-----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, JJi2uu0m+fmrJ4twt7Eo5b/HhGtx9aK/GoMbAyA/hG6JqNjNwS9iackOeod6Eun/ XlxWY7yusD3Iwx/yc+1KjQ== 0000081061-99-000017.txt : 19990512 0000081061-99-000017.hdr.sgml : 19990512 ACCESSION NUMBER: 0000081061-99-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990327 FILED AS OF DATE: 19990511 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-Q SEC ACT: SEC FILE NUMBER: 000-00981 FILM NUMBER: 99617107 BUSINESS ADDRESS: STREET 1: PO BOX 407 CITY: LAKELAND STATE: FL ZIP: 33802-0407 BUSINESS PHONE: 9416887407 MAIL ADDRESS: STREET 1: P O BOX 407 STREET 2: P O BOX 407 CITY: LAKELAND STATE: FL ZIP: 33802 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 27, 1999 OR ( ) 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 or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1936 George Jenkins Blvd. Lakeland, Florida 33815 - ----------------------------------------- ------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (941) 688-1188 -------------- 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 (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 the registrant's common stock, $1.00 par value, as of April 30, 1999 was 217,066,710. Page 1 of 11 pages PART I. FINANCIAL INFORMATION
Item 1. Financial Statements - ----------------------------- PUBLIX SUPER MARKETS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts are in thousands, except share amounts) ASSETS March 27, 1999 December 26, 1998 -------------- ----------------- (Unaudited) Current Assets - -------------- Cash and cash equivalents $ 799,787 $ 669,326 Short-term investments 6,284 2,042 Trade receivables 57,430 71,267 Merchandise inventories 664,882 657,565 Deferred tax assets 54,279 53,578 Prepaid expenses 8,822 1,889 ---------- ---------- Total Current Assets 1,591,484 1,455,667 ---------- ---------- Long-term investments 388,834 385,571 Other noncurrent assets 13,160 11,680 Property, plant and equipment 3,082,583 2,991,868 Accumulated depreciation (1,269,366) (1,227,527) ---------- ---------- Total Assets $3,806,695 $3,617,259 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities - ------------------- Accounts payable $ 617,660 $ 615,753 Accrued contribution to retirement plans 156,206 146,107 Accrued salaries and wages 60,161 53,013 Accrued self-insurance reserves 74,657 61,413 Accrued nonrecurring charge 1,889 2,219 Federal and state income taxes 64,381 2,570 Other 85,050 107,207 ---------- ---------- Total Current Liabilities 1,060,004 988,282 ---------- ---------- Deferred tax liabilities, net 124,121 123,821 Self-insurance reserves 90,031 98,956 Accrued postretirement benefit cost 50,742 48,858 Other noncurrent liabilities 27,346 29,710 Stockholders' Equity - -------------------- Common stock of $1 par value. Authorized 300,000,000 shares; issued 217,332,838 shares at March 27, 1999 and 216,862,215 shares at December 26, 1998 217,333 216,862 Additional paid-in capital 175,370 152,472 Reinvested earnings 2,077,027 1,958,459 ---------- ---------- 2,469,730 2,327,793 Less 316,331 treasury shares at March 27, 1999, at cost (14,619) --- Accumulated other comprehensive earnings (660) (161) ---------- ---------- Total Stockholders' Equity 2,454,451 2,327,632 ---------- ---------- Total Liabilities and Stockholders' Equity $3,806,695 $3,617,259 ========== ==========
See accompanying notes to condensed consolidated financial statements. -2-
PUBLIX SUPER MARKETS, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Amounts are in thousands, except per share and share amounts) Three Months Ended March 27, 1999 March 28, 1998 -------------- -------------- (Unaudited) Revenues - -------- Sales $ 3,363,248 $ 3,091,417 Other income, net 31,172 33,714 ------------ ------------ Total revenues 3,394,420 3,125,131 ------------ ------------ Costs and expenses - ------------------ Cost of merchandise sold, including store occupancy, warehousing and delivery expenses 2,537,978 2,323,499 Operating and administrative expenses 669,915 613,247 ------------ ------------ Total costs and expenses 3,207,893 2,936,746 ------------ ------------ Earnings before income tax expense 186,527 188,385 Income tax expense 67,959 69,387 ------------ ------------ Net earnings $ 118,568 $ 118,998 ============ ============ Weighted average number of common shares outstanding 216,446,126 217,598,625 ============ ============ Basic earnings per common share $ .55 $ .55 ============ ============ Cash dividends per common share None None
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Amounts are in thousands) Three Months Ended March 27, 1999 March 28, 1998 -------------- -------------- (Unaudited) Net earnings $ 118,568 $ 118,998 Other comprehensive earnings - unrealized (loss) gain on investment securities available-for-sale, net of tax effect of ($2,031) and $451 in 1999 and 1998, respectively (3,245) 721 Reclassification adjustment for net realized loss (gain) on investment securities available-for-sale, net of tax effect of $1,719 and ($306) in 1999 and 1998, respectively 2,746 (488) ------------ ------------ Comprehensive earnings $ 118,069 $ 119,231 ============ =============
