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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 29, 2001
( ) 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.
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(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 5, 2002 was approximately $4,620,237,356.
The number of shares of Registrant's common stock outstanding as of March 5,
2002 was 199,021,562.
DOCUMENTS INCORPORATED BY REFERENCE
Pages 2 through 10 of Proxy Statement solicited for the 2002 Annual Meeting of
Stockholders to be held on May 14, 2002 are incorporated by reference in Items
10, 11, 12 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 subsidiaries, hereinafter collectively referred to as the
"Company," are 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.
The Company's supermarkets sell groceries, dairy, produce, deli, bakery,
meat, seafood, housewares and health and beauty care items. Many stores have
pharmacy 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 684 supermarkets at the end of 2001, compared with 647
at the beginning of the year. In 2001, 52 stores were opened, 15 stores were
closed, and 79 stores were expanded or remodeled. The net increase in square
footage was 1.7 million square feet or 5.8% since 2000. At the end of 2001, the
Company had 533 stores located in Florida, 124 in Georgia, 23 in South Carolina
and four in Alabama. Also, as of year end, the Company had 28 stores under
construction in Florida, six in Georgia, three in South Carolina and one in
Alabama. Additionally, during 2001 the Company operated a fulfillment center to
support an online grocery shopping service and two convenience stores.
The Company is engaged in a highly competitive industry. Competition is
based primarily on price, quality of goods and service, convenience and product
mix. The Company's primary competition throughout its market areas is with
several national and regional chains, independent stores, supercenters,
membership warehouse clubs and mass merchandisers. The Company anticipates
continued competitor format innovation and location additions in 2002.
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 126,000 employees at the end of 2001 and
2000. Of this total, approximately 69,700 at the end of 2001 and 71,500 at the
end of 2000 were not full-time employees.
Compliance by the Company with Federal, state and local environmental
protection laws during 2001 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 30.9 million square feet of
retail space. The Company's stores vary in size. Current store prototypes range
from 27,000 to 61,000 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 62 locations, both the building and land are
owned and at 30 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
- --------------------------
The Company is a party in various legal claims and actions considered in
the normal course of business. In the opinion of management, the ultimate
resolution of these legal proceedings will not have a material adverse effect on
the Company's financial condition, results of operations or cash flows.
Item 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
- ---- --- -------- ---------------- -----
Charles H. Jenkins, Jr. 58 Chief Executive Cousin of 1974
Officer W. Edwin Crenshaw
W. Edwin Crenshaw 51 President Cousin of 1990
Charles H. Jenkins, Jr.
Hoyt R. Barnett 58 Vice Chairman 1977
John A. Attaway, Jr. 43 Secretary 2000
Jesse L. Benton 59 Vice President 1988
David E. Bornmann 44 Vice President 1998
David E. Bridges 52 Vice President 2000
Joseph W. Carvin 51 Vice President 1998
R. Scott Charlton 43 Vice President 1992
David S. Duncan 48 Vice President 1999
William V. Fauerbach 55 Vice President 1997
John R. Frazier 52 Vice President 1997
M. Clayton Hollis, Jr. 45 Vice President 1994
Mark R. Irby 46 Vice President 1989
Tina P. Johnson 42 Senior Vice President 1990
Linda S. Kane 36 Assistant Secretary 2000
James J. Lobinsky 62 Senior Vice President 1992
Thomas M. McLaughlin 51 Vice President 1994
Sharon A. Miller 58 Assistant Secretary 1992
Robert H. Moore 59 Vice President 1994
Dale S. Myers 49 Vice President 2001
Thomas M. O'Connor 54 Senior Vice President 1992
David P. Phillips 42 Chief Financial 1990
Officer and Treasurer
James H. Rhodes II 57 Vice President 1995
EXECUTIVE OFFICERS OF THE COMPANY
---------------------------------
Served as
Nature of Family Officer of
Relationship Company
Name Age Position Between Officers Since
- ---- --- -------- ---------------- -----
Daniel M. Risener 61 Senior Vice President 1985
and Chief Information
Officer
Richard J. Schuler II 46 Vice President 2000
Edward T. Shivers 62 Vice President 1985
The terms of all officers expire at the annual meeting of the Company in May
2002.
Name Business Experience During Last Five Years
- ---- ------------------------------------------------------
Charles H. Jenkins, Jr. Chairman of the Executive Committee of the Company to
June 2000, Chairman of the Executive Committee and
Chief Operating Officer to May 2001, Chief Executive
Officer thereafter.
W. Edwin Crenshaw President of the Company.
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.
John A. Attaway, Jr. Partner in the law firm of Lane Trohn to December
1997, Corporate Counsel of the Company to May 2000,
General Counsel and Secretary thereafter.
Jesse L. Benton Vice President of the Company.
David E. Bornmann Business Development Manager - Corporate Purchasing of
the Company to October 1998, Vice President
thereafter.
David E. Bridges Regional Director of Retail Operations - Lakeland
Division of the Company to July 2000, 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.
David S. Duncan Director of Facility Services of the Company to
November 1999, 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 Director of Real Estate of the Company 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 Vice President, Treasurer and Trustee of the 401(k)
Plan - Publix Stock Fund of the Company to July 1997,
Senior Vice President and Trustee of the 401(k) Plan -
Publix Stock Fund thereafter.
Linda S. Kane Treasury and Tax Analyst of the Company to January
1997, Manager of Business Analysis to May 1998,
Director of Benefits Administration to June 2000,
Director of Benefits Administration and Assistant
Secretary 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.
Dale S. Myers Regional Director of Retail Operations - Lakeland
Division of the Company to July 2001, Vice President
thereafter.
Thomas M. O'Connor Vice President of the Company to November 1999, Senior
Vice President thereafter.
David P. Phillips Vice President and Controller of the Company to July
1997, Vice President Finance and Treasurer to July
1999, Chief Financial Officer and Treasurer
thereafter.
James H. Rhodes II Vice President of the Company.
Daniel M. Risener Vice President of the Company to July 1999, Senior
Vice President and Chief Information Officer
thereafter.
Richard J. Schuler II Miami Distribution Manager of the Company to June
2000, Vice President thereafter.
