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 September 30, 2006March 31, 2007
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 0-00981
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)
3300 Publix Corporate Parkway
Lakeland, Florida 33811
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (863) 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
----- -------- ---
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer X Accelerated filer Non-accelerated filer
----- ----- -------- --- ---
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes No X
----- -------- ---
The number of shares outstanding of the Registrant's common stock, $1.00 par
value, as of OctoberApril 27, 20062007 was 845,483,260.846,290,000.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts are in thousands, except par value and share amounts)value)
ASSETS
SeptemberMarch 31, 2007 December 30, 2006
December 31, 2005
-------------------------------- -----------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 332,825 335,969579,519 223,571
Short-term investments 116,426 119,303147,309 126,221
Trade receivables 330,821 354,950365,918 363,020
Merchandise inventories 1,058,897 1,109,5431,111,585 1,151,907
Deferred tax assets 84,360 85,47552,411 58,513
Prepaid expenses 49,812 42,521
-----------55,530 42,784
---------- ----------
Total current assets 1,973,141 2,047,761
-----------2,312,272 1,966,016
---------- ----------
Long-term investments 2,047,336 1,573,7952,429,450 2,271,810
Other noncurrent assets 56,419 57,78658,349 55,938
Property, plant and equipment 5,823,430 5,575,612
Less accumulated5,977,716 5,872,787
Accumulated depreciation (2,744,483) (2,527,731)
-----------(2,845,147) (2,773,465)
---------- ----------
Net property, plant and equipment 3,078,947 3,047,881
-----------3,132,569 3,099,322
---------- Total assets $ 7,155,843 6,727,223
===========----------
$7,932,640 7,393,086
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 872,295 913,521$1,057,370 934,446
Accrued contribution to retirement plans 280,131 349,805168,448 359,753
Accrued self-insurance reserves 120,134 119,339115,263 112,177
Accrued salaries and wages 164,420 98,629123,998 98,293
Federal and state income taxes 870 148,352184,744 33,239
Dividend payable 338,471 ---
Other 255,410 181,627
-----------200,417 216,889
---------- ----------
Total current liabilities 1,693,260 1,811,273
-----------2,188,711 1,754,797
---------- ----------
Deferred tax liabilities 250,689 283,979210,707 225,572
Self-insurance reserves 248,798 242,449254,423 251,060
Accrued postretirement benefit cost 69,339 68,08879,638 78,894
Other noncurrent liabilities 104,908 115,660115,401 107,898
Stockholders' equity:
Common stock of $1 par value. Authorized
1,000,000,0001,000,000 shares; issued 861,906,758850,619
shares at September 30, 2006March 31, 2007 and 846,942,360839,715
shares at December 31, 2005 861,907 846,94230, 2006 850,619 839,715
Additional paid-in capital 533,553 302,178740,405 533,559
Retained earnings 3,703,944 3,070,310
-----------3,595,477 3,616,368
---------- 5,099,404 4,219,430
Less 16,463,573 treasury----------
5,186,501 4,989,642
Treasury stock at cost,
4,628 shares at September 30, 2006, at cost (289,251)March 31, 2007 (92,099) ---
Accumulated other comprehensive losses (21,304) (13,656)(10,642) (14,777)
---------- ----------- ----------
Total stockholders' equity 4,788,849 4,205,774
-----------5,083,760 4,974,865
---------- Total liabilities and stockholders'
equity $ 7,155,843 6,727,223
===========----------
$7,932,640 7,393,086
========== ==========
See accompanying notes to condensed consolidated financial statements.
