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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 26, 1998
( ) 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.)
1936 George Jenkins Boulevard
Lakeland, Florida 33815
- --------------------------------- ------------------------------
(Address of principal executive office (Zip code)
Registrant's telephone number, including area code (941) 688-1188
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock $1.00 Par Value
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
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
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 2, 1999 was approximately $5,908,273,446.
The number of shares of Registrant's common stock outstanding as of March 2,
1999 was 216,125,136.
DOCUMENTS INCORPORATED BY REFERENCE
Pages 2 through 8 of Proxy Statement solicited for the 1999 Annual Meeting of
Stockholders to be held on May 11, 1999 are incorporated by reference in Items
10, 11 and 13 of Part III hereof.
PART I
Item 1. Business
Publix Super Markets, Inc. is based in Lakeland, Florida and was
incorporated in Florida on December 27, 1921. Publix Super Markets, Inc. and its
wholly owned subsidiary, hereinafter collectively referred to as the "Company,"
is in the business of operating retail food supermarkets in Florida, Georgia,
South Carolina and Alabama. The Company has no other lines of business or
industry segments. Therefore, financial information about industry segments or
lines of business is omitted.
The Company's supermarkets sell groceries, dairy, produce, deli, bakery,
meat, seafood, housewares and health and beauty care items. Many stores have
pharmacy, photo and floral departments. In addition, the Company has agreements
with commercial banks to operate in some of its stores.
The Company's lines of merchandise include a variety of nationally
advertised and private label brands, as well as unbranded merchandise such as
produce, meat and seafood. Private label items are produced in the Company's
manufacturing facilities or are manufactured for the Company by outside
suppliers.
The Company manufactures dairy, bakery and deli products. The Company's
dairy plants are located in Lakeland and Deerfield Beach, Florida, and
Lawrenceville, Georgia. The bakery and deli plants are located in Lakeland,
Florida. The Company receives the food and non-food items it distributes from
many sources. These products are generally available in sufficient quantities to
enable the Company to adequately satisfy its customers. The Company believes
that its sources of supply of these products and raw materials used in
manufacturing are adequate for its needs and that it is not dependent upon a
single or relatively few suppliers.
The Company operated 586 supermarkets at the end of 1998, compared with 563
at the beginning of the year. In 1998, 31 stores were opened, eight stores were
closed, and 45 stores were expanded or remodeled. The net increase in square
footage was 1.0 million square feet or 4.0% since 1997. At the end of 1998, the
Company had 471 stores located in Florida, 91 in Georgia, 21 in South Carolina
and three in Alabama. Also, as of year end, the Company had 35 stores under
construction in Florida, eight in Georgia and one in South Carolina.
The Company is engaged in a highly competitive industry. Competition, based
primarily on price, quality of goods and service, convenience and product mix,
is with several national and regional chains, independent stores and mass
merchandisers throughout its market areas. The Company anticipates continued
competitor format innovation and location additions in 1999.
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 117,000 employees at the end of 1998,
compared with 111,000 at the end of 1997. Of this total, approximately 70,400 at
the end of 1998 and 68,500 at the end of 1997 were not full-time employees.
The Company's research and development expenses are insignificant.
Compliance by the Company with Federal, state and local environmental
protection laws during 1998 had no material effect upon capital expenditures,
earnings or the competitive position of the Company.
Item 2. Properties
At year end, the Company operated approximately 26.3 million square feet of
retail space. The Company's stores vary in size. Current store prototypes range
from 27,000 to 60,000 square feet. Stores are often located in strip shopping
centers where the Company is the anchor tenant.
The Company supplies its retail stores from eight distribution centers
located in Lakeland, Miami, Jacksonville, Sarasota, Orlando, Deerfield Beach and
Boynton Beach, Florida, and Lawrenceville, Georgia.
The majority of the Company's retail stores are leased. Substantially all
of these leases will expire during the next 20 years. However, in the normal
course of business, it is expected that the leases will be renewed or replaced
by leases on other properties. At 49 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 suitable and adequate for operating its business.
Item 3. Legal Proceedings
A purported class action was filed against the Company on April 3, 1997 in
the Federal District Court for the Middle District of Florida (the "Court") by
Lemuel Middleton and 15 other present or former employees of the Company,
individually and on behalf of all other persons similarly situated (the
"Middleton case"). In their Complaint, the plaintiffs allege that the Company
has and is currently engaged in a pattern and practice of race-based
discriminatory treatment of black employees and applicants with respect to
hiring, promotion, job assignment, conditions of employment, and other
employment aspects, all in violation of Federal and state law. Subsequently,
three of the named plaintiffs withdrew their claims with prejudice. The
plaintiffs sought, among other relief, a certification of the suit as a class
action, declaratory and injunctive relief, back pay, front pay, benefits and
other compensatory damages, and punitive damages.
On June 15, 1998, a Federal magistrate judge recommended certification as a
class action of claims in the Middleton case relating only to Publix's retail
stores in Florida and Georgia. Publix and the plaintiffs have both objected to
the recommendation, with Publix asking that no class be certified and plaintiffs
asking that the class be expanded. The plaintiffs have also moved to drop all
claims for compensatory and punitive damages asserted in the lawsuit and,
therefore, to withdraw their demand for a jury trial.
On November 6, 1997, another purported class action was filed against the
Company in the Court by Shirley Dyer and five other present or former employees
of the Company, individually and on behalf of all other persons similarly
situated (the "Dyer case"). In their Complaint, the plaintiffs allege that the
Company has violated and is currently violating Federal and state civil rights
statutes by discriminating against female employees and applicants with respect
to hiring, promotion, training, compensation, discipline, demotion and
termination, and/or retaliation for bringing allegations of discrimination. The
plaintiffs have moved to certify a class of all female current, former and
future Company employees and applicants in all of the Company's manufacturing
plants and distribution centers with respect to certain claims. The plaintiffs
seek, among other relief, declaratory and injunctive relief, back pay, front
pay, benefits and other compensatory damages, and punitive damages. The parties
have briefed issues relating to class certification and await the Court's
ruling.
On December 8, 1998, another purported class action was filed against the
Company in the Court by Charlene Jones, individually and on behalf of other
persons similarly situated (the "Jones case"). In her Complaint, the plaintiff
alleges that the Company has violated and is currently violating Federal and
state civil rights statutes by discriminating against female applicants for
employment in the Company's manufacturing plants and distribution centers. The
plaintiffs in the Jones and Dyer cases have asked the Court to combine the two
cases.
The Company denies the allegations of the plaintiffs in the Middleton, Dyer
and Jones cases and is vigorously defending the actions.
