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 Thirty-six Weeks ended November 4, 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 59,160,529
"AC" voting 125,000
"AL" voting 125,000
59,410,529
- 1 - <PAGE>
GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - NOVEMBER 4, 1995 AND FEBRUARY 25, 1995
Dollar amounts in thousands
ASSETS
November 4, February 25,
1995 1995
(Unaudited)
Current assets:
Cash and cash equivalents $ 102,044 $ 157,045
Short-term investments (Note 2) 119,037 92,757
Receivables 46,975 43,867
Inventories (Note 3) 240,725 237,978
Prepaid expenses 26,231 24,692
Total current assets 535,012 556,339
Property, plant and equipment 1,375,049 1,329,399
Less accumulated depreciation 615,674 609,214
759,375 720,185
Property under capital leases, net
of accumulated amortization, (11/04/95,
$63,898; 2/25/95, $59,876) 101,480 105,502
Other assets 31,254 34,684
$ 1,427,121 $ 1,416,710
See notes to consolidated financial statements.
- 2 -<PAGE>
GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - NOVEMBER 4, 1995 AND FEBRUARY 25, 1995
Dollar amounts in thousands
LIABILITIES AND SHAREHOLDERS' EQUITY
November 4, February 25,
1995 1995
(Unaudited)
Current liabilities:
Current portion of long-term debt $ 12,350 $ 28,136
Accounts payable 251,339 225,829
Accrued liabilities 78,138 85,309
Dividends payable 10,988 10,663
Income taxes 8,366 16,808
Total current liabilities 361,181 366,745
Long-term debt, net of current portion:
Notes and mortgages 46,112 57,805
Obligations under capital leases 138,121 140,946
184,233 198,751
Other liabilities 96,247 95,758
Shareholders' equity
Common stock, $1 par, all classes 60,257 60,257
Capital in excess of par value 384
Net unrealized loss on short-term investments (124) (1,648)
Retained earnings 745,148 720,784
805,665 779,393
Less class "A" stock held in
treasury, at cost (11/04/95, 846,091
2/25/95, 1,002,464 shares) 20,205 23,937
785,460 755,456
$ 1,427,121 $ 1,416,710
See notes to consolidated financial statements.
- 3 -<PAGE>
GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THIRTY-SIX WEEKS ENDED NOVEMBER 4, 1995 AND NOVEMBER 5, 1994
(Unaudited)
Dollar amounts in thousands
except for per share data
Thirty-six Weeks Twelve Weeks
1995 1994 1995 1994
Sales $ 2,596,416 $ 2,490,877 $ 870,666 $ 834,780
Cost of goods sold 1,825,897 1,752,322 611,830 584,573
Operating expenses 670,845 641,723 228,568 216,201
Interest:
Notes and mortgages 3,720 5,986 1,240 2,208
Lease obligations 11,079 11,260 3,701 3,739
Income (9,551) (6,859) (3,378) (2,535)
Other income (1,978)
2,501,990 2,402,454 841,961 804,186
Income before provision
for income taxes 94,426 88,423 28,705 30,594
Provision for income
taxes 37,135 34,777 11,285 12,033
Net income $ 57,291 $ 53,646 $ 17,420 $ 18,561
Net income per share $ .97 $ .90 $ .30 $ .31
Dividends per share $ .555 $ .54 $ .185 $ .18
Average number
of shares 59,307,748 59,422,994 59,365,343 59,317,176
See notes to consolidated financial statements.
