-----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, VYMs/sAgmereHbSywXlcprU+BQIDG5cvkqi9ldfEyEoOPr6xXKVM7chlk1QBICCY t8fj8MXDu+czueJvoHSw5w== 0000081061-98-000010.txt : 19980330 0000081061-98-000010.hdr.sgml : 19980330 ACCESSION NUMBER: 0000081061-98-000010 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971227 FILED AS OF DATE: 19980327 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIX SUPER MARKETS INC CENTRAL INDEX KEY: 0000081061 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 590324412 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-00981 FILM NUMBER: 98575359 BUSINESS ADDRESS: STREET 1: PO BOX 407 CITY: LAKELAND STATE: FL ZIP: 33802-0407 BUSINESS PHONE: 9416887407 MAIL ADDRESS: STREET 2: P O BOX 407 CITY: LAKELAND STATE: FL ZIP: 33802 10-K 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 27, 1997 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ______________ to ______________ Commission File Number 0-981 ----- PUBLIX SUPER MARKETS, INC. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Florida 59-0324412 - ------------------------ ------------------------------------ (State of Incorporation) (I.R.S. Employer Identification No.) 1936 George Jenkins Boulevard Lakeland, Florida 33815 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (941) 688-1188 -------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock $1.00 Par Value Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( ) Indicate by check mark whether the Registrant (1) 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 and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----------------- ----------------- The aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 3, 1998 was approximately $3,951,580,000. The number of shares of Registrant's common stock outstanding as of the opening of business on March 4, 1998 was 218,016,983. DOCUMENTS INCORPORATED BY REFERENCE Pages 2 through 8 of Proxy Statement solicited for the 1998 Annual Meeting of Stockholders to be held on May 12, 1998 are incorporated by reference in Items 10, 11 and 13 of Part III hereof. 2 PART I Item 1. Business - ----------------- Publix Super Markets, Inc. is based in Lakeland, Florida and was incorporated in Florida on December 27, 1921. Publix Super Markets, Inc. and its wholly owned subsidiary, hereinafter collectively referred to as the "Company," is in the business of operating retail food supermarkets in Florida, Georgia, South Carolina and Alabama. The Company has no other lines of business or industry segments. Therefore, financial information about industry segments or lines of business is omitted. The Company's supermarkets sell groceries, dairy, produce, deli, bakery, meat, seafood, housewares and health and beauty care items. Many stores have pharmacy, photo and floral departments. In addition, the Company has agreements with commercial banks to operate in some of its stores. The Company's lines of merchandise include a variety of nationally advertised and private label brands, as well as unbranded merchandise such as produce, meat and seafood. Private label items are produced in the Company's manufacturing facilities or are manufactured for the Company by outside suppliers. The Company manufactures dairy, bakery and deli products. The Company's dairy plants are located in Lakeland and Deerfield Beach, Florida, and Lawrenceville, Georgia. The bakery and deli plants are located in Lakeland, Florida. The Company receives the food and non- food items it distributes from many sources. These products are generally available in sufficient quantities to enable the Company to adequately satisfy its customers. The Company believes that its sources of supply of these products and raw materials used in manufacturing are adequate for its needs and that it is not dependent upon a single or relatively few suppliers. The Company operated 563 supermarkets at the end of 1997, compared with 534 at the beginning of the year. In 1997, 33 stores were opened, four stores were closed, and 19 stores were expanded or remodeled. The net increase in square footage was 1.4 million square feet or 5.9% since 1996. At the end of 1997, the Company had 458 stores located in Florida, 86 located in Georgia, 16 located in South Carolina and three located in Alabama. Also, as of year end, the Company had 15 stores under construction in Florida, six in Georgia and four in South Carolina. The Company is engaged in a highly competitive industry. Competition, based primarily on price, quality of goods and service, convenience and product mix, is with several national and regional chains, independent stores and mass merchandisers throughout its market areas. The Company anticipates continued competitor format innovation and location additions in 1998. The influx of winter residents to Florida and increased purchases of food during the traditional Thanksgiving, Christmas and Easter holidays typically results in seasonal sales increases between November and April of each year. The Company has experienced no significant changes in the kinds of products sold or in its methods of distribution since the beginning of the fiscal year. The Company had approximately 111,000 employees at the end of 1997, compared with 103,000 at the end of 1996. Of this total, approximately 68,500 at the end of 1997 and 64,000 at the end of 1996 were not full-time employees. The Company's research and development expenses are insignificant. Compliance by the Company with Federal, state and local environmental protection laws during 1997 had no material effect upon capital expenditures, earnings or the competitive position of the Company. 3 Item 2. Properties - ------------------- At year end, the Company operated approximately 25.3 million square feet of retail space. The Company's stores vary in size. Current store prototypes range from 27,000 to 60,000 square feet. Stores are often located in strip shopping centers where the Company is the anchor tenant. The majority of the Company's retail stores are leased. Substantially all of these leases will expire during the next 20 years. However, in the normal course of business, it is expected that the leases will be renewed or replaced by leases on other properties. At 45 locations both the building and land are owned and at 33 other locations the building is owned while the land is leased. The Company supplies its retail stores from eight distribution centers located in Lakeland, Miami, Jacksonville, Sarasota, Orlando, Deerfield Beach and Boynton Beach, Florida, and Lawrenceville, Georgia. The Company's corporate offices, distribution facilities and manufacturing plants are owned with no outstanding debt. All of the Company's properties are well maintained and in good operating condition and suitable and adequate for operating its business. Item 3. Legal Proceedings - -------------------------- The Company was the subject of a notice of charge (the "Charge") issued by the Equal Employment Opportunity Commission (the "EEOC") in March 1992, In the Matter of: Kemp v. Publix Super Markets, Inc., alleging that the Company had and was engaged in violations of Title VII of the Federal Civil Rights Act by discriminating against women with respect to job assignments and promotions because of their gender. The Charge was subsequently expanded to include allegations of race discrimination. The Company was also a defendant in a certified class action filed in July 1995 in the Federal District Court for the Middle District of Florida, Tampa Division (the "Court"), by certain present or former employees of the Company, individually and on behalf of all other persons similarly situated (the "Shores case"). The plaintiffs alleged that the Company had and was then engaged in a policy and pattern or practice of gender-based discriminatory treatment of female employees with respect to job assignments, promotional opportunities, management positions, equal pay, full-time status, bonuses, and other benefits and conditions of employment, all in violation of Title VII of the Federal Civil Rights Act, as well as the Florida Civil Rights Act of 1992. The litigation class certified by the Court consisted of all female employees of the Company who from May 22, 1991 (Florida and South Carolina operations) or from October 19, 1991 (Georgia operations) had worked or were working in the Company's retail operations; expressly excluded were females who had worked only in the Company's pharmacy operations. On January 24, 1997, the Company, the EEOC and the plaintiffs in the Shores case entered into a settlement with respect to all matters related to the case. The settlement was memorialized in a consent