The Company is also a party in various legal claims and actions considered
in the normal course of business. Management believes that the ultimate
disposition of these matters will not have a material effect on the Company's
liquidity, results of operations or financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
None
EXECUTIVE OFFICERS OF THE COMPANY
Served as
Nature of Family Officer of
Relationship Company
Name Age Position Between Officers Since
---- --- -------- ---------------- -----
Howard M. Jenkins 47 Chairman of Cousin of 1976
the Board and Charles H. Jenkins,
Chief Executive Jr., uncle of
Officer W. Edwin Crenshaw
and brother-in-law
of Hoyt R. Barnett
Charles H. Jenkins, Jr. 55 Chairman of the Cousin of 1974
Executive Committee Howard M. Jenkins and
cousin of
W. Edwin Crenshaw
W. Edwin Crenshaw 48 President Nephew of 1990
Howard M. Jenkins
and cousin of
Charles H. Jenkins, Jr.
Hoyt R. Barnett 55 Vice Chairman Brother-in-law of 1977
Howard M. Jenkins
William H. Vass 49 Executive 1986
Vice President
Jesse L. Benton 56 Vice President 1988
S. Keith Billups 66 Secretary 1968
David E. Bornmann 41 Vice President 1998
Joseph W. Carvin 48 Vice President 1998
R. Scott Charlton 40 Vice President 1992
Carolyn C. Day 53 Assistant Secretary 1992
Glenn J. Eschrich 54 Vice President 1995
William V. Fauerbach 52 Vice President 1997
John R. Frazier 49 Vice President 1997
M. Clayton Hollis, Jr. 42 Vice President 1994
Mark R. Irby 43 Vice President 1989
Tina P. Johnson 39 Senior Vice President 1990
James J. Lobinsky 59 Senior Vice President 1992
Thomas M. McLaughlin 48 Vice President 1994
Sharon A. Miller 55 Assistant Secretary 1992
EXECUTIVE OFFICERS OF THE COMPANY
Served as
Nature of Family Officer of
Relationship Company
Name Age Position Between Officers Since
---- --- -------- ---------------- -----
Robert H. Moore 56 Vice President 1994
Thomas M. O'Connor 51 Vice President 1992
David P. Phillips 39 Vice President Finance 1990
and Treasurer
Henry J. Pileggi, Jr. 40 Vice President 1998
James H. Rhodes II 54 Vice President 1995
Daniel M. Risener 58 Vice President 1985
Edward T. Shivers 59 Vice President 1985
James F. Slappey 56 Vice President 1992
The terms of all officers expire at the annual meeting of the Company in May
1999, with the exception of William H. Vass who retired as Executive Vice
President effective December 31, 1998. Mr. Vass continues to work for the
Company on a part-time basis.
Name Business Experience During Last Five Years
- ---- ------------------------------------------
Howard M. Jenkins Chairman of the Board and Chief Executive Officer of the
Company.
Charles H. Jenkins, Jr. Chairman of the Executive Committee of the Company.
W. Edwin Crenshaw Vice President of the Company to January 1994, Executive
Vice President to January 1996, President thereafter.
Hoyt R. Barnett Executive Vice President and Trustee of the Profit
Sharing Plan of the Company to August 1998, Executive
VicPresident, Trustee of the Profit Sharing Plan and
Trustee of the ESOT to January 1999, Vice Chairman,
Trustee of the Profit Sharing Plan and Trustee of the
ESOT, thereafter.
William H. Vass Executive Vice President and Trustee of the ESOT of the
Company to August 1998, Executive Vice President to
December 1998. Employee of the Company on a part-time
basis, thereafter.
Jesse L. Benton Vice President of the Company.
S. Keith Billups Secretary of the Company.
David E. Bornmann Manager of Strategic Projects -
Improvement Systems of the Company to September 1994,
Business Development Manager Corporate Purchasing to
October 1998, Vice President thereafter.
Joseph W. Carvin Human Resources Counsel of the Company to June 1998,
Director of Human Resources and Employment Law to
November 1998, Vice President thereafter.
R. Scott Charlton Vice President of the Company.
Carolyn C. Day Capital Stock Registrar and Transfer Agent and Assistant
Secretary of the Company.
Glenn J. Eschrich Director of Strategy Support of the Company to March
1995, Vice President thereafter.
William V. Fauerbach Assistant Director of Retail Operations -
Miami Division of the Company to January 1994,
Regional Director of Retail Operations - Miami
Division to January 1997, Vice President thereafter.
John R. Frazier Real Estate Manager of the Company to August 1996,
Director of Real Estate to January 1997, Vice President
thereafter.
M. Clayton Hollis, Jr. Director of Government Relations of the Company to June
1994, Vice President thereafter.
Mark R. Irby Vice President of the Company.
Tina P. Johnson Treasurer of the Company to January 1995, Treasurer and
Trustee of the 401(k) Plan - Publix Stock Fund to March
1996, Vice President, Treasurer and Trustee of the
401(k) Plan - Publix Stock Fund to July 1997, Senior
Vice President and Trustee of the 401(k) Plan - Publix
Stock Fund thereafter.
Name Business Experience During Last Five Years
James J. Lobinsky Vice President of the Company to July 1997, Senior Vice
President thereafter.
Thomas M. McLaughlin Director of Retail Operations - Lakeland
Division of the Company to January 1994, Regional
Director of Retail Operations - Lakeland Division to
June 1994, Vice President thereafter.
Sharon A. Miller Director of Administration and Assistant Secretary of
the Company.
Robert H. Moore Director of Retail Operations - Atlanta Division of the
Company to January 1994, Vice President thereafter.
Thomas M. O'Connor Vice President of the Company.
David P. Phillips Controller of the Company to March 1996, Vice President
and Controller to July 1997, Vice President Finance and
Treasurer thereafter.
Henry J. Pileggi, Jr. District Manager of the Company to June 1994, Regional
Director to October 1998, Vice President thereafter.
James H. Rhodes II Director of Human Resources of the Company to April
1995, Vice President thereafter.
Daniel M. Risener Vice President of the Company.
Edward T. Shivers Vice President of the Company.
James F. Slappey Vice President of the Company.
PART II
Item 5. Market for the Company's Common Stock and Related Stockholder Matters
(a) Market Information
Substantially all transactions of the Company's common stock have been
among the Company, its employees, former employees, their families and
various benefit plans established for the Company's employees. The market
price of the Company's common stock is determined by the Board of
Directors based upon appraisals prepared by an independent appraiser. The
market price for 1998 and 1997 was as follows:
1998 1997
---- ----
January - February $23.25 $20.75
March - April 30.75 21.00
May - July 34.75 21.75
August - October 38.25 23.00
November - December 41.00 23.25
(b) Approximate Number of Equity Security Holders
As of March 2, 1999, the approximate number of holders of record of the
Company`s common stock was 73,000.
