UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended March 27, 2004
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period
from ____________ to ______________
Commission File Number 0-981
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PUBLIX SUPER MARKETS, INC.
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(Exact name of Registrant as specified in its charter)
Florida 59-0324412
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3300 Airport Road
Lakeland, Florida 33811
- --------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (863) 688-1188
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _______
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Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No _______
--------
The number of shares outstanding of the Registrant's common stock, $1.00 par
value, as of April 30, 2004 was 179,278,596.
Page 1 of 12 pages
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts are in thousands, except share amounts)
ASSETS
March 27, 2004 December 27, 2003
-------------- -----------------
(Unaudited)
Current Assets
- --------------
Cash and cash equivalents $ 504,356 277,072
Short-term investments 16,592 16,661
Trade receivables 248,456 241,101
Merchandise inventories 985,629 981,456
Deferred tax assets 61,504 55,479
Prepaid expenses 15,455 9,778
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Total Current Assets 1,831,992 1,581,547
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Long-term investments 444,983 380,852
Other noncurrent assets 1,575 1,119
Property, plant and equipment 5,197,084 5,140,811
Less accumulated depreciation (2,021,561) (1,953,612)
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Net property, plant and equipment 3,175,523 3,187,199
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Total Assets $5,454,073 5,150,717
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
- -------------------
Accounts payable $ 736,256 724,228
Accrued contribution to retirement plans 118,830 244,848
Accrued salaries and wages 101,728 76,050
Accrued self-insurance reserves 136,696 123,462
Federal and state income taxes 124,168 12,508
Other 244,006 190,510
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Total Current Liabilities 1,461,684 1,371,606
---------- ----------
Deferred tax liabilities, net 291,362 284,458
Self-insurance reserves 210,191 202,737
Accrued postretirement benefit cost 67,808 67,960
Other noncurrent liabilities 60,065 54,646
Stockholders' Equity
- --------------------
Common stock of $1 par value. Authorized
300,000,000 shares; issued 180,929,954
shares at March 27, 2004 and 178,369,413
shares at December 27, 2003 180,930 178,369
Additional paid-in capital 630,981 494,154
Retained earnings 2,614,642 2,492,759
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3,426,553 3,165,282
Less 1,357,653 treasury shares
at March 27, 2004, at cost (69,919) ---
Accumulated other comprehensive earnings 6,329 4,028
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Total Stockholders' Equity 3,362,963 3,169,310
---------- ----------
Total Liabilities and Stockholders'
Equity $5,454,073 5,150,717
========== ==========
See accompanying notes to condensed consolidated financial statements.
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PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except per share and share amounts)
Three Months Ended
March 27, 2004 March 29, 2003
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(Unaudited)
Revenues
- --------
Sales $ 4,657,585 4,304,214
Other operating income 29,868 28,800
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Total revenues 4,687,453 4,333,014
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Costs and expenses
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Cost of merchandise sold 3,398,894 3,137,916
Operating and administrative expenses 975,229 907,705
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Total costs and expenses 4,374,123 4,045,621
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Operating profit 313,330 287,393
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Investment income, net 6,403 5,192
Other income, net 4,544 5,509
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Earnings before income tax expense 324,277 298,094
Income tax expense 120,881 110,986
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Net earnings $ 203,396 187,108
============ ===========
Weighted average number of common
shares outstanding 178,662,333 188,513,408
============ ===========
Basic and diluted earnings per common
share based on weighted average shares
outstanding $ 1.14 .99
============ ===========
Cash dividends paid per common share none none
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
Three Months Ended
March 27, 2004 March 29, 2003
-------------- --------------
(Unaudited)
Net earnings $ 203,396 187,108
Other comprehensive earnings
Unrealized gain on investment
securities available-for-sale,
net of tax effect of $1,486 and
$1,114 in 2004 and 2003, respectively 2,365 1,775
Reclassification adjustment for net
realized (gain) loss on investment
securities available-for-sale, net
of tax effect of ($41) and $29
in 2004 and 2003, respectively (64) 45
------------ -----------
Comprehensive earnings $ 205,697 188,928
============ ===========
See accompanying notes to condensed consolidated financial statements.