decree, which was approved by the Court on May 23, 1997 (the "Shores Consent Decree"). Under the Shores Consent Decree, the Company will pay $81.5 million to the plaintiffs, their counsel and other class members. The Company agreed to establish a formal system by which employees will be considered for promotion. Promotions will be based on qualifications and expressed interest of employees. The Company has also agreed to make certain other procedural changes. The Company's compliance with the Shores Consent Decree will be monitored by class counsel and the EEOC. 4 Also on January 24, 1997, the Company agreed with the EEOC to settle all pending EEOC charges related to gender and race discrimination that were not included in the Shores Consent Decree. A formal settlement agreement was executed by the parties on April 13, 1997. Under the EEOC settlement, the Company agreed to pay an additional $3.5 million to members of the affected classes. The Company also agreed to follow procedures with respect to class members similar to those established under the Shores Consent Decree. The settlement agreements recognize that the Company continues to deny that it has engaged in any unlawful discriminatory activity. The Company will pay the settlements from liquid investment funds currently on hand and the settlements were charged against the Company's fiscal 1996 fourth quarter results (see note 7). Management does not believe that the settlements will cause any cash flow or liquidity problems or will have any material impact on the Company's future financial results. A purported class action was filed against the Company on April 3, 1997 in the Court by Lemuel Middleton and 15 other present or former employees of the Company, individually and on behalf of all other persons similarly situated (the "Middleton case"). In their Complaint, the plaintiffs allege that the Company has and is currently engaged in a pattern and practice of race-based discriminatory treatment of black employees and applicants with respect to hiring, promotion, job assignment, conditions of employment, and other employment aspects, all in violation of Federal and state law. Subsequently, three of the named plaintiffs withdrew their claims with prejudice. The plaintiffs seek, among other relief, a certification of the suit as a class action, declaratory and injunctive relief, back pay, front pay, benefits and other compensatory damages, and punitive damages. Action by the Court is now pending on the plaintiffs' request for class certification. On November 6, 1997, another purported class action was filed against the Company in the Court by Shirley Dyer and five other present or former employees of the Company, individually and on behalf of all other persons similarly situated (the "Dyer case"). In their Complaint, the plaintiffs allege that the Company has violated and is currently violating Federal and state civil rights statutes by discriminating against female employees and applicants with respect to hiring, promotion, training, compensation, discipline, demotion and termination, and/or retaliation for bringing allegations of discrimination. In their Complaint, the plaintiffs propose a class of all female current, former and future Company employees and applicants in all of the Company's "non-retail" operations. The plaintiffs seek, among other relief, a certification of the suit as a class action, declaratory and injunctive relief, back pay, front pay, benefits and other compensatory damages, and punitive damages. The parties have begun extensive discovery on issues relating to class certification. The Company denies the allegations of the plaintiffs in the Middleton and Dyer cases and is vigorously defending the actions. The Company is also a party in various legal claims and actions considered in the normal course of business. Management believes that the ultimate disposition of these matters will not have a material effect on the Company's liquidity, results of operations or financial condition. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ None 5
EXECUTIVE OFFICERS OF THE COMPANY Served as Nature of Family Officer of Relationship Company Name Age Position Between Officers Since ---- --- -------- ---------------- ----- Howard M. Jenkins 46 Chairman of Cousin of 1976 the Board and Charles H. Jenkins, Chief Executive Jr., uncle of Officer W. Edwin Crenshaw and brother-in-law of Hoyt R. Barnett Charles H. Jenkins, Jr. 54 Chairman of the Cousin of 1974 Executive Committee Howard M. Jenkins and cousin of W. Edwin Crenshaw W. Edwin Crenshaw 47 President Nephew of 1990 Howard M. Jenkins and cousin of Charles H. Jenkins, Jr. William H. Vass 48 Executive 1986 Vice President Hoyt R. Barnett 54 Executive Brother-in-law of 1977 Vice President Howard M. Jenkins Jesse L. Benton 55 Vice President 1988 S. Keith Billups 65 Secretary 1968 R. Scott Charlton 39 Vice President 1992 Carolyn C. Day 52 Assistant Secretary 1992 Glenn J. Eschrich 53 Vice President 1995 William V. Fauerbach 51 Vice President 1997 John R. Frazier 47 Vice President 1997 M. Clayton Hollis, Jr. 41 Vice President 1994 Mark R. Irby 42 Vice President 1989 Tina P. Johnson 38 Senior Vice President 1990 James J. Lobinsky 58 Senior Vice President 1992 Thomas M. McLaughlin 47 Vice President 1994 Sharon A. Miller 54 Assistant Secretary 1992 Robert H. Moore 55 Vice President 1994 Thomas M. O'Connor 50 Vice President 1992 David P. Phillips 38 Vice President Finance 1990 and Treasurer
6
EXECUTIVE OFFICERS OF THE COMPANY Served as Nature of Family Officer of Relationship Company Name Age Position Between Officers Since ---- --- -------- ---------------- ----- James H. Rhodes II 53 Vice President 1995 Daniel M. Risener 57 Vice President 1985 Edward T. Shivers 58 Vice President 1985 James F. Slappey 55 Vice President 1992
The terms of all officers expire at the annual meeting of the Company in May 1998. 7
Name Business Experience During Last Five Years - ---- ------------------------------------------ Howard M. Jenkins Chairman of the Board and Chief Executive Officer of the Company. Charles H. Jenkins, Jr. Chairman of the Executive Committee of the Company. W. Edwin Crenshaw Vice President of the Company to January 1994, Executive Vice President to January 1996, President thereafter. William H. Vass Executive Vice President and Trustee of the ESOT of the Company. Hoyt R. Barnett Executive Vice President and Trustee of the Profit Sharing Plan of the Company. Jesse L. Benton Vice President of the Company. S. Keith Billups Secretary of the Company. R. Scott Charlton Vice President of the Company. Carolyn C. Day Capital Stock Registrar and Transfer Agent and Assistant Secretary of the Company. Glenn J. Eschrich Director of Strategy Support of the Company to March 1995, Vice President thereafter. William V. Fauerbach Assistant Director of Retail Operations - Miami Division of the Company to January 1994, Regional Director of Retail Operations - Miami Division to January 1997, Vice President thereafter. John R. Frazier Real Estate Manager of the Company to August 1996, Director of Real Estate to January 1997, Vice President thereafter. M. Clayton Hollis, Jr. Director of Government Relations of the Company to June 1994, Vice President thereafter. Mark R. Irby Vice President of the Company. Tina P. Johnson Treasurer of the Company to January 1995, Treasurer and Trustee of the 401(k) Plan - Publix Stock Fund to March 1996, Vice President, Treasurer and Trustee of the 401(k) Plan - Publix Stock Fund to July 1997, Senior Vice President and Trustee of the 401(k) Plan - Publix Stock Fund thereafter. James J. Lobinsky Vice President of the Company to July 1997, Senior Vice President thereafter. Thomas M. McLaughlin Director of Retail Operations - Lakeland Division of the Company to January 1994, Regional Director of Retail Operations - Lakeland Division to June 1994, Vice President thereafter. Sharon A. Miller Director of Administration and Assistant Secretary of the Company.
8
Name Business Experience During Last Five Years - ---- ------------------------------------------ Robert H. Moore Director of Retail Operations - Atlanta Division of the Company to January 1994, Vice President thereafter. Thomas M. O'Connor Vice President of the Company. David P. Phillips Controller of the Company to March 1996, Vice President and Controller to July 1997, Vice President Finance and Treasurer thereafter. James H. Rhodes II Director of Human Resources of the Company to April 1995, Vice President thereafter. Daniel M. Risener Vice President of the Company. Edward T. Shivers Vice President of the Company. James F. Slappey Vice President of the Company.
