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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 28, 2002
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the transition period from ______________ to ______________
Commission File Number 0-981
-----
PUBLIX SUPER MARKETS, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Florida 59-0324412
- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
3300 Airport Road
Lakeland, Florida 33811
- ---------------------------------------- ----------
(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 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
------- --------
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 is an accelerated filer.
Yes X No
------- --------
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 4, 2003 was approximately $3,981,441,272.
The number of shares of Registrant's common stock outstanding as of March 4,
2003 was 190,482,495.
DOCUMENTS INCORPORATED BY REFERENCE
Pages 2 through 9 of Proxy Statement solicited for the 2003 Annual Meeting of
Stockholders to be held on May 13, 2003 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, Alabama and Tennessee. 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 supermarkets
also have pharmacy and floral departments. In addition, the Company has
agreements with commercial banks to operate in many of its supermarkets.
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 741 supermarkets at the end of 2002, compared with 684
at the beginning of the year. In 2002, 76 supermarkets were opened, 19
supermarkets were closed, and 91 supermarkets were expanded or remodeled. The
net increase in square footage was 2.7 million square feet or 8.8% since 2001.
At the end of 2002, the Company had 565 supermarkets located in Florida, 137 in
Georgia, 28 in South Carolina, seven in Alabama and four in Tennessee. Also, as
of year end, the Company had 27 supermarkets under construction in Florida, six
in Georgia, four in South Carolina, three in Alabama and three in Tennessee.
Additionally, during 2002 the Company operated four convenience stores and a
fulfillment center to support an online grocery shopping service.
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 supermarkets, supercenters,
membership warehouse clubs and mass merchandisers. The Company anticipates
continued competitor format innovation and location additions in 2003.
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 123,000 employees at the end of 2002,
compared with 126,000 at the end of 2001. Of this total, approximately 67,000 at
the end of 2002 and 69,700 at the end of 2001 were not full-time employees.
Compliance by the Company with Federal, state and local environmental
protection laws during 2002 had no material effect upon capital expenditures,
earnings or the competitive position of the Company.
The Company makes available through its website, free of charge, its annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K
and any amendments to those reports as soon as reasonably practicable after such
material is electronically filed with the Securities and Exchange Commission.
The Company's website address is http://www.publix.com/stock.
---------------------------
Item 2. Properties
- -------------------
At year end, the Company operated approximately 33.6 million square feet of
supermarket space. The Company's supermarkets vary in size. Current supermarkets
prototypes range from 27,000 to 61,000 square feet. Supermarkets are often
located in strip shopping centers where the Company is the anchor tenant.
The Company supplies its supermarkets 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 supermarkets 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 70 locations, both the building and land are
owned and at 32 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 are 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. 59 Chief Executive Cousin of 1974
Officer William E. Crenshaw
William E. Crenshaw 52 President Cousin of 1990
Charles H. Jenkins, Jr.
Hoyt R. Barnett 59 Vice Chairman 1977
John A. Attaway, Jr. 44 General Counsel 2000
and Secretary
Jesse L. Benton 60 Vice President 1988
David E. Bornmann 45 Vice President 1998
David E. Bridges 53 Vice President 2000
Joseph W. Carvin 52 Vice President 1998
R. Scott Charlton 44 Vice President 1992
G. Gino DiGrazia 40 Vice President 2002
and Controller
David S. Duncan 49 Vice President 1999
William V. Fauerbach 56 Vice President 1997
John R. Frazier 53 Vice President 1997
Linda S. Hall 43 Vice President 2002
M. Clayton Hollis, Jr. 46 Vice President 1994
Mark R. Irby 47 Vice President 1989
Tina P. Johnson 43 Senior Vice President 1990
Linda S. Kane 37 Vice President and 2000
Assistant Secretary
James J. Lobinsky 63 Senior Vice President 1992
Thomas M. McLaughlin 52 Vice President 1994
Sharon A. Miller 59 Assistant Secretary 1992
Robert H. Moore 60 Vice President 1994
Dale S. Myers 50 Vice President 2001
Thomas M. O'Connor 55 Senior Vice President 1992
David P. Phillips 43 Chief Financial 1990
Officer and Treasurer
EXECUTIVE OFFICERS OF THE COMPANY
---------------------------------
Served as
Nature of Family Officer of
Relationship Company
Name Age Position Between Officers Since
- ---- --- -------- ---------------- -----
James H. Rhodes II 58 Vice President 1995
Daniel M. Risener 62 Senior Vice 1985
President and
Chief Information
Officer
Richard J. Schuler II 47 Vice President 2000
Edward T. Shivers 63 Vice President 1985
Sandra J. Woods 43 Vice President 2002
and Controller
The terms of all officers expire at the annual meeting of the Company in May
2003.
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.
William E. 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. 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.
G. Gino DiGrazia Director of Business Analysis and Reporting to May
2002, Vice President and Controller thereafter.
David S. Duncan Director of Facility Services of the Company to
November 1999, Vice President thereafter.
William V. Fauerbach Vice President of the Company.
John R. Frazier Vice President of the Company.
Linda S. Hall Director of Internal Audit to November 2002, Vice
President thereafter.
M. Clayton Hollis, Jr. Vice President of the Company.
Mark R. Irby Vice President of the Company.
Tina P. Johnson Senior Vice President of the Company and Trustee of
the 401(k) Plan - Publix Stock Fund (Publix stock
portion).