-3-
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
Three Months Ended
March 27, 2004 March 29, 2003
-------------- --------------
(Unaudited)
Cash flows from operating activities
- ------------------------------------
Cash received from customers $ 4,661,336 4,308,806
Cash paid to employees and suppliers (4,129,605) (3,755,617)
Dividends and interest received 6,894 5,599
Income taxes paid (9,787) (12,712)
Payment for self-insured claims (45,242) (49,465)
Other operating cash receipts 21,673 19,954
Other operating cash payments (1,018) (1,869)
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Net cash provided by operating
activities 504,251 514,696
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Cash flows from investing activities
- ------------------------------------
Payment for property, plant and
equipment (113,947) (153,272)
Proceeds from sale of property, plant
and equipment 27,713 1,539
Payment for investment securities -
available-for-sale (AFS) (71,326) (66,468)
Proceeds from sale and maturity of
investment securities - AFS 9,524 56,492
Net proceeds from joint ventures
and other investments 995 1,524
Other, net (467) (195)
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Net cash used in investing activities (147,508) (160,380)
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Cash flows from financing activities
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Proceeds from sale of common stock 24,234 22,475
Payment for acquisition of common stock (153,562) (240,937)
Other, net (131) (131)
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Net cash used in financing activities (129,459) (218,593)
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Net increase in cash and cash equivalents 227,284 135,723
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Cash and cash equivalents at beginning
of period 277,072 207,523
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Cash and cash equivalents at end of period $ 504,356 343,246
============ ==========
See accompanying notes to condensed consolidated financial statements.
(Continued)
-4-
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts are in thousands)
Three Months Ended
March 27, 2004 March 29, 2003
-------------- --------------
(Unaudited)
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings $ 203,396 187,108
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 89,592 84,145
Retirement contributions payable in
common stock 61,436 63,062
Deferred income taxes (566) 4,947
Loss on sale of property, plant and
equipment 8,329 2,791
(Gain) loss on sale of investments (105) 74
Self-insurance reserves in excess of
current payments 20,688 12,115
Postretirement accruals less than
current payments (152) (225)
Increase in advance purchase allowances 818 724
Other, net 596 333
Change in cash from:
Trade receivables (7,355) (11,940)
Merchandise inventories (4,173) 12,174
Prepaid expenses (5,677) (1,115)
Accounts payable and accrued expenses 25,764 67,176
Federal and state income taxes 111,660 93,327
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Total adjustments 300,855 327,588
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Net cash provided by operating activities $ 504,251 514,696
========== =======
See accompanying notes to condensed consolidated financial statements.
-5-
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying condensed consolidated financial statements included herein
are unaudited; however, in the opinion of management, such information
reflects all adjustments (consisting solely of normal recurring adjustments)
which are necessary for the fair statement of results for the interim period.
These condensed consolidated financial statements should be read in
conjunction with the fiscal 2003 Form 10-K Annual Report of the Company.
2. Due to the seasonal nature of the Company's business, the results for the
three months ended March 27, 2004 are not necessarily indicative of the
results for the entire 2004 fiscal year.
3. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
as of the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
4. Certain 2003 amounts have been reclassified to conform with the 2004
presentation.
5. In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, "Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51" (FIN 46). FIN 46 addresses the consolidation of
entities whose equity holders (a) have not provided sufficient equity at risk
to allow the entity to finance its own activities or (b) do not possess
certain characteristics of a controlling financial interest. FIN 46 requires
the consolidation of these entities, known as variable interest entities
(VIEs), by the primary beneficiary of the entity. The primary beneficiary is
the entity, if any, that is subject to a majority of the risk of loss from
the VIEs' activities, entitled to receive a majority of the VIEs' residual
returns, or both. In December 2003, the FASB issued FIN 46(R), "Consolidation
of Variable Interest Entities," which represents a revision to FIN 46. FIN
46(R) provided clarifications to FIN 46 and excluded certain entities from
its scope. The requirements of FIN 46(R) for entities commonly referred to as
special-purpose entities (SPEs) are effective for periods ending after
December 15, 2003. The requirements for all other types of entities are
effective for periods ending after March 15, 2004. The Company does not have
any entities classified as VIEs or SPEs; therefore, the adoption of FIN 46(R)
had no effect on the Company's financial condition, results of operations or
cash flows.