See accompanying notes to condensed consolidated financial statements. -3-
PUBLIX SUPER MARKETS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts are in thousands) Three Months Ended March 27, 1999 March 28, 1998 -------------- -------------- (Unaudited) Cash Flows From Operating Activities - ------------------------------------ Cash received from customers $3,398,907 $3,121,963 Cash paid to employees and suppliers (3,085,262) (2,793,738) Income taxes paid (6,234) (17,609) Payment for self-insured claims (27,565) (27,432) Other, net 12,345 12,037 ---------- ---------- Net Cash Provided by Operating Activities 292,191 295,221 ---------- ---------- Cash Flows From Investing Activities - ------------------------------------ Payment for property, plant and equipment (107,724) (65,952) Payment for investment securities - available-for-sale (73,235) (73,388) Proceeds from sale of investment securities - available-for-sale 59,361 58,508 Other, net (893) 2,069 ---------- ----------- Net Cash Used in Investing Activities (122,491) (78,763) ---------- ---------- Cash Flows From Financing Activities - ------------------------------------ Proceeds from sale of common stock 83,553 19,839 Payment for acquisition of common stock (122,661) (43,987) Other, Net (131) (131) ---------- ---------- Net Cash Used in Financing Activities (39,239) (24,279) ---------- ---------- Net increase in cash and cash equivalents 130,461 192,179 Cash and cash equivalents at beginning of period 669,326 530,018 ---------- ---------- Cash and cash equivalents at end of period $ 799,787 $ 722,197 ========== ==========
See accompanying notes to condensed consolidated financial statements. -4- PUBLIX SUPER MARKETS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments deemed necessary to fairly reflect the financial position, results of operations and changes in cash flows of the Company for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the fiscal 1998 Form 10-K Annual Report of the Company. 2. Due to the seasonal nature of the Company's business, the results for the three months ended March 27, 1999 are not necessarily indicative of the results for the entire 1999 fiscal year. 3. 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. 4. Certain 1998 amounts have been reclassified to conform with the 1999 presentation. 5. In March 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," (SOP 98-1) effective for fiscal years beginning after December 15, 1998. SOP 98-1 provides guidance on accounting for the costs of computer software developed or obtained for internal use. This pronouncement identifies the characteristics of internal use software and provides guidance on new cost recognition principles. The effect of SOP 98-1 on the Company's financial statements was not material. 6. In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities," (SOP 98-5) effective for fiscal years beginning after December 15, 1998. SOP 98-5 requires that costs incurred for start-up activities, such as store openings, be expensed as incurred. The Company has historically accounted for start-up costs in accordance with the requirements of SOP 98-5, therefore, there was no effect on the Company's financial statements from the adoption of SOP 98-5. -5- PUBLIX SUPER MARKETS, INC. Item 2. Management's Discussion and Analysis of Financial Condition and Results - ------------------------------------------------------------------------------- of Operations - ------------- Liquidity and Capital Resources - ------------------------------- Operating activities continue to be the Company's primary source of liquidity. Net cash provided by operating activities was approximately $292.2 million in the quarter ended March 27, 1999, as compared with $295.2 million in the quarter ended March 28, 1998. Cash and cash equivalents totaled $799.8 million as of March 27, 1999, as compared with $722.2 million as of March 28, 1998. Capital expenditures totaled approximately $107.7 million in the quarter ended March 27, 1999. These expenditures were primarily incurred in connection with the opening of seven new stores and remodeling or expanding 18 stores. In addition, the Company closed four stores. The net impact of new and closed stores (net new stores) added an additional .19 million square feet in the first quarter of 1999, a .74% increase. Capital expenditures totaled approximately $66.0 million in the quarter ended March 28, 1998. These expenditures were primarily incurred in connection with the opening of