Linda S. Kane Manager of Business Analysis and Reporting of the
Company to May 1998, Director of Benefits
Administration to June 2000, Director of Benefits
Administration and Assistant Secretary to May 2002,
Vice President and Assistant Secretary thereafter.
Name Business Experience During Last Five Years
- ---- ------------------------------------------------------
James J. Lobinsky Senior Vice President of the Company.
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 Finance and Treasurer of the Company 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.
Sandra J. Woods Director of Corporate Accounting to May 2002, Vice
President and Controller thereafter.
PART II
Item 5. Market for the Registrant's Common Equity 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 quarterly appraisals prepared by an independent appraiser. The market
price for 2002 and 2001 was as follows:
2002 2001
---- ----
January - February $41.00 $47.00
March - April 41.00 48.25
May - July 44.00 48.50
August - October 40.00 47.50
November - December 37.00 41.00
(b) Approximate Number of Equity Security Holders
---------------------------------------------
As of March 4, 2003, the approximate number of holders of the Company's
common stock was 90,000.
(c) Dividends
---------
The Company paid cash dividends of $.33 per share of common stock in 2002
and $.32 per share in 2001. 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
- -----------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Sales:
Sales $15,930,602 15,284,229 14,575,031 13,068,900 12,067,125
Percent increase 4.2% 4.9% 11.5% 8.3% 7.5%
Comparable store sales
percent (decrease)
increase (0.7%) 3.9% 4.1% 5.7% 4.0%
Earnings:
Gross profit $ 4,319,977 3,983,942 3,762,854 3,294,188 2,935,707
Earnings before income
tax expense $ 1,002,830 826,823 823,553 719,569 584,388
Net earnings $ 632,404 530,421 530,406 462,409 378,274
Net earnings as a
percent of sales 3.97% 3.47% 3.64% 3.54% 3.13%
Common stock:
Weighted average
shares outstanding 194,466,212 202,171,794 210,145,666 216,160,316 217,383,413
Basic and diluted
earnings per
common share,
based on weighted
average shares
outstanding $ 3.25 2.62 2.52 2.14 1.74
Cash dividends per
share $ .33 .32 .27 .22 .20
Financial data:
Capital expenditures $ 635,891 656,422 558,133 512,658 357,754
Working capital $ 96,018 33,739 176,776 515,257 467,385
Current ratio 1.07 1.03 1.14 1.47 1.46
Total assets $ 4,789,602 4,408,187 4,250,067 4,101,192 3,644,523
Stockholders' equity $ 3,008,068 2,762,551 2,662,435 2,676,144 2,327,632
Stores:
Number of supermarkets 741 684 647 614 586
Number of convenience
stores 4 2 - - -
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 2002
presentation.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
-------------
Business Environment
- --------------------
As of December 28, 2002, the Company operated 741 supermarkets representing
approximately 33.6 million square feet of retail space. Additionally, during
2002 the Company operated four convenience stores and a fulfillment center to
support an online grocery shopping service. The Company's primary competition
throughout its market areas is with several national and regional chains,
independent supermarkets, supercenters, membership warehouse clubs and mass
merchandisers.
At the end of fiscal year 2002, the Company had 565 supermarkets located in
Florida, 137 in Georgia, 28 in South Carolina, seven in Alabama and four in
Tennessee. The Company opened 51 supermarkets in Florida, 13 supermarkets in
Georgia, five supermarkets in South Carolina, four supermarkets in Tennessee and
three supermarkets in Alabama during 2002.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents and short-term and long-term investments totaled
approximately $591.9 million at December 28, 2002, compared to $592.6 million
and $830.6 million at December 29, 2001 and December 30, 2000, respectively. Net
cash provided by operating activities was approximately $1,211 million for the
year ended December 28, 2002, as compared with $1,060.8 million and $1,054.8
million for the years ended December 29, 2001 and December 30, 2000,
respectively. Any net cash in excess of the amount needed for current operations
is invested in short-term and long-term investments.
Net cash used in investing activities was approximately $625.5 million for
the year ended December 28, 2002, as compared with $557.1 million and $594.8
million for the years ended December 29, 2001 and December 30, 2000,
respectively. The primary use of net cash in investing activities was funding
capital expenditures. During the year ended December 28, 2002, capital
expenditures totaled approximately $635.9 million. These expenditures were
primarily incurred in connection with the opening of 57 net new supermarkets (76
new supermarkets opened and 19 supermarkets closed) and remodeling or expanding
91 supermarkets. Net new supermarkets added an additional 2.7 million square
feet in the year ended December 28, 2002, an 8.8% increase. Significant
expenditures were also incurred in the expansion of warehouses, new offices and
new or enhanced information technology applications. Additionally, during 2002
the Company opened two convenience stores. During the year ended December 29,
2001, capital expenditures totaled approximately $656.4 million. These
expenditures were primarily incurred in connection with the opening of 37 net
new supermarkets (52 new supermarkets opened and 15 supermarkets closed) and
remodeling or expanding 79 supermarkets. Net new supermarkets added an
additional 1.7 million square feet in the year ended December 29, 2001, a 5.8%
increase. Significant expenditures were also incurred in the expansion of
warehouses in Lakeland, Florida and the development of an online grocery
shopping service, PublixDirect. Additionally, during 2001 the Company opened two
convenience stores. During the year ended December 30, 2000, capital
expenditures totaled approximately $558.1 million. These expenditures were
primarily incurred in connection with the opening of 33 net new supermarkets (46
new supermarkets opened and 13 supermarkets closed) and remodeling or expanding
69 supermarkets. Net new supermarkets added an additional 1.5 million square
feet in the year ended December 30, 2000, a 5.3% increase. Significant
expenditures were also incurred in the expansion of warehouses in Lakeland,
Florida.