(c) Dividends
The Company paid cash dividends of $.20 per share of common stock in 1998
and $.15 per share in 1997. 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
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Sales:
Sales ................ $ 12,067,125 11,224,378 10,431,302 9,393,021 8,664,795
Percent increase ..... 7.5% 7.6% 11.1% 8.4% 16.0%
Comparable store sales
percent increase ... 3.6% 3.3% 5.6% 2.8% 5.2%
Earnings:
Gross profit ......... $ 2,935,707 2,674,118 2,424,799 2,124,036 1,952,043
Earnings before income
tax expense ........ $ 584,388 555,357 416,584 381,500 378,300
Net earnings ......... $ 378,274 354,622 265,176 242,141 238,567
Net earnings as a
percent of sales ... 3.13% 3.16% 2.54% 2.58% 2.75%
Common stock:
Weighted average
shares outstanding . 217,383,413 218,871,661 221,195,884 225,852,938 231,514,459
Basic earnings per
common share,
based on weighted
average shares
outstanding ........ $ 1.74 1.62 1.20 1.07 1.03
Dividends per share .. $ .20 .15 .13 .11 .09
Financial data:
Capital expenditures . $ 357,754 259,806 226,752 256,629 374,190
Working capital ...... $ 467,385 366,680 317,265 232,570 159,971
Current ratio ........ 1.47 1.37 1.35 1.31 1.24
Total assets ......... $ 3,617,259 3,294,980 2,921,084 2,559,365 2,302,336
Long-term debt ....... $ --- --- 108 1,765 3,031
Stockholders' equity . $ 2,327,632 2,019,299 1,751,179 1,614,717 1,473,154
Other:
Number of stores ..... 586 563 534 508 470
NOTE: Amounts are in thousands, except per share, share amounts and number of
stores. Fiscal year 1994 includes 53 weeks. All other years include 52
weeks.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
BUSINESS ENVIRONMENT
As of December 26, 1998, the Company operated 586 retail grocery stores
representing approximately 26.3 million square feet of retail space.
Historically, the Company's primary competition has been from national and
regional chains and smaller independents located throughout its market areas.
The Company has continued to experience increased competition from mass
merchandisers. The products offered by these retailers include many of the same
items sold by the Company.
At the end of fiscal 1998, the Company had 471 stores located in Florida,
91 in Georgia, 21 in South Carolina and three in Alabama. The Company opened 20
stores in Florida, six stores in Georgia and five stores in South Carolina
during 1998. The Company intends to continue to pursue vigorously new locations
in Florida and other states.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities continue to be the Company's primary source of
liquidity. Net cash provided by operating activities was approximately $665.0
million in 1998, compared with $589.2 million in 1997 and $639.9 million in
1996. Working capital was approximately $467.4 million as of December 26, 1998,
as compared with $366.7 million and $317.3 million as of December 27, 1997 and
December 28, 1996, respectively. Cash and cash equivalents aggregated
approximately $669.3 million as of December 26, 1998, as compared with $530.0
million and $457.4 million as of December 27, 1997 and December 28, 1996,
respectively.
Capital expenditures totaled $357.8 million in 1998. These expenditures
were primarily incurred in connection with the opening of 31 new stores and
remodeling or expanding 45 stores. In addition, the Company closed eight stores.
The net impact of new and closed stores (net new stores) added an additional 1.0
million square feet in 1998, a 4.0% increase. Capital expenditures totaled
$259.8 million in 1997. These expenditures were primarily incurred in connection
with the opening of 33 new stores and remodeling or expanding 19 stores. In
addition, the Company closed four stores. Net new stores added an additional 1.4
million square feet in 1997, a 5.9% increase. Capital expenditures totaled
$226.8 million in 1996. These expenditures were primarily incurred in connection
with the opening of 34 new stores and remodeling or expanding 12 stores. In
addition, the Company closed eight stores. Net new stores added an additional
1.4 million square feet in 1996, a 6.4% increase.
The Company plans to open as many as 48 stores in 1999. Although real
estate development is unpredictable, the Company's 1999 new store growth
represents a reasonable estimate of anticipated future growth. Capital
expenditures for 1999, primarily made up of new store and warehouse construction
and the remodeling or expanding of many existing stores, are expected to be
approximately $510 million. This capital program is subject to continuing change
and review. The 1999 capital expenditures are expected to be financed by
internally generated funds and current liquid assets. In the normal course of
operations, the Company replaces stores and closes unprofitable stores. The
impact of future store closings is not expected to be material.
The Company is self-insured, up to certain limits, for health care, fleet
liability, general liability and workers' compensation claims. Reserves are
established to cover estimated liabilities for existing and anticipated claims
based on actual experience including, where necessary, actuarial studies. The
Company has insurance coverage for losses in excess of varying amounts. The
provision for self-insured reserves was $136.4 million, $116.8 million and
$122.0 million in fiscal 1998, 1997 and 1996, respectively. The Company does not
believe its self-insurance program will have a material adverse impact on its
future liquidity, financial condition or results of operations.
Cash generated in excess of the amount needed for current operations and
capital expenditures is invested in short-term and long-term investments.
Short-term investments were approximately $2.0 million in 1998 compared with
$46.8 million in 1997. Long-term investments, primarily comprised of tax exempt
bonds, taxable bonds, equity securities and preferred stocks, were approximately
$385.6 million in 1998 compared with $331.7 million in 1997. Management believes
the Company's liquidity will continue to be strong.
The Company currently repurchases common stock at the stockholders' request
in accordance with the terms of the Company's Employee Stock Purchase Plan. The
Company expects to continue to repurchase its common stock, as offered by its
stockholders from time to time, at its then currently appraised value. However,
such purchases are not required and the Company retains the right to discontinue
them at any time.
RESULTS OF OPERATIONS
The Company's fiscal year ends on the last Saturday in December. Fiscal
years 1998, 1997 and 1996 include 52 weeks. Sales for 1998 were $12.1 billion as
compared with $11.2 billion in 1997, a 7.5% increase. This reflects an increase
of $404.1 million or 3.6% in sales from stores that were open for all of both
years (comparable stores) and sales of $438.6 million or 3.9% from net new
stores since the beginning of 1997. Sales for 1997 were $11.2 billion as
compared with $10.4 billion in 1996, a 7.6% increase. This reflects an increase
of $344.3 million or 3.3% in sales from comparable stores and sales of $448.8
million or 4.3% from net new stores since the beginning of 1996.