1
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except shares outstanding and per share amounts)
Three Months Ended
September 30,2006 September 24, 2005
----------------- ------------------March 31, 2007 April 1, 2006
-------------- -------------
(Unaudited)
Revenues:
Sales $ 5,247,050 4,896,702$5,878,164 5,510,290
Other operating income 39,631 37,414
----------- -----------43,593 40,788
---------- ---------
Total revenues 5,286,681 4,934,116
----------- -----------5,921,757 5,551,078
---------- ---------
Costs and expenses:
Cost of merchandise sold 3,853,670 3,615,2434,287,763 4,010,907
Operating and administrative expenses 1,095,504 1,032,406
----------- -----------1,190,557 1,121,741
---------- ---------
Total costs and expenses 4,949,174 4,647,649
----------- -----------5,478,320 5,132,648
---------- ---------
Operating profit 337,507 286,467443,437 418,430
Investment income, net 30,019 20,52136,538 26,422
Other income, net 5,132 6,750
----------- -----------4,734 4,660
---------- ---------
Earnings before income tax expense 372,658 313,738484,709 449,512
Income tax expense 119,791 113,468
----------- -----------167,128 161,105
---------- ---------
Net earnings $ 252,867 200,270
=========== ===========317,581 288,407
========== =========
Weighted average number of common
shares outstanding 849,064,631 857,867,795
=========== ===========841,981 849,674
========== =========
Basic and diluted earnings per common
share based on weighted average
shares outstanding $ 0.30 0.23
=========== ===========0.38 0.34
========== =========
Cash dividends paiddeclared per common share none none$ 0.40 0.20
========== =========
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
Three Months Ended
September 30,March 31, 2007 April 1, 2006
September 24, 2005
------------------ -------------------------------- -------------
(Unaudited)
Net earnings $ 252,867 200,270317,581 288,407
Other comprehensive earnings (losses):
Unrealized gain (loss) on investment
securities available-for-sale,
net of tax effect of $11,938$3,145 and
($7,025)3,258) in 2007 and 2006, and 2005, respectively 19,010 (11,186)4,993 (5,187)
Reclassification adjustment for net
realized gain on investment
securities available-for-sale, net
of tax effect of ($132)540) and ($118)146)
in 2007 and 2006, and 2005, respectively (211) (187)
-----------(858) (233)
---------- ---------
Comprehensive earnings $ 271,666 188,897
===========321,716 282,987
========== =========
See accompanying notes to condensed consolidated financial statements.
2
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except shares outstanding and per share amounts)
Nine Months Ended
September 30, 2006 September 24, 2005
------------------ ------------------
(Unaudited)
Revenues:
Sales $ 16,098,867 14,851,404
Other operating income 121,547 114,112
------------ -----------
Total revenues 16,220,414 14,965,516
------------ -----------
Costs and expenses:
Cost of merchandise sold 11,757,641 10,840,594
Operating and administrative expenses 3,327,985 3,101,954
------------ -----------
Total costs and expenses 15,085,626 13,942,548
------------ -----------
Operating profit 1,134,788 1,022,968
Investment income, net 84,283 53,497
Other income, net 18,280 17,900
------------ -----------
Earnings before income tax expense 1,237,351 1,094,365
Income tax expense 432,072 400,085
------------ -----------
Net earnings $ 805,279 694,280
============ ===========
Weighted average number of common
shares outstanding 851,891,922 864,171,505
============ ===========
Basic and diluted earnings per common
share based on weighted average
shares outstanding $ 0.95 0.80
============ ===========
Cash dividends paid per common share $ 0.20 0.14
============ ===========
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
Nine Months Ended
September 30, 2006 September 24, 2005
------------------ ------------------
(Unaudited)
Net earnings $ 805,279 694,280
Other comprehensive losses:
Unrealized loss on investment
securities available-for-sale,
net of tax effect of ($4,763) and
($5,294) in 2006 and 2005, respectively (7,585) (8,429)
Reclassification adjustment for net
realized gain on investment
securities available-for-sale, net
of tax effect of ($40) and ($1,634)
in 2006 and 2005, respectively (63) (2,602)
------------ -----------
Comprehensive earnings $ 797,631 683,249
============ ===========
See accompanying notes to consolidated financial statements.