In 2003, the Company plans to open approximately 69 supermarkets. Although
real estate development is unpredictable, the Company's 2003 new store growth
represents a reasonable estimate of anticipated future growth. Capital
expenditures for 2003, consisting of new supermarkets, warehouses, remodeling
and expanding of certain existing supermarkets and new or enhanced information
technology applications, are expected to be approximately $600 million. This
capital program is subject to continuing change and review. The 2003 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 supermarkets and closes supermarkets that are
not meeting performance expectations. The impact of future supermarket closings
is not expected to be material.
Net cash used in financing activities was approximately $589.3 million for
the year ended December 28, 2002, as compared with $645.9 million and $693.1
million for the years ended December 29, 2001 and December 30, 2000,
respectively. The primary use of net cash in financing activities was funding
net common stock repurchases. The Company currently repurchases common stock at
the stockholders' request in accordance with the terms of the Company's Employee
Stock Purchase Plan. Net common stock repurchases totaled approximately $523.7
million for the year ended December 28, 2002, as compared with $579.6 million
and $635 million for the years ended December 29, 2001 and December 30, 2000,
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 $65.4 million or
$.33 per share, $66.3 million or $.32 per share and $57.8 million or $.27 per
share in 2002, 2001 and 2000, respectively.
In December 2002, the Company renewed 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 28, 2002.
Based on the Company's financial position, it is expected that short-term
and long-term borrowings would be readily available to support the Company's
liquidity requirements if needed.
Contractual Obligations and Other Commercial Commitments
- --------------------------------------------------------
The following are summaries of contractual obligations and other commercial
commitments as of December 28, 2002:
Payments Due by Period
----------------------
Less Than 1 - 3 4 - 5 After
Total 1 Year Years Years 5 Years
----- ------ ----- ----- -------
(Amounts are in thousands)
Contractual Obligations -
Operating leases $3,411,993 264,817 766,059 467,019 1,914,098
========== ======= ======= ======= =========
Amount of Commitment Expiration by Period
-----------------------------------------
Total
Amounts Less Than 1 - 3 4 - 5 After
Committed 1 Year Years Years 5 Years
--------- ------ ----- ----- -------
(Amounts are in thousands)
Other Commercial Commitments
- ----------------------------
Trade letters of credit $ 5,856 5,856 --- --- ---
Standby letters of credit (1) 104,896 72,425 32,471 --- ---
-------- ------ ------ ----- -----
Total letters of credit $110,752 78,281 32,471 --- ---
======== ====== ====== ===== =====
(1) Includes standby letters of credit of $103.4 million for the benefit of the
Company's insurance carriers for the self-insured portion of workers'
compensation and fleet liability. The estimated amounts of these liabilities
are included in the Company's consolidated balance sheets.
Purchase Commitments
- --------------------
The Company has purchase commitments for materials, supplies, services and
fixed assets as part of the normal course of business. In the aggregate, such
commitments are not at prices in excess of current market rates.
Results of Operations
- ---------------------
The Company's fiscal year ends on the last Saturday in December. Fiscal
years 2002 and 2001 included 52 weeks and fiscal year 2000 included 53 weeks.
Sales for 2002 were $15.9 billion as compared with $15.3 billion in 2001,
an increase of $646.4 million or a 4.2% increase. This reflects a decrease of
$107 million or 0.7% in comparable store sales (supermarkets open for the same
weeks in both periods, including replacement supermarkets) and an increase of
$753.4 million or 4.9% from net new supermarkets since the beginning of 2001.
During the first quarter of 2002, the Company modified its calculation of
comparable store sales to include replacement supermarkets. The comparable store
sales calculation was modified to improve the comparability of this key
performance measure to others in the food retailing industry. If the current
comparable store sales calculation had been used for the year ended December 29,
2001, the comparable store sales increase would have been 3.9%, as compared to
the previously reported comparable store sales increase of 3.2%. 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 $550 million or 3.9% in comparable store
sales and sales of $448 million or 3.1% from net new supermarkets 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,
$535.8 million or 4.1% in comparable store sales and sales of $681.5 million or
5.2% from net new supermarkets since the beginning of 1999.
Due to the events of September 11, 2001, there has been a general decline
in tourism. The decline in tourism has continued to impact sales in the
Company's supermarkets in seasonal locations during the 2002 fiscal year.
Cost of merchandise sold including certain store occupancy, warehousing and
delivery expenses, as a percentage of sales, was approximately 72.9% in 2002 as
compared with 73.9% and 74.2% in 2001 and 2000, respectively. In 2002, 2001 and
2000, cost of merchandise sold decreased as a percentage of sales primarily due
to increased margins from retail pricing strategies as well as continuing
improvements in buying practices including centralized product procurement,
promotional efficiencies including category management and more efficient
distribution channels.
Operating and administrative expenses, as a percentage of sales, were
approximately 21.6% in 2002 and 2001, and approximately 21.2% in 2000. Decreases
in payroll and other expenses were offset by increases in employee benefit costs
and certain facilities 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.
Net earnings were $632.4 million or $3.25 per share, $530.4 million or
$2.62 per share and $530.4 million or $2.52 per share for 2002, 2001 and 2000,
respectively.