Cost of merchandise sold including store occupancy, warehousing and
delivery expenses was approximately 75.7% of sales in 1998 as compared with
76.2% and 76.8% in 1997 and 1996, respectively. In 1998 and 1997, cost of
merchandise sold decreased as a percentage of sales due to buying and
merchandising efficiencies.
Operating and administrative expenses, as a percent of sales, were 20.5%,
19.9% and 19.3% in 1998, 1997 and 1996, respectively. The significant components
of operating and administrative expenses are payroll costs, employee benefits
and depreciation.
In recent years, the impact of inflation on the Company's food prices has
been lower than the overall increase in the Consumer Price Index.
NONRECURRING CHARGE
An $89.0 million nonrecurring charge was recorded in the fourth quarter of
1996 to cover the settlements 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 retail employees and certain other
allegations resulting from a notice of charge issued by the Equal Employment
Opportunity Commission. The nonrecurring charge covers the full cost of the
settlements, including the 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 settlements. The impact of the nonrecurring
charge on net earnings was $46.4 million or $.21 per share for fiscal 1996.
ACCOUNTING STANDARDS
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," (SOP 98-1) effective for
fiscal years beginning after December 15, 1998. SOP 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for internal
use. This pronouncement identifies the characteristics of internal use software
and provides guidance on new cost recognition principles. The Company is
currently evaluating the effect of adopting SOP 98-1.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities," (SOP 98-5) effective for fiscal years beginning after December 15,
1998. SOP 98-5 requires that costs incurred for start-up activities, such as
store openings, be expensed as incurred. The Company has historically accounted
for start-up costs in accordance with the requirements of SOP 98-5, therefore,
there will be no effect on the Company's financial statements from the adoption
of SOP 98-5.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities," (SFAS 133) effective for fiscal years beginning after
June 15, 1999. SFAS 133 requires that derivatives be carried at fair value and
provides for hedge accounting when certain conditions are met. The Company is
currently evaluating the effect of adopting SFAS 133.
YEAR 2000
Year 2000 problems result from the use in computer hardware and software of
two digits rather than four digits to define the applicable year. When computer
systems must process dates both before and after January 1, 2000, two-digit year
"fields" may create processing ambiguities that can cause errors and system
failures. These errors or failures may have limited effects, or the effects may
be widespread, depending on the computer chip, system or software, and its
location and function. The effects of Year 2000 problems are further complicated
because of the interdependence of computer and telecommunications systems in the
United States and throughout the world. This interdependence certainly is true
for the Company and its suppliers, business partners and customers.
The Company's Board of Directors has been briefed about Year 2000 problems
generally and as they may affect the Company. The Company has adopted a Year
2000 plan (the "Plan") covering all of the Company's business units. The aim of
the Plan is to take steps to prevent the Company's processes and systems, with
emphasis on mission-critical functions, from being impaired due to Year 2000
problems. "Mission-critical" functions are those critical functions whose loss
would cause an immediate stoppage of or significant impairment to major business
areas (a major business area is one of material importance to the Company's
business). To oversee the Plan, the Company established a Year 2000 Project
Office. The Project Office is staffed with representatives from the Company's
Information Systems Department, non-Information Systems business areas and
outside consultants. Additional consultants are used on an as needed basis.
Under the Plan, three main areas are addressed: information technology (IT)
systems; non-IT systems (including embedded chip technology); and supply chain
and other third party business partner readiness. The Plan called for the
Company to inventory its mission-critical computer hardware and software systems
and embedded chips (computer chips with date-related functions, contained in a
wide variety of devices); assess the effects of Year 2000 problems on the
Company's business units; remedy systems, software and embedded chips in an
effort to avoid material disruptions or other material adverse effects on
mission-critical functions, processes and systems; verify and test the systems
to which remediation efforts have been applied; and develop contingency plans to
cope with the mission-critical consequences of Year 2000 problems that have not
been identified or remediated by that date.
The Plan recognizes that the computer, telecommunications, and other
systems ("Outside Systems") of outside entities ("Outside Entities") have the
potential for major, mission-critical, adverse effects on the conduct of the
Company's business. The Company does not have control of these Outside Entities
or Outside Systems. The Plan includes an ongoing process of identifying and
contacting Outside Entities whose systems have or may have a substantial effect
on the Company's ability to continue to conduct the mission-critical aspects of
its business without disruption from Year 2000 problems. The Plan includes
reasonable efforts to inventory and assess the extent to which these Outside
Systems may not be "Year 2000 ready" or "Year 2000 compatible." The Company will
use reasonable efforts to coordinate and cooperate with these Outside Entities
in an ongoing effort to obtain assurance that the Outside Systems that are
mission-critical will be Year 2000 compatible well before January 1, 2000.
As of February 1999, the Company and all its business units are at various
stages in implementation of the Plan. The Company will continue to closely
monitor work under the Plan and to revise estimated completion dates as needed.
With respect to non-IT systems and equipment with date sensitive operating
controls such as manufacturing equipment, security, and other similar systems,
the Company is in the process of identifying and addressing those items
requiring replacement, upgrade or other remediation efforts. The Company
estimates that it is approximately 80% complete with the identification,
remediation or replacement, and validation of the Company's IT and non-IT
systems that have been identified as having potential Year 2000 deficiencies.
The Company further estimates that substantially all mission-critical IT and
non-IT systems and equipment will be Year 2000 ready by May 31, 1999, though
unforeseen circumstances may affect this date.
The Company anticipates that total costs for Year 2000 awareness,
inventory, assessment, analysis, conversion, testing, or contingency planning to
be $40.0 million. As of February 1999, approximately $26.0 million of this
amount has been incurred. The incurred costs include the costs of all equipment
upgrades, software modifications, software replacements, employee salaries
allocable to the Year 2000 efforts, and consultant fees and expenses addressing
Year 2000 problems. The funds to pay for addressing Year 2000 problems are
expected to be financed by internally generated funds and current liquid assets.
The Company believes that the cost of addressing Year 2000 problems will not
have a material effect on the Company's consolidated financial position or
results of operations. Although management believes that its estimates are
reasonable, there can be no assurance that the actual costs of implementing the
Plan will not differ materially from the estimated costs or that the Company
will not be materially adversely affected by Year 2000 problems. Additionally,
Year 2000 costs are difficult to estimate accurately because of unanticipated
vendor delays, technical difficulties, the impact of tests of Outside Systems
and similar events. Furthermore, the estimated costs of implementing the Plan do
not take into account the costs, if any, that might be incurred as a result of
Year 2000-related failures that occur despite the Company's implementation of
the Plan.
