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 June 25, 1994 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 33801 - - ---------------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (813) 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 29, 1994 was 229,618,616. Page 1 of 10 pages 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements -------------------- PUBLIX SUPER MARKETS, INC. CONDENSED BALANCE SHEETS (Amounts in Thousands) ASSETS June 25, 1994 December 25, 1993 -------------- ----------------- (Unaudited) Current Assets - - -------------- Cash and cash equivalents $ 119,197 $ 198,997 Short-term investments 73,223 59,763 Accounts receivable 31,133 44,377 Merchandise inventories 424,218 404,602 Deferred tax assets 26,456 25,299 Prepaid income taxes 11,599 - Prepaid expenses 5,531 1,731 ---------- ---------- Total Current Assets 691,357 734,769 ---------- ---------- Long-term investments 192,641 199,385 Investment in joint ventures 5,007 5,142 Other noncurrent assets 5,199 5,844 Property, plant and equipment 2,148,821 1,966,997 Accumulated depreciation (911,134) (857,822) ---------- ---------- Total Assets $2,131,891 $2,054,315 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities - - ------------------- Current installments of long-term debt $ 2,230 $ 2,010 Accounts payable 385,817 394,863 Accrued profit sharing and ESOT contribution 98,948 50,149 Accrued salaries and wages 44,480 39,362 Accrued self-insurance reserves 48,331 48,918 Federal and state income taxes - 8,253 Other 57,687 54,054 ---------- ---------- Total Current Liabilities 637,493 597,609 ---------- ---------- Long-term debt, excluding current installments 3,366 4,930 Deferred tax liabilities, net 67,549 63,409 Self-insurance reserves 55,809 50,534 Accrued postretirement benefit cost 27,490 26,465 Other noncurrent liabilities 1,680 3,359 Stockholders' Equity - - -------------------- Common stock of $1 par value. Authorized 300,000,000 shares: Issued 236,031,122 shares at June 25, 1994 and 238,157,384 shares at December 25, 1993 236,031 238,157 Additional paid-in capital 73,240 73,240 Reinvested earnings 1,105,517 1,020,565 ---------- ---------- 1,414,788 1,331,962 Less: 6,292,326 and 2,120,612 shares of common stock acquired from stockholders at June 25, 1994 and December 25, 1993, respectively, at cost 75,696 23,953 Unrealized loss on investment securities available for sale, net 588 - ---------- ---------- Total Stockholders' Equity 1,338,504 1,308,009 ---------- ---------- Total Liabilities and Stockholders' Equity $2,131,891 $2,054,315 ========== ========== See accompanying notes to condensed financial statements. -2- 3 PUBLIX SUPER MARKETS, INC. CONDENSED STATEMENTS OF EARNINGS (Amounts in thousands except per share amounts) Three Months Ended June 25, 1994 June 26, 1993 ------------- ------------- (Unaudited) Revenues - - -------- Sales $ 2,023,749 $ 1,794,916 Other income, net 18,307 17,973 ------------ ------------ Total revenues 2,042,056 1,812,889 ------------ ------------ Costs and expenses - - ------------------ Cost of merchandise sold including store occupancy, warehousing and delivery expenses 1,575,027 1,396,274 Operating and administrative expenses 389,088 345,845 Interest expense 155 287 ------------ ------------ Total costs and expenses 1,964,270 1,742,406 ------------ ------------ Earnings before income tax expense 77,786 70,483 Income tax expense 28,207 24,645 ------------ ------------ Net earnings $ 49,579 $ 45,838 ============ ============ Weighted average number of common shares outstanding 230,169,674 235,675,048 ============ ============ Net earnings per common share $ .22 $ .19 ============ ============ Cash dividends per common share $ .09 $ .08 ============ ============ See accompanying notes to condensed financial statements. -3- 4 PUBLIX SUPER MARKETS, INC. CONDENSED STATEMENTS OF EARNINGS (Amounts in thousands except per share amounts) Six Months Ended June 25, 1994 June 26, 1993 ------------- ------------- (Unaudited) Revenues - - -------- Sales $ 4,188,330 $ 3,737,205 Other income, net 45,576 39,650 ------------ ------------ Total revenues 4,233,906 3,776,855 ------------ ------------ Costs and expenses - - ------------------ Cost of merchandise sold including store occupancy, warehousing and delivery expenses 3,245,798 2,916,223 Operating and administrative expenses 785,154 696,489 Interest expense 267 509 ------------ ------------ Total costs and expenses 4,031,219 3,613,221 ------------ ------------ Earnings before income tax expense and cumulative effect of changes in accounting principles 202,687 163,634 Income tax expense 75,063 58,715 ------------ ------------ Net earnings before cumulative effect of changes in accounting principles 127,624 104,919 Cumulative effect on prior years of changes in accounting principles - (3,494) ------------ ------------ Net earnings $ 127,624 $ 101,425 ============ ============ Weighted average number of common shares outstanding 232,119,138 236,701,933 ============ ============ Net earnings per common share before cumulative effect of changes in accounting principles $ .55 $ .44 Cumulative effect on prior years of changes in accounting principles - (.01) ------------ ------------ Net earnings per common share $ .55 $ .43 ============ ============ Cash dividends per common share $ .09 $ .08 ============ ============ See accompanying notes to condensed financial statements. -4- 5 PUBLIX SUPER MARKETS, INC. CONDENSED STATEMENTS OF CASH FLOWS (Amounts in Thousands) Six Months