- 4 -<PAGE>
GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THIRTY-SIX WEEKS ENDED NOVEMBER 4, 1995 AND NOVEMBER 5, 1994
(Unaudited)
Dollar amounts in thousands
Thirty-six Weeks
1995 1994
Cash flows from operating activities:
Net income $ 57,291 $ 53,646
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 64,389 63,463
Amortization of property under capital leases 4,022 4,008
Other adjustments, net 1,125 (357)
Net change in cash from changes in operating
assets and liabilities, detailed below 2,004 (7,133)
Net cash provided by operating activities 128,831 113,627
Cash flows from investing activities:
Purchase of short-term investments (50,734) (21,298)
Sale of short-term investments 16,966 39,054
Maturity of short-term investments 10,000 5,000
Capital expenditures (96,953) (75,050)
Other investing activities (4,321) (626)
Net cash used in investing activities (125,042) (52,920)
Cash flows from financing activities:
Repayments of notes and mortgages (27,646) (19,497)
Repayments of obligations under capital leases (2,658) (2,410)
Purchases of treasury stock (7,237)
Issuance of common stock 4,116 282
Dividends paid (32,602) (31,814)
Net cash used in financing activities (58,790) (60,676)
Net change in cash and cash equivalents (55,001) 31
Cash and cash equivalents, beginning of year 157,045 111,845
Cash and cash equivalents, end of quarter $ 102,044 $ 111,876
Increase (decrease) in cash from changes in
operating assets and liabilities:
Accounts receivable $ (3,108) $ (4,300)
Inventory (2,747) (13,720)
Prepaid expenses (1,539) 533
Accounts payable 25,510 10,136
Accrued expenses (7,171) (2,886)
Income taxes payable (8,442) 695
Other liabilities (499) 2,409
$ 2,004 $ (7,133)
See notes to consolidated financial statements.
- 5 -<PAGE>
GIANT FOOD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THIRTY-SIX WEEKS ENDED NOVEMBER 4, 1995 AND NOVEMBER 5, 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 thirty-six weeks ended November 4, 1995 and
November 5, 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 November 4, 1995:
GROSS
UNREALIZED HOLDING
COST (LOSSES) FAIR VALUE
U.S. Treasury securities $ 85,595 $ (105) $ 85,490
Federal agency securities 22,779 (116) 22,663
Corporate bonds or other 10,886 (2) 10,884
$119,260 $ (223) $119,037
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 November 4, 1995, were as
follows:
COST FAIR VALUE
Due within one year $ 57,611 $ 57,610
Due after one year through five years 61,649 61,427
$119,260 $119,037
- 6 -<PAGE>
3. Inventories:
The inventories using the LIFO method were valued at approximately 84%
of the Company's inventories as at November 4, 1995 and 83% as at
February 25, 1995. Under the FIFO method, these inventories would have
been higher by $83,667 and $80,967, respectively. The pre-tax LIFO
charge was $2,700 for both the thirty-six week period ended November 4,
1995 and November 5, 1994.
4. Net cash flows from operating activities reflects cash payments for
interest and income taxes as follows:
36 weeks ended
November 4, November 5,
1995 1994
Interest paid $16,340 $18,874
Income taxes paid 45,577 34,020
Non - cash investing and financing activities for the thirty-six
weeks ending November 5, 1994 excluded from the Consolidated Statements
of Cash Flows the recording of a capital lease aggregating $3,754.
- 7 -<PAGE>
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 4, November 5, November 4, November 5,
1995 1994 1995 1994
% % % %
Gross Profit 29.68 29.65 29.73 29.97
Operating Expenses 25.84 25.77 26.25 25.90
Interest Expense:
Notes & Mortgages .14 .24 .14 .26
Lease Obligations .43 .45 .43 .45
Interest (Income) ( .37) ( .28) ( .39) ( .30)
Other Income ( .08)
Income Before Income Taxes 3.64 3.55 3.30 3.66
Provision for Income Taxes 1.43 1.40 1.30 1.44
Net Income 2.21 2.15 2.00 2.22
Below are the differences for the periods ended November 4, 1995
compared with November 5, 1994 in thousands of dollars and percentages:
Increase (Decrease) Increase (Decrease)
Thirty-six Weeks Twelve Weeks
$ % $ %
Sales 105,539 4.2% 35,886 4.3%
Gross Profit 31,965 4.3% 8,629 3.4%
Operating Expenses 29,123 4.5% 12,367 5.7%
Interest Expense:
Notes & Mortgages (2,266) -37.9% (968) -43.8%
Lease Obligations (181) -1.6% (38) -1.0%
Interest Income (2,692) 39.2% (843) 33.2%
Other Income (1,978)
Income Before Income Taxes 6,003 6.8% (1,889) -6.2%
Provision for Income Taxes 2,358 6.8% (748) -6.2%
Net Income 3,645 6.8% (1,141) -6.2%
- 8 -<PAGE>
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 4, 1995 vs. thirty-
six weeks ended November 5, 1994):
Sales increased $105.5 million or 4.2%. The increase in sales for
stores in operation in both years was 2.2%. This same store sales change
was somewhat impacted by new units drawing sales away from existing units.