The Company cannot assure that suppliers upon which it depends for
essential goods and services will convert and test their mission-critical
systems and processes in a timely and effective manner. Failure or delay to do
so by all or some of these entities, including U.S. Federal, state or local
governments, could create substantial disruptions having a material adverse
effect on the Company's business.
As part of the Plan, the Company is developing contingency plans that deal
with two aspects of Year 2000 problems:(1) that the Company, despite its
good-faith, reasonable efforts, may not have satisfactorily remediated all of
its internal mission-critical systems; and (2) that Outside Systems may not be
Year 2000 ready, despite the Company's good-faith, reasonable efforts to work
with Outside Entities. The Company's contingency plans are being designed to
minimize the disruptions or other adverse effects resulting from Year 2000
incompatibilities regarding these mission-critical functions or systems, and to
facilitate the early identification and remediation of mission-critical Year
2000 problems that first manifest themselves after January 1, 2000.
Should the Company or any third party with whom the Company has a
significant business relationship have a Year 2000 systems failure, the Company
believes that the most significant worst-case impact would likely be the
inability, with respect to a store or group of stores, to conduct operations due
to a power failure, to timely deliver inventory, to receive certain products
from vendors, or to electronically process sales to the customer at the store
level. The Company could also experience an inability by customers, suppliers,
and others to pay, on a timely basis or at all, obligations owed to the Company.
Under these circumstances, the adverse effect on the Company could be material,
although not quantifiable at this time. The Company will continue to monitor
business conditions with the aim of assessing and quantifying material adverse
effects, if any, that result or may result from Year 2000 problems.
The Company has a Plan to deal with Year 2000 problems and believes that it
will be able to achieve substantial Year 2000 readiness with respect to the
mission-critical systems that it controls. From a forward-looking perspective,
however, the extent and magnitude of Year 2000 problems as they will affect the
Company, both before and for some period after January 1, 2000, are difficult to
predict or quantify. Given this difficulty, there can be no assurance that all
of the Company's systems and all Outside Systems will be adequately remediated
so that they are Year 2000 ready by January 1, 2000, or by some earlier date, so
as not to create a material disruption to the Company's business. If, despite
the Company's reasonable efforts under its Year 2000 Plan, there are
mission-critical Year 2000 related failures that create substantial disruptions
to the Company's business, the adverse impact on the Company's business could be
material.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
From time to time, information provided by the Company, including written
or oral statements made by its representatives, may contain forward-looking
information about the future performance of the Company which is based on
management's assumptions and beliefs in light of the information currently
available to them. When used in this document, the words "plan," "estimate,"
"project," "intend," "believe" and other similar expressions, as they relate to
the Company, are intended to identify such forward-looking statements. These
forward-looking statements are subject to uncertainties and other factors that
could cause actual results to differ materially from those statements including,
but not limited to: competitive practices and pricing in the food and drug
industries generally and particularly in the Company's principal markets;
changes in the general economy; changes in consumer spending; and other factors
affecting the Company's business in or beyond the Company's control. These
factors include changes in the rate of inflation, changes in state and Federal
legislation or regulation, adverse determinations with respect to litigation or
other claims, ability to recruit and train employees, ability to construct new
stores or complete remodels as rapidly as planned, stability of product costs,
and issues arising from addressing Year 2000 IT and non-IT problems. Other
factors and assumptions not identified above could also cause the actual results
to differ materially from those set forth in the forward-looking statements. The
Company assumes no obligation to update publicly these forward-looking
statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company does not have any material exposure to market risk associated
with activities in derivative financial instruments, other financial instruments
and derivative commodity instruments.
Item 8. Financial Statements and Supplemental Data
The Company's financial statements, together with the independent auditors'
report thereon, are included in the section following Part IV of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons of the
Registrant
Certain information concerning the directors of the Company is incorporated
by reference to pages 2 through 5 of the Proxy Statement of the Company (1999
Proxy Statement) which the Company intends to file no later than 120 days after
its fiscal year end. Certain information concerning the executive officers of
the Company is set forth in Part I under the caption "Executive Officers of the
Company."
Item 11. Executive Compensation
Information regarding executive compensation is incorporated by reference
to pages 5 through 8 of the 1999 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of March 2, 1999, the information with
respect to common stock ownership of all directors, including some who are 5% or
more beneficial owners, and all officers and directors as a group. Also, listed
are others known by the Company to own beneficially 5% or more of the shares of
the Company's common stock.
Amount and Nature Percent
Name of Beneficial Ownership (1) of Class
- ---- --------------------------- --------
Carol Jenkins Barnett 11,875,267 (2) 5.49
Hoyt R. Barnett 55,358,242 (3) 25.61
W. Edwin Crenshaw 627,680 *
Mark C. Hollis 1,364,468 (4) *
Charles H. Jenkins, Jr. 1,683,697 *
Howard M. Jenkins 13,144,041 (5) 6.08
Tina P. Johnson 3,806,989 (6) 1.76
E. Vane McClurg 1,763,062 *
William H. Vass 40,007 *
All Officers and Directors
as a group (31 individuals) 89,065,492 (7) 41.21
All Other Beneficial Owners:
Publix Super Markets, Inc.
Profit Sharing Plan and Trust 21,200,000 9.81
Publix Super Markets, Inc.
Employee Stock Ownership Plan
and Trust 32,814,662 15.18
Nancy E. Jenkins 14,703,305 6.80
*Shares represent less than 1% of class.
Note references are explained on the following page.
(1) As used in the table on the preceding page, "beneficial ownership" means
the sole or shared voting or investment power with respect to the
Company's common stock. Holdings of officers include shares allocated to
their individual accounts in the Company's Employee Stock Ownership
Plan, over which each officer exercises sole voting power and shared
investment power. In accordance with the beneficial ownership
regulations, the same shares of common stock may be included as
beneficially owned by more than one individual or entity. The address
for all beneficial owners is 1936 George Jenkins Boulevard, Lakeland,
Florida 33815.
(2) Includes 1,235,985 shares which are also shown as beneficially owned by
Carol Jenkins Barnett's husband, Hoyt R. Barnett, but excludes all other
shares beneficially owned by Hoyt R. Barnett, as to which Carol Jenkins
Barnett disclaims beneficial ownership.
