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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the fiscal year ended December 25, 1999
( ) 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 of Incorporation) (I.R.S. Employer Identification No.)
1936 George Jenkins Boulevard
Lakeland, Florida 33815
- --------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (863) 688-1188
--------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock $1.00 Par Value
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
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The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 8, 2000 was approximately $5,397,728,580.
The number of shares of Registrant's common stock outstanding as of
March 8, 2000 was 214,789,989.
DOCUMENTS INCORPORATED BY REFERENCE
Pages 2 through 8 of Proxy Statement solicited for the 2000 Annual Meeting of
Stockholders to be held on May 17, 2000 are incorporated by reference in Items
10, 11 and 13 of Part III hereof.
PART I
Item 1. Business
- -----------------
Publix Super Markets, Inc. is based in Lakeland, Florida and was
incorporated in Florida on December 27, 1921. Publix Super Markets, Inc. and its
wholly owned subsidiary, hereinafter collectively referred to as the "Company,"
is in the business of operating retail food supermarkets in Florida, Georgia,
South Carolina and Alabama. The Company has no other lines of business or
industry segments. Therefore, financial information about industry segments or
lines of business is omitted.
The Company's supermarkets sell groceries, dairy, produce, deli, bakery,
meat, seafood, housewares and health and beauty care items. Many stores have
pharmacy, photo and floral departments. In addition, the Company has agreements
with commercial banks to operate in many of its stores.
The Company's lines of merchandise include a variety of nationally
advertised and private label brands, as well as unbranded merchandise such as
produce, meat and seafood. Private label items are produced in the Company's
manufacturing facilities or are manufactured for the Company by outside
suppliers.
The Company manufactures dairy, bakery and deli products. The Company's
dairy plants are located in Lakeland and Deerfield Beach, Florida, and
Lawrenceville, Georgia. The bakery and deli plants are located in Lakeland,
Florida. The Company receives the food and non-food items it distributes from
many sources. These products are generally available in sufficient quantities to
enable the Company to adequately satisfy its customers. The Company believes
that its sources of supply of these products and raw materials used in
manufacturing are adequate for its needs and that it is not dependent upon a
single or relatively few suppliers.
The Company operated 614 supermarkets at the end of 1999, compared with 586
at the beginning of the year. In 1999, 44 stores were opened, 16 stores were
closed, and 82 stores were expanded or remodeled. The net increase in square
footage was 1.4 million square feet or 5.3% since 1998. At the end of 1999, the
Company had 490 stores located in Florida, 99 in Georgia, 22 in South Carolina
and three in Alabama. Also, as of year end, the Company had 25 stores under
construction in Florida, nine in Georgia and one in South Carolina.
The Company is engaged in a highly competitive industry. Competition, based
primarily on price, quality of goods and service, convenience and product mix,
is with several national and regional chains, independent stores and mass
merchandisers throughout its market areas. The Company anticipates continued
competitor format innovation and location additions in 2000.
The influx of winter residents to Florida and increased purchases of food
during the traditional Thanksgiving, Christmas and Easter holidays typically
results in seasonal sales increases between November and April of each year.
The Company has experienced no significant changes in the kinds of products
sold or in its methods of distribution since the beginning of the fiscal year.
The Company had approximately 120,000 employees at the end of 1999,
compared with 117,000 at the end of 1998. Of this total, approximately 70,200 at
the end of 1999 and 70,400 at the end of 1998 were not full-time employees.
The Company's research and development expenses are insignificant.
Compliance by the Company with Federal, state and local environmental
protection laws during 1999 had no material effect upon capital expenditures,
earnings or the competitive position of the Company.
Item 2. Properties
- -------------------
At year end, the Company operated approximately 27.7 million square feet of
retail space. The Company's stores vary in size. Current store prototypes range
from 27,000 to 60,000 square feet. Stores are often located in strip shopping
centers where the Company is the anchor tenant.
The Company supplies its retail stores from eight distribution centers
located in Lakeland, Miami, Jacksonville, Sarasota, Orlando, Deerfield Beach and
Boynton Beach, Florida, and Lawrenceville, Georgia.
The majority of the Company's retail stores are leased. Substantially all
of these leases will expire during the next 20 years. However, in the normal
course of business, it is expected that the leases will be renewed or replaced
by leases on other properties. At 54 locations both the building and land are
owned and at 31 other locations the building is owned while the land is leased.
The Company's corporate offices, distribution facilities and manufacturing
plants are owned with no outstanding debt.
All of the Company's properties are well maintained and in good operating
condition and suitable and adequate for operating its business.
Item 3. Legal Proceedings
- --------------------------
A purported class action was filed against the Company on April 3, 1997 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"). In their Complaint, the plaintiffs allege that the Company
has and is currently engaged in a pattern and practice of race-based
discriminatory treatment of black employees and applicants with respect to
hiring, promotion, job assignment, conditions of employment, and other
employment aspects, all in violation of Federal and state law. Subsequently,
seven of the named plaintiffs withdrew their claims with prejudice. The
plaintiffs sought, among other relief, a certification of the suit as a class
action, declaratory and injunctive relief, back pay, front pay, benefits and
other compensatory damages, and punitive damages.
On March 22, 1999, the Court certified the suit as a class action, but
limited the class to those 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 black employees who worked only in pharmacy
operations. The Court denied the plaintiffs' attempt to strike the demand that
the Middleton case be tried to a jury. The Court also, among other things,
granted the plaintiffs' motion to drop all claims for compensatory and punitive
damages.
Plaintiffs in the Middleton case still are seeking certification of a
subclass of unsuccessful applicants and have put forward a new proposed class
representative, Lydia Moultry. The parties are awaiting a ruling from the Court
regarding whether Ms. Moultry can join the lawsuit and whether a subclass of
unsuccessful applicants will be included in the Middleton case. Meanwhile, on
July 26, 1999, the Court set the Middleton case for trial by jury beginning
January 2, 2001.
On November 6, 1997, another purported class action was filed against the
Company in the Court by Shirley Dyer and five other present or former employees
of the Company, individually and on behalf of all other persons similarly
situated (the "Dyer case"). In their Complaint, the plaintiffs allege that the
Company has violated and is currently violating Federal and state civil rights
statutes by discriminating against female employees and applicants with respect
to hiring, promotion, training, compensation, discipline, demotion and
termination, and/or retaliation for bringing allegations of discrimination. The
plaintiffs have moved to certify a class of all female current, former and
future Company employees and applicants in all of the Company's manufacturing
plants and distribution centers with respect to certain claims. The plaintiffs
seek, among other relief, declaratory and injunctive relief, back pay, front
pay, benefits and other compensatory damages, and punitive damages. The parties
have briefed issues relating to class certification, engaged in oral argument on
those issues on April 16, 1999 and now await the Court's ruling.
On December 8, 1998, another purported class action was filed against the
Company in the Court by Charlene Jones, individually and on behalf of other
persons similarly situated (the "Jones case"). In her Complaint, the plaintiff
alleges that the Company has violated and is currently violating Federal and
state civil rights statutes by discriminating against female applicants for
employment in the Company's manufacturing plants and distribution centers. The
plaintiffs in the Jones and Dyer cases have asked the Court to combine the two
cases. In papers filed with the Court on April 16, 1999, the Jones case
plaintiff 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 the Jones case is not combined
with the Dyer case.
On June 29, 1999, another purported class action was filed against the
Company in the Court by Lisa Lisenby, individually and on behalf of other
persons similarly situated (the "Lisenby case"). In her Complaint, the plaintiff
alleges that the Company has violated and is currently violating Federal
statutory law by discriminating against female applicants and employees in the
Company's manufacturing plants and distribution centers. On September 10, 1999,
the Lisenby case plaintiff moved to combine her case with the Dyer case.