3
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
NineThree Months Ended
September 30,2006 September 24, 2005
----------------- ------------------March 31, 2007 April 1, 2006
-------------- -------------
(Unaudited)
Cash flows from operating activities:
Cash received from customers $ 16,150,923 14,872,702$5,882,941 5,546,254
Cash paid to employees and suppliers (14,282,554) (13,083,852)(5,144,032) (4,827,739)
Income taxes paid (606,029) (664,699)(26,979) (124,188)
Payment for self-insured claims (150,146) (142,625)(50,582) (44,520)
Dividends and interest received 73,380 51,42333,816 25,974
Other operating cash receipts 112,121 104,26240,716 37,627
Other operating cash payments (7,453) (5,842)
------------(1,881) (917)
---------- ----------
Net cash provided by operating activities 1,290,242 1,131,369
------------733,999 612,491
---------- ----------
Cash flows from investing activities:
Payment for property, plant and equipment (339,750) (237,985)(144,398) (96,556)
Proceeds from sale of property, plant
and equipment 10,632 10,0261,484 7,921
Proceeds from sale-leasebacks --- 6,247 4,050
Payment for investment securities -
available-for-sale (AFS) (773,464) (761,688)(318,134) (340,812)
Proceeds from sale and maturity of
investment securities - AFS 306,604 243,903223,733 84,931
Net (payments to) proceeds from joint
ventures and other investments (17,963) 11,238(236) 572
Other, net 4,137 (10,949)
------------(3,549) 5,141
---------- ----------
Net cash used in investing activities (803,557) (741,405)
------------(241,100) (332,556)
---------- ----------
Cash flows from financing activities:
Payment for acquisition of common stock (503,213) (490,097)(187,151) (163,141)
Proceeds from sale of common stock 185,160 92,396
Dividends paid (171,645) (121,949)50,331 60,857
Other (131) (131)
---------------------- ----------
Net cash used in financing activities (489,829) (519,781)
------------(136,951) (102,415)
---------- ----------
Net decreaseincrease in cash and cash equivalents (3,144) (129,817)355,948 177,520
Cash and cash equivalents at beginning of period 223,571 335,969
370,288
---------------------- ----------
Cash and cash equivalents at end of period $ 332,825 240,471
============579,519 513,489
========== ==========
See accompanying notes to condensed consolidated financial statements. (Continued)
43
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts are in thousands)
NineThree Months Ended
September 30,March 31, 2007 April 1, 2006
September 24, 2005
------------------ -------------------------------- -------------
(Unaudited)
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings $ 805,279 694,280$317,581 288,407
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 289,666 277,14498,928 95,657
Retirement contributions paid or payable
in common stock 202,565 205,98771,138 83,933
Deferred income taxes (27,372) (40,689)(11,368) (15,137)
Loss on saledisposal and impairment
of property, plant and equipment 11,847 4,99211,877 3,293
Amortization of deferred income from
sale-leasebacks (2,986) (4,783)(476) (2,034)
Gain on sale of investments (103) (4,236)(1,398) (380)
Net (accretion) amortization of investments (6,526) 7,927(2,561) 2,477
Self-insurance reserves in excess of
current payments 7,144 21,9216,449 1,204
Postretirement accruals in excess of (less than)
current payments 1,251 (4)
Increase (decrease)807 (245)
Decrease in advance purchase allowances 742 (1,478)
Decrease(354) (538)
Increase in closed store reserves (7,315) (2,975)202 987
Other, net (7,001) 1,1972,181 (6,440)
Change in cash from:
Trade receivables 24,129 (6,798)(2,898) 27,126
Merchandise inventories 50,646 20,12840,322 59,932
Prepaid expenses (7,291) (5,966)(12,746) (4,350)
Accounts payable and accrued expenses 103,049 188,64764,810 26,545
Federal and state income taxes (147,482) (223,925)
------------ ---------151,505 52,054
-------- -------
Total adjustments 484,963 437,089
------------ ---------416,418 324,084
-------- -------
Net cash provided by operating activities $ 1,290,242 1,131,369
============ =========$733,999 612,491
======== =======
See accompanying notes to condensed consolidated financial statements.
54
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying condensed consolidated financial statements included
herein are unaudited; however, in the opinion of management, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are necessary for the fair statement of results for the
interim period. These condensed consolidated financial statements should be
read in conjunction with the fiscal 20052006 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 and nine months ended September 30, 2006March 31, 2007 are not necessarily indicative of the
results for the entire 20062007 fiscal year.
3. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of AmericaU. S. 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. On April 18, 2006, the Company's stockholders approved an increase in the
number of authorized shares of common stock from 300 million shares to 1one
billion shares to allow for a 5-for-1 stock split effective July 1, 2006.
All applicable data, including share and per share amounts, in the
accompanying condensed consolidated financial statements have been
retroactively restated to give effect to the stock split.
5. Certain 20052006 amounts have been reclassified to conform with the 20062007
presentation.
6. In November 2004, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard No. 151, "Inventory Costs,"
(SFAS 151) effective for fiscal years beginning after June 15, 2005.