PART II Item 5. Market for the Company's Common Stock and Related Stockholder Matters - ------------------------------------------------------------------------------ (a)Market Information ------------------ Substantially all transactions of the Company's common stock have been among the Company, its employees, former employees, their families and various benefit plans established for the Company's employees. The market price of the Company's common stock is determined by the Board of Directors based upon appraisals prepared by an independent appraiser. The market price for 1997 and 1996 was as follows:
1997 1996 ---- ---- January - February $20.75 $16.25 March - April 21.00 16.75 May - July 21.75 18.50 August - October 23.00 20.00 November - December 23.25 20.75
(b)Approximate Number of Equity Security Holders --------------------------------------------- As of March 4, 1998, the approximate number of holders of record of the Company`s common stock was 70,000. (c)Dividends --------- The Company paid cash dividends of $.15 per share of common stock in 1997 and $.13 per share in 1996. Payment of dividends is within the discretion of the Company's Board of Directors and depends on, among other factors, earnings, capital requirements and the operating and financial condition of the Company. It is believed that comparable cash dividends will be paid in the future. 9 Item 6. Five Year Summary of Selected Financial Data - -----------------------------------------------------
1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- Sales: Sales $11,224,378 10,431,302 9,393,021 8,664,795 7,472,652 Percent increase 7.6% 11.1% 8.4% 16.0% 12.1% Comparable store sales percent increase 3.3% 5.6% 2.8% 5.2% 6.4% Earnings: Gross profit $ 2,674,118 2,424,799 2,124,036 1,952,043 1,638,044 Earnings before income tax expense and cumulative effect of changes in accounting principles $ 555,357 416,584 381,500 378,300 288,709 Net earnings before cumulative effect of changes in accounting principles $ 354,622 265,176 242,141 238,567 183,811 Net earnings $ 354,622 265,176 242,141 238,567 180,317 Net earnings as a percent of sales 3.16% 2.54% 2.58% 2.75% 2.41% Common stock: Weighted average shares outstanding 218,871,661 221,195,884 225,852,938 231,514,459 236,249,110 Basic earnings per common share, based on weighted average shares outstanding $ 1.62 1.20 1.07 1.03 .76 Dividends per share $ .15 .13 .11 .09 .08 Financial data: Capital expenditures $ 259,806 226,752 256,629 374,190 320,167 Working capital $ 366,680 317,265 232,570 159,971 137,160 Current ratio 1.37 1.35 1.31 1.24 1.23 Total assets $ 3,294,980 2,921,084 2,559,365 2,302,336 2,054,315 Long-term debt $ --- 108 1,765 3,031 4,930 Stockholders' equity $ 2,019,299 1,751,179 1,614,717 1,473,154 1,308,009 Other: Number of stores 563 534 508 470 425
NOTE: Amounts are in thousands, except per share and share amounts. Fiscal year 1994 includes 53 weeks. All other years include 52 weeks. 10 Item 7. Management's Discussion and Analysis of Financial Condition - -------------------------------------------------------------------- and Results of Operations ------------------------- Business Environment - -------------------- As of December 27, 1997, the Company operated 563 retail grocery stores representing approximately 25.3 million square feet of retail space. Historically, the Company's primary competition has been from national and regional chains and smaller independents located throughout its market areas. The Company has continued to experience increased competition from mass merchandisers. The products offered by these retailers include many of the same items sold by the Company. At the end of fiscal 1997, the Company had 458 stores located in Florida, 86 located in Georgia, 16 located in South Carolina and three located in Alabama. The Company opened its first store in Georgia during the fourth quarter of 1991, its first store in South Carolina in the fourth quarter of 1993, and its first store in Alabama in the third quarter of 1996. The Company opened 16 stores in Florida, 13 stores in Georgia, three stores in South Carolina and one store in Alabama during 1997. The Company intends to continue to pursue vigorously new locations in Florida and other states. Liquidity and Capital Resources - ------------------------------- Operating activities continue to be the Company's primary source of liquidity. Net cash provided by operating activities was approximately $589.2 million in 1997, compared with $639.9 million in 1996 and $488.3 million in 1995. Working capital was approximately $366.7 million as of December 27, 1997, as compared with $317.3 million and $232.6 million as of December 28, 1996 and December 30, 1995, respectively. Cash and cash equivalents aggregated approximately $530.0 million as of December 27, 1997, as compared with $457.4 million and $276.7 million as of December 28, 1996 and December 30, 1995, respectively. Capital expenditures totaled $259.8 million in 1997. These expenditures were primarily incurred in connection with the opening of 33 new stores and remodeling or expanding 19 stores which added 1.4 million square feet. In addition, the Company closed four stores. Capital expenditures totaled $226.8 million in 1996. These expenditures were primarily incurred in connection with the opening of 34 new stores and remodeling or expanding 12 stores which added 1.4 million square feet. In addition, the Company closed eight stores. Capital expenditures totaled $256.6 million in 1995. These expenditures were primarily incurred in connection with the opening of 44 new stores and remodeling or expanding 19 stores which added 2.2 million square feet. Construction was completed on a new distribution center and dairy processing plant in Lawrenceville, Georgia. In addition, the Company closed six stores. The Company plans to open as many as 31 stores in 1998. Although real estate development is unpredictable, the Company's 1998 new store growth represents a reasonable estimate of anticipated future growth. Capital expenditures for 1998, primarily made up of new store construction and the remodeling or expanding of several existing stores, are expected to be approximately $300 million. This capital program is subject to continuing change and review. The 1998 capital expenditures are expected to be financed by internally generated funds and current liquid assets. In the normal course of operations, the Company replaces stores and closes unprofitable stores. The impact of future store closings is not expected to be material. 11 The Company is self-insured, up to certain limits, for health care, fleet liability, general liability and workers' compensation claims. Reserves are established to cover estimated liabilities for existing and anticipated claims based on actual experience including, where necessary, actuarial studies. The Company has insurance coverage for losses in excess of varying amounts. The provision for self-insured reserves was $116.8 million, $122.0 million and $103.1 million in fiscal 1997, 1996 and 1995, respectively. The Company does not believe its self-insurance program will have a material adverse impact on its future liquidity, financial condition or results of operations. The Company has a committed line of credit totaling $50.0 million. This line is reviewed annually by the bank. The interest rate for this line is at or below the prime rate. No amounts were outstanding on the line of credit as of December 27, 1997 or December 28, 1996. Cash generated in excess of the amount needed for current operations and capital expenditures is invested in short-term and long- term investments. Short-term investments were approximately $46.8 million in 1997 compared with $65.6 million in 1996. Long-term investments, primarily comprised of tax exempt bonds, taxable bonds and preferred stocks, were approximately $331.7 million in 1997 compared with $172.5 million in 1996. Management believes the Company's liquidity will continue to be strong. The Company currently repurchases common stock at the stockholders' request in accordance with the terms of the Company's Employee Stock Purchase Plan. The Company expects to continue to repurchase its common stock, as offered by its stockholders from time to time, at its then currently appraised value. However, such purchases are not required and the Company retains the right to discontinue them at any time. Results of Operations - --------------------- The Company's fiscal year ends on the last Saturday in December. Fiscal years 1997, 1996 and 1995 include 52 weeks. Sales for fiscal 1997 were $11,224.4 million as compared with $10,431.3 million in fiscal 1996, a 7.6% increase. This reflects an increase of $344.3 million or 3.3% in sales from stores that were open for all of both years (comparable stores) and sales of $448.8 million or 4.3% from the net impact of new and closed stores since the beginning of 1996. Net new stores contributed an increase of 5.9% or approximately 1.4 million square feet in retail space in fiscal 1997. Sales for fiscal 1996 were $10,431.3 million as compared with $9,393.0 million in fiscal 1995, an 11.1% increase. This reflects an increase of $526.0 million or 5.6% in sales from comparable stores and sales of $512.3 million or 5.5% from the net impact of new and closed stores since the beginning of 1995. Net new stores contributed an increase of 6.2% or approximately 1.4 million square feet in retail space in fiscal 1996. Cost of merchandise sold including store occupancy, warehousing and delivery expenses was approximately 76.2% of sales in 1997 as compared with 76.8% and 77.4% in 1996 and 1995, respectively. In 1997 and 1996, cost of merchandise sold decreased as a percentage of sales due to buying and merchandising efficiencies. Operating and administrative expenses, as a percent of sales, were 19.9%, 19.3% and 19.4% in 1997, 1996 and 1995, respectively. The significant components of operating and administrative expenses are payroll costs, employee benefits and depreciation. In recent years, the impact of inflation on the Company's food prices has been lower than the overall increase in the Consumer Price Index. 12 Nonrecurring Charge - ------------------- An $89.0 million nonrecurring charge was recorded in the fourth quarter of 1996 to cover the settlements of class action litigation against the Company involving alleged violations of the Federal Civil Rights Act and Florida law with respect to certain of the Company's retail employees and certain other allegations resulting from a notice of charge issued by the Equal Employment Opportunity Commission. The nonrecurring charge covers the full cost of the settlements, including the agreed payments to class members and their counsel, as well as the estimated cost of implementing and complying with the procedures agreed to be established under the settlements. The impact of the nonrecurring charge on net earnings was $46.4 million or $.21 per share for fiscal 1996. Accounting Standards - -------------------- The Company adopted Statement of Financial Accounting Standard No. 128, "Earnings Per Share," (SFAS 128) effective for the year ended December 27, 1997. SFAS 128 governs the computation, presentation and disclosure requirements for earnings per share (EPS). SFAS 128 simplifies the computation of EPS and makes the presentation of EPS comparable to international EPS standards. There was no effect on the Company's EPS as a result of adopting SFAS 128. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income," (SFAS 130) effective for fiscal years beginning after December 15, 1997. SFAS 130 sets forth standards for the reporting of comprehensive income in the financial statements. Comprehensive income includes net earnings and other comprehensive income. Other comprehensive income includes revenues, expenses, gains and losses that have been excluded from net earnings and recorded directly in the stockholders' equity section of the balance sheet. The Company will report comprehensive income beginning with the quarter ending March 28, 1998. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information," (SFAS 131) effective for fiscal years beginning after December 15, 1997. SFAS 131 provides accounting guidance for reporting information about operating segments and requires interim segment reporting. The Company operates in a single segment of business therefore, the effect of adopting SFAS 131 is not expected to be material. Year 2000 - --------- The Company is currently completing its review of key financial informational and operational computer systems for year 2000 issues. Based upon this review to date, management does not anticipate that the Company will encounter significant operational issues related to making its systems year 2000 compliant. The financial impact of making required systems changes is not expected to be material. 13 Cautionary Note Regarding Forward-Looking Statements - ---------------------------------------------------- From time to time, information provided by the Company, including written or oral statements made by its representatives, may contain forward-looking information about the future performance of the Company which is based on management's assumptions and beliefs in light of the information currently available to them. When used in this document, the words "plan," "estimate," "project," "intend" and "believe" and other similar expressions, as they relate to the Company, are intended to identify such forward-looking statements. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from those statements including, but not limited to: competitive practices and pricing in the food and drug industries generally and particularly in the Company's principal markets; changes in the general economy; changes in consumer spending and other factors affecting the Company's business in or beyond the Company's control. These factors include changes in the rate of inflation, changes in state and Federal legislation or regulation, adverse determinations with respect to litigation or other claims, ability to recruit and train employees, ability to construct new stores or complete remodels as rapidly as planned and stability of product costs. Other factors and assumptions not identified above could also cause the actual results to differ materially from those set forth in the forward- looking statements. The Company assumes no obligation to update publicly these forward-looking statements. Item 7A. Quantitative and Qualitative Disclosures About Market Risk - ------------------------------------------------------------------- The Company does not have any material exposure to market risk associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments. Item 8. Financial Statements and Supplemental Data - --------------------------------------------------- The Company's financial statements, together with the independent auditors' report thereon, are included in the section following Part IV of this report. Item 9. Changes in and Disagreements with Accountants on Accounting - --------------------------------------------------------------------- and Financial Disclosure ------------------------ None 14 PART III Item 10. Directors, Executive Officers, Promoters and Control Persons of the - ----------------------------------------------------------------------------- Registrant ---------- Certain information concerning the directors of the Company is incorporated by reference to pages 2 through 5 of the Proxy Statement of the Company (1998 Proxy Statement) which the Company intends to file no later than 120 days after its fiscal year end. Certain information concerning the executive officers of the Company is set forth in Part I under the caption "Executive Officers of the Company." Item 11. Executive Compensation - -------------------------------- Information regarding executive compensation is incorporated by reference to pages 5 through 8 of the 1998 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management - ------------------------------------------------------------------------ The following table sets forth, as of the opening of business on March 4, 1998, the information with respect to common stock ownership of all directors, including some who are 5% or more beneficial owners, and all officers and directors as a group. Also, listed are others known by the Company to own beneficially 5% or more of the shares of the Company's common stock.