Accounting Standards
- --------------------
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 adoption of SFAS 143 is not expected to have a
material effect on the Company's financial condition, results of operations or
cash flows.
In July 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities," (SFAS 146) effective for exit or disposal
activities initiated after December 31, 2002. SFAS 146 requires that a liability
for a cost associated with an exit or disposal activity be recognized at fair
value when the liability is incurred rather than at the date of a commitment to
an exit or disposal plan. The adoption of SFAS 146 is not expected to have a
material effect on the Company's financial condition, results of operations or
cash flows.
In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others," (FIN 45)
effective for guarantees issued or modified after December 31, 2002. FIN 45
elaborates on the existing disclosure requirements for most guarantees,
including loan guarantees such as standby letters of credit. It also clarifies
that at the time a company issues a guarantee, the company must recognize an
initial liability for the fair market value of the obligations it assumes under
that guarantee and must disclose that information in its interim and annual
financial statements. The Company does not have any guarantees as defined in FIN
45 therefore, the adoption of FIN 45 will have no effect on the Company's
financial condition, results of operations or cash flows.
In December 2002, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 148, "Accounting for Stock-Based
Compensation," (SFAS 148) effective for fiscal years ending after December 15,
2002. SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation," to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require
disclosures in both interim and annual financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. The Company does not have any stock-based employee
compensation therefore, the adoption of SFAS 148 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, of which approximately 80% are calculated by the retail
method. Approximately 87% and 86% of inventories were valued using the
LIFO method as of December 28, 2002 and December 29, 2001, respectively.
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.
Investments
-----------
All of the Company's debt 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. The Company reviews its investments for impairment based on
criteria that include the extent to which cost exceeds market value, the
duration of the market decline and the financial health of and prospects
for the issuer. 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 Company also from time to time holds investments in joint ventures,
partnerships or other equity investments for which evaluation of the
existence and quantification of other-than-temporary declines in value may
be required. Realized gains and losses and declines in value judged to be
other-than-temporary on other investments are included in investment
income, net.
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 of assets to be held and used 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. Assets to be disposed of
are reported at the lower of the carrying amount or fair value less cost
to sell and are no longer depreciated.
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.
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, certain information provided by the Company, including
written or oral statements made by its representatives, may contain
forward-looking information as defined in Section 21E of the Securities Exchange
Act of 1934. Forward-looking information includes statements about the future
performance of the Company, which is based on management's assumptions and
beliefs in light of the information currently available to them. When used, the
words "plan," "estimate," "project," "intend," "believe" and other similar
expressions, as they relate to the Company, are intended to identify such
forward-looking statements. These forward-looking statements are subject to
uncertainties and other factors that could cause actual results to differ
materially from those statements including, but not limited to: competitive
practices and pricing in the food and drug industries generally and particularly
in the Company's principal markets; changes in the general economy; changes in
consumer spending; and other factors affecting the Company's business in or
beyond the Company's control. These factors include changes in the rate of
inflation, changes in state and Federal legislation or regulation, adverse
determinations with respect to litigation or other claims, ability to recruit
and retain employees, ability to construct new stores or complete remodels as
rapidly as planned and stability of product costs. Other factors and assumptions
not identified above could also cause the actual results to differ materially
from those set forth in the forward-looking statements. The Company assumes no
obligation to update publicly these forward-looking statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
The Company does not utilize financial instruments for trading or other
speculative purposes, nor does it utilize leveraged financial instruments. The
Company does not consider to be material the potential losses in future
earnings, fair values and cash flows from reasonably possible near-term changes
in interest rates.
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 (2003 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."
The Company has adopted a Code of Ethical Conduct for Financial Managers
that applies to the Company's principal executive officer, principal financial
officer, principal accounting officer or controller and all persons performing
similar functions. A copy of the Code of Ethical Conduct for Financial Managers
is attached as Exhibit 14.
Item 11. Executive Compensation
- -------------------------------
Information regarding executive compensation is incorporated by reference
to pages 7 through 9 of the 2003 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 2003 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 2003 Proxy Statement.
Item 14. Controls and Procedures
- --------------------------------
Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14 and 15d-14. Based upon that evaluation, the Chief Executive Officer and
the Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required to be
included in the Company's periodic SEC filings. There have been no significant
changes in the Company's internal controls or in other factors which could
significantly affect internal controls subsequent to the date the Company
carried out its evaluation.
PART IV
Item 15. 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 28, 2002.
(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 quarterly report of the Company
on Form 10-Q for the quarter ended June 29, 2002.
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, September 29, 2001 and June 29, 2002. Such
subsequent indemnified director and officer are listed as
follows:
Sherrill W. Hudson
Linda S. Hall
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.
14. Code of Ethics.
21. Subsidiaries of the Registrant.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PUBLIX SUPER MARKETS, INC.
March 6, 2003 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
registrant and in the capacities and on the dates indicated.
/s/ Carol Jenkins Barnett Director March 6, 2003
- ---------------------------
Carol Jenkins Barnett
/s/ Hoyt R. Barnett Vice Chairman and Director March 6, 2003
- ---------------------------
Hoyt R. Barnett
/s/ Joan G. Buccino Director March 6, 2003
- ---------------------------
Joan G. Buccino
/s/ William E. Crenshaw President and Director March 6, 2003
- ---------------------------
William E. Crenshaw
/s/ Mark C. Hollis Director March 6, 2003
- ---------------------------
Mark C. Hollis
/s/ Sherrill W. Hudson Director March 6, 2003
- ---------------------------
Sherrill W. Hudson
Chief Executive Officer and
Director
/s/ Charles H. Jenkins, Jr. (Principal Executive Officer) March 6, 2003
- ---------------------------
Charles H. Jenkins, Jr.
