or 3.6%. The increase in sales for
stores in operation in both years was 1.7%. This same store sales change
was impacted by new units drawing sales away from existing units. Without
cannibalization same store sales would have increased 2.1%.
Gross profit increased $11.6 million. Gross profit as a percent of
sales was 29.66% compared to 29.34% for the prior year. The gross profit %
increase resulted principally from more profits from processing and
manufacturing, and lesser distribution costs.
Operating expenses was 26.02% in both the current and prior year. The
increase in expenses was matched by sales increases.
Interest expense - notes and mortgages decreased by $725 million
because of lower debt. Interest income increased by $577 million because
of higher yields.
Pre-tax earnings were up $5.1 million, an increase of 21.1%. The
effective tax rate was 39.3% for both the current and prior year.
Net income was 2.07% of sales for the current quarter compared with
1.78% for the same period of the prior year.
- 10 -<PAGE>
GIANT FOOD INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued):
LIQUIDITY:
Working capital decreased $2.8 million from February 25, 1995.
At August 12, 1995 working capital ratio was 1.56 to 1, compared to
1.52 to 1 at February 25, 1995. Including LIFO reserves of $82.8 million
at August 12, 1995, the working capital ratio was 1.81 to 1.
At August 12, 1995, cash and cash equivalents were $133.1 million and
short-term investments were $103.2 million totaling $236.3 million compared
with $249.8 million as at February 25, 1995. During the twelve months
ended August 12, 1995 notes and mortgage debt was reduced by $35.6 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 announced plans for starting or opening 18
stores together with five shopping centers. The Company has a $50 million
revolving credit facility, and has had no short-term bank borrowings for
more than sixteen years.
CAPITALIZATION:
Shareholders' equity as a percentage of capitalization was 79.9%
on August 12, 1995, compared to 79.2% on February 25, 1995 and 77.3% on
August 13, 1994.
- 11 -<PAGE>
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 August 12, 1995.
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, 1995 By /s/ Pete Manos
Pete Manos
President
Date September 22, 1995 By /s/ David B Sykes
David B Sykes
Senior Vice President Finance,
Treasurer
Chief Financial Officer and
Principal Accounting Officer
- 12 -<PAGE>
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