Amount and Nature Percent Name of Beneficial Ownership (1) of Class - ---- --------------------------- -------- Carol Jenkins Barnett 11,991,612 (2) 5.50 Hoyt R. Barnett 22,574,456 (3) 10.35 W. Edwin Crenshaw 638,220 * Mark C. Hollis 1,411,414 (4) * Charles H. Jenkins, Jr. 1,744,795 * Howard M. Jenkins 14,006,850 (5) 6.42 Tina P. Johnson 2,813,570 (6) 1.29 E. V. McClurg 1,985,132 * William H. Vass 32,998,039 (7) 15.14 All Officers and Directors as a group (28 individuals) 89,542,824 (8) 41.07 All Other Beneficial Owners: - ---------------------------- Publix Super Markets, Inc. Profit Sharing Plan and Trust 21,200,000 9.72 Publix Super Markets, Inc. Employee Stock Ownership Plan and Trust 32,964,229 15.12 Nancy E. Jenkins 14,703,305 6.74
*Shares represent less than 1% of class. Note references are explained on the following page. 15 (1) As used in the table on the preceding page, "beneficial ownership" means the sole or shared voting or investment power with respect to the Company's common stock. Holdings of officers include shares allocated to their individual accounts in the Company's Employee Stock Ownership Plan, over which each officer exercises sole voting power and shared investment power. In accordance with the beneficial ownership regulations, the same shares of common stock may be included as beneficially owned by more than one individual or entity. The address for all beneficial owners is 1936 George Jenkins Boulevard, Lakeland, Florida 33815. (2) Includes 1,248,255 shares which are also shown as beneficially owned by Carol Jenkins Barnett's husband, Hoyt R. Barnett, but excludes all other shares beneficially owned by Hoyt R. Barnett, as to which Carol Jenkins Barnett disclaims beneficial ownership. (3) Hoyt R. Barnett is Trustee of the Profit Sharing Plan which is the record owner of 21,200,000 shares of common stock over which he exercises sole voting and investment power. Total shares beneficially owned include 1,248,255 shares also shown as beneficially owned by his wife, Carol Jenkins Barnett, but exclude all other shares of common stock beneficially owned by Carol Jenkins Barnett, as to which Hoyt R. Barnett disclaims beneficial ownership. (4) All shares are owned in a family trust over which Mark C. Hollis is Co-Trustee with his wife. As Co-Trustee, Mark C. Hollis has shared voting and investment power for these shares. (5) Howard M. Jenkins has sole voting and sole investment power over 3,126,015 shares of common stock which are held directly, sole voting and sole investment power over 162,103 shares which are held indirectly and shared voting and shared investment power over 10,700,373 shares which are held indirectly. (6) Tina P. Johnson is Trustee of the 401(k) Plan - Publix Stock Fund which is the record owner of 2,762,813 shares of common stock over which she has sole voting and shared investment power. (7) William H. Vass is Trustee of the Employee Stock Ownership Plan (ESOT) which is the record owner of 32,964,229 shares of common stock over which he has shared investment power. As Trustee, William H. Vass exercises sole voting power over 626,744 shares in the ESOT because such shares have not been allocated to participants' accounts. For ESOT shares allocated to participants' accounts, William H. Vass will vote shares as instructed by participants. Additionally, William H. Vass will vote ESOT shares for which no instruction is received. (8) Includes 56,927,042 shares of common stock owned by the Profit Sharing Plan, ESOT and 401(k) Plan. Item 13. Certain Relationships and Related Transactions - -------------------------------------------------------- Information regarding certain relationships and related transactions is incorporated by reference to pages 2 through 5 and 8 of the 1998 Proxy Statement. 16 PART IV Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K - ------------------------------------------------------------------------ (a) Consolidated Financial Statements and Schedule ---------------------------------------------- The consolidated financial statements and schedule listed in the accompanying Index to Consolidated Financial Statements and Schedule are filed as part of this Annual Report on Form 10-K. (b) Reports on Form 8-K ------------------- The Company filed no reports on Form 8-K during the fourth quarter of the year ended December 27, 1997. (c) Exhibits -------- 3(a). Articles of Incorporation of the Company, together with all amendments thereto, are incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 25, 1993. 3(b). Amended and Restated By-laws of the Company are incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 28, 1996. 9. Voting Trust Agreement dated September 12, 1986, between Howard M. Jenkins, Julia J. Fancelli, Nancy E. Jenkins and David F. Jenkins, is incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 31, 1988. Amendment to Voting Trust Agreement dated September 12, 1986, between Howard M. Jenkins, Julia J. Fancelli, Nancy E. Jenkins and David F. Jenkins, effective March 8, 1990, is incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 30, 1989. Amendment to Voting Trust Agreement dated September 12, 1986, between Howard M. Jenkins, Julia J. Fancelli, Nancy E. Jenkins and David F. Jenkins, effective June 14, 1991, is incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 28, 1991. Amendment to Voting Trust Agreement dated September 12, 1986, between Howard M. Jenkins, Julia J. Fancelli, Nancy E. Jenkins and David F. Jenkins, effective November 3, 1992, is incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 26, 1992. Amendment to Voting Trust Agreement dated September 12, 1986, between Howard M. Jenkins, Julia J. Fancelli, Nancy E. Jenkins and David F. Jenkins, effective February 26, 1993, is incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 26, 1992. Amendment to Voting Trust Agreement dated September 12, 1986, between Howard M. Jenkins, Julia J. Fancelli, Nancy E. Jenkins and David F. Jenkins, effective March 1, 1994, is incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 31, 1994. Deed of Termination of Voting Trust Agreement dated September 12, 1986, between Howard M. Jenkins, Julia J. Fancelli, Nancy E. Jenkins and David F. Jenkins, effective June 9, 1995, is incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 30, 1995. 17 (c) Exhibits, continued ------------------- 21. Subsidiary of the Company. 27. Financial Data Schedule. 18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PUBLIX SUPER MARKETS, INC. March 4, 1998 By: /s/ S. Keith Billups -------------------- S. Keith Billups Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated. Chairman of the Board, Chief Executive Officer and Director /s/ Howard M. Jenkins (Principal Executive Officer) March 4, 1998 - --------------------------- Howard M. Jenkins Chairman of the Executive /s/ Charles H. Jenkins, Jr. Committee and Director March 4, 1998 - --------------------------- Charles H. Jenkins, Jr. /s/ W. Edwin Crenshaw President and Director March 4, 1998 - ---------------------------- W. Edwin Crenshaw Executive Vice President /s/ William H. Vass and Director March 4, 1998 - ---------------------------- William H. Vass Executive Vice President /s/ Hoyt R. Barnett and Director March 4, 1998 - ---------------------------- Hoyt R. Barnett Senior Vice President /s/ Tina P. Johnson and Director March 4, 1998 - ---------------------------- Tina P. Johnson Vice President Finance and Treasurer (Principal Financial and /s/ David P. Phillips Accounting Officer) March 4, 1998 - ---------------------------- David P. Phillips 19 PUBLIX SUPER MARKETS, INC. Index to Consolidated Financial Statements and Schedule Independent Auditors' Report Consolidated Financial Statements: Consolidated Balance Sheets - December 27, 1997 and December 28, 1996 Consolidated Statements of Earnings - Years ended December 27, 1997, December 28, 1996 and December 30, 1995 Consolidated Statements of Stockholders' Equity - Years ended December 27, 1997, December 28, 1996 and December 30, 1995 Consolidated Statements of Cash Flows - Years ended December 27, 1997, December 28, 1996 and December 30, 1995 Notes to Consolidated Financial Statements The following consolidated supporting schedule of the Company for the years ended December 27, 1997, December 28, 1996 and December 30, 1995 is submitted herewith: Schedule: II - Valuation and Qualifying Accounts All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. 20 INDEPENDENT AUDITORS' REPORT To the Stockholders of Publix Super Markets, Inc.: We have audited the consolidated financial statements of Publix Super Markets, Inc. (the "Company") as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the consolidated financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Publix Super Markets, Inc. as of December 27, 1997 and December 28, 1996, and the results of its operations and its cash flows for each of the years in the three-year period ended December 27, 1997, in conformity with generally accepted accounting principles. Also in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG PEAT MARWICK LLP Tampa, Florida February 25, 1998 21