Without cannibalization same store sales would have increased 2.5%.
Gross profit increased $32.0 million. Gross profit as a percent of
sales was 29.68% compared to 29.65% for the prior year. The gross profit
percentage increase resulted principally from lower, as a percent of sales,
cost from the distribution activity.
Operating expenses increased from 25.77% of sales to 25.84%. The
Company's expense control cost programs resulted in a lower payroll and
related benefit cost offset by increased cost for electronic payment plans
and, occupancy cost. As Giant has moved into the northern territory it has
incurred substantial pre-opening and promotional costs.
Interest expense - notes and mortgages decreased by $2.3 million
because of lower debt. The Company has reduced this debt by $27.8 million
in the 52 weeks ended November 4, 1995. Interest income increased by $2.7
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 $6.0 million, an increase of 6.8%. The
effective tax rate was 39.3% for both the current and prior year.
Net income was 2.21% of sales for the current period compared with
2.15% 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 November 4, 1995 vs. twelve weeks
ended November 5, 1994):
Sales increased $35.9 million or 4.3%. The increase in sales for
stores in operation in both years was 2.4%. This same store sales change
was somewhat impacted by new units drawing sales away from existing units.
Without cannibalization same store sales would have increased 2.5%.
Gross profit increased $8.6 million. Gross profit as a percent of
sales was 29.73% compared to 29.97% for the prior year. The gross profit
percentage continues at the same level that was realized in the 1st and 2nd
reporting periods of the current year when the gross profit percentage was
29.64 and 29.66 respectively. The Company's gross profit has been affected
by the promotional activity in the three stores operating in the northern
territory.
Operating expenses were 26.25% compared to 25.90% in the prior year.
The increase in expenses was due principally to the fourth year union wage
increase that took place in September and to new store pre-opening and
advertising expenses incurred in the northern territory.
Interest expense - notes and mortgages decreased by $968 thousand
because of lower debt. Interest income increased by $843 thousand because
of higher yields.
Pre-tax earnings were down $1.9 million, a decrease of 6.2%. The
effective tax rate was 39.3% for both the current and prior year.
Net income was 2.00% of sales for the current quarter compared with
2.22% 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 $15.8 million from February 25, 1995.
At November 4, 1995 working capital ratio was 1.48 to 1, compared to
1.52 to 1 at February 25, 1995. Including LIFO reserves of $83.7 million
at November 4, 1995, the working capital ratio was 1.71 to 1.
At November 4, 1995, cash and cash equivalents were $102 million and
short-term investments were $119 million totaling $221 million compared
with $250 million as at February 25, 1995. During the twelve months ended
November 4, 1995 notes and mortgage debt was reduced by $27.8 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, scheduled debt reduction and dividend
requirements. Capital expenditures include the announced plans for
starting or opening 18 stores. Four stores have been opened by November 4,
1995 and two additional units will be opened by mid December 1995. The
Company has a $50 million revolving credit facility, a $10 million credit
line, and has had no short-term bank borrowings for more than sixteen
years.
CAPITALIZATION:
Shareholders' equity as a percentage of capitalization was 81.0%
on November 4, 1995, compared to 79.2% on February 25, 1995 and 78.4% on
November 5, 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 November 4, 1995. On November 28, 1995 the Company file Form 8-K due
to changes in control of registrant. On November 22, 1995, Israel Cohen,
the Chief Executive Officer and the Chairman of the Board of Directors of
Registrant, died of complications associated with Non-Hodgkin's Lymphoma.
Included in the 8-K were the News Release dated November 23, 1995 and
Article Seven of the Last Will And Testament of Israel Cohen.
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, 1995 By /s/ Pete Manos
Pete Manos
President and Chief Executive Officer
Date December 13, 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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