SFAS 151 amends Accounting Research Bulletin No. 43, Chapter 4, "Inventory
Pricing," to clarify the accounting for abnormal amounts of idle facility
expense, freight, handling costs and wasted material. SFAS 151 requires
that those items be recognized as current period charges and requires that
allocation of fixed production overhead to the cost of conversion be based
on the normal capacity of the production facilities. The adoption of
SFAS 151 did not have a material effect on the Company's financial
condition, results of operations or cash flows.
7. In December 2004, the FASB issued a revision to Statement of Financial
Accounting Standard No. 123, "Share-Based Payment," (SFAS 123(R)) effective
for fiscal years beginning after June 15, 2005. SFAS 123(R) requires all
stock-based compensation awards to be recorded at fair value as an expense
in the Company's consolidated financial statements. The adoption of
SFAS 123(R) had no effect on the Company's financial condition, results of
operations or cash flows.
8. In May 2005, the FASB issued Statement of Financial Accounting Standard
No. 154, "Accounting Changes and Error Corrections," (SFAS 154) effective
for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. SFAS 154 replaces Accounting Principles
Board Opinion 20, "Accounting Changes," and Statement of Financial
Accounting Standard No. 3 "Reporting Accounting Changes in Interim
Financial Statements." Among other changes, SFAS 154 requires retrospective
application to prior periods' financial statements for changes in
accounting principle, unless it is impractical to determine either the
period-specific effects or the cumulative effect of the change. SFAS 154
also requires that a change in depreciation, amortization, or depletion
method for long-lived non-financial assets be accounted for as a change in
accounting estimate effected by a change in accounting principle. The
adoption of SFAS 154 will only affect the Company's financial condition or
results of operations if it has such changes or corrections of errors in
the future.
6
9. In June 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109,"
(FIN 48) effective for fiscal years beginning after December 15, 2006.
FIN 48 clarifies the accounting for uncertainty in tax positions. FIN 48
requires financial statement recognition of the impact of a tax position
when it is more likely than not, based on its technical merits, that the
position will be sustained upon examination and the cumulative effect of
the change in accounting principle is to be recorded as an adjustment to
opening retained earnings. The adoptionCompany is subject to the provisions of
FIN 48 as of December 31, 2006, and has analyzed filing positions in all of
the federal and state jurisdictions where it is required to file income tax
returns, as well as all open tax years in these jurisdictions. The only
periods subject to examination for the Company's federal return are the
2002 through 2006 tax years. The Internal Revenue Service is currently
auditing tax years 2002 through 2005. The periods subject to examination
for the Company's state returns are the 2005 and 2006 tax years. The
Company believes that its income tax filing positions and deductions will
be sustained on audit and does not expected to haveanticipate any adjustments that will
result in a material effect on the Company'schange to its financial condition, results of
operations or cash flows. 10. In June 2006,Therefore, no reserves for uncertain income tax
positions have been recorded pursuant to FIN 48. Additionally, the FASB ratified Emerging Issues Task Force Issue No. 06-3,
"How Sales Taxes Collected From Customers and RemittedCompany
did not record a cumulative effect adjustment related to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross
Versus Net Presentation)," (EITF 06-3) effective for periods beginning
after December 15, 2006. EITF 06-3 allows taxes assessed by various
governmental authorities that are directly imposed on revenue-producing
transactions between a seller and a customer, such as sales and some excise
taxes, to be presented on either a gross or net basis. If such taxes are
significant, the accounting policy should be disclosed as well as the
amount of taxes included in revenue if presented on a gross basis. The
Company records sales net of applicable sales taxes. As a result, the adoption of
EITF 06-3 will not have an effect on the presentationFIN 48. The Company recognizes accrued interest and penalties related to
unrecognized tax benefits as a component of the
Company's financial statements.
11.income tax expense.
7. In September 2006, the FASB issued Statement of Financial Accounting
Standard No. 157, "Fair Value Measurement," (SFAS 157) effective for fiscal
years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value
measurements. SFAS 157 does not require any new fair value measurements.
The Company is currently evaluating the effect of adopting SFAS 157.