Ended June 25, 1994 June 26, 1993 ------------- ------------- (Unaudited) Cash Flows From Operating Activities - - ------------------------------------ Cash received from customers $4,228,617 $3,775,472 Cash paid to employees and suppliers (3,913,434) (3,455,805) Income taxes paid (91,562) (48,674) Payment for self-insured claims (33,960) (34,428) Other 17,136 6,095 ---------- ---------- Net Cash Provided by Operating Activities 206,797 242,660 ---------- ---------- Cash Flows From Investing Activities - - ------------------------------------ Payment for property, plant and equipment (193,437) (129,728) Payment for investment securities - (19,880) Payment for investment securities - held-to-maturity (5,937) - Payment for investment securities - available-for-sale (113,254) - Proceeds from sale of investment securities 122,454 961 Other, net 1,462 (515) ---------- ---------- Net Cash Used in Investing Activities (188,712) (149,162) ---------- ---------- Cash Flows From Financing Activities - - ------------------------------------ Payment of long-term debt (1,344) (981) Proceeds from sale of common stock 8,597 9,728 Payment for acquisition of common stock (84,356) (46,950) Dividends paid (20,782) (18,978) ---------- ---------- Net Cash Used in Financing Activities (97,885) (57,181) ---------- ---------- Net increase (decrease) in cash and cash equivalents (79,800) 36,317 Cash and cash equivalents at beginning of period 198,997 293,473 ---------- ---------- Cash and cash equivalents at end of period $ 119,197 $ 329,790 ========== ========== See accompanying notes to condensed financial statements. -5- 6 PUBLIX SUPER MARKETS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying 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. 2. In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 115, Accounting for Certain Investments in Debt and Equity Securities. The Company adopted the provisions of the new Standard for investments held as of, or acquired after, the beginning of fiscal 1994. The cumulative effect of adopting the Standard as of the beginning of fiscal 1994 is not material. In accordance with the Standard, prior period financial statements have not been restated to reflect the change in accounting principle. Securities held-to-maturity and available-for-sale: Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Debt securities are classified as held- to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at cost, adjusted for amortization of premiums and accretion of discounts to maturity. This amortization and accretion is included in other income. Debt securities not classified as held-to-maturity and marketable equity securities are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in a separate component of stockholders' equity. The cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. This amortization and accretion is included in other income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in other income. The cost of securities sold is based on the specific identification method. Following is a summary of available-for-sale securities and held-to-maturity securities as of June 25, 1994: Available-for-Sale Securities ----------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- --------- (Amounts In Thousands) Tax-free bonds $178,941 $ 481 $1,623 $177,799 Equity securities 31,911 1,256 1,072 32,095 -------- ------ ------ -------- $210,852 $1,737 $2,695 $209,894 ======== ====== ====== ======== Held-to-Maturity Securities --------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- --------- (Amounts In Thousands) Tax-free bonds $55,907 $1,002 $1,228 $55,681 ======= ====== ====== ======= -6- 7 For the six month period ended June 25, 1994, the realized gains on sales of available-for-sale securities totaled $219,000 and the realized losses totaled $1,736,000. The net adjustment for unrealized losses on available-for-sale securities included as a separate component of stockholders' equity totaled $588,000. The amortized cost and estimated fair value of debt and marketable equity securities as of June 25, 1994, by expected maturity, are as follows: Estimated Amortized Fair Cost Value --------- --------- (Amounts In Thousands) Available-for-Sale ------------------ Due in one year or less $ 54,345 $ 54,345 Due after one year through three years 60,728 60,525 Due after three years 63,868 62,929 -------- -------- 178,941 177,799 Equity securities 31,911 32,095 -------- -------- $210,852 $209,894 ======== ======== Held-to-Maturity ---------------- Due in one year or less $ 18,815 $ 18,815 Due after one year through three years 35,775 35,521 Due after three years 1,317 1,345 -------- -------- $ 55,907 $ 55,681 ======== ======== At June 25, 1994, the Company classified its one investment in common stock as a trading security. This investment had a cost of $198,000 and a fair value of $63,000. The unrealized loss on this investment is included in the statement of earnings as a reduction of other income. -7- 8 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 $206.8 million in the six months ended June 25, 1994, as compared with $242.7 million in the six months ended June 26, 1993. Cash and cash equivalents totaled $119.2 million as of June 25, 1994. Capital expenditures totaled $193.4 million in the six months ended June 25, 1994. These expenditures were primarily incurred in connection with the opening of 25 new stores and the remodeling or enlarging of 11 stores which added 1.3 million square feet. Construction was completed