Chairman of the Board and
/s/ Howard M. Jenkins Director March 6, 2003
- ---------------------------
Howard M. Jenkins
Senior Vice President
/s/ Tina P. Johnson and Director March 6, 2003
- ---------------------------
Tina P. Johnson
/s/ E. Vane McClurg Director March 6, 2003
- ---------------------------
E. Vane McClurg
/s/ Kelly E. Norton Director March 6, 2003
- ---------------------------
Kelly E. Norton
Chief Financial Officer
and Treasurer
(Principal Financial and
/s/ David P. Phillips Accounting Officer) March 6, 2003
- ---------------------------
David P. Phillips
CERTIFICATIONS PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
Certification
- -------------
I, Charles H. Jenkins, Jr., certify that:
1. I have reviewed this annual report on Form 10-K of Publix Super Markets,
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 6, 2003
/s/ Charles H. Jenkins, Jr.
- ---------------------------
Charles H. Jenkins, Jr.
Chief Executive Officer
Certification
- -------------
I, David P. Phillips, certify that:
1. I have reviewed this annual report on Form 10-K of Publix Super Markets,
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 6, 2003
/s/ David P. Phillips
- -----------------------
David P. Phillips
Chief Financial Officer
PUBLIX SUPER MARKETS, INC.
Index to Consolidated Financial Statements and Schedule
Independent Auditors' Report
Consolidated Financial Statements:
Consolidated Balance Sheets - December 28, 2002 and December 29, 2001
Consolidated Statements of Earnings - Years ended December 28, 2002,
December 29, 2001 and December 30, 2000
Consolidated Statements of Comprehensive Earnings - Years ended December 28,
2002, December 29, 2001 and December 30, 2000
Consolidated Statements of Stockholders' Equity - Years ended December 28,
2002, December 29, 2001 and December 30, 2000
Consolidated Statements of Cash Flows - Years ended December 28, 2002,
December 29, 2001 and December 30, 2000
Notes to Consolidated Financial Statements
The following consolidated financial statement schedule of the Company for the
years ended December 28, 2002, December 29, 2001 and December 30, 2000 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 28, 2002 and December 29, 2001,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 28, 2002, 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 25, 2003
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 28, 2002 and
December 29, 2001
Assets 2002 2001
------ ---- ----
(Amounts are in thousands)
Current assets:
Cash and cash equivalents $ 207,523 211,296
Short-term investments 6,713 5,176
Trade receivables 188,077 171,878
Merchandise inventories 922,243 840,115
Deferred tax assets 57,383 54,172
Prepaid expenses 4,263 3,001
---------- ---------
Total current assets 1,386,202 1,285,638
---------- ---------
Long-term investments 377,616 376,118
Other noncurrent assets 950 6,841
Property, plant and equipment:
Land 162,552 132,518
Buildings and improvements 1,034,854 899,277
Furniture, fixtures and equipment 2,620,704 2,267,850
Leasehold improvements 745,468 651,467
Construction in progress 134,072 191,695
---------- ---------
4,697,650 4,142,807
Less accumulated depreciation 1,672,816 1,403,217
---------- ---------
Net property, plant and equipment 3,024,834 2,739,590
---------- ---------
$4,789,602 4,408,187
========== =========
See accompanying notes to consolidated financial statements. (Continued)
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 28, 2002 and
December 29, 2001
Liabilities and Stockholders' Equity 2002 2001
------------------------------------ ---- ----
(Amounts are in thousands,
except share amounts)
Current liabilities:
Accounts payable $ 686,634 693,473
Accrued expenses:
Salaries and wages 63,906 56,560
Contribution to retirement plans 248,605 232,925
Self-insurance reserves 102,722 103,048
Other 172,186 152,863
---------- ---------
Total accrued expenses 587,419 545,396
---------- ---------
Federal and state income taxes 16,131 13,030
---------- ---------
Total current liabilities 1,290,184 1,251,899
Deferred tax liabilities, net 238,573 172,440
Self-insurance reserves 176,895 137,474
Accrued postretirement benefit cost 69,062 70,151
Other noncurrent liabilities 6,820 13,672
---------- ---------
Total liabilities 1,781,534 1,645,636
---------- ---------
Stockholders' equity:
Common stock of $1 par value. Authorized
300,000,000 shares; issued and outstanding
189,167,769 shares in 2002 and 197,111,536
shares in 2001 189,168 197,112
Additional paid-in capital 421,019 343,834
Reinvested earnings 2,397,634 2,226,768
---------- ---------
3,007,821 2,767,714
Accumulated other comprehensive earnings 247 (5,163)
---------- ---------
Total stockholders' equity 3,008,068 2,762,551
Commitments and contingencies --- ---
---------- ---------
$4,789,602 4,408,187
========== =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Earnings
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
2002 2001 2000
---- ---- ----
(Amounts are in thousands, except shares
outstanding and per share amounts)
Revenues:
Sales $ 15,930,602 15,284,229 14,575,031
Other operating income 96,062 85,790 77,710
------------ ----------- -----------
Total revenues 16,026,664 15,370,019 14,652,741
------------ ----------- -----------
Costs and expenses:
Cost of merchandise sold, including
certain store occupancy, warehousing
and delivery expenses 11,610,625 11,300,287 10,812,177
Operating and administrative
expenses 3,446,448 3,301,652 3,083,122
------------ ----------- -----------
Total costs and expenses 15,057,073 14,601,939 13,895,299
------------ ----------- -----------
Operating profit 969,591 768,080 757,442
------------ ----------- -----------
Investment income, net 16,477 38,353 50,426
Other income, net 16,762 20,390 15,685
------------ ----------- -----------