Edward T. Shivers Vice President of the Company.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
- --------------------------------------------------------------------------
Matters
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(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 quarterly appraisals prepared by an independent appraiser. The market
price for 2001 and 2000 was as follows:
2001 2000
---- ----
January - February $47.00 $44.50
March - April 48.25 45.00
May - July 48.50 45.50
August - October 47.50 46.50
November - December 41.00 47.00
(b) Approximate Number of Equity Security Holders
---------------------------------------------
As of March 5, 2002, the approximate number of holders of the Company's
common stock was 87,000.
(c) Dividends
---------
The Company paid cash dividends of $.32 per share of common stock in 2001
and $.27 per share in 2000. 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
- -----------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Sales:
Sales $15,284,229 14,575,031 13,068,900 12,067,125 11,224,378
Percent increase 4.9% 11.5% 8.3% 7.5% 7.6%
Comparable store sales
percent increase 3.2% 3.4% 5.0% 3.6% 3.3%
Earnings:
Gross profit $ 3,983,942 3,762,854 3,294,188 2,935,707 2,674,118
Earnings before income
tax expense $ 826,823 823,553 719,569 584,388 555,357
Net earnings $ 530,421 530,406 462,409 378,274 354,622
Net earnings as a
percent of sales 3.47% 3.64% 3.54% 3.13% 3.16%
Common stock:
Weighted average
shares outstanding 202,171,794 210,145,666 216,160,316 217,383,413 218,871,661
Basic and diluted
earnings per
common share,
based on weighted
average shares
outstanding $ 2.62 2.52 2.14 1.74 1.62
Cash dividends per
share $ .32 .27 .22 .20 .15
Financial data:
Capital expenditures $ 656,422 558,133 512,658 357,754 259,806
Working capital $ 33,739 176,776 515,257 467,385 366,680
Current ratio 1.03 1.14 1.47 1.46 1.37
Total assets $ 4,405,785 4,248,045 4,098,641 3,643,318 3,294,980
Stockholders' equity $ 2,762,551 2,662,435 2,676,144 2,327,632 2,019,299
Other:
Number of stores 684 647 614 586 563
NOTE: Amounts are in thousands, except shares outstanding, per share amounts
and number of stores. Fiscal year 2000 includes 53 weeks. All other
years include 52 weeks.
Certain prior year amounts have been reclassified to conform to the 2001
presentation.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
-------------
Business Environment
- --------------------
As of December 29, 2001, the Company operated 684 retail grocery stores
representing approximately 30.9 million square feet of retail space.
Additionally, during 2001 the Company operated a fulfillment center to support
an online grocery shopping service and two convenience stores. The Company's
primary competition is from national and regional chains and smaller
independents located throughout its market areas. The Company has continued to
experience increased competition from supercenters, membership warehouse clubs
and mass merchandisers. The products offered by these retailers include many of
the same items sold by the Company.
At the end of fiscal 2001, the Company had 533 stores located in Florida,
124 in Georgia, 23 in South Carolina and four in Alabama. The Company opened 39
stores in Florida and 13 stores in Georgia during 2001. 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 $1,057.4
million in 2001, compared with $1,058.1 million in 2000 and $796.4 million in
1999. Cash and cash equivalents aggregated approximately $251.3 million as of
December 29, 2001, as compared with $396.9 million and $626.6 million as of
December 30, 2000 and December 25, 1999, respectively.
In 2001, capital expenditures totaled $656.4 million. These expenditures
were primarily incurred in connection with the opening of 52 new stores and
remodeling or expanding 79 stores. Significant expenditures were also incurred
in the expansion of warehouses in Lakeland, Florida and the development of an
online grocery shopping service, PublixDirect. In addition, the Company closed
15 stores. The net impact of new and closed stores (net new stores) added an
additional 1.7 million square feet, a 5.8% increase. In 2000, capital
expenditures totaled $558.1 million. These expenditures were primarily incurred
in connection with the opening of 46 new stores and remodeling or expanding 69
stores. Significant expenditures were also incurred in the expansion of
warehouses in Lakeland, Florida. In addition, the Company closed 13 stores. Net
new stores added an additional 1.5 million square feet, a 5.3% increase. In
1999, capital expenditures totaled $512.7 million. 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. Net new stores added an additional 1.4 million square
feet, a 5.3% increase.
In 2002, the Company plans to open approximately 67 stores. Although real
estate development is unpredictable, the Company's 2002 new store growth
represents a reasonable estimate of anticipated future growth. Capital
expenditures for 2002, consisting of new stores, warehouse and office
construction, remodeling and expanding of certain existing stores and new or
enhanced information technology applications, are expected to be approximately
$765 million. This capital program is subject to continuing change and review.
The 2002 capital expenditures are expected to be financed by internally
generated funds, liquid assets or the committed line of credit described below.
In the normal course of operations, the Company replaces stores and closes
unprofitable stores. The impact of future store closings is not expected to be
material.
During 2001, the Company launched an online grocery shopping service under
a new wholly owned subsidiary, PublixDirect. The online grocery shopping service
enables customers within certain geographical boundaries to order groceries
online and have them delivered to their homes. The customer orders are filled
and delivered from a fulfillment center. During 2001, the Company incurred
approximately $25.5 million in capital expenditures on behalf of PublixDirect
for the development of the online grocery service web site and the construction
of a fulfillment center in Pompano Beach, Florida.
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 $229.2 million, $177 million and $144.6
million in fiscal 2001, 2000 and 1999, 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.
In December 2001, the Company executed an agreement for a committed line of
credit totaling $100 million. This 364-day line of credit facility is available
to fund liquidity requirements if necessary. The interest rate is based on LIBOR
or prime. There were no amounts outstanding on this line of credit as of
December 29, 2001.
The Company currently repurchases common stock at the stockholders' request
in accordance with the terms of the Company's Employee Stock Purchase Plan. Net
common stock repurchases under this plan totaled approximately $579.6 million,
$635 million and $211.2 million in fiscal 2001, 2000 and 1999, respectively. 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.
The Company paid cash dividends on its common stock of $66.3 million or
$.32 per share, $57.8 million or $.27 per share and $47.8 million or $.22 per
share in 2001, 2000 and 1999, respectively.
