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 20, 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 59,026,493
"AC" voting 125,000
"AL" voting 125,000
59,276,493
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - MAY 20, 1995 AND FEBRUARY 25, 1995
Dollar amounts in thousands
ASSETS
May 20, February 25,
1995 1995
(Unaudited)
Current assets:
Cash and cash equivalents $ 134,091 $ 157,045
Short-term investments (Note 2) 84,072 92,757
Receivables 50,428 43,867
Inventories (Note 3) 242,158 237,978
Prepaid expenses 23,794 24,692
Total current assets 534,543 556,339
Property, plant and equipment 1,354,783 1,329,399
Less accumulated depreciation 629,832 609,214
724,951 720,185
Property under capital leases, net
of accumulated amortization, (5/20/95,
$61,210; 2/25/95, $59,876) 104,169 105,502
Other assets 40,851 34,684
$ 1,404,514 $ 1,416,710
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - MAY 20, 1995 AND FEBRUARY 25, 1995
Dollar amounts in thousands
LIABILITIES AND SHAREHOLDERS' EQUITY
May 20, February 25,
1995 1995
(Unaudited)
Current liabilities:
Current portion of long-term debt $ 12,236 $ 28,136
Accounts payable 224,294 225,829
Accrued liabilities 77,401 85,309
Dividends payable 11,309 10,663
Income taxes 17,616 16,808
Total current liabilities 342,856 366,745
Long-term debt, net of current portion:
Notes and mortgages 57,665 57,805
Obligations under capital leases 139,983 140,946
197,648 198,751
Other liabilities 96,587 95,758
Shareholders' equity
Common stock, $1 par, all classes 60,257 60,257
Net unrealized loss on short-term investments (785) (1,648)
Retained earnings 731,355 720,784
790,827 779,393
Less class "A" stock held in
treasury, at cost (5/20/95 980,127
2/25/95, 1,002,464 shares) 23,404 23,937
767,423 755,456
$ 1,404,514 $ 1,416,710
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
TWELVE WEEKS ENDED MAY 20, 1995 AND MAY 21, 1994
(Unaudited)
Dollar amounts in thousands
except for per share data
Twelve Weeks
1995 1994
Sales $ 869,235 $ 829,697
Cost of goods sold 611,609 583,850
Operating expenses 219,420 210,504
Interest:
Notes and mortgages 1,368 1,941
Lease obligations 3,698 3,757
Income (3,296) (2,024)
Other income (1,978)
832,799 796,050
Income before provision
for income taxes 36,436 33,647
Provision for income
taxes 14,330 13,233
Net income $ 22,106 $ 20,414
Net income per share $ .37 $ .34
Dividends per share $ .185 $ .18
Average number of shares 59,261,777 59,553,243
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
TWELVE WEEKS ENDED MAY 20, 1995 AND MAY 21, 1994
(Unaudited)
Dollar amounts in thousands
Twelve Weeks
1995 1994
Cash flows from operating activities:
Net income $ 22,106 $ 20,414
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 20,618 20,668
Amortization of property under capital leases 1,333 1,329
Other adjustments, net 400 380
Net change in cash from changes in operating
assets and liabilities, detailed below (18,210) (11,802)
Net cash provided by operating activities 26,247 30,989
Cash flows from investing activities:
Purchase of short-term investments (8,956) (3,798)
Sale of short-term investments 18,955 13,230
Capital expenditures (31,862) (29,616)
Other investing activities (2,088)
Net cash used in investing activities (21,863) (22,272)
Cash flows from financing activities:
Repayments of notes and mortgages (16,125) (222)
Repayments of obligations under capital leases (879) (796)
Purchases of treasury stock (3,566)
Issuance of common stock 329 124
Dividends paid (10,663) (10,395)
Net cash used in financing activities (27,338) (14,855)
Net change in cash and cash equivalents (22,954) (6,138)
Cash and cash equivalents, beginning of year 157,045 111,845
Cash and cash equivalents, end of quarter $ 134,091 $ 105,707
Increase (decrease) in cash from changes in
operating assets and liabilities:
Accounts receivable $ (6,561) $ (2,836)
Inventory (4,180) 9,546
Prepaid expenses 898 (1,920)
Accounts payable (1,535) (19,517)
Accrued expenses (7,908) (4,493)
Income taxes payable 808 6,787
Deferred taxes (561)
Other liabilities 829 631
$ (18,210) $ (11,802)
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWELVE WEEKS ENDED MAY 20, 1995 AND MAY 21, 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 May 20, 1995 and May 21, 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 May 20, 1995:
GROSS
UNREALIZED HOLDING
COST (LOSSES) FAIR VALUE
U.S. Treasury securities $ 61,976 $ (961) $ 61,015
Federal agency securities 23,410 (353) 23,057
$ 85,386 $(1,314) $ 84,072
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 May 20, 1995, were as follows:
COST FAIR VALUE
Due within one year $ 22,775 $ 22,613
Due after one year through five years 62,611 61,459
$ 85,386 $ 84,072
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3. Inventories:
The inventories valued using the LIFO method were approximately 84% of
the Company's inventories as at May 20, 1995 and 83% as at
February 25, 1995. Under the FIFO method, these inventories would have
been higher by $81,867 and $80,967, respectively. The pre-tax LIFO
charge was $900 for the twelve week period ended May 20, 1995 and
$900 for the twelve week period ended May 21, 1994.