nine new stores and remodeling or expanding of three stores. In addition, the Company closed two stores. Net new stores added an additional .35 million square feet in the first quarter of 1998, a 1.4% increase. Capital expenditures for the remainder of 1999, primarily made up of new store and warehouse construction and the remodeling or expanding of many existing stores, are expected to be approximately $402.3 million. The capital program is subject to continuing change and review. The remaining 1999 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. Cash generated in excess of the amount needed for current operations and capital expenditures is invested in short-term and long-term investments. Management believes the Company's liquidity will continue to be strong. Operating Results - ----------------- Sales for the first quarter of 1999 were $3.4 billion as compared with $3.1 billion in the same quarter in 1998, an 8.8% increase. This reflects an increase of $163.8 million or 5.3% in sales from stores that were open for all of both quarters (comparable stores) and sales of $108.0 million or 3.5% from net new stores since the beginning of the first quarter of 1998. Cost of merchandise sold including store occupancy, warehousing and delivery expenses, as a percentage of sales, was approximately 75.5% for the quarter ended March 27, 1999 and 75.2% for the quarter ended March 28, 1998. The slight increase in cost of merchandise sold, as a percentage of sales, was primarily due to competitive pressures. Operating and administrative expenses, as a percentage of sales, were approximately 19.9% and 19.8% for the quarters ended March 27, 1999 and March 28, 1998, respectively. The significant components of operating and administrative expenses are payroll costs, employee benefits and depreciation. Year 2000 - --------- Year 2000 problems result from the use in computer hardware and software of two digits rather than four digits to define the applicable year. When computer systems must process dates both before and after January 1, 2000, two-digit year "fields" may create processing ambiguities that can cause errors and system failures. These errors or failures may have limited effects, or the effects may be widespread, depending on the computer chip, system or software, and its location and function. The effects of Year 2000 problems are further complicated because of the -6- interdependence of computer and telecommunications systems in the United States and throughout the world. This interdependence certainly is true for the Company and its suppliers, business partners and customers. The Company's Board of Directors has been briefed about Year 2000 problems generally and as they may affect the Company. The Company has adopted a Year 2000 plan (the "Plan") covering all of the Company's business units. The aim of the Plan is to take steps to prevent the Company's processes and systems, with emphasis on mission-critical functions, from being impaired due to Year 2000 problems. "Mission-critical" functions are those critical functions whose loss would cause an immediate stoppage of or significant impairment to major business areas (a major business area is one of material importance to the Company's business). To oversee the Plan, the Company established a Year 2000 Project Office. The Project Office is staffed with representatives from the Company's Information Systems Department, non-Information Systems business areas and outside consultants. Additional consultants are used on an as needed basis. Under the Plan, three main areas are addressed: information technology (IT) systems; non-IT systems (including embedded chip technology); and supply chain and other third party business partner readiness. The Plan called for the Company to inventory its mission-critical computer hardware and software systems and embedded chips (computer chips with date-related functions, contained in a wide variety of devices); assess the effects of Year 2000 problems on the Company's business units; remedy systems, software and embedded chips in an effort to avoid material disruptions or other material adverse effects on mission-critical functions, processes and systems; verify and test the systems to which remediation efforts have been applied; and develop contingency plans to cope with the mission-critical consequences of Year 2000 problems that have not been identified or remediated by that date. The Plan recognizes that the computer, telecommunications, and other systems ("Outside Systems") of outside entities ("Outside Entities") have the potential for major, mission-critical, adverse effects on the conduct of the Company's business. The Company does not have control of these Outside Entities or Outside Systems. The Plan includes an ongoing process of identifying and contacting Outside