Net cash provided by operating activities was approximately $1,057.4
million, $1,058.1 million and $796.4 million for 2001, 2000 and 1999,
respectively. The primary use of the net cash provided by operating activities
was funding capital expenditures of $656.4 million, $558.1 million and $512.7
million and net common stock repurchases of $579.6 million, $635 million and
$211.2 million for 2001, 2000 and 1999, respectively. Any net cash in excess of
the amount needed for current operations is invested in short-term and long-term
investments. Cash and cash equivalents, short-term investments and long-term
investments totaled approximately $595.6 million in 2001 compared with $852.2
million in 2000. Based on the Company's financial position, it is expected that
short-term and long-term borrowings would be readily available to support the
Company's liquidity requirements if needed.
Results of Operations
- ---------------------
The Company's fiscal year ends on the last Saturday in December. Fiscal
years 2001 and 1999 included 52 weeks and fiscal year 2000 included 53 weeks.
Sales for 2001 were $15.3 billion as compared with $14.6 billion in 2000, a
4.9% increase. After excluding sales of $288.8 million for the extra week
included in fiscal 2000, this reflects an increase of $457.2 million or 3.2% in
sales from stores that were open for all of both years (comparable stores) and
sales of $540.8 million or 3.8% from net new stores since the beginning of 2000.
Sales for 2000 were $14.6 billion as compared with $13.1 billion in 1999, an
11.5% increase. This reflects an increase of $288.8 million or 2.2% in sales
from an additional week included in the 2000 fiscal year, $444.3 million or 3.4%
in sales from comparable stores and sales of $773 million or 5.9% from net new
stores since the beginning of 1999.
Cost of merchandise sold including store occupancy, warehousing and
delivery expenses was approximately 73.9% of sales in 2001 as compared with
74.2% and 74.8% in 2000 and 1999, respectively. In 2001, 2000 and 1999, cost of
merchandise sold decreased as a percentage of sales due to continuing
improvements in buying practices including centralized product procurement,
promotional efficiencies including category management, shrink reduction, a
shifting of the sales mix toward higher margin value-added products and more
efficient distribution channels.
Operating and administrative expenses, as a percent of sales, were 21.6%,
21.2% and 20.7% in 2001, 2000 and 1999, respectively. The increases in operating
and administrative expenses, as a percentage of sales, were primarily due to
increases in workers' compensation, health and other insurance costs, repair and
maintenance, depreciation and utility costs.
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.
During the fourth quarter of 2000, an $11.7 million expense was recorded to
cover the settlement of class action litigation against the Company involving
alleged violations of the Federal Civil Rights Act and Florida law with respect
to certain of the Company's black employees and former black employees. The
expense recorded covers the full cost of the settlement, including agreed
payments to class members and their counsel, as well as the estimated cost of
implementing and complying with the procedures agreed to be established under
the settlement. The impact of the expense recorded on net earnings was
approximately $5.7 million or $.03 per share for fiscal 2000. The liability for
the settlement was reflected as an other accrued expense in the Company's
consolidated balance sheet as of December 30, 2000.
Due to the events of September 11, 2001, there has been a general decline
in tourism. The decline in tourism has impacted sales in the Company's stores in
seasonal locations during the last half of the fourth quarter.
Accounting Standards
- --------------------
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 141, "Business Combinations," (SFAS 141) and
Statement of Financial Accounting Standard No. 142, "Goodwill and Other
Intangible Assets," (SFAS 142). SFAS 141 requires that all business combinations
initiated after June 30, 2001 be accounted for under the purchase method and
addresses the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination. The Company was required
to adopt SFAS 141 immediately. Since the Company has not completed any business
combinations since June 30, 2001, there was no effect on the Company from the
adoption of SFAS 141. SFAS 142 addresses the initial recognition and measurement
of intangible assets acquired outside of a business combination and the
accounting for goodwill and other intangible assets subsequent to their
acquisition. SFAS 142 provides that intangible assets with finite useful lives
be amortized and that goodwill and intangible assets with indefinite useful
lives will not be amortized, but instead will be tested at least annually for
impairment. SFAS 142 is effective for fiscal years beginning after December 15,
2001. The Company does not have any goodwill or intangible assets as defined in
SFAS 142. Therefore, the adoption of SFAS 142 will have no effect on the
Company's financial condition, results of operations or cash flows.
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 143, "Accounting for Asset Retirement
Obligations," (SFAS 143) effective for fiscal years beginning after June 15,
2002. SFAS 143 addresses the financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. SFAS 143 requires the Company to record the fair value
of an asset retirement obligation as a liability in the period in which it
incurs a legal obligation associated with the retirement of tangible long-lived
assets. The Company would also record a corresponding asset which is depreciated
over the life of the asset. Subsequent to the initial measurement of the asset
retirement obligation, the obligation will be adjusted at the end of each period
to reflect the passage of time and changes in the estimated future cash flows
underlying the obligation. The Company is currently evaluating the effect of
adopting SFAS 143.
In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," (SFAS 144) effective for fiscal years beginning
after December 15, 2001. SFAS 144 addresses the financial accounting and
reporting for the impairment or disposal of long-lived assets. This statement
requires that long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If the carrying amount of an asset exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by
which the carrying amount of the asset exceeds the fair value of the asset. SFAS
144 requires companies to separately report discontinued operations and extends
that reporting to a component of an entity that either has been disposed of (by
sale, abandonment, or in distribution to owners) or is classified as held for
sale. Assets to be disposed of are reported at the lower of the carrying amount
or the fair value less costs to sell. The adoption of SFAS 144 will have no
effect on the Company's financial condition, results of operations or cash
flows.
Critical Accounting Policies
- ----------------------------
The Company's discussion and analysis of its financial condition and
results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements 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. The Company's significant
accounting policies are described in Note 1 of the Notes to Consolidated
Financial Statements. The Company believes the following critical accounting
policies reflect its more significant judgments and estimates used in the
preparation of its consolidated financial statements:
Inventories
-----------
Inventories are valued at the lower of cost (principally the dollar value
last-in, first-out ("LIFO") method) or market value, including store
inventories, which are calculated by the retail method. Approximately 86%
of inventories for 2001 and 2000 were valued using the LIFO method. All
remaining inventory is valued at the lower of cost (using the first-in,
first-out ("FIFO") method) or market value. The FIFO cost of inventory
approximates replacement or current cost.