4. Net cash flows from operating activities reflects cash payments for
interest and income taxes as follows:
12 weeks ended
May 20, May 21,
1995 1994
Interest paid $ 5,388 $ 7,641
Income taxes paid 13,520 6,168
Non - cash investing and financing activities, for the twelve weeks
ending May 21, 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:
12 Weeks Ended 12 Weeks Ended
May 20, 1995 May 21, 1994
% %
Gross Profit 29.64 29.63
Operating Expenses 25.24 25.37
Interest Expense-Notes & Mortgages .16 .23
Interest Expense-Lease Obligations .43 .45
Interest (Income) ( .38) ( .24)
Other Income ( .24)
Income Before Income Taxes 4.19 4.06
Provision for Income Taxes 1.65 1.60
Income before cumulative
effect of change in accounting
for deferred taxes 2.54 2.46
Below are the differences for the periods ended May 20, 1995
compared with May 21, 1994 in thousands of dollars and percentages:
Increase (Decrease)
Twelve Weeks
$ %
Sales 39,538 4.8%
Gross Profit 11,779 4.8%
Operating Expenses 8,916 4.2%
Interest Expense-Notes & Mortgages (573) -29.5%
Interest Expense-Lease Obligations (59) -1.6%
Interest Income 1,272 62.8%
Other Income (1,978)
Income Before Income Taxes 2,789 8.3%
Provision for Income Taxes 1,097 8.3%
Income before cumulative effect of
change in accounting for deferred taxes 1,692 8.3%
- 8 -<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 May 20, 1995 vs. twelve weeks
ended May 21, 1994):
Sales increased $39.5 million or 4.8%, including an increase of 2.6%,
for stores in operation in both years. The strong trend in sales growth
has been the result of an aggressive promotional program that began in the
fourth quarter of the prior year.
Gross profit increased $11.8 million. Gross profit as a percent of
sales was 29.64% compared to 29.63% in the prior year. The stable level of
gross profit is the result of the lower margins being offset by the gains
from operating efficiencies in distribution, manufacturing and processing
areas.
Operating expenses decreased from 25.37% of sales to 25.24%.
Operating efficiencies contributed to this decrease, with expenses
increasing by 4.2% while sales increased by 4.8%.
Interest expense on notes and mortgages decreased by $573 thousand
because of repayment of mortgages. Interest income increased by $1.3
million because of higher yields.
In the prior year the Company realized other income of $1.978 million
from the sale of its interest in a partnership that operates the automatic
teller machines in its stores.
Pre-tax earnings increased $2.8 million, an increase of 8.3%. The
effective tax rate was 39.3% for both the current and prior period.
Net income was 2.54% of sales for the current quarter compared with
2.46% 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):
LIQUIDITY:
Working capital increased $2.1 million from February 25, 1995.
At May 20, 1995 working capital ratio was 1.56 to 1, compared to 1.52
to 1 at February 25, 1995. Including LIFO reserves of $81.9 million at May
20, 1995, the working capital ratio was 1.80 to 1.
At May 20, 1995, cash and cash equivalents were $134.1 million and
short-term investments were $84.1 million totaling $218.2 million compared
with $249.8 million as of February 25, 1995. The major factor in the
reduction of cash was the payoff of a $16 million mortgage, which carried
an interest rate of 9.73%
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 in the next year and half. 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 78.5%
on May 20, 1995, compared to 76.9% on February 25, 1995 and 74.3% on May
21, 1994.
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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 20, 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 June 30, 1995 By/s/ Israel Cohen
Israel Cohen
Chairman of the Board
Chief Executive Officer
Date June 30, 1995 By/s/ David B Sykes
David B Sykes
Senior Vice President Finance,
Treasurer
Chief Financial Officer and
Principal Accounting Officer
- 11 -<PAGE>
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