PUBLIX SUPER MARKETS, INC. Consolidated Balance Sheets December 27, 1997 and December 28, 1996 Assets 1997 1996 ------ ---- ---- (Amounts are in thousands) Current assets: Cash and cash equivalents $ 530,018 457,405 Short-term investments 46,847 65,586 Trade receivables (principally due from suppliers) 71,318 61,221 Merchandise inventories 638,044 570,254 Deferred tax assets 66,402 71,027 Prepaid expenses 2,153 1,339 ---------- ---------- Total current assets 1,354,782 1,226,832 ---------- ---------- Long-term investments 331,659 172,486 Other noncurrent assets 9,036 11,491 Property, plant and equipment: Land 87,733 87,052 Buildings and improvements 609,639 577,129 Furniture, fixtures and equipment 1,688,425 1,747,854 Leasehold improvements 315,205 282,922 Construction in progress 56,705 33,509 ---------- ---------- 2,757,707 2,728,466 Less accumulated depreciation 1,158,204 1,218,191 ---------- ---------- Net property, plant and equipment 1,599,503 1,510,275 ---------- ---------- $3,294,980 2,921,084 ========== ==========
See accompanying notes to consolidated financial statements. 22
PUBLIX SUPER MARKETS, INC. Consolidated Balance Sheets December 27, 1997 and December 28, 1996 Liabilities and Stockholders' Equity 1997 1996 (Amounts are in thousands, except share amounts) Current liabilities: Accounts payable $ 562,536 523,497 Accrued expenses: Salaries and wages 47,367 47,115 Contribution to retirement plans 138,858 73,555 Self-insurance reserves 57,415 64,250 Other 97,094 91,114 Nonrecurring charge 69,249 89,000 ---------- ---------- Total accrued expenses 409,983 365,034 ---------- ---------- Federal and state income taxes 15,583 21,036 ---------- ---------- Total current liabilities 988,102 909,567 Deferred tax liabilities, net 114,807 100,127 Self-insurance reserves 90,068 73,336 Accrued postretirement benefit cost 42,612 37,295 Other noncurrent liabilities 40,092 49,580 ---------- ---------- Total liabilities 1,275,681 1,169,905 ---------- ---------- Stockholders' equity: Common stock of $1 par value. Authorized 300,000,000 shares; issued and outstanding 217,419,178 shares in 1997 and 219,942,912 shares in 1996 217,419 219,943 Additional paid-in capital 100,757 91,991 Reinvested earnings 1,696,659 1,437,902 ---------- ---------- 2,014,835 1,749,836 Unrealized gain on investment securities available-for-sale, net 4,464 1,343 ---------- ---------- Total stockholders' equity 2,019,299 1,751,179 Commitments and contingencies ---------- ---------- $3,294,980 2,921,084 ========== ==========
See accompanying notes to consolidated financial statements. 23
PUBLIX SUPER MARKETS, INC. Consolidated Statements of Earnings Years ended December 27, 1997, December 28, 1996 and December 30, 1995 1997 1996 1995 ---- ---- ---- (Amounts are in thousands, except per share amounts) Revenues: Sales $11,224,378 10,431,302 9,393,021 Other income, net 114,507 94,667 77,685 ----------- ---------- ---------- Total revenues 11,338,885 10,525,969 9,470,706 ----------- ---------- ---------- Costs and expenses: Cost of merchandise sold including store occupancy, warehousing and delivery expenses 8,550,260 8,006,503 7,268,985 Operating and administrative expenses 2,233,268 2,013,882 1,820,221 Nonrecurring charge --- 89,000 --- ----------- ---------- ---------- Total costs and expenses 10,783,528 10,109,385 9,089,206 ----------- ---------- ---------- Earnings before income tax expense 555,357 416,584 381,500 Income tax expense 200,735 151,408 139,359 ----------- ---------- ---------- Net earnings $ 354,622 265,176 242,141 =========== ========== ========== Basic earnings per common share based on weighted average shares outstanding $ 1.62 1.20 1.07 =========== ========== ==========
See accompanying notes to consolidated financial statements. 24
PUBLIX SUPER MARKETS, INC. Consolidated Statements of Stockholders' Equity Years ended December 27, 1997, December 28, 1996 and December 30, 1995 Common Unrealized stock gain (loss) acquired on investment Total Additional from securities stock- Common paid-in Reinvested stock- available- holders' stock capital earnings holders for-sale, net equity ----- ------- -------- ------- ------------- ------ (Amounts are in thousands, except per share and share amounts) Balances at December 31, 1994 $231,585 78,421 1,165,128 --- (1,980) 1,473,154 Net earnings for the year --- --- 242,141 --- --- 242,141 Cash dividends, $.11 per share --- --- (25,250) --- --- (25,250) Contribution of 3,369,603 shares to retirement plans --- 6,859 --- 47,898 --- 54,757 11,196,418 shares acquired from stockholders --- --- --- (162,137) --- (162,137) Sale of 1,987,772 shares to stockholders --- --- --- 29,668 --- 29,668 Change in valuation allowance, net of tax --- --- --- --- 2,384 2,384 Retirement of 5,839,043 shares (5,839) --- (78,732) 84,571 --- --- -------- ------- --------- ------- ----- --------- Balances at December 30, 1995 225,746 85,280 1,303,287 --- 404 1,614,717 Net earnings for the year --- --- 265,176 --- --- 265,176 Cash dividends, $.13 per share --- --- (29,184) --- --- (29,184) Contribution of 3,156,519 shares to retirement plans --- 6,711 --- 57,487 --- 64,198 11,161,186 shares acquired from stockholders --- --- --- (206,235) --- (206,235) Sale of 2,200,962 shares to stockholders --- --- --- 41,568 --- 41,568 Change in valuation allowance, net of tax --- --- --- --- 939 939 Retirement of 5,803,705 shares (5,803) --- (101,377) 107,180 --- --- -------- ------- --------- ------- ----- --------- Balances at December 28, 1996 219,943 91,991 1,437,902 --- 1,343 1,751,179 Net earnings for the year --- --- 354,622 --- --- 354,622 Cash dividends, $.15 per share --- --- (33,003) --- --- (33,003) Contribution of 1,407,322 shares to retirement plans --- 1,446 --- 30,479 --- 31,925 6,926,207 shares acquired from stockholders --- --- --- (153,886) --- (153,886) Sale of 2,637,377 shares to stockholders 358 7,320 --- 57,663 --- 65,341 Change in valuation allowance, net of tax --- --- --- --- 3,121 3,121 Retirement of 2,881,508 shares (2,882) --- (62,862) 65,744 --- --- -------- ------- --------- ------- ----- --------- Balances at December 27, 1997 $217,419 100,757 1,696,659 --- 4,464 2,019,299 ======== ======= ========= ======= ===== =========
See accompanying notes to consolidated financial statements. 25
PUBLIX SUPER MARKETS, INC. Consolidated Statements of Cash Flows Years ended December 27, 1997, December 28, 1996 and December 30, 1995 1997 1996 1995 ---- ---- ---- (Amounts are in thousands) Cash flows from operating activities: Cash received from customers $ 11,291,118 10,482,420 9,451,659 Cash paid to employees and suppliers (10,441,281) (9,589,610) (8,758,575) Dividends and interest received 42,437 28,816 21,649 Income taxes paid (188,842) (170,412) (124,884) Payment for self-insured claims (106,920) (103,286) (93,250) Other operating cash receipts 678 626 548 Other operating cash payments (7,982) (8,651) (8,808) ------------ ---------- ---------- Net cash provided by operating activities 589,208 639,903 488,339 ------------ ---------- ---------- Cash flows from investing activities: Payment for property, plant and equipment (259,806) (226,752) (256,629) Proceeds from sale of property, plant and equipment 7,778 11,072 3,559 Payment for investment securities - available-for-sale (AFS) (512,912) (453,334) (241,414) Proceeds from sale and maturity of investment securities - AFS 375,335 408,808 252,009 Other, net (5,204) (2,349) 1,290 ------------ ---------- ---------- Net cash used in investing activities (394,809) (262,555) (241,185) ------------ ---------- ---------- Cash flows from financing activities: Payment of long-term debt (238) (2,792) (1,620) Proceeds from sale of common stock 65,341 41,568 29,668 Payment for acquisition of common stock (153,886) (206,235) (162,137) Dividends paid (33,003) (29,184) (25,250) ------------ ---------- ---------- Net cash used in financing activities (121,786) (196,643) (159,339) ------------ ---------- ---------- Net increase in cash and cash equivalents 72,613 180,705 87,815 Cash and cash equivalents at beginning of year 457,405 276,700 188,885 ------------ ---------- ---------- Cash and cash equivalents at end of year $ 530,018 457,405 276,700 ============ ========== ==========
See accompanying notes to consolidated financial statements. (Continued) 26