Earnings before income tax expense 1,002,830 826,823 823,553
Income tax expense 370,426 296,402 293,147
------------ ----------- -----------
Net earnings $ 632,404 530,421 530,406
============ =========== ===========
Weighted average number of common
shares outstanding 194,466,212 202,171,794 210,145,666
=========== =========== ===========
Basic and diluted earnings per common
share based on weighted average
shares outstanding $ 3.25 2.62 2.52
============ =========== ===========
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Comprehensive Earnings
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Net earnings $632,404 530,421 530,406
Other comprehensive earnings
Unrealized (loss) gain on investment
securities available-for-sale,
net of tax effect of ($456),
$1,704 and ($1,253) in 2002,
2001 and 2000, respectively (726) 2,713 (1,995)
Reclassification adjustment for net
realized loss on investment securities
available-for-sale, net of tax effect
of $3,854, $170 and $595 in 2002, 2001
and 2000, respectively 6,136 270 948
-------- ------- -------
Comprehensive earnings $637,814 533,404 529,359
======== ======= =======
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Stockholders' Equity
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
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 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
Acquired 16,464,016 shares 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
Acquired 14,249,727 shares 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
Comprehensive earnings for the year --- --- 632,404 --- 5,410 637,814
Cash dividends, $.33 per share --- --- (65,439) --- --- (65,439)
Contribution of 4,801,677 shares to
retirement plans 1,809 72,350 --- 122,710 --- 196,869
Acquired 14,558,822 shares from stockholders --- (703) --- (597,776) --- (598,479)
Sale of 1,813,378 shares to stockholders 137 5,538 --- 69,077 --- 74,752
Retirement of 9,890,943 shares (9,890) --- (396,099) 405,989 --- ---
-------- ------- --------- ------- ------ ---------
Balances at December 28, 2002 $189,168 421,019 2,397,634 --- 247 3,008,068
======== ======= ========= ======= ====== =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Cash flows from operating activities:
Cash received from customers $ 16,031,205 15,394,511 14,677,659
Cash paid to employees and suppliers (14,325,863) (13,887,440) (13,240,262)
Dividends and interest received 27,363 42,228 56,358
Income taxes paid (307,799) (293,877) (276,433)
Payment for self-insured claims (204,190) (182,180) (153,021)
Other operating cash receipts 919 873 826
Other operating cash payments (10,649) (13,364) (10,367)
------------ ---------- ----------
Net cash provided by operating
activities 1,210,986 1,060,751 1,054,760
------------ ---------- ----------
Cash flows from investing activities:
Payment for property, plant and
equipment (635,891) (656,422) (558,133)
Proceeds from sale of property, plant
and equipment 15,512 2,550 4,390
Payment for investment securities -
available-for-sale (AFS) (265,381) (173,061) (111,143)
Proceeds from sale and maturity of
investment securities - AFS 259,622 285,072 75,349
Net proceeds from (investment in)
joint ventures and other investments 644 (15,289) (5,286)
Other, net 32 48 39
------------ ---------- ----------
Net cash used in investing activities (625,462) (557,102) (594,784)
------------ ---------- ----------
Cash flows from financing activities:
Proceeds from sale of common stock 74,752 90,711 116,471
Payment for acquisition of common stock (598,479) (670,308) (751,479)
Dividends paid (65,439) (66,284) (57,816)
Other, net (131) --- (262)
------------ ---------- ----------
Net cash used in financing activities (589,297) (645,881) (693,086)
------------ ---------- ----------
Net decrease in cash and cash equivalents (3,773) (142,232) (233,110)
Cash and cash equivalents at beginning
of year 211,296 353,528 586,638
------------ ---------- ----------
Cash and cash equivalents at end of year $ 207,523 211,296 353,528
============ ========== ==========
See accompanying notes to consolidated financial statements. (Continued)
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
(Continued)
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings $ 632,404 530,421 530,406
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 309,793 259,682 226,950
Retirement contributions paid or payable
in common stock 213,722 196,582 218,790
Deferred income taxes 59,526 19,163 19,542
Loss on sale of property, plant and
equipment 28,977 20,966 15,683
Loss on sale of investments 9,990 439 1,543
Self-insurance reserves in excess of
current payments 39,095 47,004 24,008
Postretirement accruals (less than)
in excess of current payments (1,089) 7,165 7,251
Decrease in advance purchase allowances (6,721) (4,333) (6,261)
Other, net 3,120 3,077 3,922
Change in cash from:
Trade receivables (16,199) 1,873 6,892
Merchandise inventories (82,128) (25,130) (45,531)
Prepaid expenses (1,262) (727) 168
Accounts payable and accrued expenses 18,657 21,207 54,225
Federal and state income taxes 3,101 (16,638) (2,828)
---------- --------- ---------
Total adjustments 578,582 530,330 524,354
---------- --------- ---------
Net cash provided by operating activities $1,210,986 1,060,751 1,054,760
========== ========= =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
December 28, 2002, December 29, 2001
and December 30, 2000
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Business
--------
The Company is in the business of operating retail food supermarkets
in Florida, Georgia, South Carolina, Alabama and Tennessee. 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
2002 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 uncollected
vendor allowances, debit and credit card sales and third party
insurance pharmacy billings.
