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 26, 2005
--------------
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.
-----------------------------------------------------
(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 Publix Corporate Parkway
Lakeland, Florida 33811
- --------------------------------------- --------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (863) 688-1188
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- -------
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 21, 2005 was 174,197,042.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts are in thousands, except par value and share amounts)
ASSETS
March 26, 2005 December 25, 2004
-------------- -----------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 598,292 370,288
Short-term investments 119,143 101,718
Trade receivables 297,345 289,455
Merchandise inventories 961,112 1,054,183
Deferred tax assets 91,014 71,934
Prepaid expenses 14,208 11,804
---------- ----------
Total current assets 2,081,114 1,899,382
---------- ----------
Long-term investments 1,028,600 918,443
Other noncurrent assets 22,041 18,372
Property, plant and equipment 5,435,431 5,401,760
Less accumulated depreciation (2,336,415) (2,273,686)
---------- ----------
Net property, plant and equipment 3,099,016 3,128,074
---------- ----------
Total assets $6,230,771 5,964,271
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 788,217 762,655
Accrued contribution to retirement plans 148,618 290,136
Accrued self-insurance reserves 119,665 115,010
Accrued salaries and wages 111,025 90,069
Federal and state income taxes 194,443 232,478
Other 279,833 187,451
---------- ----------
Total current liabilities 1,641,801 1,677,799
---------- ----------
Deferred tax liabilities, net 305,495 313,073
Self-insurance reserves 247,452 240,821
Accrued postretirement benefit cost 68,013 68,101
Other noncurrent liabilities 99,667 78,761
Stockholders' equity:
Common stock of $1 par value. Authorized
300,000,000 shares; issued 175,488,534
shares at March 26, 2005 and 172,591,732
shares at December 25, 2004 175,489 172,592
Additional paid-in capital 818,227 630,983
Retained earnings 2,916,264 2,779,592
---------- ----------
3,909,980 3,583,167
Less 507,652 treasury shares
at March 26, 2005, at cost (32,490) ---
Accumulated other comprehensive earnings (9,147) 2,549
---------- ----------
Total stockholders' equity 3,868,343 3,585,716
---------- ----------
Total liabilities and stockholders'
equity $6,230,771 5,964,271
========== ==========
See accompanying notes to condensed consolidated financial statements.
1
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except shares outstanding and per share amounts)
Three Months Ended
March 26, 2005 March 27, 2004
-------------- --------------
(Unaudited)
Revenues:
Sales $ 5,142,311 4,650,448
Other operating income 38,162 32,372
------------ -----------
Total revenues 5,180,473 4,682,820
------------ -----------
Costs and expenses:
Cost of merchandise sold 3,744,622 3,395,087
Operating and administrative expenses 1,047,844 974,403
------------ -----------
Total costs and expenses 4,792,466 4,369,490
------------ -----------
Operating profit 388,007 313,330
------------ -----------
Investment income, net 16,117 6,403
Other income, net 6,353 4,544
------------ -----------
Earnings before income tax expense 410,477 324,277
Income tax expense 151,371 120,881
------------ -----------
Net earnings $ 259,106 203,396
============ ===========
Weighted average number of common
shares outstanding 173,145,420 178,662,333
============ ===========
Basic and diluted earnings per common
share based on weighted average
shares outstanding $ 1.50 1.14
============ ===========
Cash dividends paid per common share none none
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
Three Months Ended
March 26, 2005 March 27, 2004
-------------- --------------
(Unaudited)
Net earnings $ 259,106 203,396
Other comprehensive earnings
Unrealized (loss) gain on investment
securities available-for-sale,
net of tax effect of ($6,025) and
$1,486 in 2005 and 2004, respectively (9,593) 2,365
Reclassification adjustment for net
realized gain on investment
securities available-for-sale, net
of tax effect of ($1,320) and ($41)
in 2005 and 2004, respectively (2,103) (64)
------------ -----------
Comprehensive earnings $ 247,410 205,697
============ ===========
See accompanying notes to condensed consolidated financial statements.