The Company denies the allegations of the plaintiffs in the Middleton,
Dyer, Jones and Lisenby cases and is vigorously defending the actions. Although
these cases are subject to the uncertainties inherent in the litigation process,
based on the information presently available to the Company, management does not
expect the ultimate resolution of these actions to have a material adverse
effect on the Company's financial condition or results of operations.
The Company is also 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 or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None
EXECUTIVE OFFICERS OF THE COMPANY
---------------------------------
Served as
Nature of Family Officer of
Relationship Company
Name Age Position Between Officers Since
- ---- --- -------- ---------------- -----
Howard M. Jenkins 48 Chairman of Cousin of 1976
the Board and Charles H. Jenkins,
Chief Executive Jr., uncle of
Officer W. Edwin Crenshaw
and brother-in-law
of Hoyt R. Barnett
Charles H. Jenkins, Jr. 56 Chairman of the Cousin of 1974
Executive Committee Howard M. Jenkins and
cousin of
W. Edwin Crenshaw
W. Edwin Crenshaw 49 President Nephew of 1990
Howard M. Jenkins
and cousin of
Charles H. Jenkins, Jr.
Hoyt R. Barnett 56 Vice Chairman Brother-in-law of 1977
Howard M. Jenkins
Jesse L. Benton 57 Vice President 1988
S. Keith Billups 67 Secretary 1968
David E. Bornmann 42 Vice President 1998
Joseph W. Carvin 49 Vice President 1998
R. Scott Charlton 41 Vice President 1992
Carolyn C. Day 54 Assistant Secretary 1992
David S. Duncan 46 Vice President 1999
Glenn J. Eschrich 55 Vice President 1995
William V. Fauerbach 53 Vice President 1997
John R. Frazier 50 Vice President 1997
M. Clayton Hollis, Jr. 43 Vice President 1994
Mark R. Irby 44 Vice President 1989
Tina P. Johnson 40 Senior Vice President 1990
James J. Lobinsky 60 Senior Vice President 1992
Thomas M. McLaughlin 49 Vice President 1994
Sharon A. Miller 56 Assistant Secretary 1992
EXECUTIVE OFFICERS OF THE COMPANY
---------------------------------
Served as
Nature of Family Officer of
Relationship Company
Name Age Position Between Officers Since
- ---- --- -------- ---------------- -----
Robert H. Moore 57 Vice President 1994
Thomas M. O'Connor 52 Senior Vice President 1992
David P. Phillips 40 Chief Financial 1990
Officer and Treasurer
Henry J. Pileggi, Jr. 41 Vice President 1998
James H. Rhodes II 55 Vice President 1995
Daniel M. Risener 59 Senior Vice President 1985
and Chief Information
Officer
Edward T. Shivers 60 Vice President 1985
James F. Slappey 57 Vice President 1992
The terms of all officers expire at the annual meeting of the Company in
May 2000.
Name Business Experience During Last Five Years
- ---- ------------------------------------------
Howard M. Jenkins Chairman of the Board and Chief Executive Officer of
the Company.
Charles H. Jenkins, Jr. Chairman of the Executive Committee of the Company.
W. Edwin Crenshaw Executive Vice President of the Company to
January 1996, President thereafter.
Hoyt R. Barnett Executive Vice President and Trustee of the Profit
Sharing Plan of the Company to August 1998, Executive
Vice President, Trustee of the Profit Sharing Plan and
Trustee of the Employee Stock Ownership Plan to
January 1999, Vice Chairman, Trustee of the Profit
Sharing Plan and Trustee of the Employee Stock
Ownership Plan to December 1999, Vice Chairman,
Trustee of the Employee Stock Ownership Plan,
thereafter.
Jesse L. Benton Vice President of the Company.
S. Keith Billups Secretary of the Company.
David E. Bornmann Business Development Manager - Corporate Purchasing of
the Company to October 1998, Vice President
thereafter.
Joseph W. Carvin Human Resources Counsel of the Company to June 1998,
Director of Human Resources and Employment Law to
November 1998, Vice President thereafter.
R. Scott Charlton Vice President of the Company.
Carolyn C. Day Capital Stock Registrar and Transfer Agent and
Assistant Secretary of the Company.
David S. Duncan Director of Facility Services of the Company to
November 1999, Vice President thereafter.
Glenn J. Eschrich Director of Strategy Support of the Company to
March 1995, Vice President thereafter.
William V. Fauerbach Regional Director of Retail Operations - Miami
Division of the Company to January 1997, Vice
President thereafter.
John R. Frazier Real Estate Manager of the Company to August 1996,
Director of Real Estate to January 1997, Vice
President thereafter.
M. Clayton Hollis, Jr. Vice President of the Company.
Mark R. Irby Vice President of the Company.
Tina P. Johnson Treasurer of the Company to January 1995, Treasurer
and Trustee of the 401(k) Plan - Publix Stock Fund to
March 1996, Vice President, Treasurer and Trustee of
the 401 (k) Plan - Publix Stock Fund to July
1997, Senior Vice President and Trustee of the 401(k)
Plan - Publix Stock Fund thereafter.
Name Business Experience During Last Five Years
- ---- ------------------------------------------
James J. Lobinsky Vice President of the Company to July 1997, Senior
Vice President thereafter.
Thomas M. McLaughlin Vice President of the Company.
Sharon A. Miller Director of Administration and Assistant Secretary of
the Company.
Robert H. Moore Vice President of the Company.
Thomas M. O'Connor Vice President of the Company to November 1999, Senior
Vice President thereafter.
David P. Phillips Controller of the Company to March 1996, Vice
President and Controller to July 1997, Vice President
Finance and Treasurer to July 1999, Chief Financial
Officer and Treasurer thereafter.
Henry J. Pileggi, Jr. Regional Director of the Company to October 1998, Vice
President thereafter.
James H. Rhodes II Director of Human Resources of the Company to April
1995, Vice President thereafter.
Daniel M. Risener Vice President of the Company to July 1999, Senior
Vice President and Chief Information Officer
thereafter.
Edward T. Shivers Vice President of the Company.
James F. Slappey Vice President of the Company.
PART II
Item 5. Market for the Company's Common Stock and Related Stockholder Matters
- ------------------------------------------------------------------------------
(a) Market Information
------------------
Substantially all transactions of the Company's common stock have been
among the Company, its employees, former employees, their families and
the benefit plans established for the Company's employees. The market
price of the Company's common stock is determined by the Board of
Directors based upon appraisals prepared by an independent appraiser. The
market price for 1999 and 1998 was as follows:
1999 1998
---- ----
January - February $41.00 $23.25
March - April 46.50 30.75
May - July 46.50 34.75
August - October 46.50 38.25
November - December 44.50 41.00
(b) Approximate Number of Equity Security Holders
---------------------------------------------
As of March 8, 2000, the approximate number of holders of record of the
Company`s common stock was 78,000.
(c) Dividends
---------
The Company paid cash dividends of $.22 per share of common stock in 1999
and $.20 per share in 1998. Payment of dividends is within the discretion
of the Company's Board of Directors and depends on, among other factors,
earnings, capital requirements and the operating and financial condition
of the Company. It is believed that comparable cash dividends will be
paid in the future.