(3) Hoyt R. Barnett is Trustee of the Profit Sharing Plan which is the
record owner of 21,200,000 shares of common stock over which he
exercises sole voting and investment power. Hoyt R. Barnett is also
Trustee of the Employee Stock Ownership Plan (ESOT) which is the record
owner of 32,814,662 shares of common stock over which he has shared
investment power. As Trustee, Hoyt R. Barnett exercises sole voting
power over 626,094 shares in the ESOT because such shares have not been
allocated to participants' accounts. For ESOT shares allocated to
participants' accounts, Hoyt R. Barnett will vote shares as instructed
by participants. Additionally, Hoyt R. Barnett will vote ESOT shares for
which no instruction is received. Total shares beneficially owned
include 1,235,985 shares also shown as beneficially owned by his wife,
Carol Jenkins Barnett, but exclude all other shares of common stock
beneficially owned by Carol Jenkins Barnett, as to which Hoyt R. Barnett
disclaims beneficial ownership.
(4) All shares are owned in a family trust over which Mark C. Hollis is
Co-Trustee with his wife. As Co-Trustee, Mark C. Hollis has shared
voting and investment power for these shares.
(5) Howard M. Jenkins has sole voting and investment power over 2,262,706
shares of common stock which are held directly, sole voting and
investment power over 162,603 shares which are held indirectly and
shared voting and investment power over 10,700,373 shares which are held
indirectly.
(6) Tina P. Johnson is Trustee of the 401(k) Plan - Publix Stock Fund which
is the record owner of 3,751,391 shares of common stock over which she
has sole voting and shared investment power.
(7) Includes 57,766,053 shares of common stock owned by the Profit Sharing
Plan, ESOT and 401(k) Plan.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related transactions is
incorporated by reference to pages 2 through 5 and 8 of the 1999 Proxy
Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
(a) Consolidated Financial Statements and Schedule
The consolidated financial statements and schedule listed in the
accompanying Index to Consolidated Financial Statements and Schedule
are filed as part of this Annual Report on Form 10-K.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the fourth quarter of
the year ended December 26, 1998.
(c) Exhibits
3(a). Articles of Incorporation of the Company, together with all
amendments thereto, are incorporated by reference to the
exhibits to the Annual Report of the Company on Form 10-K
for the year ended December 25, 1993.
3(b). Amended and Restated By-laws of the Company are incorporated
by reference to the exhibits to the Annual Report of the
Company on Form 10-K for the year ended December 28, 1996.
10. Employment Agreement dated August 28, 1998, between William
H. Vass and the Company, effective January 1, 1999.
21. Subsidiary of the Company.
27. Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PUBLIX SUPER MARKETS, INC.
March 2, 1999 By: /s/ S. Keith Billups
--------------------------
S. Keith Billups
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
Chairman of the Board, Chief
Executive Officer and Director
/s/ Howard M. Jenkins (Principal Executive Officer) March 2, 1999
- ---------------------------
Howard M. Jenkins
Chairman of the Executive
/s/ Charles H. Jenkins, Jr. Committee and Director March 2, 1999
- ---------------------------
Charles H. Jenkins, Jr.
/s/ W. Edwin Crenshaw President and Director March 2, 1999
- ---------------------------
W. Edwin Crenshaw
/s/ Hoyt R. Barnett Vice Chairman and Director March 2, 1999
- ---------------------------
Hoyt R. Barnett
Senior Vice President
/s/ Tina P. Johnson and Director March 2, 1999
- ---------------------------
Tina P. Johnson
Vice President Finance
and Treasurer
(Principal Financial and
/s/ David P. Phillips Accounting Officer) March 2, 1999
- ---------------------------
David P. Phillips
PUBLIX SUPER MARKETS, INC.
Index to Consolidated Financial Statements and Schedule
Independent Auditors' Report
Consolidated Financial Statements:
Consolidated Balance Sheets - December 26, 1998 and December 27, 1997
Consolidated Statements of Earnings - Years ended December 26, 1998,
December 27, 1997 and December 28, 1996
Consolidated Statements of Comprehensive Earnings - Years ended December
26, 1998, December 27, 1997 and December 28, 1996
Consolidated Statements of Stockholders' Equity - Years ended December 26,
1998, December 27, 1997 and December 28, 1996
Consolidated Statements of Cash Flows - Years ended December 26, 1998,
December 27, 1997 and December 28, 1996
Notes to Consolidated Financial Statements
The following consolidated supporting schedule of the Company for the years
ended December 26, 1998, December 27, 1997 and December 28, 1996 is
submitted herewith:
Schedule:
II - Valuation and Qualifying Accounts
All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Publix Super Markets, Inc.:
We have audited the consolidated financial statements of Publix Super Markets,
Inc. (the "Company") as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
consolidated financial statement schedule as listed in the accompanying index.
These consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Publix Super
Markets, Inc. as of December 26, 1998 and December 27, 1997, and the results of
its operations and its cash flows for each of the years in the three-year period
ended December 26, 1998, in conformity with generally accepted accounting
principles. Also in our opinion, the related consolidated financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG LLP
Tampa, Florida
February 24, 1999
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 26, 1998 and
December 27, 1997
Assets 1998 1997
------ ---- ----
(Amounts are in thousands)
Current assets:
Cash and cash equivalents .................. $ 669,326 530,018
Short-term investments ..................... 2,042 46,847
Trade receivables (principally due from
suppliers) .............................. 71,267 71,318
Merchandise inventories .................... 657,565 638,044
Deferred tax assets ........................ 53,578 66,402
Prepaid expenses ........................... 1,889 2,153
----------- ---------
Total current assets .................. 1,455,667 1,354,782
----------- ---------
Long-term investments ........................ 385,571 331,659
Other noncurrent assets ...................... 11,680 9,036
Property, plant and equipment:
Land ....................................... 90,731 87,733
Buildings and improvements ................. 659,209 609,639
Furniture, fixtures and equipment .......... 1,815,852 1,688,425
Leasehold improvements ..................... 363,247 315,205
Construction in progress ................... 62,829 56,705
----------- ---------
2,991,868 2,757,707
Less accumulated depreciation .............. 1,227,527 1,158,204
----------- ---------
Net property, plant and equipment ..... 1,764,341 1,599,503
----------- ---------
$ 3,617,259 3,294,980
=========== =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 26, 1998 and
December 27, 1997
Liabilities and Stockholders' Equity 1998 1997
------------------------------------ ---- ----
(Amounts are in thousands,
except share amounts)
Current liabilities:
Accounts payable ........................... $ 615,753 562,536
Accrued expenses:
Salaries and wages ....................... 53,013 47,367
Contribution to retirement plans ......... 146,107 138,858
Self-insurance reserves .................. 61,413 57,415
Other .................................... 107,207 97,094
