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 June 29, 2002
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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
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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 (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 _______
--------
The number of shares outstanding of the Registrant's common stock, $1.00 par
value, as of July 31, 2002 was 194,099,074.
Page 1 of 13 pages
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts are in thousands, except share amounts)
ASSETS
June 29, 2002 December 29, 2001
------------- -----------------
(Unaudited)
Current Assets
- --------------
Cash and cash equivalents $ 267,769 251,337
Short-term investments 1,501 5,176
Trade receivables 126,883 129,435
Merchandise inventories 820,319 840,115
Deferred tax assets 61,795 54,172
Prepaid expenses 9,462 3,001
---------- ----------
Total Current Assets 1,287,729 1,283,236
---------- ----------
Long-term investments 347,829 339,048
Other noncurrent assets 27,978 43,911
Property, plant and equipment 4,446,003 4,142,807
Accumulated depreciation (1,533,978) (1,403,217)
---------- ----------
Total Assets $4,575,561 4,405,785
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
- -------------------
Accounts payable $ 661,010 691,071
Accrued contribution to retirement plans 168,287 232,925
Accrued salaries and wages 91,669 56,560
Accrued self-insurance reserves 114,416 103,048
Federal and state income taxes 4,741 13,030
Other 162,481 152,863
---------- ----------
Total Current Liabilities 1,202,604 1,249,497
---------- ----------
Deferred tax liabilities, net 202,273 172,440
Self-insurance reserves 145,199 137,474
Accrued postretirement benefit cost 69,718 70,151
Other noncurrent liabilities 10,180 13,672
Stockholders' Equity
- --------------------
Common stock of $1 par value. Authorized
300,000,000 shares; issued 199,053,347
shares at June 29, 2002 and 197,111,536
shares at December 29, 2001 199,053 197,112
Additional paid-in capital 421,711 343,834
Reinvested earnings 2,497,733 2,226,768
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3,118,497 2,767,714
Less 3,918,049 treasury shares
at June 29, 2002, at cost (168,241) ---
Accumulated other comprehensive earnings (4,669) (5,163)
---------- ----------
Total Stockholders' Equity 2,945,587 2,762,551
---------- ----------
Total Liabilities and Stockholders'
Equity $4,575,561 4,405,785
========== ==========
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
-2-
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except per share and share amounts)
Three Months Ended
June 29, 2002 June 30, 2001
------------- -------------
(Unaudited)
Revenues
- --------
Sales $ 3,823,975 3,708,866
Other operating income 23,079 20,897
------------ -----------
Total revenues 3,847,054 3,729,763
------------ -----------
Costs and expenses
- ------------------
Cost of merchandise sold, including store
occupancy, warehousing and delivery
expenses 2,772,635 2,731,948
Operating and administrative expenses 858,384 826,023
------------ -----------
Total costs and expenses 3,631,019 3,557,971
------------ -----------
Operating profit 216,035 171,792
------------ -----------
Investment income, net 2,621 9,256
Other income, net 6,110 5,194
------------ -----------
Earnings before income tax expense 224,766 186,242
Income tax expense 83,317 66,380
------------ -----------
Net earnings $ 141,449 119,862
============ ===========
Weighted average number of common
shares outstanding 196,866,501 204,101,245
============ ===========
Basic and diluted earnings per common
share based on weighted average shares
outstanding $ .72 .59
============ ===========
Cash dividends paid per common share $ .33 .32
============ ===========
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
Three Months Ended
June 29, 2002 June 30, 2001
------------- -------------
(Unaudited)
Net earnings $ 141,449 119,862
Other comprehensive earnings
Unrealized (loss) gain on investment
securities available-for-sale,
net of tax effect of ($415) and
$25 in 2002 and 2001, respectively (660) 40
Reclassification adjustment for net
realized loss on investment
securities available-for-sale, net
of tax effect of $1,332 and $335 in
2002 and 2001, respectively 2,120 533
------------ -----------
Comprehensive earnings $ 142,909 120,435
============ ===========
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
-3-
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except per share and share amounts)
Six Months Ended
June 29, 2002 June 30, 2001
------------- -------------
(Unaudited)
Revenues
- --------
Sales $ 8,017,991 7,626,356
Other operating income 46,724 42,227
------------ -----------
Total revenues 8,064,715 7,668,583
------------ -----------
Costs and expenses
- ------------------
Cost of merchandise sold, including store