Item 6. Five Year Summary of Selected Financial Data
- -----------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Sales:
Sales $13,068,900 12,067,125 11,224,378 10,431,302 9,393,021
Percent increase 8.3% 7.5% 7.6% 11.1% 8.4%
Comparable store sales
percent increase 5.0% 3.6% 3.3% 5.6% 2.8%
Earnings:
Gross profit $ 3,294,188 2,935,707 2,674,118 2,424,799 2,124,036
Earnings before income
tax expense $ 719,569 584,388 555,357 416,584 381,500
Net earnings $ 462,409 378,274 354,622 265,176 242,141
Net earnings as a
percent of sales 3.54% 3.13% 3.16% 2.54% 2.58%
Common stock:
Weighted average
shares outstanding 216,160,316 217,383,413 218,871,661 221,195,884 225,852,938
Basic earnings per
common share,
based on weighted
average shares
outstanding $ 2.14 1.74 1.62 1.20 1.07
Dividends per share $ .22 .20 .15 .13 .11
Financial data:
Capital expenditures $ 512,658 357,754 259,806 226,752 256,629
Working capital $ 515,257 467,385 366,680 317,265 232,570
Current ratio 1.48 1.47 1.37 1.35 1.31
Total assets $ 4,067,732 3,617,259 3,294,980 2,921,084 2,559,365
Long-term debt $ --- --- --- 108 1,765
Stockholders' equity $ 2,676,144 2,327,632 2,019,299 1,751,179 1,614,717
Other:
Number of stores 614 586 563 534 508
NOTE: Amounts are in thousands, except per share, share amounts and number of stores.
All years include 52 weeks.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
-------------
Business Environment
- --------------------
As of December 25, 1999, the Company operated 614 retail grocery stores
representing approximately 27.7 million square feet of retail space.
Historically, the Company's primary competition has been from national and
regional chains and smaller independents located throughout its market areas.
The Company has continued to experience increased competition from mass
merchandisers. The products offered by these retailers include many of the same
items sold by the Company.
At the end of fiscal 1999, the Company had 490 stores located in Florida,
99 in Georgia, 22 in South Carolina and three in Alabama. The Company opened 35
stores in Florida, eight stores in Georgia and one store in South Carolina
during 1999. The Company intends to continue to pursue vigorously new locations
in Florida and other states.
Liquidity and Capital Resources
- -------------------------------
Operating activities continue to be the Company's primary source of
liquidity. Net cash provided by operating activities was approximately $796.4
million in 1999, compared with $665.0 million in 1998 and $589.2 million in
1997. Working capital was approximately $515.3 million as of December 25, 1999,
as compared with $467.4 million and $366.7 million as of December 26, 1998 and
December 27, 1997, respectively. Cash and cash equivalents aggregated
approximately $626.6 million as of December 25, 1999, as compared with $669.3
million and $530.0 million as of December 26, 1998 and December 27, 1997,
respectively.
Capital expenditures totaled $512.7 million in 1999. These expenditures
were primarily incurred in connection with the opening of 44 new stores and
remodeling or expanding 82 stores. Significant expenditures were also incurred
in the purchase of nine additional store sites from A & P in the greater Atlanta
area and the expansion of a warehouse in Jacksonville, Florida. In addition, the
Company closed 16 stores. The net impact of new and closed stores (net new
stores) added an additional 1.4 million square feet in 1999, a 5.3% increase.
Capital expenditures totaled $357.8 million in 1998. These expenditures were
primarily incurred in connection with the opening of 31 new stores and
remodeling or expanding 45 stores. In addition, the Company closed eight stores.
Net new stores added an additional 1.0 million square feet in 1998, a 4.0%
increase. Capital expenditures totaled $259.8 million in 1997. These
expenditures were primarily incurred in connection with the opening of 33 new
stores and remodeling or expanding 19 stores. In addition, the Company closed
four stores. Net new stores added an additional 1.4 million square feet in 1997,
a 5.9% increase.
The Company plans to open as many as 54 stores in 2000. Although real
estate development is unpredictable, the Company's 2000 new store growth
represents a reasonable estimate of anticipated future growth. Capital
expenditures for 2000, primarily made up of new store and warehouse construction
and the remodeling or expanding of many existing stores, are expected to be
approximately $635.0 million. This capital program is subject to continuing
change and review. The 2000 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.
The Company is self-insured, up to certain limits, for health care, fleet
liability, general liability and workers' compensation claims. Reserves are
established to cover estimated liabilities for existing and anticipated claims
based on actual experience including, where necessary, actuarial studies. The
Company has insurance coverage for losses in excess of varying amounts. The
provision for self-insured reserves was $144.6 million, $136.4 million and
$116.8 million in fiscal 1999, 1998 and 1997, respectively. The Company does not
believe its self-insurance program will have a material adverse impact on its
future liquidity, financial condition or results of operations.
Cash generated in excess of the amount needed for current operations and
capital expenditures is invested in short-term and long-term investments.
Short-term investments were approximately $28.2 million in 1999 compared with
$2.0 million in 1998. Long-term investments, primarily comprised of tax exempt
bonds, taxable bonds, equity securities and preferred stocks, were approximately
$398.9 million in 1999 compared with $385.6 million in 1998. Management believes
the Company's liquidity will continue to be strong.
The Company currently repurchases common stock at the stockholders' request
in accordance with the terms of the Company's Employee Stock Purchase Plan. The
Company expects to continue to repurchase its common stock, as offered by its
stockholders from time to time, at its then currently appraised value. However,
such purchases are not required and the Company retains the right to discontinue
them at any time.
Results of Operations
- ---------------------
The Company's fiscal year ends on the last Saturday in December. Fiscal
years 1999, 1998 and 1997 include 52 weeks.
Sales for 1999 were $13.1 billion as compared with $12.1 billion in 1998,
an 8.3% increase. This reflects an increase of $603.4 million or 5.0% in sales
from stores that were open for all of both years (comparable stores) and sales
of $398.4 million or 3.3% from net new stores since the beginning of 1998. Sales
for 1998 were $12.1 billion as compared with $11.2 billion in 1997, a 7.5%
increase. This reflects an increase of $404.1 million or 3.6% in sales from
comparable stores and sales of $438.6 million or 3.9% from net new stores since
the beginning of 1997.
Cost of merchandise sold including store occupancy, warehousing and
delivery expenses was approximately 74.8% of sales in 1999 as compared with
75.7% and 76.2% in 1998 and 1997, respectively. In 1999 and 1998, cost of
merchandise sold decreased as a percentage of sales due to buying and
merchandising efficiencies.
Operating and administrative expenses, as a percent of sales, were 20.7%,
20.5% and 19.9% in 1999, 1998 and 1997, respectively. The significant components
of operating and administrative expenses are payroll costs, employee benefits
and depreciation.
In recent years, the impact of inflation on the Company's food prices has
been lower than the overall increase in the Consumer Price Index.
Accounting Standards
- --------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities," (SFAS 133) effective for fiscal years beginning after
June 15, 1999. SFAS 133 requires that derivatives be carried at fair value and
provides for hedge accounting when certain conditions are met. In June 1999, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standard No. 137, "Accounting for Derivative Instruments and Hedging Activities
- - Deferral of the Effective Date of FASB Statement No. 133" (SFAS 137) which
deferred the effective date of adoption of SFAS 133 for one year. The Company is
currently evaluating the effect of adopting SFAS 133.
Year 2000
- ---------
In order to avoid potential Year 2000 problems, the Company adopted a Year
2000 plan (the "Plan") covering all of the Company's business units. The aim of
the Plan was 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. Year 2000 problems result from the use in computer hardware and
software of two digits rather than four digits to define the applicable year. To
oversee the Plan, the Company established a Year 2000 Project Office. The
Project Office was staffed with representatives from the Company's Information
Systems Department, non-Information Systems business areas and outside
consultants. Additional consultants were used on an as needed basis.
Under the Plan, three main areas were 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 were not
identified or remediated.
As of February 2000, the Company has not experienced any significant Year
2000 problems prior to or after January 1, 2000. The Company further believes
that it will not experience any material Year 2000 problems in its
mission-critical functions, processes and systems. Additionally, the Company
plans to discontinue the Project Office during the first quarter of 2000.
The Company anticipated that total costs for Year 2000 awareness,
inventory, assessment, analysis, conversion, testing and contingency planning
would be approximately $40.0 million. As of February 2000, approximately $39.0
million had been incurred. The Company does not anticipate any significant
additional costs related to Year 2000. The incurred costs include the costs of
all equipment upgrades, software modifications, software replacements, employee
salaries and consultant fees and expenses incurred in addressing Year 2000
problems. The funds to pay for addressing Year 2000 problems were financed by
internally generated funds and current liquid assets. The costs incurred to
address Year 2000 problems did not have a material effect on the Company's
consolidated financial position or results of operations.