PUBLIX SUPER MARKETS, INC. Consolidated Statements of Cash Flows (Continued) 1997 1996 1995 ---- ---- ---- (Amounts are in thousands) Reconciliation of Net Earnings to Net Cash Provided by Operating Activities Net earnings $354,622 265,176 242,141 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 168,613 158,454 144,717 Retirement contributions paid or payable in common stock 78,695 68,239 60,385 Deferred income taxes 17,345 (38,721) 15,886 Loss on sale of property, plant and equipment 3,674 242 5,891 (Gain) loss on sale of investments (415) 126 (681) Self-insurance reserves in excess of current payments 9,897 18,709 9,872 Postretirement accruals in excess of current payments 5,317 4,098 2,867 Increase (decrease) in advance purchase allowances (10,690) 60,773 (3,358) Other, net 2,121 967 1,236 Changes in current assets and liabilities: Increase in trade receivables (10,097) (16,729) (3,643) Increase in merchandise inventories (67,790) (27,368) (62,010) (Increase) decrease in prepaid expenses (814) 1,930 (1,502) Increase in accounts payable and accrued expenses 44,183 124,289 77,949 Increase (decrease) in Federal and state income taxes payable (5,453) 19,718 (1,411) -------- ------- ------- Total adjustments 234,586 374,727 246,198 -------- ------- ------- Net cash provided by operating activities $589,208 639,903 488,339 ======== ======= =======
See accompanying notes to consolidated financial statements. 27 PUBLIX SUPER MARKETS, INC. Notes to Consolidated Financial Statements December 27, 1997, December 28, 1996 and December 30, 1995 (1) Summary of Significant Accounting Policies ------------------------------------------ (a)Business -------- The Company is in the business of operating retail food supermarkets in Florida, Georgia, South Carolina and Alabama. (b)Principles of Consolidation --------------------------- The consolidated financial statements include the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. (c)Definition of Fiscal Year ------------------------- The fiscal year ends on the last Saturday in December. Fiscal years 1997, 1996 and 1995 include 52 weeks. (d)Cash Equivalents ---------------- The Company considers all liquid investments with maturities of three months or less to be cash equivalents. (e)Inventories ----------- Inventories are valued at cost (principally the dollar value last- in, first-out method) including store inventories which are calculated by the retail method. (f)Property, Plant and Equipment and Depreciation ---------------------------------------------- Assets are recorded at cost and are depreciated using the straight-line method over their estimated useful life or the term of their lease. Maintenance and repairs are charged to expense as incurred. Expenditures for renewals and betterments are capitalized. The gain or loss is applied to the asset accounts for traded items or is reflected in income for disposed items. (g)Self-Insurance -------------- Self-insurance reserves are established for health care, fleet liability, general liability and workers' compensation claims. These reserves are determined based on actual experience including, where necessary, actuarial studies. The Company has insurance coverage for losses in excess of varying amounts. (h)Long-Lived Assets ----------------- At the beginning of fiscal year 1996, the Company adopted Statement of Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of"(SFAS 121). SFAS 121 requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. SFAS 121 also requires that long-lived assets and certain identifiable intangibles to be disposed of be reported at the lower of the carrying amount or fair value less costs to sell. The effect of adopting SFAS 121 as of the beginning of fiscal 1996 was not material. (Continued) 28 PUBLIX SUPER MARKETS, INC. Notes to Consolidated Financial Statements (i)Earnings Per Share ------------------ The Company adopted Statement of Financial Accounting Standard No. 128, "Earnings Per Share," (SFAS 128) effective for the year ended December 27, 1997. SFAS 128 governs the computation, presentation and disclosure requirements for earnings per share (EPS). SFAS 128 simplifies the computation of EPS and makes the presentation of EPS comparable to international EPS standards. There was no effect on the Company's EPS as a result of adopting SFAS 128. (j)Comprehensive Income -------------------- In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income," (SFAS 130) effective for fiscal years beginning after December 15, 1997. SFAS 130 sets forth standards for the reporting of comprehensive in the financial statements. Comprehensive income includes net earnings and other comprehensive income. Other comprehensive income includes revenues, expenses, gains and losses that have been excluded from net earnings and recorded directly in the stockholders' equity section of the balance sheet. The Company will report comprehensive income beginning with the quarter ending March 28, 1998. (k)Segment Information ------------------- In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information," (SFAS 131) effective for fiscal years beginning after December 15, 1997. SFAS 131 provides accounting guidance for reporting information about operating segments and requires interim segment reporting. The Company operates in a single segment of business therefore, the effect of adopting SFAS 131 is not expected to be material. (l)Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (m)Reclassifications ----------------- Certain 1995 and 1996 amounts have been reclassified to conform with the 1997 presentation. (2) Merchandise Inventories ----------------------- If the first-in, first-out method of valuing inventories had been used by the Company, inventories and current assets would have been higher than reported by approximately $102,393,000, $101,531,000 and $96,231,000 as of December 27, 1997, December 28, 1996 and December 30, 1995, respectively. Also, net earnings would have increased by approximately $423,000 or less than $.01 per share in 1997, $2,764,000 or $.01 per share in 1996 and $3,106,000 or $.01 per share in 1995. 2 (Continued) 29 PUBLIX SUPER MARKETS, INC. Notes to Consolidated Financial Statements (3) Fair Value of Financial Instruments ----------------------------------- The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments: Cash and cash equivalents: The carrying amount for cash and cash equivalents approximates fair value. Investment securities: The fair values for marketable debt and equity securities are based on quoted market prices. The carrying amount of the Company's financial instruments as of December 27, 1997 and December 28, 1996 approximated their respective fair values. (4) Investments ----------- Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in other income, net. The Company had no held-to-maturity securities as of December 27, 1997 and December 28, 1996. All of the Company's debt securities and marketable equity securities are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as a separate component of stockholders' equity. The cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in other income, net. Realized gains and losses and declines in value judged to be other- than-temporary on available-for-sale securities are included in other income, net. The cost of securities sold is based on the specific identification method. Following is a summary of available-for-sale securities as of December 27, 1997 and December 28, 1996:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---- ----- ------ ----- (Amounts are in thousands) 1997: Tax-free bonds $231,517 1,185 775 231,927 Taxable bonds 32,940 1,632 46 34,526 Equity securities 106,782 5,845 574 112,053 -------- ----- ----- ------- $371,239 8,662 1,395 378,506 ======== ===== ===== ======= 1996: Tax-free bonds $156,694 713 416 156,991 Equity securities 79,191 2,584 694 81,081 -------- ----- ----- ------- $235,885 3,297 1,110 238,072 ======== ===== ===== =======
For the fiscal years ended December 27, 1997 and December 28, 1996, the realized gains on sales of available-for-sale securities totaled $1,540,000 and $451,000, respectively, and the realized losses totaled $1,125,000 and $577,000, respectively. The unrealized gains on available-for-sale securities, net of applicable income taxes, included as a separate component of stockholders' equity, was $4,464,000 at the end of 1997 and $1,343,000 at the end of 1996. 3 (Continued) 30 PUBLIX SUPER MARKETS, INC. Notes to Consolidated Financial Statements The amortized cost and estimated fair value of debt and marketable equity securities classified as available-for-sale as of December 27, 1997 and December 28, 1996, by expected maturity, are as follows:
1997 1996 -------------------- ------------------- Amortized Fair Amortized Fair Cost Value Cost Value ---- ----- ---- ----- (Amounts are in thousands) Due in one year or less $ 46,722 46,847 65,487 65,586 Due after one year through three years 26,200 26,624 57,795 57,985 Due after three years 191,535 192,982 33,412 33,420 -------- ------- ------- ------- 264,457 266,453 156,694 156,991 Equity securities 106,782 112,053 79,191 81,081 -------- ------- ------- ------- $371,239 378,506 235,885 238,072 ======== ======= ======= =======