on a new general merchandise warehouse in Lakeland, Florida and significant expenditures were incurred in the continued construction of a new distribution center in Lawrenceville, Georgia. In addition, the Company closed three stores. Capital expenditures in the six months ended June 26, 1993, were approximately $129.7 million. These expenditures were primarily incurred in connection with the opening of 12 new stores and remodeling or enlarging of various existing stores. Also, significant expenditures were incurred in expanding the warehouse facilities in Deerfield Beach, Florida and purchasing land for the Atlanta Distribution Center. In addition, the Company closed two stores. The Company has budgeted approximately $206.6 million for the remainder of 1994 for new store construction, the remodeling or expanding of several existing stores and the expansion and construction of distribution facilities. The capital budget is subject to continuing change and review. The remaining capital expenditures are expected to be financed by internally generated funds and current liquid assets. As of June 25, 1994, the Company has committed lines of credit for $100.0 million and one uncommitted line of credit for $25.0 million. These lines are reviewed annually by the banks. The interest rate for these lines is at or below the prime rate. No amounts were outstanding as of June 25, 1994. 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 increased 12.7% in the second quarter of 1994 to $2,023.7 million, an increase of $228.8 million compared to the same quarter in 1993. This represents an increase of $86.5 million or 4.8% in additional sales from stores that were open for all of both quarters (comparable stores) and additional sales of $142.3 million or 7.9% from the net impact of 42 stores opened and three stores closed since June 26, 1993, and four stores opened and two stores closed in the second quarter of 1993. Other income increased $.3 million or 1.9% in the second quarter of 1994 as compared to the same quarter in 1993. Sales increased 12.1% in the six months ended June 25, 1994, to $4,188.3 million, an increase of $451.1 million over the six months ended June 26, 1993. This reflects an increase of $186.4 million or 5.0% in sales from comparable stores and sales of $264.7 million or 7.1% from the net impact of 42 stores opened and three stores closed since June 26, 1993, and 12 stores opened and four stores closed in the first six months of 1993. Other revenue increased $5.9 million or 14.9% in the first six months of 1994 as compared to the first six months of 1993. This increase is primarily the result of the recognition of a $5.9 million gain in the settlement of claims for business interruption losses and property losses related to the extensive damage caused by Hurricane Andrew. -8- 9 PUBLIX SUPER MARKETS, INC. Cost of merchandise sold including store occupancy, warehousing and delivery expenses, as a percentage of sales, was approximately 77.8% in the quarters ended June 25, 1994 and June 26, 1993. These cost of sales percentages were 77.5% and 78.0% for the six months ended June 25, 1994 and June 26, 1993, respectively. During the six months ended June 25, 1994, the decrease in cost of merchandise sold is due to buying and merchandising efficiencies. Operating and administrative expenses, as a percentage of sales, were approximately 19.2% and 19.3% for the quarters ended June 25, 1994 and June 26, 1993, respectively. The operating and administrative expenses, as a percentage of sales, were 18.7% and 18.6% in the six months ended June 26, 1994 and June 26, 1993, respectively. The significant components of operating and administrative expenses are payroll costs, employee benefits and depreciation. New Accounting Standard The Company adopted Financial Accounting Standard No. 115, Accounting for Certain Investments in Debt and Equity Securities, in the first quarter of 1994. This Standard requires the reporting of certain securities at fair value except for those securities which the Company has the positive intent and ability to hold to maturity. The Company adopted the provisions of the new Standard for investments held as of, or acquired after, the beginning of fiscal 1994. The cumulative effect of adopting the Standard as of the beginning of fiscal 1994 is not material. In accordance with the Standard, prior period financial statements have not been restated to reflect the change in accounting principle. PART II. OTHER INFORMATION Item 1. Legal Proceedings In the Company's Form 10-K for the fiscal year ended December 25, 1993, the Company disclosed a legal proceeding with the Equal Employment Opportunity Commission (EEOC). No material developments have occurred since the Form 10-K filing. Item 4. Results of Votes of Security Holders The Annual Meeting of Stockholders of the Company was held on May 17, 1994, 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 in the proxy statement were elected. Item 6(a). Exhibits 27. Financial Data Schedule for the six months ended June 25, 1994. Item 6(b). Reports on Form 8-K No reports on Form 8-K were filed during the three months ended June 25, 1994. -9- 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: August 5, 1994 /s/ S. Keith Billups -------------------------------------------- S. Keith Billups, Secretary Date: August 5, 1994 /s/ William H. Vass -------------------------------------------- William H. Vass, Executive Vice President and Chief Financial Officer (Principal Financial Officer) -10-