2
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
Three Months Ended
March 26, 2005 March 27, 2004
-------------- --------------
(Unaudited)
Cash flows from operating activities:
Cash received from customers $ 5,144,262 4,651,499
Cash paid to employees and suppliers (4,430,392) (4,133,968)
Income taxes paid (208,719) (9,787)
Payment for self-insured claims (41,368) (43,775)
Dividends and interest received 14,325 6,614
Other operating cash receipts 34,922 28,570
Other operating cash payments (757) (1,018)
----------- ----------
Net cash provided by operating
activities 512,273 498,135
----------- ----------
Cash flows from investing activities:
Payment for property, plant and
equipment (69,698) (107,924)
Proceeds from sale of property, plant
and equipment 6,624 21,690
Proceeds from sale-leasebacks --- 6,116
Payment for investment securities -
available-for-sale (AFS) (214,016) (71,326)
Proceeds from sale and maturity of
investment securities - AFS 68,888 9,524
Net (payments) proceeds to/from joint
ventures and other investments (160) 995
Other, net (3,875) (467)
----------- ----------
Net cash used in investing activities (212,237) (141,392)
----------- ----------
Cash flows from financing activities:
Payment for acquisition of common stock (104,588) (153,562)
Proceeds from sale of common stock 32,687 24,234
Other, net (131) (131)
----------- ----------
Net cash used in financing activities (72,032) (129,459)
----------- ----------
Net increase in cash and cash equivalents 228,004 227,284
----------- ----------
Cash and cash equivalents at beginning
of period 370,288 277,072
----------- ----------
Cash and cash equivalents at end of period $ 598,292 504,356
=========== ==========
See accompanying notes to condensed consolidated financial statements.
(Continued)
3
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts are in thousands)
Three Months Ended
March 26, 2005 March 27, 2004
-------------- --------------
(Unaudited)
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings $259,106 203,396
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 92,600 89,592
Retirement contributions paid or payable
in common stock 76,951 61,436
Deferred income taxes (19,313) (566)
(Gain) loss on sale of property, plant
and equipment (262) 8,329
Amortization of deferred income from
sale-leasebacks (457) (280)
Gain on sale of investments (3,423) (105)
Self-insurance reserves in excess of
current payments 11,286 12,241
Postretirement accruals less than
current payments (88) (152)
(Decrease) increase in advance purchase
allowances (533) 818
Other, net (1,167) 581
Change in cash from:
Trade receivables (7,890) (7,355)
Merchandise inventories 93,071 (4,173)
Prepaid expenses (2,404) (5,677)
Accounts payable and accrued expenses 52,831 28,390
Federal and state income taxes (38,035) 111,660
-------- -------
Total adjustments 253,167 294,739
-------- -------
Net cash provided by operating activities $512,273 498,135
======== =======
See accompanying notes to condensed consolidated financial statements.
4
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 2004 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 26, 2005 are not necessarily indicative of the
results for the entire 2005 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 2004 amounts have been reclassified to conform with the 2005
presentation.
5. In November 2004, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard No. 151, "Inventory Costs," (SFAS
151) effective for fiscal years beginning after June 15, 2005. SFAS 151
amends Accounting Research Bulletin No. 43, Chapter 4, "Inventory Pricing,"
to clarify the accounting for abnormal amounts of idle facility expense,
freight, handling costs and wasted material. SFAS 151 requires that those
items be recognized as current period charges and requires that allocation of
fixed production overhead to the cost of conversion be based on the normal
capacity of the production facilities. The adoption of SFAS 151 is not
expected to have a material effect on the Company's financial condition,
results of operations or cash flows.
6. In December 2004, the Financial Accounting Standards Board (FASB) issued a
revision to Statement of Financial Accounting Standard No. 123, "Share-Based
Payment," (SFAS 123(R)) effective for fiscal years beginning after June 15,
2005. SFAS 123(R) will require all stock-based compensation awards to be
recorded at fair value as an expense in the Company's consolidated financial
statements. The Company does not have any stock-based employee compensation;
therefore, the adoption of SFAS 123(R) will have no effect on the Company's
financial condition, results of operations or cash flows.