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PUBLIX SUPER MARKETS, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
- --------------------------------------------------------------------------------
Results of Operations
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Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents and short-term and long-term investments totaled
approximately $965.9 million at March 27, 2004, compared to $738.6 million at
March 29, 2003. Net cash provided by operating activities was approximately
$504.3 million for the three months ended March 27, 2004, as compared to $514.7
million for the three months ended March 29, 2003. 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 $147.5 million for
the three months ended March 27, 2004, as compared to $160.4 million for the
three months ended March 29, 2003. The primary use of net cash in investing
activities was funding capital expenditures. During the three months ended March
27, 2004, capital expenditures totaled approximately $113.9 million. These
expenditures were primarily incurred in connection with the opening of 11 net
new supermarkets (15 new supermarkets opened and four supermarkets closed) and
remodeling or expanding 15 supermarkets. Net new supermarkets added an
additional 0.5 million square feet in the three months ended March 27, 2004, a
1.3% increase. Significant expenditures were also incurred in the expansion of
warehouses and new or enhanced information technology applications. During the
three months ended March 29, 2003, capital expenditures totaled approximately
$153.3 million. These expenditures were primarily incurred in connection with
the opening of 14 net new supermarkets (16 new supermarkets opened and two
supermarkets closed) and remodeling or expanding ten supermarkets. Net new
supermarkets added an additional 0.7 million square feet in the three months
ended March 29, 2003, a 2.1% increase. Significant expenditures were also
incurred in the expansion of warehouses and new or enhanced information
technology applications.
Capital expenditures for the remainder of 2004, primarily consisting of new
supermarkets, remodeling and expanding certain existing supermarkets, expansion
of warehouses and new or enhanced information technology applications, are
expected to be approximately $386.1 million. This capital program is subject to
continuing change and review. 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 $129.5 million for
the three months ended March 27, 2004, as compared to $218.6 million for the
three months ended March 29, 2003. 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, Non-Employee Directors
Stock Purchase Plan, 401(k) Plan and Employee Stock Ownership Plan. Net common
stock repurchases totaled approximately $129.3 million for the three months
ended March 27, 2004, as compared to $218.5 million for the three months ended
March 29, 2003. The amount of common stock offered to the Company for repurchase
is not within the control of the Company, but is at the discretion of the
stockholders. 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 for amounts similar to those in prior years. However, such repurchases are
not required and the Company retains the right to discontinue them at any time.
-7-
On March 3, 2004, the Company declared an annual cash dividend on its
common stock of $.45 per share or approximately $80.8 million, payable on June
1, 2004, to stockholders of record as of the close of business April 19, 2004.
In December 2003, 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 March
27, 2004.
The cash requirements for 2004 current operations, capital expenditures and
common stock repurchases are expected to be financed by internally generated
funds, liquid assets or the committed line of credit described above. Based on
the Company's financial position, it is expected that short-term and long-term
borrowings would be readily available to support the Company's liquidity
requirements if needed.
Results of Operations
- ---------------------
Sales for the three months ended March 27, 2004, were $4.7 billion as
compared to $4.3 billion for the three months ended March 29, 2003, an increase
of $353.4 million or an 8.2% increase. This reflects an increase of
approximately $222.2 million or 5.2% from net new supermarkets and an increase
of approximately $131.2 million or 3% in comparable store sales (supermarkets
open for the same weeks in both periods, including replacement supermarkets)
since the beginning of the first quarter of 2003.
Gross profit, as a percentage of sales, was approximately 27% and 27.1% for
the three months ended March 27, 2004 and March 29, 2003, respectively. Gross
profit for the three months ended March 27, 2004 remained relatively unchanged
compared to the three months ended March 29, 2003. During 2003, the Company
modified its calculation of cost of merchandise sold. The cost of merchandise
sold calculation was modified to improve the comparability of the Company's
gross profit to others in the food retailing industry.
Operating and administrative expenses, as a percentage of sales, were
approximately 20.9% and 21.1% for the three months ended March 27, 2004 and
March 29, 2003, respectively. The decrease in operating and administrative
expenses during the three month period ended March 27, 2004 was primarily due to
decreases in payroll and workers' compensation costs partially offset by
increases in utilities and health insurance costs. The operating and
administrative expenses, as a percentage of sales, for the prior three month
period was adjusted due to the modification of the cost of merchandise sold
calculation discussed above.
Net earnings were $203.4 million or $1.14 per share and $187.1 million or
$.99 per share for the three months ended March 27, 2004 and March 29, 2003,
respectively.
-8-
Cautionary Note Regarding Forward-Looking Statements
- ----------------------------------------------------
From time to time, certain information provided by the Company, including
written or oral statements made by its representatives, may contain
forward-looking information as defined in Section 21E of the Securities Exchange
Act of 1934. Forward-looking information includes statements about the future
performance of the Company, which is based on management's assumptions and
beliefs in light of the information currently available to them. When used, the
words "plan," "estimate," "project," "intend," "believe" and other similar
expressions, as they relate to the Company, are intended to identify such
forward-looking statements. These forward-looking statements are subject to
uncertainties and other factors that could cause actual results to differ
materially from those statements including, but not limited to: competitive
practices and pricing in the food and drug industries generally and particularly
in the Company's principal markets; changes in the general economy; changes in
consumer spending; and other factors affecting the Company's business in or
beyond the Company's control. These factors include changes in the rate of
inflation, changes in state and Federal legislation or regulation, adverse
determinations with respect to litigation or other claims, ability to recruit
and retain employees, ability to construct new stores or complete remodels as
rapidly as planned and stability of product costs. Other factors and assumptions
not identified above could also cause the actual results to differ materially
from those set forth in the forward-looking statements. The Company assumes no
obligation to update publicly these forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
The Company does not utilize financial instruments for trading or other
speculative purposes, nor does it utilize leveraged financial instruments. The
Company does not consider to be material the potential losses in future
earnings, fair values and cash flows from reasonably possible near-term changes
in interest rates.