12.5
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. In September 2006, the FASB issued Statement of Financial Accounting
Standard No. 158, "Employers' Accounting for Defined Benefit Pension and
Other Postretirement Plans - an amendment of FASB Statements No. 87, 88,
106 and 132(R)," (SFAS 158). SFAS 158 requires financial statement
recognition of the overfunded or underfunded status of a defined benefit
postretirement plan or an other postretirement plan as an asset or liability
and recognition of changes in the funded status in comprehensive earnings
in the year in which the changes occur, effective for fiscal years ending
after December 15, 2006. SFAS 158 also requires that the measurement date
for the calculation of plan assets and obligations coincide with a
company's fiscal year end dates, effective for fiscal years ending after
December 15, 2008. The adoption of the recognition provision of SFAS 158
did not have a material effect on the Company's financial condition,
results of operations or cash flows. The adoption of the measurement
provision of SFAS 158 is not expected to have a material effect on the
Company's financial condition, results of operations or cash flows.
13.9. In September 2006,February 2007, the SecuritiesFASB issued Statement of Financial Accounting
Standard No. 159, "The Fair Value Option for Financial Assets and Exchange Commission issued
Staff Accounting Bulletin No. 108, "Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year
Financial
Statements,Liabilities," (SAB 108)(SFAS 159) effective for fiscal years endingbeginning after
November 15, 2006. SAB 108 provides interpretive guidance2007. SFAS 159 permits entities to choose to measure many
financial instruments and certain other items at fair value. Unrealized
gains and losses on items for which the consideration of the effects of prior year misstatementsfair value option has been elected
will be recognized in quantifying
current year misstatements for the purpose of a materiality assessment.earnings at each subsequent reporting date. The
adoption of SAB 108 isCompany does not expectedexpect to have a material effect on the
Company's financial condition, results of operations or cash flows.
7adopt SFAS 159.
6
PUBLIX SUPER MARKETS, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results
- --------------------------------------------------------------------------------------------------------------------------------------------------------
Results of Operations
----------------------------------
Overview
- --------
The Company is primarily engaged in the retail food industry, operating
stores in Florida, Georgia, South Carolina, Alabama and Tennessee. As of
September 30, 2006,March 31, 2007, the Company operated 883901 supermarkets, 5five convenience stores,
25 liquor stores and 19 liquor stores. In addition, the Company has a majority position in the40 Crispers restaurant chain. As of September 30, 2006, Crispers operated 37
restaurants, all located in Florida.restaurants.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents, short-term investments and long-term
investments totaled $2,496.6$3,156.3 million as of September 30, 2006,March 31, 2007, as compared with
$2,029.1$2,621.6 million as of December 31, 2005.30, 2006.
Net cash provided by operating activities
- -----------------------------------------
Net cash provided by operating activities was $1,290.2$734.0 million for the
ninethree months ended September 30, 2006,March 31, 2007, as compared with $1,131.4$612.5 million for the ninethree
months ended September 24, 2005.April 1, 2006. As a result of hurricaneHurricane Wilma that occurred during
the fourth quarter of 2005, the Company received an extension on its Federal
income tax payment due December 15, 2005 until February 28, 2006. The delay in
this tax payment decreased net cash provided by operating activities by
$95.0approximately $95 million during the ninethree months ended September 30,April 1, 2006.
During 2004, the Company experienced an unprecedented four major hurricanes
in six weeks. As a result, the Company received an extension on its Federal
income tax payments due September 15, 2004 and December 15, 2004 until
December 30, 2004 (which fell within the 2005 fiscal year). The delay in
these tax payments decreased net cash provided by operating activities by
$190.0 million during the nine months ended September 24, 2005. Any net
cash in excess of the amount needed for current operations is invested in
short-term and long-term investments.
Net cash used in investing activities
- -------------------------------------
Net cash used in investing activities was $803.6$241.1 million for the ninethree
months ended September 30, 2006,March 31, 2007, as compared with $741.4$332.6 million for the ninethree
months ended September 24, 2005.April 1, 2006. The primary use of net cash in investing activities
was funding capital expenditures and purchasing investments. During the ninethree
months ended September 30, 2006,March 31, 2007, capital expenditures totaled $339.8$144.4 million. These
expenditures were incurred in connection with the opening of eightnine net new
supermarkets (18(13 new supermarkets opened and 10four supermarkets closed) and
remodeling 3720 supermarkets. Net new supermarkets added an additional 0.4 million
square feet in the ninethree months ended September 30, 2006,March 31, 2007, a 1.0% increase.