From a forward-looking perspective, Year 2000 problems may affect the
Company for some period of time after January 1, 2000. However, the extent and
magnitude of these Year 2000 problems is difficult to predict or quantify. 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
The Company does not have any material exposure to market risk associated
with activities in derivative financial instruments, other financial instruments
and derivative commodity instruments.
Item 8. Financial Statements and Supplemental Data
- ---------------------------------------------------
The Company's financial statements, together with the independent auditors'
report thereon, are included in the section following Part IV of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -------------------------------------------------------------------------
Financial Disclosure
--------------------
None
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons of the
- -----------------------------------------------------------------------------
Registrant
----------
Certain information concerning the directors of the Company is incorporated
by reference to pages 2 through 5 of the Proxy Statement of the Company (2000
Proxy Statement) which the Company intends to file no later than 120 days after
its fiscal year end. Certain information concerning the executive officers of
the Company is set forth in Part I under the caption "Executive Officers of the
Company."
Item 11. Executive Compensation
- --------------------------------
Information regarding executive compensation is incorporated by
reference to pages 5 through 8 of the 2000 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- ------------------------------------------------------------------------
The following table sets forth, as of March 8, 2000, the information with
respect to common stock ownership of all directors, including some who are 5% or
more beneficial owners, and all officers and directors as a group. Also, listed
are others known by the Company to own beneficially 5% or more of the shares of
the Company's common stock.
Amount and Nature Percent
Name of Beneficial Ownership (1) of Class
- ---- -------------------------- --------
Carol Jenkins Barnett 11,841,318 (2) 5.51
Hoyt R. Barnett 61,399,507 (3) 28.59
W. Edwin Crenshaw 632,240 *
Mark C. Hollis 1,400,011 (4) *
Charles H. Jenkins, Jr. 1,678,792 *
Howard M. Jenkins 12,392,621 (5) 5.77
Tina P. Johnson 4,463,460 (6) 2.08
E. Vane McClurg 1,761,772 *
William H. Vass 16,305 *
All Officers and Directors
as a group (32 individuals) 94,840,465 (7) 44.15
All Other Beneficial Owners:
- ----------------------------
Publix Super Markets, Inc.
Employee Stock Ownership Plan 60,065,487 (8) 27.96
Nancy E. Jenkins 14,638,789 6.82
*Shares represent less than 1% of class.
Note references are explained on the following page.
(1) As used in the table on the preceding page, "beneficial ownership" means
the sole or shared voting or investment power with respect to the
Company's common stock. Holdings of officers and former officers include
shares allocated to their individual accounts in the Company's Employee
Stock Ownership Plan (ESOP), over which each officer exercises sole
voting power and shared investment power. In accordance with the
beneficial ownership regulations, the same shares of common stock
may be included as beneficially owned by more than one individual or
entity. The address for all beneficial owners is 1936 George Jenkins
Boulevard, Lakeland, Florida 33815.
(2) Includes 1,226,675 shares of common stock which are also shown as
beneficially owned by Carol Jenkins Barnett's husband, Hoyt R. Barnett,
but excludes all other shares beneficially owned by Hoyt R. Barnett, as
to which Carol Jenkins Barnett disclaims beneficial ownership.
(3) Hoyt R. Barnett is Trustee of the ESOP which is the record owner of
60,065,487 shares of common stock over which he has shared investment
power. As Trustee, Hoyt R. Barnett exercises sole voting power over
971,028 shares in the ESOP because such shares have not been allocated
to participants' accounts. For ESOP shares allocated to participants'
accounts, Hoyt R. Barnett will vote shares as instructed by
participants. Additionally, Hoyt R. Barnett will vote ESOP shares for
which no instruction is received. Total shares beneficially owned
include 1,226,675 shares also shown as beneficially owned by his
wife, Carol Jenkins Barnett, but exclude all other shares
beneficially owned by Carol Jenkins Barnett, as to which Hoyt R.
Barnett disclaims beneficial ownership.
(4) Mark C. Hollis has shared voting and investment power over 1,312,461
shares of common stock.
(5) Howard M. Jenkins has sole voting and investment power over 2,233,565
shares of common stock which are held directly, sole voting and
investment power over 5,947,054 shares which are held indirectly and
shared voting and investment power over 4,175,125 shares which are held
indirectly.
(6) Tina P. Johnson is Trustee of the 401(k) Plan - Publix Stock Fund which
is the record owner of 4,403,285 shares of common stock over which she
has sole voting and shared investment power.
(7) Includes 64,468,772 shares of common stock owned by the ESOP and 401(k)
Plan.
(8) Includes 26,272,224 shares of common stock previously held by the Profit
Sharing Plan as a result of the merger of the Plans.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
Information regarding certain relationships and related transactions is
incorporated by reference to pages 2 through 5 and 8 of the 2000 Proxy
Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
- ------------------------------------------------------------------------
(a) Consolidated Financial Statements and Schedule
----------------------------------------------
The consolidated financial statements and schedule listed in the
accompanying Index to Consolidated Financial Statements and Schedule
are filed as part of this Annual Report on Form 10-K.
(b) Reports on Form 8-K
-------------------
The Company filed no reports on Form 8-K during the fourth quarter of
the year ended December 25, 1999.
(c) Exhibits
--------
3(a). Articles of Incorporation of the Company, together with all
amendments thereto, are incorporated by reference to the
exhibits to the Annual Report of the Company on Form 10-K
for the year ended December 25, 1993.
3(b). Amended and Restated By-laws of the Company are incorporated
by reference to the exhibits to the Annual Report of the
Company on Form 10-K for the year ended December 28, 1996.
10. Employment Agreement dated August 28, 1998, between William
H. Vass and the Company, effective January 1, 1999 is
incorporated by reference to the exhibits to the Annual
Report of the Company on Form 10-K for the year ended
December 26, 1998.
21. Subsidiary of the Company.
27. Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PUBLIX SUPER MARKETS, INC.
March 8, 2000 By: /s/ S. Keith Billups
--------------------------
S. Keith Billups
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
Chairman of the Board, Chief
Executive Officer and Director
/s/ Howard M. Jenkins (Principal Executive Officer) March 8, 2000
- ---------------------------
Howard M. Jenkins
Chairman of the Executive
/s/ Charles H. Jenkins, Jr. Committee and Director March 8, 2000
- ---------------------------
Charles H. Jenkins, Jr.
/s/ W. Edwin Crenshaw President and Director March 8, 2000
- ---------------------------
W. Edwin Crenshaw
/s/ Hoyt R. Barnett Vice Chairman and Director March 8, 2000
- ---------------------------
Hoyt R. Barnett
Senior Vice President
/s/ Tina P. Johnson and Director March 8, 2000
- ---------------------------
Tina P. Johnson
Chief Financial Officer
and Treasurer
(Principal Financial and
/s/ David P. Phillips Accounting Officer) March 8, 2000
- ---------------------------
David P. Phillips
PUBLIX SUPER MARKETS, INC.
Index to Consolidated Financial Statements and Schedule
Independent Auditors' Report
Consolidated Financial Statements:
Consolidated Balance Sheets - December 25, 1999 and December 26, 1998
Consolidated Statements of Earnings - Years ended December 25, 1999,
December 26, 1998 and December 27, 1997
Consolidated Statements of Comprehensive Earnings - Years ended
December 25, 1999, December 26, 1998 and December 27, 1997
Consolidated Statements of Stockholders' Equity - Years ended
December 25, 1999, December 26, 1998 and December 27, 1997
Consolidated Statements of Cash Flows - Years ended December 25, 1999,
December 26, 1998 and December 27, 1997
Notes to Consolidated Financial Statements
The following consolidated supporting schedule of the Company for the years
ended December 25, 1999, December 26, 1998 and December 27, 1997 is submitted
herewith:
Schedule:
II - Valuation and Qualifying Accounts
All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Stockholders of
Publix Super Markets, Inc.:
We have audited the consolidated financial statements of Publix Super Markets,
Inc. (the "Company") as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
consolidated financial statement schedule as listed in the accompanying index.
These consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Publix Super
Markets, Inc. as of December 25, 1999 and December 26, 1998, and the results of
its operations and its cash flows for each of the years in the three-year period
ended December 25, 1999, in conformity with generally accepted accounting
principles. Also in our opinion, the related consolidated financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG LLP
Tampa, Florida
February 24, 2000
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 25, 1999 and
December 26, 1998
Assets 1999 1998
------ ---- ----
(Amounts are in thousands)
Current assets:
Cash and cash equivalents $ 626,636 669,326
Short-term investments 28,233 2,042
Trade receivables 107,185 71,267
Merchandise inventories 769,454 657,565
Deferred tax assets 57,065 53,578
Prepaid expenses 2,442 1,889
---------- ---------
Total current assets 1,591,015 1,455,667
---------- ---------
Long-term investments 398,865 385,571
Other noncurrent assets 22,682 11,680
Property, plant and equipment:
Land 111,052 90,731
Buildings and improvements 702,322 659,209
Furniture, fixtures and equipment 1,927,899 1,815,852
Leasehold improvements 448,355 363,247
Construction in progress 117,759 62,829
---------- ---------
3,307,387 2,991,868
Less accumulated depreciation 1,252,217 1,227,527
---------- ---------
Net property, plant and equipment 2,055,170 1,764,341
---------- ---------
$4,067,732 3,617,259
========== =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 25, 1999 and
December 26, 1998
Liabilities and Stockholders' Equity 1999 1998
------------------------------------ ---- ----
(Amounts are in thousands,
except share amounts)
Current liabilities:
Accounts payable $ 634,995 615,753
Accrued expenses:
Salaries and wages 52,591 53,013
Contribution to retirement plans 182,981 146,107
Self-insurance reserves 69,356 61,413
Other 103,339 109,426
---------- ---------
Total accrued expenses 408,267 369,959
---------- ---------
Federal and state income taxes 32,496 2,570
---------- ---------
Total current liabilities 1,075,758 988,282
Deferred tax liabilities, net 135,413 123,821
Self-insurance reserves 100,154 98,956
Accrued postretirement benefit cost 55,735 48,858
Other noncurrent liabilities 24,528 29,710
---------- ---------
Total liabilities 1,391,588 1,289,627
---------- ---------
Stockholders' equity:
Common stock of $1 par value. Authorized
300,000,000 shares; issued and outstanding
215,567,950 shares in 1999 and 216,862,215
shares in 1998 215,568 216,862
Additional paid-in capital 196,352 152,472
Reinvested earnings 2,271,323 1,958,459
---------- ---------
2,683,243 2,327,793
Accumulated other comprehensive earnings (7,099) (161)
---------- ---------
Total stockholders' equity 2,676,144 2,327,632
Commitments and contingencies --- ---
---------- ---------
$4,067,732 3,617,259
========== =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Earnings
Years ended December 25, 1999, December 26, 1998
and December 27, 1997
1999 1998 1997
---- ---- ----
(Amounts are in thousands,
except per share amounts)
Revenues:
Sales $13,068,900 12,067,125 11,224,378
Other income, net 136,661 128,188 118,182
----------- ---------- ----------
Total revenues 13,205,561 12,195,313 11,342,560
----------- ---------- ----------
Costs and expenses:
Cost of merchandise sold, including
store occupancy, warehousing
and delivery expenses 9,774,712 9,131,418 8,550,260
Operating and administrative
expenses 2,711,280 2,479,507 2,236,943
----------- ---------- ----------
Total costs and expenses 12,485,992 11,610,925 10,787,203
----------- ---------- ----------
Earnings before income tax expense 719,569 584,388 555,357
Income tax expense 257,160 206,114 200,735
----------- ---------- ----------
Net earnings $ 462,409 378,274 354,622
=========== ========== ==========
Basic earnings per common share based on
weighted average shares outstanding $ 2.14 1.74 1.62
=========== ========== ==========
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Comprehensive Earnings
Years ended December 25, 1999, December 26, 1998
and December 27, 1997
1999 1998 1997
---- ---- ----
(Amounts are in thousands)
Net earnings $462,409 378,274 354,622
Other comprehensive earnings
Unrealized (loss) gain on
investment securities available-
for-sale, net of tax effect
of ($6,089), ($5,683) and $2,113 in
1999, 1998 and 1997, respectively (9,707) (9,078) 3,376
Reclassification adjustment for net
realized loss (gain) on investment
securities available- for-sale, net of
tax effect of $1,733, $2,787 and ($160)
in 1999, 1998 and 1997, respectively 2,769 4,453 (255)
-------- ------ -------
Comprehensive earnings $455,471 373,649 357,743
======== ======= =======
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Stockholders' Equity
Years ended December 25, 1999, December 26, 1998
and December 27, 1997
Common
stock
acquired Accumulated Total
Additional from other stock-
Common paid-in Reinvested stock- comprehensive holders'
stock capital earnings holders earnings equity
----- ------- -------- ------- -------- ------
(Amounts are in thousands, except per share and share amounts)
Balances at December 28, 1996 $219,943 91,991 1,437,902 --- 1,343 1,751,179
Comprehensive earnings for the year --- --- 354,622 --- 3,121 357,743
Cash dividends, $.15 per share --- --- (33,003) --- --- (33,003)
Contribution of 1,407,322 shares to
retirement plans --- 1,446 --- 30,479 --- 31,925
6,926,207 shares acquired from stockholders --- --- --- (153,886) --- (153,886)
Sale of 2,995,314 shares to stockholders 358 7,320 --- 57,663 --- 65,341
Retirement of 2,881,508 shares (2,882) --- (62,862) 65,744 --- ---
-------- ------- --------- -------- ------ ---------
Balances at December 27, 1997 217,419 100,757 1,696,659 --- 4,464 2,019,299
Comprehensive earnings for the year --- --- 378,274 --- (4,625) 373,649
Cash dividends, $.20 per share --- --- (43,752) --- --- (43,752)
Contribution of 2,269,549 shares to
retirement plans 738 31,780 --- 45,929 --- 78,447
6,298,211 shares acquired from stockholders --- --- --- (213,981) --- (213,981)
Sale of 3,471,695 shares to stockholders 757 19,935 --- 93,278 --- 113,970
Retirement of 2,051,992 shares (2,052) --- (72,722) 74,774 --- ---
-------- ------- --------- -------- ------ ---------
Balances at December 26, 1998 216,862 152,472 1,958,459 --- (161) 2,327,632
Comprehensive earnings for the year --- --- 462,409 --- (6,938) 455,471
Cash dividends, $.22 per share --- --- (47,846) --- --- (47,846)
Contribution of 3,328,017 shares to
retirement plans --- (517) --- 152,633 --- 152,116
10,789,790 shares acquired from stockholders --- --- --- (492,892) --- (492,892)
Sale of 6,167,508 shares to stockholders 967 44,397 --- 236,299 --- 281,663
Retirement of 2,261,077 shares (2,261) --- (101,699) 103,960 --- ---
-------- ------- --------- -------- ------ ---------
Balances at December 25, 1999 $215,568 196,352 2,271,323 --- (7,099) 2,676,144
======== ======= ========= ======== ====== =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
Years ended December 25, 1999, December 26, 1998
and December 27, 1997
1999 1998 1997
---- ---- ----
(Amounts are in thousands)
Cash flows from operating activities:
Cash received from customers $ 13,120,450 12,153,967 11,291,118
Cash paid to employees and suppliers (12,021,554) (11,218,411) (10,441,281)
Dividends and interest received 55,329 55,056 42,437
Income taxes paid (214,773) (194,385) (188,842)
Payment for self-insured claims (135,464) (123,481) (106,920)
Other operating cash receipts 751 726 678
Other operating cash payments (8,335) (8,475) (7,982)
------------ ---------- ----------
Net cash provided by operating
activities 796,404 664,997 589,208
------------ ---------- ----------
Cash flows from investing activities:
Payment for property, plant and
equipment (512,658) (357,754) (259,806)
Proceeds from sale of property, plant
and equipment 2,679 7,562 7,778
Payment for investment securities -
available-for-sale (AFS) (190,003) (193,707) (512,912)
Proceeds from sale and maturity of
investment securities - AFS 130,609 164,999 375,335