Item 4. Controls and Procedures
- --------------------------------
As of the end of the period covered by this quarterly 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-15. 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 Securities and Exchange Commission filings.
There have been no significant changes in the Company's internal control over
financial reporting during the quarter ended March 27, 2004, that have
materially affected, or are reasonably likely to materially affect, the internal
control over financial reporting.
-9-
PUBLIX SUPER MARKETS, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- ----------------------------
As reported in the Company's Form 10-K for the year ended December 27,
2003, the Company is a party in various legal claims and actions considered in
the normal course of business. In the opinion of management, the ultimate
resolution of these legal proceedings will not have a material adverse effect on
the Company's financial condition, results of operations or cash flows.
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
- --------------------------------------------------------------------------------
Securities
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Shares of common stock repurchased by the Company during the three months
ended March 27, 2004 were as follows:
Total
Number of Approximate
Shares Dollar Value
Purchased as of Shares
Total Average Part of Publicly that May Yet Be
Number of Price Announced Purchased Under
Shares Paid per Plans or the Plans or
Period Purchased Share Programs(1) Programs(1)
- ------ --------- ----- ----------- -----------
December 28, 2003
through
January 31, 2004 527,230 $ 46.50 N/A N/A
February 1, 2004
through
February 28, 2004 857,773 46.50 N/A N/A
February 29, 2004
through
March 27, 2004 1,731,243 51.50 N/A N/A
--------- -------
Total 3,116,246 $ 49.28 N/A N/A
========= =======
(1) Common stock is made available for sale only to the Company's current
employees and members of its Board of Directors through the Company's
Employee Stock Purchase Plan (ESPP), Non-Employee Directors Stock Purchase
Plan (Directors Plan) and 401(k) Plan. In addition, common stock is made
available under the Employee Stock Ownership Plan (ESOP). The Company
currently repurchases common stock subject to certain terms and
conditions. The ESPP, Directors Plan, 401(k) Plan and ESOP each contain
provisions prohibiting any transfer for value without the owner first
offering the common stock to the Company.
The Company's common stock is not traded on any public stock exchange. The
amount of common stock offered to the Company for repurchase is not within
the control of the Company, but is at the discretion of the stockholders.
The Company does not believe that these repurchases of its common stock
are within the scope of a publicly announced plan or program (although the
terms of the plans discussed above have been communicated to the
participants). Thus, the Company does not believe that it has made any
repurchases during the three months ended March 27, 2004 required to be
disclosed in the last two columns of the table.
-10-
Item 3. Defaults Upon Senior Securities
- ------------------------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- --------------------------------------------------------------
Not Applicable.
Item 5. Other Information
- ----------------------------
Not Applicable.
Item 6(a). Exhibits
- -------------------
10. Since the filing of the Company's Form 10-K for the year ended
December 27, 2003, the Company has entered into an Indemnification
Agreement with a new officer of the Company. The Indemnification
Agreement is in the same form of Indemnification Agreement filed as
an exhibit to the Company's Form 10-Q for the quarter ended March
31, 2001. Such subsequent indemnified officer is listed as follows:
Alfred J. Ottolino
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-11-
Item 6(b). Reports on Form 8-K
- ------------------------------
The Company filed a report on Form 8-K on March 5, 2004, pursuant to Item
12 ("Results of Operations and Financial Condition"), attaching the Company's
press release dated March 1, 2004.
The Company filed a report on Form 8-K on May 4, 2004, pursuant to Item 12
("Results of Operations and Financial Condition"), attaching the Company's press
release dated May 3, 2004.
SIGNATURES
Pursuant to the requirements 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.
Date: May 4, 2004 /s/ John A. Attaway, Jr.
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John A. Attaway, Jr., Secretary
Date: May 4, 2004 /s/ David P. Phillips
------------------------------------------
David P. Phillips, Chief Financial Officer
and Treasurer (Principal Financial and
Accounting Officer)
-12-