occupancy, warehousing and delivery
expenses 5,823,580 5,628,403
Operating and administrative expenses 1,723,893 1,649,813
------------ -----------
Total costs and expenses 7,547,473 7,278,216
------------ -----------
Operating profit 517,242 390,367
------------ -----------
Investment income, net 8,765 21,872
Other income, net 10,834 9,714
------------ -----------
Earnings before income tax expense 536,841 421,953
Income tax expense 200,223 151,205
------------ -----------
Net earnings $ 336,618 270,748
============ ===========
Weighted average number of common
shares outstanding 196,893,432 204,671,305
============ ===========
Basic and diluted earnings per common
share based on weighted average shares
outstanding $ 1.71 1.32
============ ===========
Cash dividends paid per common share $ .33 .32
============ ===========
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
Six Months Ended
June 29, 2002 June 30, 2001
------------- -------------
(Unaudited)
Net earnings $ 336,618 270,748
Other comprehensive earnings
Unrealized (loss) gain on investment
securities available-for-sale,
net of tax effect of ($1,178) and
$1,974 in 2002 and 2001, respectively (1,875) 3,143
Reclassification adjustment for net
realized loss on investment
securities available-for-sale, net
of tax effect of $1,488 and $70 in
2002 and 2001, respectively 2,369 111
------------ -----------
Comprehensive earnings $ 337,112 274,002
============ ===========
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
-4-
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
Six Months Ended
June 29, 2002 June 30, 2001
------------- -------------
(Unaudited)
Cash flows from operating activities
- ------------------------------------
Cash received from customers $ 8,075,875 7,660,267
Cash paid to employees and suppliers (7,127,639) (6,855,383)
Dividends and interest received 13,052 24,178
Income taxes paid (186,612) (180,977)
Payment for self-insured claims (78,067) (90,044)
Other operating cash receipts 460 431
Other operating cash payments (4,823) (4,362)
----------- ----------
Net cash provided by operating
activities 692,246 554,110
----------- ----------
Cash flows from investing activities
- ------------------------------------
Payment for property, plant and
equipment (335,391) (323,684)
Proceeds from sale of property, plant
and equipment 1,370 1,063
Payment for investment securities -
available-for-sale (AFS) (176,831) (102,500)
Proceeds from sale and maturity of
investment securities - AFS 168,242 78,546
Investment in joint ventures 17,853 (8,559)
Other, net 19 23
----------- ----------
Net cash used in investing activities (324,738) (355,111)
----------- ----------
Cash flows from financing activities
- ------------------------------------
Proceeds from sale of common stock 39,333 53,667
Payment for acquisition of common stock (324,839) (398,660)
Dividends paid (65,439) (66,223)
Other, net (131) ---
----------- ----------
Net cash used in financing activities (351,076) (411,216)
----------- ----------
Net increase (decrease) in cash and cash
equivalents 16,432 (212,217)
----------- ----------
Cash and cash equivalents at beginning
of period 251,337 396,906
----------- ----------
Cash and cash equivalents at end of period $ 267,769 184,689
=========== ==========
<FN>
See accompanying notes to condensed consolidated financial statements.
(Continued)
</FN>
-5-
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts are in thousands)
Six Months Ended
June 29, 2002 June 30, 2001
------------- -------------
(Unaudited)
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings $ 336,618 270,748
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 148,127 123,124
Retirement contributions paid or payable
in common stock 126,301 111,207
Deferred income taxes 21,900 (4,918)
Loss on sale of property, plant and
equipment 13,481 9,432
Loss on sale of investments 3,857 181
Self-insurance reserves in excess of
current payments 19,093 17,370
Postretirement accruals (less than)
in excess of current payments (433) 3,358
Decrease in advance purchase allowances (3,361) (973)
Other, net (1,531) 1,884
Change in cash from:
Trade receivables 2,552 (17,910)
Merchandise inventories 19,796 31,993
Prepaid expenses (6,461) (7,369)
Accounts payable and accrued expenses 20,596 40,837
Federal and state income taxes (8,289) (24,854)
--------- -------
Total adjustments 355,628 283,362
--------- -------
Net cash provided by operating activities $ 692,246 554,110
========= =======
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
-6-
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 2001 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 six months ended June 29, 2002 are not necessarily
indicative of the results for the entire 2002 fiscal year.
3. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 2001 amounts have been reclassified to conform with the 2002
presentation.