(5) Postretirement Benefits ----------------------- The Company provides life insurance benefits for salaried and hourly full-time employees. Such employees retiring from the Company on or after attaining age 55 and having ten years of credited service are entitled to postretirement life insurance benefits. The Company funds the life insurance benefits on a pay- as-you-go basis. During 1997, 1996 and 1995, the Company made benefit payments to beneficiaries of retirees of approximately $1,271,000, $1,420,000 and $1,310,000, respectively. Net postretirement benefit cost consists of the following components:
1997 1996 1995 ---- ---- ---- (Amounts are in thousands) Service cost attributed to service during the year $ 2,533 1,980 1,362 Interest cost on postretirement benefit obligation 3,755 3,208 2,815 Net amortization 300 330 --- ------- ----- ----- Net periodic postretirement benefit cost $ 6,588 5,518 4,177 ======= ===== =====
The following summarizes the reconciliation of the amounts recognized in the Company's consolidated balance sheets as of December 27, 1997 and December 28, 1996:
1997 1996 ---- ---- (Amounts are in thousands) Accumulated postretirement benefit obligation: Retirees $18,417 15,337 Fully eligible active plan participants 11,966 12,981 Other active plan participants 23,634 18,201 ------- ------ Accumulated postretirement benefit obligation 54,017 46,519 Unrecognized net loss (11,405) (9,224) ------- ------ Accrued postretirement benefit cost $42,612 37,295 ======= ======
4 (Continued) 31 PUBLIX SUPER MARKETS, INC. Notes to Consolidated Financial Statements The following actuarial assumptions were used in the calculation of the year end accumulated postretirement benefit obligation:
1997 1996 1995 ---- ---- ---- Discount rate 7.25% 7.75% 7.25% Salary increase rate 4.00% 4.00% 4.00%
The change in the discount rate from 7.75% to 7.25% in 1997 increased the accumulated postretirement benefit obligation by $4,438,000 and is expected to increase annual postretirement benefit costs by $684,000 beginning in 1998. The change in the discount rate from 7.25% to 7.75% in 1996 decreased the accumulated postretirement benefit obligation by $4,064,000. (6) Retirement Plans ---------------- The Company has a trusteed, noncontributory profit sharing plan for the benefit of eligible employees. The amount of the Company's contribution to this plan is determined by the Board of Directors. The contribution cannot exceed 15% of compensation paid to participants. The expense recorded for contributions to this plan amounted to $69,420,000 in 1997, $49,010,000 in 1996 and $44,941,000 in 1995. The Company has an Employee Stock Ownership Plan (ESOT). Annual contributions to the ESOT are determined by the Board of Directors and can be made in Company stock or cash. The expense recorded for contributions to the plan amounted to $69,420,000 in 1997, $60,818,000 in 1996 and $54,944,000 in 1995. The Company has a 401(k) plan for the benefit of eligible employees. The 401(k) plan is a voluntary defined contribution plan. Eligible employees may contribute up to 6% of their annual compensation, subject to certain maximum contribution restrictions. The Company may make a discretionary annual matching contribution to eligible participants of this plan as determined by the Board of Directors. During 1997, 1996 and 1995, the Board of Directors approved a match of 50% of eligible contributions up to 3% of eligible wages not to exceed a maximum of $750 per employee. The match, which is made in the subsequent year, is in the form of common stock of the Company. The expense recorded for the Company's match to the 401(k) plan was approximately $9,275,000, $7,421,000 and $5,441,000 in 1997, 1996 and 1995, respectively. The Company intends to continue the profit sharing plan, ESOT and 401(k) plan indefinitely; however, the right to modify, amend or terminate these plans has been reserved. In the event of termination, all amounts contributed under the plans must be paid to the participants or their beneficiaries. (7) Nonrecurring Charge ------------------- An $89.0 million nonrecurring charge was recorded in the fourth quarter of 1996 to cover the settlements of class action litigation against the Company involving alleged violations of the Federal Civil Rights Act and Florida law with respect to certain of the Company's retail employees and certain other allegations resulting from a notice of charge issued by the Equal Employment Opportunity Commission. The nonrecurring charge covers the full cost of the settlements, including the agreed payments to class members and their counsel, as well as the estimated cost of implementing and complying with the procedures agreed to be established under the settlements (see note 9). 5 (Continued) 32 PUBLIX SUPER MARKETS, INC. Notes to Consolidated Financial Statements (8) Income Taxes ------------ The provision for income taxes consists of the following:
Current Deferred Total ------- -------- ----- (Amounts are in thousands) 1997: Federal $156,543 14,792 171,335 State 26,847 2,553 29,400 -------- ------ ------- $183,390 17,345 200,735 ======== ====== ======= 1996: Federal $162,460 (33,073) 129,387 State 27,669 (5,648) 22,021 -------- ------ ------- $190,129 (38,721) 151,408 ======== ====== ======= 1995: Federal $104,996 13,546 118,542 State 18,477 2,340 20,817 -------- ------ ------- $123,473 15,886 139,359 ======== ====== =======
The actual tax expense for 1997, 1996 and 1995 differs from the "expected" tax expense for those years (computed by applying the U.S. Federal corporate tax rate of 35% to earnings before income taxes) as follows:
1997 1996 1995 ---- ---- ---- (Amounts are in thousands) Computed "expected" tax expense $194,375 145,804 133,525 State income taxes (net of Federal income tax benefit) 9,108 14,309 13,532 Tax exempt interest (9,291) (7,066) (5,530) Other, net (3,457) (1,639) (2,168) -------- ------- ------- $200,735 151,408 139,359 ======== ======= =======
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of December 27, 1997 and December 28, 1996 are as follows:
1997 1996 ---- ---- (Amounts are in thousands) Deferred tax assets: Self-insurance reserves $ 55,579 50,363 Nonrecurring charge 26,728 34,390 Advance purchase allowances 19,481 23,483 Postretirement benefit cost 16,445 14,356 Retirement plan contributions 13,390 9,432 Inventory capitalization 7,872 7,552 Other 10,152 11,161 -------- ------- Total deferred tax assets $149,647 150,737 ======== ======= Deferred tax liabilities: Property, plant and equipment, principally due to depreciation $197,875 179,570 Other 177 267 -------- ------- Total deferred tax liabilities $198,052 179,837 ======== =======
The Company expects the results of future operations to generate sufficient taxable income to allow utilization of deferred tax assets. 6 (Continued) 33 PUBLIX SUPER MARKETS, INC. Notes to Consolidated Financial Statements (9) Commitments and Contingencies ----------------------------- (a) Operating Leases ---------------- The Company conducts a major portion of its retail operations from leased store and shopping center premises generally under 20 year leases. Contingent rentals paid to lessors of certain store facilities are determined on the basis of a percentage of sales in excess of stipulated minimums plus, in certain cases, reimbursement of taxes and insurance. Total rental expense, net of sublease rental income, for the years ended December 27, 1997, December 28, 1996 and December 30, 1995, is as follows:
1997 1996 1995 ---- ---- ---- (Amounts are in thousands) Minimum rentals $154,727 135,273 129,288 Contingent rentals 9,835 9,892 9,525 Sublease rental income (4,366) (3,572) (3,467) -------- ------- ------- $160,196 141,593 135,346 ======== ======= =======
As of December 27, 1997, future minimum lease payments for all noncancelable operating leases and related subleases are as follows:
Minimum Sublease Rental Rental Year Commitments Income Net ---- ----------- ------ --- (Amounts are in thousands) 1998 $ 153,933 4,957 148,976 1999 152,690 4,587 148,103 2000 150,999 4,253 146,746 2001 149,921 3,512 146,409 2002 148,339 1,845 146,494 Thereafter 1,435,595 322 1,435,273 ---------- ------ --------- $2,191,477 19,476 2,172,001 ========== ====== =========
