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 18, 1996
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 59,382,723
"AC" voting 125,000
"AL" voting 125,000
59,632,723
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - MAY 18, 1996 AND FEBRUARY 24, 1996
Dollar amounts in thousands
ASSETS
May 18, February 24,
1996 1996
(Unaudited)
Current assets:
Cash and cash equivalents $ 143,237 $ 111,133
Short-term investments (Note 2) 129,366 134,677
Receivables 49,805 47,771
Inventories (Note 3) 219,141 225,801
Prepaid expenses 27,506 26,889
Total current assets 569,055 546,271
Property, plant and equipment 1,436,264 1,405,084
Less accumulated depreciation 664,409 643,693
771,855 761,391
Property under capital leases, net
of accumulated amortization, (5/18/96,
$66,402; 2/24/96, $65,018) 104,455 105,839
Other assets 35,625 33,638
$ 1,480,990 $ 1,447,139
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - MAY 18, 1996 AND FEBRUARY 24, 1996
Dollar amounts in thousands
LIABILITIES AND SHAREHOLDERS' EQUITY
May 18, February 24,
1996 1996
(Unaudited)
Current liabilities:
Current portion of long-term debt $ 12,284 $ 12,156
Accounts payable 227,439 219,253
Accrued liabilities 84,481 85,763
Dividends payable 11,323 11,009
Income taxes 16,099 9,061
Total current liabilities 351,626 337,242
Long-term debt, net of current portion:
Notes and mortgages 45,802 45,959
Obligations under capital leases 141,779 142,863
187,581 188,822
Other liabilities 103,095 98,318
Shareholders' equity
Common stock, $1 par, all classes 60,926 60,645
Net unrealized loss on short-term investments (810) (108)
Retained earnings 793,460 779,000
853,576 839,537
Less class "A" stock held in
treasury, at cost (5/18/96 623,897
2/24/96, 702,782 shares) 14,888 16,780
838,688 822,757
$ 1,480,990 $ 1,447,139
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
TWELVE WEEKS ENDED MAY 18, 1996 AND MAY 20, 1995
(Unaudited)
Dollar amounts in thousands
except for per share data
Twelve Weeks
1996 1995
Sales $ 895,627 $ 869,235
Cost of goods sold 624,483 611,609
Operating expenses 227,322 219,420
Interest:
Notes and mortgages 815 1,368
Lease obligations 3,746 3,698
Income (3,236) (3,296)
853,130 832,799
Income before provision
for income taxes 42,497 36,436
Provision for income
taxes 16,714 14,330
Net income $ 25,783 $ 22,106
Net income per share $ .43 $ .37
Dividends per share $ .19 $ .185
Average number of shares 59,589,692 59,261,777
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
TWELVE WEEKS ENDED MAY 18, 1996 AND MAY 20, 1995
(Unaudited)
Dollar amounts in thousands
Twelve Weeks
1996 1995
Cash flows from operating activities:
Net income $ 25,783 $ 22,106
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 20,623 20,618
Amortization of property under capital leases 1,384 1,333
Other adjustments, net 375 400
Net change in cash from changes in operating
assets and liabilities, detailed below 23,426 (18,210)
Net cash provided by operating activities 71,591 26,247
Cash flows from investing activities:
Purchase of short-term investments (34,168) (8,956)
Maturity of short-term investments 13,588
Sale of short-term investments 24,734 18,955
Capital expenditures (31,133) (31,862)
Other investing activities (2,316)
Net cash used in investing activities (29,295) (21,863)
Cash flows from financing activities:
Repayments of notes and mortgages (139) (16,125)
Repayments of obligations under capital leases (974) (879)
Issuance of common stock 1,930 329
Dividends paid (11,009) (10,663)
Net cash used in financing activities (10,192) (27,338)
Net change in cash and cash equivalents 32,104 (22,954)
Cash and cash equivalents, beginning of year 111,133 157,045
Cash and cash equivalents, end of quarter $ 143,237 $ 134,091
Increase (decrease) in cash from changes in
operating assets and liabilities:
Accounts receivable $ (2,034) $ (6,561)
Inventory 6,660 (4,180)
Prepaid expenses (617) 898
Accounts payable 8,186 (1,535)
Accrued expenses (1,282) (7,908)
Income taxes payable 7,281 808
Deferred taxes (561)
Other liabilities 5,232 829
$ 23,426 $ (18,210)
See notes to consolidated financial statements.