5. In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 143, "Accounting for Asset Retirement
Obligations," (SFAS 143) effective for fiscal years beginning after June 15,
2002. SFAS 143 addresses the financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. SFAS 143 requires the Company to
record the fair value of an asset retirement obligation as a liability in the
period in which it incurs a legal obligation associated with the retirement
of tangible long-lived assets. The Company would also record a corresponding
asset which is depreciated over the life of the asset. Subsequent to the
initial measurement of the asset retirement obligation, the obligation will
be adjusted at the end of each period to reflect the passage of time and
changes in the estimated future cash flows underlying the obligation. The
Company is currently evaluating the effect of adopting SFAS 143.
6. In July 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities," (SFAS 146) effective for exit or disposal
activities initiated after December 31, 2002. SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be
recognized at fair value when the liability is incurred rather than at the
date of a commitment to an exit or disposal plan. The Company is currently
evaluating the effect of adopting SFAS 146.
-7-
PUBLIX SUPER MARKETS, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
- -------------------------------------------------------------------------------
Results of Operations
- ---------------------
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents, short-term and long-term investments totaled
approximately $617.1 million at June 29, 2002, compared to $666.9 million at
June 30, 2001. Net cash provided by operating activities was approximately
$692.2 million for the six months ended June 29, 2002, as compared with $554.1
million for the six months ended June 30, 2001. 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 was approximately $324.7 million for
the six months ended June 29, 2002, as compared with $355.1 million for the six
months ended June 30, 2001. The primary use of net cash in investing activities
was funding capital expenditures. During the six months ended June 29, 2002,
capital expenditures totaled approximately $335.4 million. These expenditures
were primarily incurred in connection with the opening of 19 net new stores (29
new stores opened and ten stores closed) and remodeling or expanding 45 stores.
Net new stores added an additional .87 million square feet in the six months
ended June 29, 2002, a 2.8% increase. Significant expenditures were also
incurred in the expansion of warehouses, office construction and enhanced
information technology applications. During the six months ended June 30, 2001,
capital expenditures totaled approximately $323.7 million. These expenditures
were primarily incurred in connection with the opening of 17 net new stores (27
new stores opened and ten stores closed) and remodeling or expanding 38 stores.
Net new stores added an additional .86 million square feet in the six months
ended June 30, 2001, a 3.0% increase. Significant expenditures were also
incurred in the expansion of warehouses in Lakeland, Florida and the development
of an online grocery shopping service, PublixDirect.
Capital expenditures for the remainder of 2002, primarily made up of new
store, warehouse and office construction, remodeling and expanding of certain
existing stores and new or enhanced information technology applications, are
expected to be approximately $429.6 million. This capital program is subject to
continuing change and review. The remaining 2002 capital expenditures are
expected to be financed by internally generated funds, liquid assets or the
committed line of credit described below. In the normal course of operations,
the Company replaces stores and closes stores that are not meeting performance
expectations. The impact of future store closings is not expected to be
material.
Net cash used in financing activities was approximately $351.1 million for
the six months ended June 29, 2002, as compared with $411.2 million for the six
months ended June 30, 2001. The primary use of net cash in financing activities
was funding net common stock repurchases. The Company currently repurchases
common stock at the stockholders' request in accordance with the terms of the
Company's Employee Stock Purchase Plan. Net common stock repurchases under this
plan totaled approximately $285.5 million for the six months ended June 29,
2002, as compared with $345.0 million for the six months ended June 30, 2001.
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.
-8-
The Company paid a cash dividend on its common stock of $.33 per share or
approximately $65.4 million, on June 3, 2002, to stockholders of record as of
the close of business March 29, 2002.
In December 2001, the Company executed an agreement for a committed line of
credit totaling $100 million. This 364-day line of credit facility is available
to fund liquidity requirements if necessary. The interest rate is based on LIBOR
or prime. There were no amounts outstanding on this line of credit as of June
29, 2002.
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 for the second quarter ended June 29, 2002, were $3.8 billion as
compared with $3.7 billion in the same quarter in 2001, an increase of $115.1
million or a 3.1% increase. This reflects a decrease of $66.8 million or 1.8% in
comparable store sales (stores open for the same weeks in both periods,
including replacement stores) and an increase of $181.9 million or 4.9% from net
new store sales since March 31, 2001. The second quarter of 2002 was hurt by the
early Easter holiday. The holiday was in the first quarter of 2002 and the
second quarter of 2001. During the first quarter of 2002, the Company modified
its calculation of comparable store sales to include replacement stores. The
comparable store sales calculation was modified to improve the comparability of
this key performance measure to others in the food retailing industry. If the
current comparable store sales calculation had been used for the quarter ended
June 30, 2001, the comparable store sales increase would have been 4.3%, as
compared to the previously reported comparable store sales increase of 3.5%.