Property, Plant and Equipment and Depreciation
----------------------------------------------
Assets are recorded at cost and are depreciated using the straight-line
method over their estimated useful lives or the terms of their leases, if
shorter, as follows: buildings and improvements are at 10 - 40 years,
furniture, fixtures and equipment are at 3 - 20 years and leasehold
improvements are at 10 - 40 years.
Long-Lived Assets
-----------------
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the net book value of an asset may
not be recoverable. Recoverability is measured by a comparison of the net
book value of an asset to the future net undiscounted cash flows expected
to be generated by the asset. An impairment loss would be recorded for the
excess of the net book value over the fair value of the asset impaired. The
fair value is estimated based on expected discounted future cash flows.
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.
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 and stability of product
costs. Other factors and assumptions not identified above could also cause the
actual results to differ materially from those set forth in the forward-looking
statements. The Company assumes no obligation to update publicly these
forward-looking statements.
Item 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 Supplementary 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 and Executive Officers of the Registrant
- -----------------------------------------------------------
Certain information concerning the directors and executive officers of the
Company is incorporated by reference to pages 2 through 7 of the Proxy Statement
of the Company (2002 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 7 through 10 of the 2002 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
Information regarding security ownership is incorporated by reference to
pages 5 through 7 of the 2002 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
Information regarding certain relationships and related transactions is
incorporated by reference to pages 3, 6 and 7 of the 2002 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 29, 2001.
(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.
10. Indemnification Agreement, in the form attached as an exhibit to
the quarterly report of the Company on Form 10-Q for the quarter
ended March 31, 2001, between the Company and all of its directors
and officers as reported in the quarterly reports of the Company on
Form 10-Q for the quarters ended March 31, 2001, June 30, 2001 and
September 29, 2001.
10.1 Non-Employee Directors Stock Purchase Plan Summary Plan
Description, as registered in the Form S-8 filed with the
Securities and Exchange Commission on June 21, 2001, is
incorporated by reference to the exhibits to the quarterly report
of the Company on Form 10-Q for the quarter ended June 30, 2001.
21. Subsidiaries of the Company.
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 14, 2002 By: /s/ John A. Attaway, Jr.
------------------------
John A. Attaway, Jr.
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 and
/s/ Howard M. Jenkins Director March 14, 2002
- ---------------------------
Howard M. Jenkins
Chief Executive Officer and
Director
/s/ Charles H. Jenkins, Jr. (Principal Executive Officer) March 14, 2002
- ---------------------------
Charles H. Jenkins, Jr.
/s/ W. Edwin Crenshaw President and Director March 14, 2002
- ---------------------------
W. Edwin Crenshaw
/s/ Hoyt R. Barnett Vice Chairman and Director March 14, 2002
- ---------------------------
Hoyt R. Barnett
Senior Vice President
/s/ Tina P. Johnson and Director March 14, 2002
- ---------------------------
Tina P. Johnson
Chief Financial Officer
and Treasurer
(Principal Financial and
/s/ David P. Phillips Accounting Officer) March 14, 2002
- ---------------------------
David P. Phillips
PUBLIX SUPER MARKETS, INC.
Index to Consolidated Financial Statements and Schedule
Independent Auditors' Report
Consolidated Financial Statements:
Consolidated Balance Sheets - December 29, 2001 and December 30, 2000
Consolidated Statements of Earnings - Years ended December 29, 2001, December
30, 2000 and December 25, 1999
Consolidated Statements of Comprehensive Earnings - Years ended December 29,
2001, December 30, 2000 and December 25, 1999
Consolidated Statements of Stockholders' Equity - Years ended December 29,
2001, December 30, 2000 and December 25, 1999
Consolidated Statements of Cash Flows - Years ended December 29, 2001,
December 30, 2000 and December 25, 1999
Notes to Consolidated Financial Statements
The following consolidated financial statement schedule of the Company for the
years ended December 29, 2001, December 30, 2000 and December 25, 1999 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
----------------------------
The Board of Directors and Stockholders
Publix Super Markets, Inc.:
We have audited the consolidated financial statements of Publix Super Markets,
Inc. and subsidiaries (the "Company") as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the 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. and subsidiaries as of December 29, 2001 and December 30, 2000,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 29, 2001, in conformity with accounting
principles generally accepted in the United States of America. Also in our
opinion, the related 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 28, 2002
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 29, 2001 and
December 30, 2000
Assets 2001 2000
------ ---- ----
(Amounts are in thousands)
Current assets:
Cash and cash equivalents $ 251,337 396,906
Short-term investments 5,176 21,028
Trade receivables 129,435 128,351
Merchandise inventories 840,115 814,985
Deferred tax assets 54,172 55,598
Prepaid expenses 3,001 2,274
---------- ---------
Total current assets 1,283,236 1,419,142
---------- ---------
Long-term investments 339,048 434,226
Other noncurrent assets 43,911 28,354
Property, plant and equipment:
Land 132,518 119,016
Buildings and improvements 899,277 765,825
Furniture, fixtures and equipment 2,267,850 2,033,736
Leasehold improvements 651,467 537,417
Construction in progress 191,695 201,258
---------- ---------
4,142,807 3,657,252
Less accumulated depreciation 1,403,217 1,290,929
---------- ---------
Net property, plant and equipment 2,739,590 2,366,323
---------- ---------
$4,405,785 4,248,045
========== =========
See accompanying notes to consolidated financial statements. (Continued)
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 29, 2001 and
December 30, 2000
Liabilities and Stockholders' Equity 2001 2000
------------------------------------ ---- ----
(Amounts are in thousands,
except share amounts)
Current liabilities:
Accounts payable $ 691,071 676,924
Accrued expenses:
Salaries and wages 56,560 57,090
Contribution to retirement plans 232,925 250,832
Self-insurance reserves 103,048 84,095
Other 152,863 143,757
---------- ---------
Total accrued expenses 545,396 535,774
---------- ---------
Federal and state income taxes 13,030 29,668
---------- ---------
Total current liabilities 1,249,497 1,242,366
Deferred tax liabilities, net 172,440 152,830
Self-insurance reserves 137,474 109,423
Accrued postretirement benefit cost 70,151 62,986
Other noncurrent liabilities 13,672 18,005
---------- ---------
Total liabilities 1,643,234 1,585,610
---------- ---------
Stockholders' equity:
Common stock of $1 par value. Authorized
300,000,000 shares; issued and outstanding