(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, of which approximately 80% are calculated by the
retail method. Approximately 87% and 86% of inventories were valued
using the LIFO method as of December 28, 2002 and December 29, 2001,
respectively. 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 28, 2002 and December 29, 2001.
(Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
All of the Company's debt 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. The Company reviews
its investments for impairment based on criteria that include the
extent to which cost exceeds market value, the duration of the market
decline and the financial health of and prospects for the issuer.
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.
The Company also from time to time holds investments in joint
ventures, partnerships or other equity investments for which
evaluation of the existence and quantification of
other-than-temporary declines in value may be required. Realized
gains and losses and declines in value judged to be
other-than-temporary on other investments are included in investment
income, net.
(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 disposed assets or assets to be disposed
of is recorded in operating and administrative 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 $26,282,000, $24,611,000 and
$6,024,000 for the fiscal years ended December 28, 2002, December 29,
2001 and December 30, 2000, respectively.
2 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(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 of assets to be
held and used 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. Assets to be disposed of are reported at the lower
of the carrying amount or fair value less cost to sell and are no
longer depreciated.
(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.
(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 supermarkets, primarily check
cashing, automated teller transactions, money transfer and 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
$116,210,000, $111,555,000 and $92,494,000 for the fiscal years ended
December 28, 2002, December 29, 2001 and December 30, 2000,
respectively.
3 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(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 accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
(t) Reclassifications
-----------------
Certain 2001 and 2000 amounts have been reclassified to conform with
the 2002 presentation. The Company reclassified approximately
$40,041,000 from cash and cash equivalents to trade receivables for
2001. This reclassification related to debit card settlements which
normally settle in two to three days.
(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 $117,581,000, $119,809,000
and $112,606,000 as of December 28, 2002, December 29, 2001 and December
30, 2000, respectively. Also, net earnings would have decreased by
approximately $1,142,000 or less than $.01 per share in 2002 and increased
by approximately $3,625,000 or less than $.02 per share in 2001 and
approximately $1,584,000 or less than $.01 per share in 2000.
(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 debt and marketable equity
----------------------
securities are based on quoted market prices.
The carrying amount of the Company's other financial instruments as of
December 28, 2002 and December 29, 2001 approximated their respective fair
values.
All other investments are accounted for using the equity method. The
carrying amount of other investments approximates fair value.
4 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(4) Investments
-----------
Following is a summary of investments as of December 28, 2002 and December
29, 2001:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
2002 (Amounts are in thousands)
----
Available-for-sale:
Tax exempt bonds $152,207 2,068 2,322 151,953
Taxable bonds 123,185 1,988 570 124,603
Equity securities 72,110 2,290 3,052 71,348
-------- ----- ------ -------
347,502 6,346 5,944 347,904
Other investments 36,425 --- --- 36,425
-------- ----- ------ -------
$383,927 6,346 5,944 384,329
======== ===== ====== =======
2001
----
Available-for-sale:
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
Other investments 37,070 --- --- 37,070
-------- ----- ------ -------
$389,698 6,067 14,471 381,294
======== ===== ====== =======
The realized gains on sales of available-for-sale securities totaled
approximately $5,957,000, $6,218,000 and $1,388,000 for the fiscal years
ended December 28, 2002, December 29, 2001 and December 30, 2000,
respectively, and the realized losses totaled approximately $15,947,000,
$6,657,000 and $2,931,000, respectively.
The net realized gains on other investments totaled approximately
$1,903,000, $602,000 and $455,000 for the fiscal years ended December 28,
2002, December 29, 2001 and December 30, 2000, respectively.
5 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The amortized cost and estimated fair value of debt and marketable equity
securities classified as available-for-sale and other investments as of
December 28, 2002 and December 29, 2001, by expected maturity, are as
follows:
2002 2001
-------------------- --------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---- ----- ---- -----
(Amounts are in thousands)
Due in one year or less $ 6,740 6,713 5,373 5,176
Due after one year through
five years 24,749 24,734 19,283 18,541
Due after five years through
ten years 33,975 33,951 19,704 18,350
Due after ten years 209,928 211,158 196,917 191,327
-------- ------- ------- -------
275,392 276,556 241,277 233,394
Equity securities 72,110 71,348 111,351 110,830
Other investments 36,425 36,425 37,070 37,070
-------- ------- ------- -------
$383,927 384,329 389,698 381,294
======== ======= ======= =======
(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.
The Company made benefit payments to beneficiaries of retirees of
approximately $1,879,000, $1,976,000 and $1,165,000 during the fiscal
years ended December 28, 2002, December 29, 2001 and December 30, 2000,
respectively.