Entities whose systems have or may have a substantial effect on the Company's ability to continue to conduct the mission-critical aspects of its business without disruption from Year 2000 problems. The Plan includes reasonable efforts to inventory and assess the extent to which these Outside Systems may not be "Year 2000 ready" or "Year 2000 compatible." The Company will use reasonable efforts to coordinate and cooperate with these Outside Entities in an ongoing effort to obtain assurance that the Outside Systems that are mission-critical will be Year 2000 compatible well before January 1, 2000. As of April 1999, the Company and all its business units are at various stages in implementation of the Plan. The Company will continue to closely monitor work under the Plan and to revise estimated completion dates as needed. With respect to non-IT systems and equipment with date sensitive operating controls such as manufacturing equipment, security, and other similar systems, the Company is in the process of identifying and addressing those items requiring replacement, upgrade or other remediation efforts. The Company estimates that it is approximately 87% complete with the identification, remediation or replacement, and validation of the Company's IT and non-IT systems that have been identified as having potential Year 2000 deficiencies. The Company further estimates that substantially all mission-critical IT and non-IT systems and equipment will be Year 2000 ready by May 31, 1999, though unforeseen circumstances may affect this date. -7- The Company anticipates that total costs for Year 2000 awareness, inventory, assessment, analysis, conversion, testing, or contingency planning to be $40.0 million. As of April 1999, approximately $30.0 million of this amount has been incurred. The incurred costs include the costs of all equipment upgrades, software modifications, software replacements, employee salaries allocable to the Year 2000 efforts, and consultant fees and expenses addressing Year 2000 problems. The funds to pay for addressing Year 2000 problems are expected to be financed by internally generated funds and current liquid assets. The Company believes that the cost of addressing Year 2000 problems will not have a material effect on the Company's consolidated financial position or results of operations. Although management believes that its estimates are reasonable, there can be no assurance that the actual costs of implementing the Plan will not differ materially from the estimated costs or that the Company will not be materially adversely affected by Year 2000 problems. Additionally, Year 2000 costs are difficult to estimate accurately because of unanticipated vendor delays, technical difficulties, the impact of tests of Outside Systems and similar events. Furthermore, the estimated costs of implementing the Plan do not take into account the costs, if any, that might be incurred as a result of Year 2000-related failures that occur despite the Company's implementation of the Plan. The Company cannot assure that suppliers upon which it depends for essential goods and services will convert and test their mission-critical systems and processes in a timely and effective manner. Failure or delay to do so by all or some of these entities, including U.S. Federal, state or local governments, could create substantial disruptions having a material adverse effect on the Company's business. As part of the Plan, the Company is developing contingency plans that deal with two aspects of Year 2000 problems:(1) that the Company, despite its good-faith, reasonable efforts, may not have satisfactorily remediated all of its internal mission-critical systems; and (2) that Outside Systems may not be Year 2000 ready, despite the Company's good-faith, reasonable efforts to work with Outside Entities. The Company's contingency plans are being designed to minimize the disruptions or other adverse effects resulting from Year 2000 incompatibilities regarding these mission-critical functions or systems, and to facilitate the early identification and remediation of mission-critical Year 2000 problems that first manifest themselves after January 1, 2000. Should the Company or any third party with whom the Company has a significant business relationship have a Year 2000 systems failure, the Company believes that the most significant worst-case impact would likely be the inability, with respect to a store or group of stores, to conduct operations due to a power failure, to timely deliver inventory, to receive certain products from vendors, or to electronically process sales to the customer at the store level. The Company could also experience an inability by customers, suppliers, and others to pay, on a timely basis or at all, obligations owed to the Company. Under these circumstances, the