197,111,536 shares in 2001 and 204,972,803
shares in 2000 197,112 204,973
Additional paid-in capital 343,834 212,947
Reinvested earnings 2,226,768 2,252,661
---------- ---------
2,767,714 2,670,581
Accumulated other comprehensive earnings (5,163) (8,146)
---------- ---------
Total stockholders' equity 2,762,551 2,662,435
Commitments and contingencies --- ---
---------- ---------
$4,405,785 4,248,045
========== =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Earnings
Years ended December 29, 2001, December 30, 2000
and December 25, 1999
2001 2000 1999
---- ---- ----
(Amounts are in thousands,
except shares outstanding and
per share amounts)
Revenues:
Sales $ 15,284,229 14,575,031 13,068,900
Other operating income 85,790 77,710 72,756
------------ ----------- -----------
Total revenues 15,370,019 14,652,741 13,141,656
------------ ----------- -----------
Costs and expenses:
Cost of merchandise sold, including
store occupancy, warehousing
and delivery expenses 11,300,287 10,812,177 9,774,712
Operating and administrative
expenses 3,301,652 3,083,122 2,706,320
------------ ----------- -----------
Total costs and expenses 14,601,939 13,895,299 12,481,032
------------ ----------- -----------
Operating profit 768,080 757,442 660,624
------------ ----------- -----------
Investment income, net 38,353 50,426 46,714
Other income, net 20,390 15,685 12,231
------------ ----------- -----------
Earnings before income tax expense 826,823 823,553 719,569
Income tax expense 296,402 293,147 257,160
------------ ----------- -----------
Net earnings $ 530,421 530,406 462,409
============ =========== ===========
Weighted average number of common
shares outstanding 202,171,794 210,145,666 216,160,316
=========== =========== ===========
Basic and diluted earnings per common
share based on weighted average
shares outstanding $ 2.62 2.52 2.14
============ =========== ===========
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Comprehensive Earnings
Years ended December 29, 2001, December 30, 2000
and December 25, 1999
2001 2000 1999
---- ---- ----
(Amounts are in thousands)
Net earnings $530,421 530,406 462,409
Other comprehensive earnings
Unrealized gain (loss) on investment
securities available-for-sale,
net of tax effect of $1,704,
($1,253) and ($6,089) in 2001,
2000 and 1999, respectively 2,713 (1,995) (9,707)
Reclassification adjustment for net
realized loss on investment securities
available-for-sale, net of tax effect
of $170, $595 and $1,733 in 2001,
2000 and 1999, respectively 270 948 2,769
-------- ------- -------
Comprehensive earnings $533,404 529,359 455,471
======== ======= =======
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Stockholders' Equity
Years ended December 29, 2001, December 30, 2000
and December 25, 1999
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 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
Comprehensive earnings for the year --- --- 530,406 --- (1,047) 529,359
Cash dividends, $.27 per share --- --- (57,816) --- --- (57,816)
Contribution of 3,319,596 shares to
retirement plans --- 1,505 --- 148,251 --- 149,756
16,464,016 shares acquired from stockholders --- --- --- (751,479) --- (751,479)
Sale of 2,549,273 shares to stockholders 347 15,090 --- 101,034 --- 116,471
Retirement of 10,941,939 shares (10,942) --- (491,252) 502,194 --- ---
-------- ------- --------- ------- ------- ---------
Balances at December 30, 2000 204,973 212,947 2,252,661 --- (8,146) 2,662,435
Comprehensive earnings for the year --- --- 530,421 --- 2,983 533,404
Cash dividends, $.32 per share --- --- (66,284) --- --- (66,284)
Contribution of 4,404,719 shares to
retirement plans --- 1,738 --- 210,855 --- 212,593
14,249,727 shares acquired from stockholders --- 357 --- (670,665) --- (670,308)
Sale of 1,983,741 shares to stockholders 2,744 128,792 --- (40,825) --- 90,711
Retirement of 10,605,219 shares (10,605) --- (490,030) 500,635 --- ---
-------- ------- --------- ------- ------- ---------
Balances at December 29, 2001 $197,112 343,834 2,226,768 --- (5,163) 2,762,551
======== ======= ========= ======= ======= =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
Years ended December 29, 2001, December 30, 2000
and December 25, 1999
2001 2000 1999
---- ---- ----
(Amounts are in thousands)
Cash flows from operating activities:
Cash received from customers $ 15,365,329 14,675,826 13,120,450
Cash paid to employees and suppliers (13,861,595) (13,235,049) (12,021,554)
Dividends and interest received 42,228 56,358 55,329
Income taxes paid (293,877) (276,433) (214,773)
Payment for self-insured claims (182,180) (153,021) (135,464)
Other operating cash receipts 873 826 751
Other operating cash payments (13,364) (10,367) (8,335)
------------ ---------- ----------
Net cash provided by operating
activities 1,057,414 1,058,140 796,404
------------ ---------- ----------
Cash flows from investing activities:
Payment for property, plant and
equipment (656,422) (558,133) (512,658)
Proceeds from sale of property, plant
and equipment 2,550 4,390 2,679
Payment for investment securities -
available-for-sale (AFS) (173,061) (111,143) (190,003)
Proceeds from sale and maturity of
investment securities - AFS 285,072 75,349 130,609
Other, net (15,241) (5,247) (10,515)
------------ ---------- ----------
Net cash used in investing activities (557,102) (594,784) (579,888)
------------ ---------- ----------
Cash flows from financing activities:
Proceeds from sale of common stock 90,711 116,471 281,663
Payment for acquisition of common stock (670,308) (751,479) (492,892)
Dividends paid (66,284) (57,816) (47,846)
Other, net --- (262) (131)
------------ ---------- ----------
Net cash used in financing activities (645,881) (693,086) (259,206)
------------ ---------- ----------
Net decrease in cash and cash equivalents (145,569) (229,730) (42,690)
Cash and cash equivalents at beginning
of year 396,906 626,636 669,326
------------ ---------- ----------
Cash and cash equivalents at end of year $ 251,337 396,906 626,636
============ ========== ==========
See accompanying notes to consolidated financial statements. (Continued)
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
(Continued)
2001 2000 1999
---- ---- ----
(Amounts are in thousands)
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings $ 530,421 530,406 462,409
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 259,682 226,950 199,428
Retirement contributions paid or payable
in common stock 196,582 218,790 193,227
Deferred income taxes 19,163 19,542 12,461
Loss on sale of property, plant and
equipment 20,966 15,683 20,015
Loss on sale of investments 439 1,543 4,586
Self-insurance reserves in excess of
current payments 47,004 24,008 9,141
Postretirement accruals in excess of
current payments 7,165 7,251 6,877
Decrease in advance purchase
allowances (4,333) (6,261) (5,051)
Other, net 3,077 3,922 3,249
Change in cash from:
Trade receivables (27,309) 9,743 (40,768)
Merchandise inventories (25,130) (45,531) (111,889)
Prepaid expenses (727) 168 (553)
Accounts payable and accrued expenses 47,052 54,754 13,346
Federal and state income taxes (16,638) (2,828) 29,926
---------- --------- -------
Total adjustments 526,993 527,734 333,995
---------- --------- -------
Net cash provided by operating activities $1,057,414 1,058,140 796,404
========== ========= =======
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
December 29, 2001, December 30, 2000
and December 25, 1999
(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. The Company operates
in a single industry segment.