5
PUBLIX SUPER MARKETS, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
Overview
- --------
The Company is primarily engaged in the retail supermarket business,
operating stores in Florida, Georgia, South Carolina, Alabama and Tennessee. As
of March 26, 2005, the Company operated 851 supermarkets, five convenience
stores and five liquor stores. In addition, the Company has a majority position
in the Crispers restaurant chain. As of March 26, 2005, Crispers operated 28
restaurants, all located in Florida. During the first quarter, the Company
announced its new Hispanic supermarket format under the banner Publix Sabor. The
first two Publix Sabor stores are scheduled to open during the second quarter
2005.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents and short-term and long-term investments totaled
approximately $1,746.0 million at March 26, 2005, compared to $1,390.4 million
at December 25, 2004.
Net cash provided by operating activities
- -----------------------------------------
Net cash provided by operating activities was approximately $512.3 million
for the three months ended March 26, 2005, as compared with $498.1 million for
the three months ended March 27, 2004. During 2004, the Company and the state of
Florida experienced an unprecedented four major hurricanes in six weeks. As a
result, the Company received an extension on its Federal income tax payments due
September 15, 2004 and December 15, 2004 until December 30, 2004. The delay in
these tax payments decreased net cash provided by operating activities by $190.0
million during the three months ended March 26, 2005. 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
- -------------------------------------
Net cash used in investing activities was approximately $212.2 million for
the three months ended March 26, 2005, as compared with $141.4 million for the
three months ended March 27, 2004. The primary use of net cash in investing
activities was purchasing investments and funding capital expenditures. During
the three months ended March 26, 2005, capital expenditures totaled
approximately $69.7 million. These expenditures were primarily incurred in
connection with the opening of one net new supermarket (seven new supermarkets
opened and six supermarkets closed) and remodeling or expanding 11 supermarkets.
Net new supermarkets added an additional 0.1 million square feet in the three
months ended March 26, 2005, a 0.2% increase. Expenditures were also incurred in
the expansion of warehouses and new or enhanced information technology
applications. During the three months ended March 27, 2004, capital expenditures
totaled approximately $107.9 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.
Capital expenditure projection
- ------------------------------
Capital expenditures for the remainder of 2005, 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 $330.3 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.
6
Net cash used in financing activities
- -------------------------------------
Net cash used in financing activities was approximately $72.0 million for
the three months ended March 26, 2005, as compared with $129.5 million for the
three months ended March 27, 2004. 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, 401(k) Plan, Employee Stock
Ownership Plan and Non-Employee Directors Stock Purchase Plan. Net common stock
repurchases totaled approximately $71.9 million for the three months ended March
26, 2005, as compared with $129.3 million for the three months ended March 27,
2004. 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 purchases are not
required and the Company retains the right to discontinue them at any time.
Dividends
- ---------
On March 2, 2005, the Company declared an annual cash dividend on its
common stock of $.70 per share or approximately $122.4 million, payable on June
1, 2005, to stockholders of record as of the close of business April 19, 2005.
In 2004, the Company paid an annual cash dividend on its common stock of $80.8
million or $.45 per share.
Cash requirements
- -----------------
In 2005, the cash requirements for current operations, capital expenditures
and common stock repurchases are expected to be financed by internally generated
funds or liquid assets. 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
- -----
Sales for the three months ended March 26, 2005, were $5.1 billion as
compared with $4.7 billion for the three months ended March 27, 2004, an
increase of $491.9 million or a 10.6% increase. The Company estimates that its
sales increased approximately $194.3 million or 4.2% from net new supermarkets
and approximately $297.6 million or 6.4% in comparable store sales (supermarkets
open for the same weeks in both periods, including replacement supermarkets)
since the beginning of the first quarter of 2004. Included in comparable store
sales is approximately $60.5 million or 1.3% of sales related to the early
Easter holiday, which was in the second quarter of 2004.