6 (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 28, 2002 and December 29, 2001:
2002 2001
---- ----
(Amounts are in thousands)
Change in benefit obligation:
Benefit obligation as of beginning of year $ 55,733 69,343
Service cost 830 3,560
Interest cost 4,035 5,581
Amendments --- (18,746)
Curtailments --- (4,397)
Actuarial loss 3,578 2,368
Benefit payments (1,879) (1,976)
-------- -------
Benefit obligation as of end of year $ 62,297 55,733
======== =======
Change in fair value of plan assets:
Fair value of plan assets as of beginning
of year $ --- ---
Employer contributions 1,879 1,976
Benefit payments (1,879) (1,976)
-------- -------
Fair value of plan assets as of end of year $ --- ---
======== =======
Funded status $(62,297) (55,733)
Unrecognized actuarial loss 7,906 4,328
Unrecognized prior service cost (14,671) (18,746)
-------- -------
Accrued postretirement benefit cost $(69,062) (70,151)
======== =======
Following are the actuarial assumptions that were used in the calculation
of the year end benefit obligation:
2002 2001 2000
---- ---- ----
Discount rate 6.75% 7.25% 7.75%
Rate of compensation increase 4.00% 4.00% 4.00%
Net periodic postretirement benefit cost consists of the following
components:
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Service cost $ 830 3,560 3,429
Interest cost 4,035 5,581 4,987
Amortization of prior service cost (4,075) --- ---
------ ----- -----
Net periodic postretirement benefit cost $ 790 9,141 8,416
====== ===== =====
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.
7 (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 $198,315,000,
$181,507,000 and $204,968,000 for the fiscal years ended December 28,
2002, December 29, 2001 and December 30, 2000, respectively.
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 2002, 2001 and 2000, 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
$15,407,000, $15,075,000 and $13,822,000 for the fiscal years ended
December 28, 2002, December 29, 2001 and December 30, 2000, respectively.
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) Income Taxes
------------
The provision for income taxes consists of the following:
Current Deferred Total
------- -------- -----
(Amounts are in thousands)
2002
----
Federal $270,386 50,411 320,797
State 41,510 8,119 49,629
-------- ------ -------
$311,896 58,530 370,426
======== ====== =======
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
======== ====== =======
8 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The actual tax expense for the fiscal years ended December 28, 2002,
December 29, 2001 and December 30, 2000 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:
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Computed "expected" tax expense $350,991 289,388 288,243
State income taxes (net of
Federal income tax benefit) 32,259 25,795 28,016
Tax exempt interest (4,088) (8,077) (12,990)
Other, net (8,736) (10,704) (10,122)
-------- ------- -------
$370,426 296,402 293,147
======== ======= =======
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities as of
December 28, 2002 and December 29, 2001 are as follows:
2002 2001
---- ----
(Amounts are in thousands)
Deferred tax assets:
Self-insurance reserves $ 99,895 85,645
Advance purchase allowances 12,205 14,767
Postretirement benefit cost 26,636 27,060
Retirement plan contributions 23,636 19,448
Inventory capitalization 8,444 8,794
Other 18,828 12,878
-------- -------
Total deferred tax assets $189,644 168,592
======== =======
Deferred tax liabilities:
Property, plant and equipment,
principally due to depreciation $357,644 280,643
Other 13,190 6,217
-------- -------
Total deferred tax liabilities $370,834 286,860
======== =======
The Company expects the results of future operations and the reversal of
deferred tax liabilities to generate sufficient taxable income to allow
utilization of deferred tax assets; therefore, no valuation allowance has
been recorded as of December 28, 2002 and December 29, 2001.
(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 stores are determined on the basis
of a percentage of sales in excess of stipulated minimums plus, in
certain instances, reimbursement of taxes, insurance and other
expenses.
9 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
Total rental expense for the years ended December 28, 2002, December
29, 2001 and December 30, 2000, is as follows:
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Minimum rentals $257,258 219,757 200,267
Contingent rentals 8,949 10,529 11,498
Sublease rental income (10,181) (10,148) (8,260)
-------- ------- -------
$256,026 220,138 203,505
======== ======= =======
As of December 28, 2002, 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)
2003 $ 264,817 9,225 255,592
2004 261,731 7,768 253,963
2005 254,876 6,236 248,640
2006 249,452 4,273 245,179
2007 238,674 1,925 236,749
Thereafter 2,142,443 339 2,142,104
---------- ------ ---------
$3,411,993 29,766 3,382,227
========== ====== =========
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, insurance and other expenses.
Contingent rentals are included in trade receivables and were
approximately $1,024,000 and $1,033,000 as of December 28, 2002 and
December 29, 2001, respectively. Rental income was approximately
$14,057,000, $12,986,000 and $11,513,000 for the fiscal years ended
December 28, 2002, December 29, 2001 and December 30, 2000,
respectively. The approximate amounts of minimum future rental
payments to be received under noncancelable operating leases are
$10,565,000, $8,752,000, $6,430,000, $4,618,000 and $2,737,000 for
the years 2003 through 2007, respectively, and $12,701,000
thereafter.
(b) Line of Credit
--------------
In December 2002, the Company renewed 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 28, 2002.
(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 28, 2002 and December 29, 2001. All quarters
have 13 weeks.
Quarter Ended
----------------------------------------------------
March June September December
----- ---- --------- --------
(Amounts are in thousands, except per share amounts)
2002
----
Revenues $4,217,661 3,847,054 3,867,430 4,094,519
Costs and expenses $3,916,454 3,631,019 3,654,345 3,855,255
Net earnings $ 195,169 141,449 140,701 155,085
Basic and diluted
earnings per common
share, based on
weighted average
shares outstanding $ .99 .72 .73 .81
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
11 (Continued)
Schedule II
-----------
PUBLIX SUPER MARKETS, INC.
Valuation and Qualifying Accounts
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
(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 28, 2002
Reserves not deducted from assets:
Self-insurance reserves:
-Current $103,048 203,864 204,190 102,722
-Noncurrent 137,474 39,421 --- 176,895
-------- ------- ------- -------
$240,522 243,285 204,190 279,617
======== ======= ======= =======
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
======== ======= ======= =======