(b) Principles of Consolidation
---------------------------
The consolidated financial statements include the Company and its
wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
(c) Fiscal Year
-----------
The fiscal year ends on the last Saturday in December. Fiscal years
1999 and 2001 include 52 weeks. Fiscal year 2000 includes 53 weeks.
(d) Cash Equivalents
----------------
The Company considers all liquid investments with maturities of three
months or less to be cash equivalents.
(e) Trade Receivables
-----------------
Trade receivables primarily includes amounts due from credit card
sales, third party insurance pharmacy billings and uncollected vendor
allowances.
(f) Inventories
-----------
Inventories are valued at the lower of cost (principally the dollar
value last-in, first-out ("LIFO") method) or market value, including
store inventories, which are calculated by the retail method.
Approximately 86% of inventories for 2001 and 2000 were valued using
the LIFO method. All remaining inventory is valued at the lower of
cost (using the first-in, first-out ("FIFO") method) or market value.
The FIFO cost of inventory approximates replacement or current cost.
(g) Investments
-----------
The Company 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
investment income, net. The Company had no held-to-maturity securities
as of December 29, 2001 and December 30, 2000.
(Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
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 investment income, net. Realized gains and
losses and declines in value judged to be other-than-temporary on
available-for-sale securities are included in investment income, net.
The cost of securities sold is based on the specific identification
method.
Interest income is accrued as earned. Dividend income is recognized as
income on the ex-dividend date of the stock.
(h) Property, Plant and Equipment and Depreciation
----------------------------------------------
Assets are recorded at cost and are depreciated using the
straight-line method over their estimated useful lives or the terms of
their leases, if shorter, as follows:
Buildings and improvements 10 - 40 years
Furniture, fixtures and equipment 3 - 20 years
Leasehold improvements 10 - 40 years
Maintenance and repairs are charged to operating expenses as incurred.
Expenditures for renewals and betterments are capitalized. The gain or
loss realized on assets traded is applied to the asset accounts in the
consolidated balance sheets. The gain or loss realized on disposed
assets or assets to be disposed of is recorded in operating expenses
in the consolidated statements of earnings.
(i) Capitalized Computer Software Costs
-----------------------------------
The Company capitalizes certain costs incurred in connection with
developing or obtaining software for internal use in accordance with
Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." These costs are
capitalized and amortized over a three year life. The amounts
capitalized were approximately $24,611,000 and $6,024,000 for the
fiscal years ended December 29, 2001 and December 30, 2000,
respectively.
(j) Long-Lived Assets
-----------------
The Company reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the net book value of
an asset may not be recoverable. Recoverability is measured by a
comparison of the net book value of an asset to the future net
undiscounted cash flows expected to be generated by the asset. An
impairment loss would be recorded for the excess of the net book value
over the fair value of the asset impaired. The fair value is estimated
based on expected discounted future cash flows.
(k) 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.
2 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(l) Comprehensive Earnings
----------------------
Comprehensive earnings includes net earnings and other comprehensive
earnings. Other comprehensive earnings includes revenues, expenses,
gains and losses that have been excluded from net earnings and
recorded directly to stockholders' equity. Included in other
comprehensive earnings for the Company are unrealized gains and losses
on available-for-sale securities.
(m) Revenue Recognition
-------------------
Revenue is recognized at the point of sale for retail sales. Vendor
coupons and other sales incentives that are reimbursed are accounted
for as sales. Coupons and other sales incentives offered by the
Company that are not reimbursed are recorded as a reduction of sales.
Vendor allowances and credits that relate to the Company's buying and
merchandising activities are recognized as a reduction of cost of
merchandise sold as earned according to the underlying agreements.
Short-term vendor agreements with advance payments are recorded as a
current liability and are recognized over the appropriate period as
earned. Long-term vendor agreements with advance payments are recorded
as a noncurrent liability and are recognized over the appropriate
period as earned.
(n) Other Operating Income
----------------------
Other operating income includes income generated from other activities
conducted in the Company's stores, primarily check cashing, automated
teller transactions, money order sales, lottery sales, vending machine
sales and in-store subleases.
(o) Other Income, net
-----------------
Other income, net includes rent received from shopping center
operations, net of related expenses and other miscellaneous
nonoperating income.
(p) Advertising Costs
-----------------
Advertising costs are expensed as incurred and were approximately
$111,555,000, $92,494,000 and $88,466,000 for the fiscal years ended
December 29, 2001, December 30, 2000 and December 25, 1999,
respectively.
(q) Income Taxes
------------
Deferred tax assets and liabilities are established for temporary
differences between financial and tax reporting bases and are
subsequently adjusted to reflect changes in tax rates expected to be
in effect when the temporary differences reverse.