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GIANT FOOD INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWELVE WEEKS ENDED MAY 18, 1996 AND MAY 20, 1995
(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 18, 1996 and May 20, 1995
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 18, 1996:
GROSS
UNREALIZED HOLDING
COST (LOSSES) FAIR VALUE
U.S. Treasury securities $105,175 $(1,081) $104,094
Federal agency securities 24,675 (253) 24,422
Corporate bonds & other 850 850
$130,700 $(1,334) $129,366
As of February 24, 1996:
GROSS
UNREALIZED HOLDING
COST (LOSSES) FAIR VALUE
U.S. Treasury securities $111,021 $ (168) $110,853
Federal agency securities 22,920 ( 9) 22,911
Corporate bonds or other 913 913
$134,854 $ (177) $134,677
Maturities of short-term investments at May 18, 1996, were as follows:
COST FAIR VALUE
Due within one year $ 68,532 $ 68,635
Due after one year through five years 62,168 60,731
$130,700 $129,366
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3. Inventories:
The inventories valued using the LIFO method were approximately 84% of
the Company's inventories as at May 18, 1996 and 84% as at
February 24, 1996. Under the FIFO method, these inventories would have
been higher by $86,793 and $85,713, respectively. The pre-tax LIFO
charge was $1,080 for the twelve week period ended May 18, 1996 and
$900 for the twelve week period ended May 20, 1995.
4. Effective February 25,1996, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 121, "Accounting for Impairment of Long-
Lived Assets to be Disposed Of," and SFAS No. 123, "Accounting for
Stock-Based Compensation". In accordance with SFAS No. 121, the
recoverability of long-lived assets is assessed annually or whenever
adverse effects and changes in circumstances indicate that
undiscounted cash flows previously anticipated warrants a
reassessment.
In accordance with the provions of SFAS No. 123, the Company has
elected to continue to measure compensation expense for its stock-
based employee compensation plans using the intrinsic value method
prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" and will provide pro forma disclosures
of net income and earnings per share as if the fair value-based method
prescribed by SFAS No. 123 had been applied in measuring compensation
expense. The adoption of these standards did not have a material
effect on the Company's financial position or results of operation.
5. Net cash flows from operating activities reflects cash payments for
interest and income taxes as follows:
12 weeks ended
May 18, May 20,
1996 1995
Interest paid $ 5,074 $ 5,388
Income taxes paid 9,433 13,520
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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 18, 1996 May 20, 1995
% %
Gross Profit 30.27 29.64
Operating Expenses 25.38 25.24
Interest Expense-Notes & Mortgages .09 .16
Interest Expense-Lease Obligations .41 .43
Interest (Income) ( .36) ( .38)
Income Before Income Taxes 4.75 4.19
Provision for Income Taxes 1.87 1.65
Net Income 2.88 2.54
Below are the differences for the periods ended May 18, 1996
compared with May 20, 1995 in thousands of dollars and percentages:
Increase (Decrease)
Twelve Weeks
$ %
Sales 26,392 3.0%
Gross Profit 13,518 5.2%
Operating Expenses 7,902 3.6%
Interest Expense-Notes & Mortgages (553) -40.4%
Interest Expense-Lease Obligations 48 1.3%
Interest Income 60 -1.8%
Income Before Income Taxes 6,061 16.6%
Provision for Income Taxes 2,384 16.6%
Net Income 3,677 16.6%
- 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 18, 1996 vs. twelve weeks
ended May 20, 1995):
Sales increased $26.4 million or 3.0%. Stores in operation both years
showed a modest increase of .2%. Same store sale change was impacted by
the opening of four food-drug stores since November 1995 in the
Washington/Baltimore area. Eliminating this cannibalization effect, same
stores sales would have been up 1.0%.
Gross profit increased $13.5 million. Gross profit as a percent of
sales was 30.27% compared to 29.64% in the prior year. The gross profit
percentage reflects the continuation of the gross profit level achieved in
the most recent quarter (ended February 24, 1996) which was 30.25%.
Operating expenses increased from 25.24% of sales to 25.38%. The
primary factor for the increase is the occupancy costs related to the seven
stores that were opened in the last twelve months.
Interest expense on notes and mortgages decreased by $553 thousand
because of reduction of debt during 1995.
Pre-tax earnings increased $6.1 million, an increase of 16.6%. The
effective tax rate was 39.3% for both the current and prior period.
Net income was 2.88% of sales for the current quarter compared with
2.54% 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 $8.4 million from February 24, 1996.
At May 18, 1996 working capital ratio was 1.62 to 1, compared to 1.61
to 1 at February 24, 1996. Including LIFO reserves of $86.8 million at May
18, 1996, the working capital ratio was 1.86 to 1.
At May 18, 1996, cash and cash equivalents were $143.2 million and
short-term investments were $129.4 million totaling $272.6 million compared
with $245.8 million as of February 24, 1996.
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, required debt reduction and dividend
requirements. Capital expenditures include the announced plans for opening
eight stores in the current fiscal year, of which two are in the
Washington/Baltimore area, five in New Jersey and the first store in
Pennsylvania. 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 seventeen years.
CAPITALIZATION:
Shareholders' equity as a percentage of capitalization was 80.8%
on May 18, 1996, compared to 80.4% on February 24, 1996 and 78.5% on May
20, 1995.
- 10 -<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 May 18, 1996.
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 28, 1996 By /s/ Pete L. Manos
Pete L. Manos
President and
Chief Executive Officer
Date June 28, 1996 By /s/ David B Sykes
David B Sykes
Senior Vice President Finance,
Treasurer
Chief Financial Officer and
Principal Accounting Officer
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