Gross profit
- ------------
Gross profit, as a percentage of sales, was approximately 27.2% and 27.0%
for the three months ended March 26, 2005 and March 27, 2004, respectively.
Gross profit for the three months ended March 26, 2005 remained relatively
unchanged as a percentage of sales compared to the three months ended March 27,
2004.
Operating and administrative expenses
- -------------------------------------
Operating and administrative expenses, as a percentage of sales, were
approximately 20.4% and 21.0% for the three months ended March 26, 2005 and
March 27, 2004, respectively. The decrease in operating and administrative
expenses as a percentage of sales during the three months ended March 26, 2005
was primarily due to decreases in payroll and workers' compensation as a
percentage of sales.
The Company reviewed its lease accounting policies in connection with the
recently issued Securities and Exchange Commission views on this matter. The
Company's related lease accounting adjustments had an insignificant effect on
the Company's financial condition and results of operations and did not affect
cash flows.
7
Net earnings
- ------------
Net earnings were $259.1 million or $1.50 per share and $203.4 million or
$1.14 per share for the three months ended March 26, 2005 and March 27, 2004,
respectively.
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; results of programs to control or reduce
costs, improve buying practices and control shrink; results of programs to
increase sales, including private-label sales, improve perishable departments
and pricing and promotional programs; changes in the general economy; changes in
consumer spending; changes in population, employment and job growth in the
Company's principal markets; 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, increases in operating costs, including but not limited to
labor costs, credit card fees and utility costs, particularly electric utility
costs, 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 26, 2005, that have
materially affected, or are reasonably likely to materially affect, the internal
control over financial reporting.
8
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 25,
2004, 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. Unregistered Sales of Equity Securities and Use of Proceeds
- -------------------------------------------------------------------
Issuer Purchases of Equity Securities
-------------------------------------
Shares of common stock repurchased by the Company during the three months
ended March 26, 2005 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 26, 2004
through
January 29, 2005 439,802 $58.50 N/A N/A
January 30, 2005
through
February 26, 2005 470,327 58.50 N/A N/A
February 27, 2005
through
March 26, 2005 804,921 63.79 N/A N/A
--------- ------
Total 1,715,050 $60.98 N/A N/A
========= ======
(1) Common stock is made available for sale only to the Company's current
employees through the Company's Employee Stock Purchase Plan (ESPP) and
401(k) Plan. In addition, common stock is made available under the
Employee Stock Ownership Plan (ESOP). Common stock is also made
available for sale to members of the Company's Board of Directors
through the Non-Employee Directors Stock Purchase Plan (Directors
Plan). The Company currently repurchases common stock subject to
certain terms and conditions. The ESPP, 401(k) Plan, ESOP and Directors
Plan 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
26, 2005 required to be disclosed in the last two columns of the table.
9
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
The Annual Meeting of Stockholders of the Company was held on April 12,
2005, for the purpose of electing a board of directors. Proxies for the meeting
were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934
and there were no solicitations in opposition to management's solicitation. All
nominees for director listed below were elected. The term of office of the
directors will be until the next annual meeting or until their successors shall
be elected and qualified.
Votes For Votes Withheld
--------- --------------
Carol Jenkins Barnett 133,005,112 134,734
Hoyt R. Barnett 133,003,126 136,720
Joan G. Buccino 132,811,928 327,918
William E. Crenshaw 132,898,854 240,992
Sherrill W. Hudson 132,822,456 317,390
Charles H. Jenkins, Jr. 133,021,668 118,178
Howard M. Jenkins 133,020,515 119,331
E. Vane McClurg 132,857,058 282,788
Kelly E. Norton 132,828,430 311,416
Maria A. Sastre 132,747,638 392,208
Item 5. Other Information
- -------------------------
Not Applicable.
Item 6. Exhibits
- ----------------
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.
10
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: April 26, 2005 /s/ John A. Attaway, Jr.
------------------------------------------
John A. Attaway, Jr., Secretary
Date: April 26, 2005 /s/ David P. Phillips
------------------------------------------
David P. Phillips, Chief Financial Officer
and Treasurer (Principal Financial and
Accounting Officer)
11