(r) Earnings Per Share
------------------
Basic and diluted earnings per common share are calculated by dividing
net earnings by the weighted average number of common shares
outstanding. Basic and diluted earnings per common share are the same
because the Company does not have options or other stock compensation
programs that would impact the calculation of diluted earnings per
share.
(s) 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.
3 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(t) Reclassifications
-----------------
Certain 2000 and 1999 amounts have been reclassified to conform with
the 2001 presentation.
(2) Merchandise Inventories
-----------------------
If the first-in, first-out method of valuing inventories had been used by
the Company to value all inventories, inventories and current assets would
have been higher than reported by approximately $119,809,000, $112,606,000
and $109,379,000 as of December 29, 2001, December 30, 2000 and December
25, 1999, respectively. Also, net earnings would have increased by
approximately $3,625,000 or less than $.02 per share in 2001, $1,584,000
and $630,000 or less than $.01 per share in 2000 and 1999, respectively.
(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 other financial instruments as of
December 29, 2001 and December 30, 2000 approximated their respective fair
values.
(4) Investments
-----------
Following is a summary of available-for-sale securities as of December 29,
2001 and December 30, 2000:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
(Amounts are in thousands)
2001
----
Tax exempt bonds $213,066 1,162 8,590 205,638
Taxable bonds 28,211 139 594 27,756
Equity securities 111,351 4,766 5,287 110,830
-------- ----- ------ -------
$352,628 6,067 14,471 344,224
======== ===== ====== =======
2000
----
Tax exempt bonds $356,921 1,940 6,256 352,605
Taxable bonds 13,537 2,353 3,044 12,846
Equity securities 98,057 2,115 10,369 89,803
-------- ----- ------ -------
$468,515 6,408 19,669 455,254
======== ===== ====== =======
4 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
For the fiscal years ended December 29, 2001, December 30, 2000 and
December 25, 1999, the realized gains on sales of available-for-sale
securities totaled $6,218,000, $1,388,000 and $1,566,000, respectively, and
the realized losses totaled $6,657,000, $2,931,000 and $6,152,000,
respectively.
The amortized cost and estimated fair value of debt and marketable equity
securities classified as available-for-sale as of December 29, 2001 and
December 30, 2000, by expected maturity, are as follows:
2001 2000
------------------- -------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---- ----- ---- -----
(Amounts are in thousands)
Due in one year or less $ 5,373 5,176 21,926 21,028
Due after one year through
five years 19,283 18,541 79,920 80,396
Due after five years through
ten years 19,704 18,350 30,538 30,726
Due after ten years 196,917 191,327 238,074 233,301
-------- ------- ------- -------
241,277 233,394 370,458 365,451
Equity securities 111,351 110,830 98,057 89,803
-------- ------- ------- -------
$352,628 344,224 468,515 455,254
======== ======= ======= =======
(5) 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 postretirement life insurance benefits. The Company funds the
life insurance benefits on a pay-as-you-go basis. Effective January 1,
2002, the Company amended the plan's eligibility requirements. As of
October 1, 2001, an employee must have had at least five years of full-time
service and the employee's age plus years of credited service must have
equaled 65 or greater to retain postretirement life insurance benefits at
retirement. In addition, the employee must be at least age 55 with ten
years of full-time service at retirement to receive the benefit. During
2001, 2000 and 1999, the Company made benefit payments to beneficiaries of
retirees of approximately $1,976,000, $1,165,000 and $1,877,000,
respectively.
5 (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 29, 2001 and December 30, 2000:
2001 2000
---- ----
(Amounts are in thousands)
Change in benefit obligation:
Benefit obligation as of beginning of year $ 69,343 61,688
Service cost 3,560 3,429
Interest cost 5,581 4,987
Amendments (18,746) ---
Curtailments (4,397) ---
Actuarial loss 2,368 404
Benefit payments (1,976) (1,165)
-------- -------
Benefit obligation as of end of year $ 55,733 69,343
======== =======
Change in fair value of plan assets:
Fair value of plan assets as of beginning
of year $ --- ---
Employer contributions 1,976 1,165
Benefit payments (1,976) (1,165)
-------- -------
Fair value of plan assets as of end of year $ --- ---
======== =======
Funded status $(55,733) (69,343)
Unrecognized actuarial loss 4,328 6,357
Unrecognized prior service cost (18,746) ---
-------- -------
Accrued postretirement benefit cost $(70,151) (62,986)
======== =======
Following are the actuarial assumptions that were used in the calculation
of the year end benefit obligation:
2001 2000 1999
---- ---- ----
Discount rate 7.25% 7.75% 7.75%
Rate of compensation increase 4.00% 4.00% 4.00%
Net periodic postretirement benefit cost consists of the following
components:
2001 2000 1999
---- ---- ----
(Amounts are in thousands)
Service cost $3,560 3,429 3,754
Interest cost 5,581 4,987 4,551
Recognized actuarial loss --- --- 449
------ ----- -----
Net periodic postretirement benefit cost $9,141 8,416 8,754
====== ===== =====
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.
6 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(6) Retirement Plans
----------------
The Company has a trusteed, noncontributory Employee Stock Ownership Plan
(ESOP) for the benefit of eligible employees. The amount of the Company's
discretionary contribution to the ESOP is determined annually by the Board
of Directors and can be made in Company common stock or cash. The expense
recorded for contributions to this plan was approximately $181,507,000 in
2001, $204,968,000 in 2000 and $90,256,000 in 1999.
Prior to 2000, the Company had a trusteed, noncontributory Profit Sharing
Plan for the benefit of eligible employees. The amount of the Company's
discretionary contribution to this plan was determined annually by the
Board of Directors and was made in Company common stock or cash. The
expense recorded for contributions to this plan was approximately
$92,731,000 in 1999. Effective December 31, 1999, the Company merged the
Profit Sharing Plan into the ESOP.
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 10% of their eligible annual compensation (8% prior to
January 1, 2002), subject to the maximum contribution limits established by
Federal law. The Company may make a discretionary annual matching
contribution to eligible participants of this plan as determined by the
Board of Directors. During 2001, 2000 and 1999, the Board of Directors
approved a match of 50% of eligible contributions up to 3% of eligible
wages, not to exceed a maximum match of $750 per employee. The match, which
is determined as of the last day of the plan year and paid in the
subsequent plan year, is in common stock of the Company. The expense
recorded for the Company's match to the 401(k) plan was approximately
$15,075,000 in 2001, $13,822,000 in 2000 and $12,715,000 in 1999.