Other, net (10,515) (2,895) (5,204)
------------ --------- ----------
Net cash used in investing
activities (579,888) (381,795) (394,809)
------------ --------- ----------
Cash flows from financing activities:
Proceeds from sale of common stock 281,663 113,970 65,341
Payment for acquisition of common stock (492,892) (213,981) (153,886)
Dividends paid (47,846) (43,752) (33,003)
Other, net (131) (131) (238)
------------ ---------- ----------
Net cash used in financing
activities (259,206) (143,894) (121,786)
----------- ---------- ----------
Net (decrease) increase in cash and cash
equivalents (42,690) 139,308 72,613
Cash and cash equivalents at beginning
of year 669,326 530,018 457,405
------------ ----------- ----------
Cash and cash equivalents at end of year $ 626,636 669,326 530,018
============ =========== ==========
See accompanying notes to consolidated financial statements. (Continued)
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
(Continued)
1999 1998 1997
---- ---- ----
(Amounts are in thousands)
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings $462,409 378,274 354,622
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 199,428 181,020 168,613
Retirement contributions paid or payable
in common stock 193,227 84,532 78,695
Deferred income taxes 12,461 24,742 17,345
Loss on sale of property, plant and
equipment 20,015 4,877 3,674
Loss (gain) on sale of investments 4,586 7,240 (415)
Self-insurance reserves in excess of
current payments 9,141 12,886 9,897
Postretirement accruals in excess of
current payments 6,877 6,246 5,317
Decrease in advance purchase
allowances (5,051) (10,251) (10,690)
Other, net 3,249 4,540 2,121
Change in cash from:
Trade receivables (35,918) 51 (10,097)
Merchandise inventories (111,889) (19,521) (67,790)
Prepaid expenses (553) 264 (814)
Accounts payable and accrued expenses 8,496 3,110 44,183
Federal and state income taxes 29,926 (13,013) (5,453)
-------- ------- -------
Total adjustments 333,995 286,723 234,586
-------- ------- -------
Net cash provided by operating activities $796,404 664,997 589,208
======== ======= =======
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
December 25, 1999, December 26, 1998
and December 27, 1997
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Business
--------
The Company is in the business of operating retail food
supermarkets in Florida, Georgia, South Carolina and Alabama.
(b) Principles of Consolidation
---------------------------
The consolidated financial statements include the Company and
its wholly owned subsidiary. All significant intercompany
balances and transactions have been eliminated in consolidation.
(c) Definition of Fiscal Year
-------------------------
The fiscal year ends on the last Saturday in December. Fiscal
years 1999, 1998 and 1997 include 52 weeks.
(d) Cash Equivalents
----------------
The Company considers all liquid investments with maturities of
three months or less to be cash equivalents.
(e) Inventories
-----------
Inventories are valued at cost (principally the dollar value
last-in, first-out method) including store inventories which are
calculated by the retail method.
(f) Property, Plant and Equipment and Depreciation
----------------------------------------------
Assets are recorded at cost and are depreciated using the
straight-line method over their estimated useful life or the
term of their lease. Maintenance and repairs are charged to
expense as incurred. Expenditures for renewals and betterments
are capitalized. The gain or loss is applied to the asset
accounts for traded items or is reflected in income for disposed
items.
(g) Self-Insurance
--------------
Self-insurance reserves are established for health care, fleet
liability, general liability and workers' compensation claims.
These reserves are determined based on actual experience
including, where necessary, actuarial studies. The Company has
insurance coverage for losses in excess of varying amounts.
(h) Long-Lived Assets
-----------------
The Company periodically reviews its long-lived assets and
evaluates such assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset
may not be recoverable. Asset impairment is determined to exist
if the fair value of the asset is less than the carrying amount.
If an asset is impaired, a loss is recognized.
(i) Comprehensive Income
--------------------
The Company adopted Statement of Financial Accounting Standard
No. 130, "Reporting Comprehensive Income," (SFAS 130) beginning
with the quarter ended March 28, 1998. SFAS 130 sets forth
standards for the reporting of comprehensive income in the
financial statements. Comprehensive income includes net earnings
and other comprehensive income. Other comprehensive income
includes revenues, expenses, gains and losses that have been
excluded from net earnings and recorded directly in the
stockholders' equity section of the balance sheet.
(Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(j) Segment Information
-------------------
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 131, "Disclosures
about Segments of an Enterprise and Related Information," (SFAS
131) effective for fiscal years beginning after December 15,
1997. SFAS 131 provides accounting guidance for reporting
information about operating segments and requires interim
segment reporting. The Company operates in a single segment of
business. Therefore, there was no effect on the Company's
financial statements from the adoption of SFAS 131.
(k) Postretirement Benefits
-----------------------
In February 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standard No. 132,
"Employers' Disclosures about Pensions and Other Postretirement
Benefits," (SFAS 132) effective for fiscal years beginning after
December 15, 1997. SFAS 132 revises employers' disclosures about
pension and other postretirement benefit plans. SFAS 132 does
not change the measurement or recognition of those plans.
Therefore, the only effect from the adoption of SFAS 132 was in
the notes to the Company's consolidated financial statements.
(l) Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
(m) Reclassifications
-----------------
Certain 1998 and 1997 amounts have been reclassified to conform
with the 1999 presentation.
(2) Merchandise Inventories
-----------------------
If the first-in, first-out method of valuing inventories had been used
by the Company, inventories and current assets would have been higher
than reported by approximately $109,379,000, $108,096,000 and
$102,393,000 as of December 25, 1999, December 26, 1998 and December
27, 1997, respectively. Also, net earnings would have increased by
approximately $630,000 or less than $.01 per share in 1999, $2,799,000
or $.01 per share in 1998 and $423,000 or less than $.01 per share in
1997.
2 (Continued
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(3) Fair Value of Financial Instruments
-----------------------------------
The following methods and assumptions were used by the Company in
estimating the fair value of its financial instruments:
Cash and cash equivalents: The carrying amount for cash and cash
----------------------------
equivalents approximates fair value.
Investment securities: The fair values for marketable debt and equity
----------------------
securities are based on quoted market prices.
The carrying amount of the Company's financial instruments as of
December 25, 1999 and December 26, 1998 approximated their respective
fair values.
(4) Investments
-----------
Management determines the appropriate classification of debt securities
at the time of purchase and reevaluates such designation as of each
balance sheet date. Debt securities are classified as held-to-maturity
when the Company has the positive intent and ability to hold the
securities to maturity. Held-to-maturity securities are stated at cost,
adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization and accretion is included in other income,
net. The Company had no held-to-maturity securities as of December 25,
1999 and December 26, 1998.