The Company also owns shopping centers which are leased to tenants for minimum monthly rentals plus, in certain instances, contingent rentals. Contingent rentals received are determined on the basis of a percentage of sales in excess of stipulated minimums plus, in certain instances, reimbursement of taxes. Contingent rentals were estimated at December 27, 1997 and are included in trade receivables. Rental income was approximately $9,622,000 in 1997, $8,983,000 in 1996 and $8,576,000 in 1995. The approximate amounts of minimum future rental payments to be received under operating leases are $7,455,000, $5,971,000, $4,589,000, $2,879,000 and $2,005,000 for the years 1998 through 2002, respectively, and $5,747,000 thereafter. (b)Lines of Credit --------------- The Company has a committed line of credit totaling $50,000,000 available for short-term borrowings, with an interest rate at or below the prime rate. There were no amounts outstanding as of December 27, 1997 or December 28, 1996. The Company pays no fees related to this line. (c)Environmental ------------- In October 1996, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 96-1, "Environmental Remediation Liabilities." The guidance provided by the SOP is consistent with the Company's current method of accounting for environmental remediation costs. The Company accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. 7 (Continued) 34 PUBLIX SUPER MARKETS, INC. Notes to Consolidated Financial Statements (d)Litigation ---------- The Company was the subject of a notice of charge (the "Charge") issued by the Equal Employment Opportunity Commission (the "EEOC") in March 1992, In the Matter of: Kemp v. Publix Super Markets, Inc., alleging that the Company had and was engaged in violations of Title VII of the Federal Civil Rights Act by discriminating against women with respect to job assignments and promotions because of their gender. The Charge was subsequently expanded to include allegations of race discrimination. The Company was also a defendant in a certified class action filed in July 1995 in the Federal District Court for the Middle District of Florida, Tampa Division (the "Court"), by certain present or former employees of the Company, individually and on behalf of all other persons similarly situated (the "Shores case"). The plaintiffs alleged that the Company had and was then engaged in a policy and pattern or practice of gender-based discriminatory treatment of female employees with respect to job assignments, promotional opportunities, management positions, equal pay, full-time status, bonuses, and other benefits and conditions of employment, all in violation of Title VII of the Federal Civil Rights Act, as well as the Florida Civil Rights Act of 1992. The litigation class certified by the Court consisted of all female employees of the Company who from May 22, 1991 (Florida and South Carolina operations) or from October 19, 1991 (Georgia operations) had worked or were working in the Company's retail operations; expressly excluded were females who had worked only in the Company's pharmacy operations. On January 24, 1997, the Company, the EEOC and the plaintiffs in the Shores case entered into a settlement with respect to all matters related to the case. The settlement was memorialized in a consent decree, which was approved by the Court on May 23, 1997 (the "Shores Consent Decree"). Under the Shores Consent Decree, the Company will pay $81.5 million to the plaintiffs, their counsel and other class members. The Company agreed to establish a formal system by which employees will be considered for promotion. Promotions will be based on qualifications and expressed interest of employees. The Company has also agreed to make certain other procedural changes. The Company's compliance with the Shores Consent Decree will be monitored by class counsel and the EEOC. Also on January 24, 1997, the Company agreed with the EEOC to settle all pending EEOC charges related to gender and race discrimination that were not included in the Shores Consent Decree. A formal settlement agreement was executed by the parties on April 13, 1997. Under the EEOC settlement, the Company agreed to pay an additional $3.5 million to members of the affected classes. The Company also agreed to follow procedures with respect to class members similar to those established under the Shores Consent Decree. The settlement agreements recognize that the Company continues to deny that it has engaged in any unlawful discriminatory activity. The Company will pay the settlements from liquid investment funds currently on hand and the settlements were charged against the Company's fiscal 1996 fourth quarter results (see note 7). Management does not believe that the settlements will cause any cash flow or liquidity problems or will have any material impact on the Company's future financial results. A purported class action was filed against the Company on April 3, 1997 in the Court by Lemuel Middleton and 15 other present or former employees of the Company, individually and on behalf of all other persons similarly situated (the "Middleton case"). In their Complaint, the plaintiffs allege that the Company has and is currently engaged in a pattern and practice of race-based discriminatory treatment of black employees and applicants with respect to hiring, promotion, job assignment, conditions of employment, and other employment aspects, all in violation of Federal and state law. Subsequently, three of the named plaintiffs withdrew their claims with prejudice. The plaintiffs seek, among other relief, a certification of the suit as a class action, declaratory and injunctive relief, back pay, front pay, benefits and other compensatory damages, and punitive damages. Action by the Court is now pending on the plaintiffs' request for class certification. 8 (Continued) 35 PUBLIX SUPER MARKETS, INC. Notes to Consolidated Financial Statements On November 6, 1997, another purported class action was filed against the Company in the Court by Shirley Dyer and five other present or former employees of the Company, individually and on behalf of all other persons similarly situated (the "Dyer case"). In their Complaint, the plaintiffs allege that the Company has violated and is currently violating Federal and state civil rights statutes by discriminating against female employees and applicants with respect to hiring, promotion, training, compensation, discipline, demotion and termination, and/or retaliation for bringing allegations of discrimination. In their Complaint, the plaintiffs propose a class of all female current, former and future Company employees and applicants in all of the Company's "non-retail" operations. The plaintiffs seek, among other relief, a certification of the suit as a class action, declaratory and injunctive relief, back pay, front pay, benefits and other compensatory damages, and punitive damages. The parties have begun extensive discovery on issues relating to class certification. The Company denies the allegations of the plaintiffs in the Middleton and Dyer cases and is vigorously defending the actions. The Company is also a party in various legal claims and actions considered in the normal course of business. Management believes that the ultimate disposition of these matters will not have a material effect on the Company's liquidity, results of operations or financial condition. 9 36 Schedule II ----------- PUBLIX SUPER MARKETS, INC. Valuation and Qualifying Accounts Years ended December 27, 1997, December 28, 1996 and December 30, 1995 (Amounts are in thousands)
Balance at Additions Deductions Balance at beginning charged to from end of Description of year income reserves year ----------- ------- ------ -------- ---- Year ended December 27, 1997 Reserves not deducted from assets: Self-insurance reserves: -Current $ 64,250 100,085 106,920 57,415 -Noncurrent 73,336 16,732 --- 90,068 -------- ------- ------- ------- $137,586 116,817 106,920 147,483 ======== ======= ======= ======= Year ended December 28, 1996 Reserves not deducted from assets: Self-insurance reserves: -Current $ 58,442 109,094 103,286 64,250 -Noncurrent 60,435 12,901 --- 73,336 -------- ------- ------- ------- $118,877 121,995 103,286 137,586 ======== ======= ======= ======= Year ended December 30, 1995 Reserves not deducted from assets: Self-insurance reserves: -Current $ 49,295 102,397 93,250 58,442 -Noncurrent 59,710 725 --- 60,435 -------- ------- ------- ------- $109,005 103,122 93,250 118,877 ======== ======= ======= =======
37 PUBLIX SUPER MARKETS, INC. Index to Exhibits EXHIBIT 21 Subsidiary of the Company EXHIBIT 27 Financial Data Schedule for the year ended December 28, 1996 EX-21 2 SUBSIDIARY OF THE COMPANY EXHIBIT 21 PUBLIX SUPER MARKETS, INC. Subsidiary of the Company Publix Alabama, Inc. (incorporated in Alabama) EX-27 3 FINANCIAL DATA SCHEDULE FOR THE YEAR ENDED DECEMBER 28, 1996
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENT OF PUBLIX SUPER MARKETS, INC. FOR THE YEAR ENDED DECEMBER 27, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000081061 PUBLIX SUPER MARKETS, INC. 1,000 U.S. DOLLARS YEAR DEC-27-1997 DEC-29-1996 DEC-27-1997 1 530,018 46,847 71,318 0 638,044 1,354,782 2,757,707 1,158,204 3,294,980 988,102 0 0 0 217,419 1,801,880 3,294,980 11,224,378 11,338,885 8,550,260 10,783,528 0 0 0 555,357 200,735 354,622 0 0 0 354,622 1.62 1.62
-----END PRIVACY-ENHANCED MESSAGE-----