The Company intends to continue its retirement plans; 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.
7 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(7) Income Taxes
------------
The provision for income taxes consists of the following:
Current Deferred Total
------- -------- -----
(Amounts are in thousands)
2001
----
Federal $240,433 16,285 256,718
State 36,805 2,879 39,684
-------- ------ -------
$277,238 19,164 296,402
======== ====== =======
2000
----
Federal $233,284 16,761 250,045
State 40,321 2,781 43,102
-------- ------ -------
$273,605 19,542 293,147
======== ====== =======
1999
----
Federal $208,413 10,606 219,019
State 36,286 1,855 38,141
-------- ------ -------
$244,699 12,461 257,160
======== ====== =======
The actual tax expense for 2001, 2000 and 1999 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:
2001 2000 1999
---- ---- ----
(Amounts are in thousands)
Computed "expected" tax expense $289,388 288,243 251,849
State income taxes (net of
Federal income tax benefit) 25,795 28,016 24,792
Tax exempt interest (8,077) (12,990) (13,466)
Other, net (10,704) (10,122) (6,015)
-------- ------- -------
$296,402 293,147 257,160
======== ======= =======
8 (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
29, 2001 and December 30, 2000 are as follows:
2001 2000
---- ----
(Amounts are in thousands)
Deferred tax assets:
Self-insurance reserves $ 85,645 71,115
Advance purchase allowances 14,767 12,589
Postretirement benefit cost 27,060 24,297
Retirement plan contributions 19,448 20,121
Inventory capitalization 8,794 9,497
Other 12,878 15,472
-------- -------
Total deferred tax assets $168,592 153,091
======== =======
Deferred tax liabilities:
Property, plant and equipment,
principally due to depreciation $280,643 248,287
Other 6,217 2,036
-------- -------
Total deferred tax liabilities $286,860 250,323
======== =======
The Company expects the results of future operations to generate sufficient
taxable income to allow utilization of deferred tax assets; therefore, no
valuation allowance has been recorded as of December 29, 2001 and December
30, 2000.
(8) Commitments and Contingencies
-----------------------------
(a) Operating Leases
----------------
The Company conducts a major portion of its retail operations from
leased store premises generally subject to 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 instances, reimbursement of taxes and insurance.
Total rental expense for the years ended December 29, 2001, December
30, 2000 and December 25, 1999, is as follows:
2001 2000 1999
---- ---- ----
(Amounts are in thousands)
Minimum rentals $219,757 200,267 178,812
Contingent rentals 10,529 11,498 10,685
Sublease rental income (10,148) (8,260) (7,028)
-------- ------- -------
$220,138 203,505 182,469
======== ======= =======
9 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
As of December 29, 2001, 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)
2002 $ 227,332 6,510 220,822
2003 224,656 4,206 220,450
2004 221,101 3,037 218,064
2005 216,297 1,590 214,707
2006 211,097 512 210,585
Thereafter 1,854,092 87 1,854,005
---------- ------ ---------
$2,954,575 15,942 2,938,633
========== ====== =========
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 and insurance. Contingent rentals
were estimated at December 29, 2001 and are included in trade
receivables. Rental income was approximately $12,986,000 in 2001,
$11,513,000 in 2000 and $9,508,000 in 1999. The approximate amounts of
minimum future rental payments to be received under noncancelable
operating leases are $11,367,000, $9,576,000, $7,182,000, $4,860,000
and $2,862,000 for the years 2002 through 2006, respectively, and
$11,839,000 thereafter.
(b) Line of Credit
--------------
In December 2001, the Company executed an agreement for a committed
line of credit totaling $100 million. This 364-day line of credit
facility is available to fund liquidity requirements if necessary. The
interest rate is based on LIBOR or prime. There were no amounts
outstanding on this line of credit as of December 29, 2001.
(c) Litigation
----------
The Company is a party in various legal claims and actions considered
in the normal course of business. In the opinion of management, the
ultimate resolution of these legal proceedings will not have a
material adverse effect on the Company's financial condition, results
of operations or cash flows.
10 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(9) Quarterly Information (unaudited)
---------------------------------
Following is a summary of the quarterly results of operations for the
fiscal years ended December 29, 2001 and December 30, 2000. All quarters
have 13 weeks except the fourth quarter of 2000 which has 14 weeks.
Quarter Ended
----------------------------------------------------
March June September December
----- ---- --------- --------
(Amounts are in thousands, except per share amounts)
2001
----
Revenues $3,938,820 3,729,763 3,736,347 3,965,089
Costs and expenses $3,720,245 3,557,971 3,568,910 3,754,813
Net earnings $ 150,886 119,862 116,242 143,431
Basic and diluted
earnings per common
share, based on
weighted average
shares outstanding $ .74 .59 .58 .71
2000
----
Revenues $3,632,998 3,495,747 3,484,487 4,039,509
Costs and expenses $3,425,816 3,312,523 3,324,529 3,832,431
Net earnings $ 142,363 128,266 113,860 145,917
Basic and diluted
earnings per common
share, based on
weighted average
shares outstanding $ .67 .60 .55 .70
11 (Continued)
Schedule II
-----------
PUBLIX SUPER MARKETS, INC.
Valuation and Qualifying Accounts
Years ended December 29, 2001, December 30, 2000
and December 25, 1999
(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 29, 2001
Reserves not deducted from assets:
Self-insurance reserves:
-Current $ 84,095 201,133 182,180 103,048
-Noncurrent 109,423 28,051 --- 137,474
-------- ------- ------- -------
$193,518 229,184 182,180 240,522
======== ======= ======= =======
Year ended December 30, 2000
Reserves not deducted from assets:
Self-insurance reserves:
-Current $ 69,356 167,760 153,021 84,095
-Noncurrent 100,154 9,269 --- 109,423
-------- ------- ------- -------
$169,510 177,029 153,021 193,518
======== ======= ======= =======
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
======== ======= ======= =======