All of the Company's debt securities and marketable equity securities
are classified as available-for-sale. Available-for-sale securities are
carried at fair value, with the unrealized gains and losses, net of
tax, reported as other comprehensive earnings and included as a
separate component of stockholders' equity. The cost of debt securities
in this category is adjusted for amortization of premiums and accretion
of discounts to maturity. Such amortization and accretion is included
in other income, net. Realized gains and losses and declines in value
judged to be other-than-temporary on available-for-sale securities are
included in other income, net. The cost of securities sold is based on
the specific identification method.
Following is a summary of available-for-sale securities as of
December 25, 1999 and December 26, 1998:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
(Amounts are in thousands)
1999:
Tax-free bonds $329,125 585 8,603 321,107
Taxable bonds 15,797 2,729 2,325 16,201
Equity securities 93,731 1,341 5,282 89,790
-------- ----- ------ -------
$438,653 4,655 16,210 427,098
======== ===== ====== =======
1998:
Tax-free bonds $247,751 2,501 661 249,591
Taxable bonds 9,252 65 1,009 8,308
Equity securities 130,872 3,868 5,026 129,714
-------- ----- ------ -------
$387,875 6,434 6,696 387,613
======== ===== ====== =======
3 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
For the fiscal years ended December 25, 1999, December 26, 1998 and
December 27, 1997, the realized gains on sales of available-for-sale
securities totaled $1,566,000, $4,176,000 and $1,540,000, respectively,
and the realized losses totaled $6,152,000, $11,416,000 and $1,125,000,
respectively.
The amortized cost and estimated fair value of debt and marketable
equity securities classified as available-for-sale as of
December 25, 1999 and December 26, 1998, by expected maturity, are as
follows:
1999 1998
------------------- --------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---- ----- ---- -----
(Amounts are in thousands)
Due in one year or less $ 28,513 28,233 2,351 2,042
Due after one year through
three years 33,687 34,618 36,832 37,519
Due after three years 282,722 274,457 217,820 218,338
-------- ------- ------- -------
344,922 337,308 257,003 257,899
Equity securities 93,731 89,790 130,872 129,714
-------- ------- ------- -------
$438,653 427,098 387,875 387,613
======== ======= ======= =======
(5) Accumulated Other Comprehensive Earnings
----------------------------------------
Accumulated other comprehensive earnings consists of net unrealized
gains (losses) on investment securities available-for-sale. Following
is a summary of the change in the balance of accumulated other
comprehensive earnings as of December 25, 1999 and December 26, 1998:
1999 1998
---- ----
(Amounts are in thousands)
Balance as of beginning of year $ (161) 4,464
Current period change (6,938) (4,625)
------- ------
Balance as of end of year $(7,099) (161)
======= ======
(6) Postretirement Benefits
-----------------------
The Company provides life insurance benefits for salaried and hourly
full-time employees. Such employees retiring from the Company on or
after attaining age 55 and having ten years of credited full-time
service are entitled to life insurance benefits. The Company funds the
life insurance benefits on a pay-as-you-go basis. During 1999, 1998 and
1997, the Company made benefit payments to beneficiaries of retirees of
approximately $1,877,000 and $1,361,000 and $1,271,000, respectively.
4 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The following tables provide a reconciliation of the changes in the
benefit obligations and fair value of plan assets and a statement of
the funded status as of December 25, 1999 and December 26, 1998:
1999 1998
---- ----
(Amounts are in thousands)
Change in benefit obligation:
Benefit obligation at beginning of year $ 61,937 54,017
Service cost 3,754 3,124
Interest cost 4,551 4,097
Actuarial (gain) loss (6,677) 2,060
Benefit payments (1,877) (1,361)
-------- ------
Benefit obligation at end of year $ 61,688 61,937
======== ======
Change in fair value of plan assets:
Fair value of plan assets at beginning
of year $ - -
Employer contributions 1,877 1,361
Benefit payments (1,877) (1,361)
-------- ------
Fair value of plan assets at end of year $ - -
======== ======
Funded status $(61,688) (61,937)
Unrecognized actuarial loss 5,953 13,079
-------- -------
Accrued postretirement benefit cost $(55,735) (48,858)
======== =======
Following are the actuarial assumptions that were used in the
calculation of the year end benefit obligation:
1999 1998 1997
---- ---- ----
Discount rate 7.75% 7.00% 7.25%
Rate of compensation increase 4.00% 4.00% 4.00%
Net periodic postretirement benefit cost consists of the following
components:
1999 1998 1997
---- ---- ----
(Amounts are in thousands)
Service cost $3,754 3,124 2,533
Interest cost 4,551 4,097 3,755
Recognized actuarial loss 449 386 300
------ ----- -----
Net periodic postretirement benefit cost $8,754 7,607 6,588
====== ===== =====
Actuarial losses are amortized over the average remaining service life
of active participants when the accumulation of such losses exceeds 10%
of the greater of the projected benefit obligation or the fair value of
plan assets.
5 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(7) Retirement Plans
----------------
The Company has a trusteed, noncontributory Profit Sharing Plan for the
benefit of eligible employees. The amount of the Company's contribution
to this plan is determined by the Board of Directors. The contribution
cannot exceed 15% of compensation paid to participants. The expense
recorded for contributions to this plan was approximately $92,731,000
in 1999, $73,048,000 in 1998 and $69,420,000 in 1997. Effective
December 31, 1999, the Company merged the Profit Sharing Plan into the
Employee Stock Ownership Plan (ESOP).
The Company has an ESOP for the benefit of eligible employees. Annual
contributions to the ESOP are determined by the Board of Directors and
can be made in Company stock or cash. The expense recorded for
contributions to this plan was approximately $90,256,000 in 1999,
$73,048,000 in 1998 and $69,420,000 in 1997.
The Company has a 401(k) plan for the benefit of eligible employees.
The 401(k) plan is a voluntary defined contribution plan. Eligible
employees may contribute up to 8% of their annual compensation, subject
to certain maximum contribution restrictions. The Company may make a
discretionary annual matching contribution to eligible participants of
this plan as determined by the Board of Directors. During 1999, 1998
and 1997, the Board of Directors approved a match of 50% of eligible
contributions up to 3% of eligible wages not to exceed a maximum of
$750 per employee. The match, which is made in the subsequent year, is
in the form of common stock of the Company. The expense recorded for
the Company's match to the 401(k) plan was approximately $12,715,000 in
1999, $11,484,000 in 1998 and $9,275,000 in 1997.
The Company intends to continue its retirement plans indefinitely;
however, the right to modify, amend, terminate or merge these plans has
been reserved. In the event of termination, all amounts contributed
under the plans must be paid to the participants or their
beneficiaries.
6 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(8) Income Taxes
------------
The provision for income taxes consists of the following:
Current Deferred Total
------- -------- -----
(Amounts are in thousands)
1999:
Federal $208,413 10,606 219,019
State 36,286 1,855 38,141
-------- ------ -------
$244,699 12,461 257,160
======== ====== =======
1998:
Federal $154,384 21,128 175,512
State 26,988 3,614 30,602
-------- ------ -------
$181,372 24,742 206,114
======== ====== =======
1997:
Federal $156,543 14,792 171,335
State 26,847 2,553 29,400
-------- ------ -------
$183,390 17,345 200,735
======== ====== =======
The actual tax expense for 1999, 1998 and 1997 differs from the
"expected" tax expense for those years (computed by applying the U.S.
Federal corporate tax rate of 35% to earnings before income taxes) as
follows:
1999 1998 1997
---- ---- ----
(Amounts are in thousands)
Computed "expected" tax expense $251,849 204,536 194,375
State income taxes (net of
Federal income tax benefit) 24,792 19,892 19,108
Tax exempt interest (13,466) (11,663) (9,291)
Other, net (6,015) (6,651) (3,457)
-------- ------- -------
$257,160 206,114 200,735
======== ======= =======
7 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities as of
December 25, 1999 and December 26, 1998 are as follows:
1999 1998
---- ----
(Amounts are in thousands)
Deferred tax assets:
Self-insurance reserves $ 63,446 59,906
Advance purchase allowances 23,731 25,347
Postretirement benefit cost 21,503 18,857
Retirement plan contributions 17,410 14,098
Inventory capitalization 8,020 7,383
Other 11,879 13,732
-------- -------
Total deferred tax assets $145,989 139,323
======== =======
Deferred tax liabilities:
Property, plant and equipment,
principally due to depreciation $222,733 208,123
Other 1,604 1,443
-------- -------
Total deferred tax liabilities $224,337 209,566
======== =======
The Company expects the results of future operations to generate
sufficient taxable income to allow utilization of deferred tax assets.