adverse effect on the Company could be material, although not quantifiable at this time. The Company will continue to monitor business conditions with the aim of assessing and quantifying material adverse effects, if any, that result or may result from Year 2000 problems. -8- The Company has a Plan to deal with Year 2000 problems and believes that it will be able to achieve substantial Year 2000 readiness with respect to the mission-critical systems that it controls. From a forward-looking perspective, however, the extent and magnitude of Year 2000 problems as they will affect the Company, both before and for some period after January 1, 2000, are difficult to predict or quantify. Given this difficulty, there can be no assurance that all of the Company's systems and all Outside Systems will be adequately remediated so that they are Year 2000 ready by January 1, 2000, or by some earlier date, so as not to create a material disruption to the Company's business. If, despite the Company's reasonable efforts under its Year 2000 Plan, there are mission-critical Year 2000 related failures that create substantial disruptions to the Company's business, the adverse impact on the Company's business could be material. 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," "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, stability of product costs, and issues arising from addressing Year 2000 IT and non-IT problems. 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. -9- PUBLIX SUPER MARKETS, INC. PART II. OTHER INFORMATION Item 1. Legal Proceedings - -------------------------- In the Company's Form 10-K for the fiscal year ended December 26, 1998, the Company discussed the purported class action pending in the Federal District Court for the Middle District of Florida (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"). On March 22, 1999, the Court certified a class of all black employees and former black employees of the Company who have sought to be promoted or who have been discharged from employment at the Company's retail stores in Florida since April 3, 1993, and at retail stores in Georgia since January 14, 1995. The certified class excludes black employees or former employees who worked only in pharmacy operations. The Court also, among other things, granted the plaintiffs' motion to drop all claims for compensatory and punitive damages and to add a new plaintiff, and ordered the parties to conduct additional discovery and submit supplemental briefings on whether that new plaintiff could be a class representative for a subclass of unsuccessful black applicants for employment at Publix's retail stores in Florida and Georgia. That briefing is now in progress. The Court also denied the plaintiffs' attempt to strike the demand that the Middleton case be tried to a jury. Also in its Form 10-K for the year ended December 26, 1998, the Company discussed the purported class action filed against the Company in the Court by Charlene Jones, individually and on behalf of all other persons similarly situated (the "Jones case"). In papers filed with the Court on April 16, 1999, the plaintiff in the Jones case represented that she would not pursue a separate class action on behalf of unsuccessful female applicants for employment in the Company's manufacturing plants and distribution centers if her case is not combined with the purported class action filed against the Company by Shirley Dyer and other present or former employees of the Company (the "Dyer case"), which is also discussed in the Company's 1998 Form 10-K. The Company denies the allegations of the plaintiffs in the Middleton, Dyer and Jones cases and is vigorously defending the actions. Item 6(a) Exhibits 27. Financial Data Schedule for the three months ended March 27, 1999. Item 6(b) Reports on Form 8-K - ----------------------------- No reports on Form 8-K were filed during the three months ended March 27, 1999. -10- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized. PUBLIX SUPER MARKETS, INC. Date: May 7, 1999 /s/ S. Keith Billups ----------------------------------------- S. Keith Billups, Secretary Date: May 7, 1999 /s/ David P. Phillips ------------------------------------------ David P. Phillips, Vice President Finance and Treasurer (Principal Financial and Accounting Officer) -11- EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the financial statements for the three months ended March 27, 1999, and is qualified in its entirety by reference to such financial statements. 1,000 US DOLLARS 3-MOS DEC-25-1999 DEC-27-1998 MAR-27-1999 1 799,787 6,284 57,430 0 664,882 1,591,484 3,082,583 (1,269,366) 3,806,695 1,060,004 0 0 0 217,333 2,237,118 3,806,695 3,363,248 3,394,420 2,537,978 3,207,893 0 0 0 186,527 67,959 118,568 0 0 0 118,568 .55 .55
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