Expenditures were also incurred for new or enhanced information technology
hardware and applications.applications and emergency backup generators. During the ninethree
months ended September 24,
2005,April 1, 2006, capital expenditures totaled $238.0$96.6 million. These
expenditures were primarily incurred in connection with the opening of 14 nettwo new
supermarkets (22 new(two supermarkets opened and eight supermarketsalso closed) and remodeling or
expanding 29seven supermarkets. Net new supermarkets added an additional 0.6 million
square feet in the nine months ended September 24, 2005, a 1.6% increase.
Expenditures were also incurred in the expansion of warehouses and new or
enhanced information technology hardware and applications.
Capital expenditure projection
- ------------------------------
Capital expenditures for the remainder of 2006,2007, primarily consisting of
new supermarkets, remodeling and expanding certain existing supermarkets,
expansion of warehouses, installation of generators at hurricane prone
locations, and new or enhanced
information technology hardware and applications, installation of emergency
backup generators and expansion of warehouses, are expected to be approximately
$135.2$455.6 million. This capital program is subject to continuing change and review.
In the normal course of operations, the Company replaces supermarkets and closes
supermarkets that are not meeting performance expectations. The impact of future
supermarket closings is not expected to be material.
87
Net cash used in financing activities
- -------------------------------------
Net cash used in financing activities was $489.8$137.0 million for the ninethree
months ended September 30, 2006,March 31, 2007, as compared with $519.8$102.4 million for the ninethree
months ended September 24, 2005.April 1, 2006. The primary use of net cash in financing activities
was funding net common stock repurchases and payment of an annual
cash dividend.repurchases. The Company currently repurchases
common stock at the stockholders' request in accordance with the terms of the
Company's Employee Stock Purchase Plan, 401(k) Plan, Employee Stock Ownership
Plan (ESOP) and Non-Employee Directors Stock Purchase Plan. Net common stock
repurchases totaled $318.1$136.8 million for the ninethree months ended September 30, 2006,March 31, 2007, as
compared with $397.7$102.3 million for the ninethree months ended September 24, 2005.April 1, 2006. The
amount of common stock offered to the Company for repurchase is not within the
control of the Company, but is at the discretion of the stockholders. 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 for
amounts similar to those in prior years. However, such purchases are not
required and the Company retains the right to discontinue them at any time.
Dividends
- ---------
TheOn March 7, 2007, the Company declared an annual cash dividend on its
common stock of $0.40 per share or approximately $338.5 million, payable on
June 1, 2007 to stockholders of record as of the close of business April 20,
2007. In 2006, the Company paid an annual cash dividend on its common stock of
$0.20 per share or $171.6 million on June 1, 2006 to stockholders of record
as of the close of business April 21, 2006. In 2005, the Company paid an annual
cash dividend on its common stock of $0.14 per share or $121.9 million.
Cash requirements
- -----------------
In 2006,2007, the cash requirements for current operations, capital
expenditures, and common stock repurchases and payment of the annual cash dividend
are expected to be financed by internally generated funds or liquid assets.
Based on the Company's financial position, it is expected that short-term and
long-term borrowings would be readily available to support the Company's
liquidity requirements if needed.
Results of Operations
- ---------------------
Sales
- -----
Sales for the three months ended September 30, 2006March 31, 2007 were $5.2$5.9 billion as
compared with $4.9$5.5 billion for the three months ended September 24, 2005,April 1, 2006, an increase
of $350.3$367.9 million or a 7.2%6.7% increase. The Company estimates that its sales
increased approximately $100.6$86.9 million or 2.1%1.6% from net new supermarkets and
approximately $249.7$281.0 million or 5.1% in comparable store sales (supermarkets
open for the same weeks in both periods, including replacement supermarkets).
Sales for the nine months ended September 30, 2006 were $16.1 billion as
compared with $14.9 billion for the nine months ended September 24, 2005, an
increase of $1,247.5 million or an 8.4% increase. This reflects an increase of
approximately $326.7 million or 2.2% from net new supermarkets and an increase
of approximately $920.8 million or 6.2% in comparable store sales.
Gross profit
- ------------
Gross profit as a percentage of sales was 26.6%27.1% and 26.2%27.2% for the three
months ended September 30,March 31, 2007 and April 1, 2006, and September 24, 2005, respectively. These
grossGross profit percentages were 27.0% for
the ninethree months ended September 30, 2006
and September 24, 2005. The increase in gross profitMarch 31, 2007 remained relatively unchanged as a
percentage of sales forcompared to the three months ended September 30, 2006 was primarily due to improvements
in buying and merchandising practices.