Nonrecurring charge ...................... 2,219 69,249
----------- ---------
Total accrued expenses ................ 369,959 409,983
----------- ---------
Federal and state income taxes ............. 2,570 15,583
----------- ---------
Total current liabilities ............. 988,282 988,102
Deferred tax liabilities, net ................ 123,821 114,807
Self-insurance reserves ...................... 98,956 90,068
Accrued postretirement benefit cost .......... 48,858 42,612
Other noncurrent liabilities ................. 29,710 40,092
----------- ---------
Total liabilities ..................... 1,289,627 1,275,681
----------- ---------
Stockholders' equity:
Common stock of $1 par value. Authorized
300,000,000 shares; issued and outstanding
216,862,215 shares in 1998 and 217,419,178
shares in 1997 ........................... 216,862 217,419
Additional paid-in capital ................. 152,472 100,757
Reinvested earnings ........................ 1,958,459 1,696,659
----------- ---------
2,327,793 2,014,835
Accumulated other comprehensive earnings ... (161) 4,464
----------- ---------
Total stockholders' equity ............ 2,327,632 2,019,299
Commitments and contingencies
----------- ---------
$ 3,617,259 3,294,980
=========== =========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Earnings
Years ended December 26, 1998, December 27, 1997
and December 28, 1996
1998 1997 1996
---- ---- ----
(Amounts are in thousands,
except per share amounts)
Revenues:
Sales ............................... $12,067,125 11,224,378 10,431,302
Other income, net ................... 123,311 114,507 94,667
----------- ---------- ----------
Total revenues ................ 12,190,436 11,338,885 10,525,969
----------- ---------- ----------
Costs and expenses:
Cost of merchandise sold, including
store occupancy, warehousing
and delivery expenses ............ 9,131,418 8,550,260 8,006,503
Operating and administrative
expenses ......................... 2,474,630 2,233,268 2,013,882
Nonrecurring charge .................. -- -- 89,000
----------- ---------- ----------
Total costs and expenses ...... 11,606,048 10,783,528 10,109,385
----------- ---------- ----------
Earnings before income tax expense ..... 584,388 555,357 416,584
Income tax expense ..................... 206,114 200,735 151,408
----------- ---------- ----------
Net earnings ........................... $ 378,274 354,622 265,176
=========== ========== ==========
Basic earnings per common share based on
weighted average shares outstanding .. $ 1.74 1.62 1.20
=========== ========== ==========
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Comprehensive Earnings
Years ended December 26, 1998, December 27, 1997
and December 28, 1996
1998 1997 1996
---- ---- ----
(Amounts are in thousands)
Net earnings ........................... $ 378,274 354,622 265,176
Other comprehensive earnings
Unrealized (loss) gain on investment
securities available-for-sale, net of
tax effect of ($5,683), $2,113 and
$540 in 1998, 1997 and 1996,
respectively ......................... (9,078) 3,376 862
Reclassification adjustment
for net realized loss (gain) on
investment securities available-
for-sale, net of tax effect
of $2,787, ($160) and $49 in 1998,
1997 and 1996, respectively .......... 4,453 (255) 77
----------- ---------- ----------
Comprehensive earnings ................. $ 373,649 357,743 266,115
=========== ========== ==========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Stockholders' Equity
Years ended December 26, 1998, December 27, 1997
and December 28, 1996
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 30, 1995 .............. $ 225,746 85,280 1,303,287 -- 404 1,614,717
Comprehensive earnings for the year ........ -- -- 265,176 -- 939 266,115
Cash dividends, $.13 per share ............. -- -- (29,184) -- -- (29,184)
Contribution of 3,156,519 shares to
retirement plans ......................... -- 6,711 -- 57,487 -- 64,198
11,161,186 shares acquired from stockholders -- -- -- (206,235) -- (206,235)
Sale of 2,200,962 shares to stockholders ... -- -- -- 41,568 -- 41,568
Retirement of 5,803,705 shares ............. (5,803) -- (101,377) 107,180 -- --
----------- ----------- ----------- ----------- ----------- -----------
Balances at December 28, 1996 .............. 219,943 91,991 1,437,902 -- 1,343 1,751,179
Comprehensive earnings for the year ........ -- -- 354,622 -- 3,121 357,743
Cash dividends, $.15 per share ............. -- -- (33,003) -- -- (33,003)
Contribution of 1,407,322 shares to
retirement plans ......................... -- 1,446 -- 30,479 -- 31,925
6,926,207 shares acquired from stockholders -- -- -- (153,886) -- (153,886)
Sale of 2,995,314 shares to stockholders ... 358 7,320 -- 57,663 -- 65,341
Retirement of 2,881,508 shares ............. (2,882) -- (62,862) 65,744 -- --
----------- ----------- ----------- ----------- ----------- -----------
Balances at December 27, 1997 .............. 217,419 100,757 1,696,659 -- 4,464 2,019,299
Comprehensive earnings for the year ........ -- -- 378,274 -- (4,625) 373,649
Cash dividends, $.20 per share ............. -- -- (43,752) -- -- (43,752)
Contribution of 2,269,549 shares to
retirement plans ......................... 738 31,780 -- 45,929 -- 78,447
6,298,211 shares acquired from stockholders -- -- -- (213,981) -- (213,981)
Sale of 3,471,695 shares to stockholders ... 757 19,935 -- 93,278 -- 113,970
Retirement of 2,051,992 shares ............. (2,052) -- (72,722) 74,774 -- --
----------- ----------- ----------- ----------- ----------- -----------
Balances at December 26, 1998 .............. $ 216,862 152,472 1,958,459 -- (161) 2,327,632
=========== =========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
Years ended December 26, 1998, December 27, 1997
and December 28, 1996
1998 1997 1996
---- ---- ----
(Amounts are in thousands)
Cash flows from operating activities:
Cash received from customers ............ $ 12,153,967 11,291,118 10,482,420
Cash paid to employees and suppliers .... (11,218,411) (10,441,281) (9,589,610)
Dividends and interest received ......... 55,056 42,437 28,816
Income taxes paid ....................... (194,385) (188,842) (170,412)
Payment for self-insured claims ......... (123,481) (106,920) (103,286)
Other operating cash receipts ........... 726 678 626
Other operating cash payments ........... (8,475) (7,982) (8,651)
------------ ----------- -----------
Net cash provided by operating
activities .................... 664,997 589,208 639,903
------------ ----------- -----------
Cash flows from investing activities:
Payment for property, plant and
equipment .............................. (357,754) (259,806) (226,752)
Proceeds from sale of property, plant
and equipment .......................... 7,562 7,778 11,072
Payment for investment securities -
available-for-sale (AFS) ............... (193,707) (512,912) (453,334)
Proceeds from sale and maturity of
investment securities - AFS ............ 164,999 375,335 408,808
Other, net ............................. (2,895) (5,204) (2,349)
------------ ----------- -----------
Net cash used in investing activities (381,795) (394,809) (262,555)
------------ ----------- -----------
Cash flows from financing activities:
Proceeds from sale of common stock ..... 113,970 65,341 41,568
Payment for acquisition of common stock (213,981) (153,886) (206,235)
Dividends paid ......................... (43,752) (33,003) (29,184)
Other, net ............................. (131) (238) (2,792)
------------ ----------- -----------