(9) Commitments and Contingencies
-----------------------------
(a) Operating Leases
----------------
The Company conducts a major portion of its retail operations
from leased store and shopping center premises generally under
20 year leases. Contingent rentals paid to lessors of certain
store facilities are determined on the basis of a percentage of
sales in excess of stipulated minimums plus, in certain cases,
reimbursement of taxes and insurance.
Total rental expense, net of sublease rental income, for the
years ended December 25, 1999, December 26, 1998 and
December 27, 1997, is as follows:
1999 1998 1997
---- ---- ----
(Amounts are in thousands)
Minimum rentals $178,812 167,536 154,727
Contingent rentals 10,685 10,259 9,835
Sublease rental income (7,028) (6,189) (4,366)
-------- ------- -------
$182,469 171,606 160,196
======== ======= =======
8 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
As of December 25, 1999, future minimum lease payments for all
noncancelable operating leases and related subleases are as
follows:
Minimum Sublease
Rental Rental
Year Commitments Income Net
---- ----------- ------ ---
(Amounts are in thousands)
2000 $ 186,674 6,025 180,649
2001 185,638 5,575 180,063
2002 183,937 4,173 179,764
2003 181,561 2,342 179,219
2004 178,325 1,371 176,954
Thereafter 1,627,733 1,183 1,626,550
---------- ------ ---------
$2,543,868 20,669 2,523,199
========== ====== =========
The Company also owns shopping centers which are leased to
tenants for minimum monthly rentals plus, in certain instances,
contingent rentals. Contingent rentals received are determined
on the basis of a percentage of sales in excess of stipulated
minimums plus, in certain instances, reimbursement of taxes.
Contingent rentals were estimated at December 25, 1999 and are
included in trade receivables. Rental income was approximately
$9,508,000 in 1999, $8,655,000 in 1998 and $9,622,000 in 1997.
The approximate amounts of minimum future rental payments to be
received under operating leases are $9,493,000, $7,446,000,
$5,721,000, $4,070,000 and $2,387,000 for the years 2000 through
2004, respectively, and $4,806,000 thereafter.
(b) Environmental
-------------
The Company accrues for losses associated with environmental
remediation obligations when such losses are probable and
reasonably estimable. Accruals for estimated losses from
environmental remediation obligations generally are recognized
no later than completion of the remedial feasibility study. Such
accruals are adjusted as further information develops or
circumstances change.
(c) Litigation
----------
A purported class action was filed against the Company on April
3, 1997 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").
In their Complaint, the plaintiffs allege that the Company has
and is currently engaged in a pattern and practice of race-based
discriminatory treatment of black employees and applicants with
respect to hiring, promotion, job assignment, conditions of
employment, and other employment aspects, all in violation of
Federal and state law. Subsequently, seven of the named
plaintiffs withdrew their claims with prejudice. The plaintiffs
sought, among other relief, a certification of the suit as a
class action, declaratory and injunctive relief, back pay, front
pay, benefits and other compensatory damages, and punitive
damages.
9 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
On March 22, 1999, the Court certified the suit as a class
action, but limited the class to those 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 black employees who
worked only in pharmacy operations. The Court denied the
plaintiffs' attempt to strike the demand that the Middleton case
be tried to a jury. The Court also, among other things, granted
the plaintiffs' motion to drop all claims for compensatory and
punitive damages.
Plaintiffs in the Middleton case still are seeking certification
of a subclass of unsuccessful applicants and have put forward a
new proposed class representative, Lydia Moultry. The parties
are awaiting a ruling from the Court regarding whether Ms.
Moultry can join the lawsuit and whether a subclass of
unsuccessful applicants will be included in the Middleton case.
Meanwhile, on July 26, 1999, the Court set the Middleton case
for trial by jury beginning January 2, 2001.
On November 6, 1997, another purported class action was filed
against the Company in the Court by Shirley Dyer and five other
present or former employees of the Company, individually and on
behalf of all other persons similarly situated (the "Dyer
case"). In their Complaint, the plaintiffs allege that the
Company has violated and is currently violating Federal and
state civil rights statutes by discriminating against female
employees and applicants with respect to hiring, promotion,
training, compensation, discipline, demotion and termination,
and/or retaliation for bringing allegations of discrimination.
The plaintiffs have moved to certify a class of all female
current, former and future Company employees and applicants in
all of the Company's manufacturing plants and distribution
centers with respect to certain claims. The plaintiffs seek,
among other relief, declaratory and injunctive relief, back pay,
front pay, benefits and other compensatory damages, and punitive
damages. The parties have briefed issues relating to class
certification, engaged in oral argument on those issues on April
16, 1999 and now await the Court's ruling.
On December 8, 1998, another purported class action was filed
against the Company in the Court by Charlene Jones, individually
and on behalf of other persons similarly situated (the "Jones
case"). In her Complaint, the plaintiff alleges that the Company
has violated and is currently violating Federal and state civil
rights statutes by discriminating against female applicants for
employment in the Company's manufacturing plants and
distribution centers. The plaintiffs in the Jones and Dyer cases
have asked the Court to combine the two cases. In papers filed
with the Court on April 16, 1999, the Jones case plaintiff
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 the
Jones case is not combined with the Dyer case.
On June 29, 1999, another purported class action was filed
against the Company in the Court by Lisa Lisenby, individually
and on behalf of other persons similarly situated (the "Lisenby
case"). In her Complaint, the plaintiff alleges that the Company
has violated and is currently violating Federal statutory law by
discriminating against female applicants and employees in the
Company's manufacturing plants and distribution centers. On
September 10, 1999, the Lisenby case plaintiff moved to combine
her case with the Dyer case.
10 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The Company denies the allegations of the plaintiffs in the
Middleton, Dyer, Jones and Lisenby cases and is vigorously
defending the actions. Although these cases are subject to the
uncertainties inherent in the litigation process, based on the
information presently available to the Company, management does
not expect the ultimate resolution of these actions to have a
material adverse effect on the Company's financial condition or
results of operations.
The Company is also 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 or results of operations.
11 (Continued)
Schedule II
-----------
PUBLIX SUPER MARKETS, INC.
Valuation and Qualifying Accounts
Years ended December 25, 1999, December 26, 1998
and December 27, 1997
(Amounts are in thousands)
Balance at Additions Deductions Balance at
beginning charged to from end of
Description of year income reserves year
----------- ------- ------ -------- ----
Year ended December 25, 1999
Reserves not deducted from assets:
Self-insurance reserves:
-Current $ 61,413 143,407 135,464 69,356
-Noncurrent 98,956 1,198 --- 100,154
-------- ------- ------- -------
$160,369 144,605 135,464 169,510
======== ======= ======= =======
Year ended December 26, 1998
Reserves not deducted from assets:
Self-insurance reserves:
-Current $ 57,415 127,479 123,481 61,413
-Noncurrent 90,068 8,888 --- 98,956
-------- ------- ------- -------
$147,483 136,367 123,481 160,369
======== ======= ======= =======
Year ended December 27, 1997
Reserves not deducted from assets:
Self-insurance reserves:
-Current $ 64,250 100,085 106,920 57,415
-Noncurrent 73,336 16,732 --- 90,068
-------- ------- ------- -------
$137,586 116,817 106,920 147,483
======== ======= ======= =======