9
April 1, 2006.
Operating and administrative expenses
- -------------------------------------
Operating and administrative expenses as a percentage of sales were
20.9%20.3% and 21.1%20.4% for the three months ended September 30,March 31, 2007 and April 1, 2006,
and
September 24, 2005, respectively. The operatingOperating and administrative expenses for the three months ended
March 31, 2007 remained relatively unchanged as a percentage of sales were 20.7% and 20.9% forcompared
to the ninethree months ended September 30, 2006 and September 24, 2005, respectively. The decreases in
operating and administrative expenses as a percentage of sales during the three
and nine months ended September 30, 2006 were primarily due to decreases in
payroll and employee benefit costs as a percentage of sales which were partially
offset by increases in utilities and other operating expenses.April 1, 2006.
Investment income, net
- ----------------------
Investment income, net was $30.0$36.5 million and $20.5$26.4 million for the three
months ended September 30,March 31, 2007 and April 1, 2006, and September 24, 2005, respectively.
Investment income, net was $84.3 million and $53.5 million for the nine months
ended September 30, 2006 and September 24, 2005, respectively. The increase in
investment income, net was primarily due to higher investment balances as well
as higher interest rates during the three and nine months ended September 30, 2006.March 31, 2007.
8
Income taxes
- ------------
The effective income tax rates were 32.1%34.5% and 36.2%35.8% for the three months
ended September 30,March 31, 2007 and April 1, 2006, and September 24, 2005, respectively. The
effective income tax rates were 34.9% and 36.6% for the nine months ended
September 30, 2006 and September 24, 2005, respectively. The decrease in the
effective income tax rates is driven by increases in tax exempt income,
dividends paid to ESOP participants and deductions for manufacturing production
costs and the favorable resolution of various tax issues.costs.
Net earnings
- ------------
Net earnings were $252.9$317.6 million or $0.30$0.38 per share and $200.3$288.4 million
or $0.23$0.34 per share for the three months ended September 30,March 31, 2007 and April 1, 2006,
and September 24, 2005, respectively. Net earnings were $805.3 million or
$0.95 per share and $694.3 million or $0.80 per share for the nine months
ended September 30, 2006 and September 24, 2005,
respectively.
Forward-Looking Statements
- --------------------------
From time to time, certain information provided by the Company,
including written or oral statements made by its representatives, may contain
forward-looking information as defined in Section 21E of the Securities Exchange
Act of 1934. Forward-looking information includes statements 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, 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; results of programs to control or reduce
costs, improve buying practices and control shrink; results of programs to
increase sales, including private-label sales, improve perishable departments
and improve pricing and promotional efforts; changes in the general economy;
changes in consumer spending; changes in population, employment and job growth
in the Company's principal markets; 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 retain employees, increases in operating costs including, but not
limited to, labor costs, credit card fees and utility costs, particularly
electric utility costs, ability to construct new supermarkets 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.
10
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- ----------------------------------------------------------------------------------------------------------------------------------------
The Company does not utilize financial instruments for trading or other
speculative purposes, nor does it utilize leveraged financial instruments. There
have been no material changes in the market risk factors from those disclosed in
the Company's Form 10-K for the year ended December 31, 2005.30, 2006.
Item 4. Controls and Procedures
- ------------------------------------------------------------------
As of the end of the period covered by this quarterly report, the
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company (including its consolidated
subsidiaries) required to be included in the Company's periodic Securities and
Exchange Commission filings. There have been no changes in the Company's
internal control over financial reporting during the quarter ended September 30, 2006March 31,
2007 that have materially affected, or are reasonably likely to materially
affect, the internal control over financial reporting.
119
PUBLIX SUPER MARKETS, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
As reported in the Company's Form 10-K for the year ended December 30,
2006, the Company is a party in various legal claims and actions considered in
the normal course of business. In the opinion of management, the ultimate
resolution of these legal proceedings will not have a material adverse effect on
the Company's financial condition, results of operations or cash flows.