Sales for the six months ended June 29, 2002, were $8.0 billion as compared
with $7.6 billion in the same period in 2001, an increase of $391.6 million or a
5.1% increase. This reflects an increase of $15.3 million or .2% in comparable
store sales and an increase of $376.3 million or 4.9% from net new store sales
since the beginning of 2001.
Due to the events of September 11, 2001, there has been a general decline
in tourism. The decline in tourism has continued to impact sales in the
Company's stores in seasonal locations during the first half of 2002.
Cost of merchandise sold including store occupancy, warehousing and
delivery expenses, as a percentage of sales, was approximately 72.5% and 73.7%
for the three months ended June 29, 2002 and June 30, 2001, respectively. These
cost of sales percentages were 72.6% and 73.8% for the six months ended June 29,
2002 and June 30, 2001, respectively. The decrease in cost of merchandise sold,
as a percentage of sales, was primarily due to increased margins from optimal
retail pricing strategies as well as continuing improvements in buying practices
including centralized product procurement, promotional efficiencies including
category management and more efficient distribution channels.
-9-
Operating and administrative expenses, as a percentage of sales, were
approximately 22.4% and 22.3% for the three months ended June 29, 2002 and June
30, 2001, respectively. The operating and administrative expenses, as a
percentage of sales, were 21.5% and 21.6% for the six months ended June 29, 2002
and June 30, 2001, respectively. Operating and administrative expenses remained
relatively flat, as a percentage of sales, during the three and six month
periods in 2002 compared to the same periods in the prior year. Decreases in
payroll and other general expenses were offset by increases in health care costs
and facilities costs.
Net earnings were $141.4 million or $.72 per share and $119.9 million or
$.59 per share for the three months ended June 29, 2002 and June 30, 2001,
respectively. Net earnings were $336.6 million or $1.71 per share and $270.7
million or $1.32 per share for the six months ended June 29, 2002 and June 30,
2001, respectively.
Cautionary Note Regarding 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; 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 retain 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 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. The
Company does not consider to be material the potential losses in future
earnings, fair values and cash flows from reasonably possible near-term changes
in interest rates.
-10-
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 29,
2001, 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 2. Changes in Securities
- -------------------------------
Not Applicable.
Item 3. Defaults Upon Senior Securities
- -----------------------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- -------------------------------------------------------------
The Annual Meeting of Stockholders of the Company was held on May 14, 2002,
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 of
management's nominees for directors as 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 159,485,438 419,004
Hoyt R. Barnett 159,475,576 428,866
Joan G. Buccino 158,620,578 1,283,864
W. Edwin Crenshaw 159,490,573 413,869
Mark C. Hollis 159,199,284 705,158
Charles H. Jenkins, Jr. 159,407,243 497,199
Howard M. Jenkins 159,490,303 414,139
Tina P. Johnson 159,268,072 636,370
E. Vane McClurg 159,421,622 482,820
Kelly E. Norton 158,767,992 1,136,450
Item 5. Other Information
- ---------------------------
Not Applicable.
-11-
Item 6(a) Exhibits
- -------------------
3(b). Amended and Restated By-laws of the Company.
10. Since the filing of the Company's Form 10-K for the year ended
December 29, 2001, the Company has entered into an Indemnification
Agreement with a new director and two new officers of the Company. The
Indemnification Agreement is in the same form of Indemnification Agreement
filed as an exhibit to the Company's Form 10-Q for the quarter ended March
31, 2001. Such subsequent indemnified director and officers are listed as
follows:
Joan G. Buccino
G. Gino DiGrazia
Sandra J. Woods
21. Subsidiaries of the Registrant.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Item 6(b) Reports on Form 8-K
- -----------------------------
No reports on Form 8-K were filed during the quarter ended June 29, 2002.
-12-
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: August 13, 2002 /s/ John A. Attaway, Jr.
------------------------------------------
John A. Attaway, Jr., Secretary
Date: August 13, 2002 /s/ David P. Phillips
------------------------------------------
David P. Phillips, Chief Financial Officer
and Treasurer (Principal Financial and
Accounting Officer)
-13-