Item 1A. Risk Factors
- ---------------------
There have been no material changes in the risk factors from those
disclosed in the Company's Form 10-K for the year ended December 30, 2006.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
- --------------------------------------------------------------------
PUBLIX SUPER MARKETS, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- ----------------------------
As reported in the Company's Form 10-K for the year ended
December 31, 2005, the Company is a party in various legal claims and
actions considered in the normal course of business. In the opinion of
management, the ultimate resolution of these legal proceedings will not
have a material adverse effect on the Company's financial condition, results
of operations or cash flows.
Item 1A. Risk Factors
- -----------------------
There have been no material changes in the risk factors from those
disclosed in the Company's Form 10-K for the year ended December 31, 2005.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
- ----------------------------------------------------------------------
Issuer Purchases of Equity Securities
-------------------------------------
Shares of common stock repurchased by the Company during the three months
ended September 30, 2006March 31, 2007 were as follows:
Total
Number of Approximate
Shares Dollar Value
Purchased as of Shares
Total Average Part of Publicly that May Yet Be
Number of Price Announced Purchased Under
Shares Paid per Plans or the Plans or
Period Purchased Share Programs(1) Programs(1)
- ------ --------- ----- ----------- -----------
July 2,
December 31, 2006
through
August 5, 2006 7,112,877 $17.74February 3, 2007 1,589,959 $19.60 N/A N/A
August 6, 2006February 4, 2007
through
September 2, 2006 2,815,475 18.25March 3, 2007 1,456,349 19.67 N/A N/A
September 3, 2006March 4, 2007
through
September 30, 2006 2,354,346 18.25March 31, 2007 6,399,318 19.90 N/A N/A
------------------- ------
Total 12,282,698 $17.959,445,626 $19.81 N/A N/A
=================== ======
(1) Common stock is made available for sale only to the Company's
current employees through the Company's Employee Stock Purchase
Plan (ESPP) and 401(k) Plan. In addition, common stock is made
available under the Employee Stock Ownership Plan (ESOP).ESOP. Common stock is also made available for
sale to members of the Company's Board of Directors through the
Non-Employee Directors Stock Purchase Plan (Directors Plan). The
Company currently repurchases common stock subject to certain
terms and conditions. The ESPP, 401(k) Plan, ESOP and Directors
Plan each contain provisions prohibiting any transfer for value
without the owner first offering the common stock to the Company.
1210
The Company's common stock is not traded on any public stock
exchange. The amount of common stock offered to the Company for
repurchase is not within the control of the Company, but is at the
discretion of the stockholders. The Company does not believe that
these repurchases of its common stock are within the scope of a
publicly announced plan or program (although the terms of the
plans discussed above have been communicated to the participants).
Thus, the Company does not believe that it has made any
repurchases during the three months ended September 30, 2006March 31, 2007 required
to be disclosed in the last two columns of the table.
Item 3. Defaults Upon Senior Securities
- ----------------------------------------------------------------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- --------------------------------------------------------------
Not Applicable.------------------------------------------------------------
The Annual Meeting of Stockholders of the Company was held on April 17,
2007, for the purpose of electing a board of directors. Proxies for the meeting
were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934
and there were no solicitations in opposition to management's solicitation. All
nominees for director listed below were elected. The term of office of the
directors will be until the next annual meeting or until their successors shall
be elected and qualified.
Votes For Votes Withheld
--------- --------------
Carol Jenkins Barnett 658,188,623 396,117
Hoyt R. Barnett 658,168,936 415,804
Joan G. Buccino 657,014,559 1,570,181
William E. Crenshaw 657,578,396 1,006,344
Sherrill W. Hudson 657,141,668 1,443,072
Charles H. Jenkins, Jr. 658,242,033 342,707
Howard M. Jenkins 658,210,413 374,327
E. Vane McClurg 657,444,993 1,139,747
Kelly E. Norton 657,244,358 1,340,382
Maria A. Sastre 656,775,797 1,808,943
Item 5. Other Information
- -------------------------------------------------------
Not Applicable.
Item 6. Exhibits
- ------------------------------------
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
1311
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PUBLIX SUPER MARKETS, INC.
Date: November 9, 2006May 10, 2007 /s/ John A. Attaway, Jr.
-------------------------------------------------------------------------
John A. Attaway, Jr., Secretary
Date: November 9, 2006May 10, 2007 /s/ David P. Phillips
------------------------------------------
David P. Phillips, Chief Financial Officer
and Treasurer (Principal Financial and
Accounting Officer)
1412