Net cash used in financing activities (143,894) (121,786) (196,643)
------------ ----------- -----------
Net increase in cash and cash equivalents . 139,308 72,613 180,705
Cash and cash equivalents at beginning
of year ................................. 530,018 457,405 276,700
------------ ----------- -----------
Cash and cash equivalents at end of year .. $ 669,326 530,018 457,405
============ =========== ===========
See accompanying notes to consolidated financial statements. (Continued)
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
(Continued)
1998 1997 1996
---- ---- ----
(Amounts are in thousands)
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings .............................. $ 378,274 354,622 265,176
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization ......... 181,020 168,613 158,454
Retirement contributions paid or payable
in common stock ..................... 84,532 78,695 68,239
Deferred income taxes ................. 24,742 17,345 (38,721)
Loss on sale of property, plant and
equipment ........................... 4,877 3,674 242
Loss (gain) on sale of investments .... 7,240 (415) 126
Self-insurance reserves in excess of
current payments .................... 12,886 9,897 18,709
Postretirement accruals in excess of
current payments .................... 6,246 5,317 4,098
(Decrease) increase in advance purchase
allowances .......................... (10,251) (10,690) 60,773
Other, net ............................ 4,540 2,121 967
Change in cash from:
Trade receivables .................. 51 (10,097) (16,729)
Merchandise inventories ............ (19,521) (67,790) (27,368)
Prepaid expenses ................... 264 (814) 1,930
Accounts payable and accrued expenses 3,110 44,183 124,289
Federal and state income taxes ..... (13,013) (5,453) 19,718
------------ ----------- -----------
Total adjustments .......... 286,723 234,586 374,727
------------ ----------- -----------
Net cash provided by operating activities . $ 664,997 589,208 639,903
============ =========== ===========
See accompanying notes to consolidated financial statements.
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
December 26, 1998, December 27, 1997
and December 28, 1996
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Business
--------
The Company is in the business of operating retail food supermarkets
in Florida, Georgia, South Carolina and Alabama.
(b) Principles of Consolidation
---------------------------
The consolidated financial statements include the Company and its
wholly owned subsidiary. All significant intercompany balances and
transactions have been eliminated in consolidation.
(c) Definition of Fiscal Year
-------------------------
The fiscal year ends on the last Saturday in December. Fiscal years
1998, 1997 and 1996 include 52 weeks.
(d) Cash Equivalents
----------------
The Company considers all liquid investments with maturities of three
months or less to be cash equivalents.
(e) Inventories
-----------
Inventories are valued at cost (principally the dollar value last-in,
first-out method) including store inventories which are calculated by
the retail method.
(f) Property, Plant and Equipment and Depreciation
----------------------------------------------
Assets are recorded at cost and are depreciated using the
straight-line method over their estimated useful life or the term of
their lease. Maintenance and repairs are charged to expense as
incurred. Expenditures for renewals and betterments are capitalized.
The gain or loss is applied to the asset accounts for traded items or
is reflected in income for disposed items.
(g) Self-Insurance
--------------
Self-insurance reserves are established for health care, fleet
liability, general liability and workers' compensation claims. These
reserves are determined based on actual experience including, where
necessary, actuarial studies. The Company has insurance coverage for
losses in excess of varying amounts.
(h) Long-Lived Assets
-----------------
The Company accounts for long-lived assets in accordance with the
provisions of Statement of Financial Accounting Standard No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of"(SFAS 121). SFAS 121 requires that long-lived
assets and certain identifiable intangibles held and used by an entity
be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
SFAS 121 also requires that long-lived assets and certain identifiable
intangibles to be disposed of be reported at the lower of the carrying
amount or fair value less costs to sell.
(Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(i) Comprehensive Income
--------------------
The Company adopted Statement of Financial Accounting Standard No.
130, "Reporting Comprehensive Income," (SFAS 130) beginning with the
quarter ended March 28, 1998. SFAS 130 sets forth standards for the
reporting of comprehensive income in the financial statements.
Comprehensive income includes net earnings and other comprehensive
income. Other comprehensive income includes revenues, expenses, gains
and losses that have been excluded from net earnings and recorded
directly in the stockholders' equity section of the balance sheet. The
Company has reclassified prior year financial statements to conform to
the requirements of SFAS 130.
(j) Segment Information
-------------------
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 131, "Disclosures about
Segments of an Enterprise and Related Information," (SFAS 131)
effective for fiscal years beginning after December 15, 1997. SFAS 131
provides accounting guidance for reporting information about operating
segments and requires interim segment reporting. The Company operates
in a single segment of business. Therefore, there was no effect on the
Company's financial statements from the adoption of SFAS 131.
(k) Postretirement Benefits
-----------------------
In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," (SFAS
132) effective for fiscal years beginning after December 15, 1997.
SFAS 132 revises employers' disclosures about pension and other
postretirement benefit plans. SFAS 132 does not change the measurement
or recognition of those plans. Therefore, the only effect from the
adoption of SFAS 132 was in the notes to the Company's consolidated
financial statements.
(l) Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(m) Reclassifications
-----------------
Certain 1996 and 1997 amounts have been reclassified to conform with
the 1998 presentation.
(2) Merchandise Inventories
-----------------------
If the first-in, first-out method of valuing inventories had been used by
the Company, inventories and current assets would have been higher than
reported by approximately $108,096,000, $102,393,000 and $101,531,000 as of
December 26, 1998, December 27, 1997 and December 28, 1996, respectively.
Also, net earnings would have increased by approximately $2,799,000 or $.01
per share in 1998, $423,000 or less than $.01 per share in 1997 and
$2,764,000 or $.01 per share in 1996.
2 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(3) Fair Value of Financial Instruments
-----------------------------------
The following methods and assumptions were used by the Company in
estimating the fair value of its financial instruments:
Cash and cash equivalents: The carrying amount for cash and cash
equivalents approximates fair value.
Investment securities: The fair values for marketable debt and equity
securities are based on quoted market prices.
The carrying amount of the Company's financial instruments as of December
26, 1998 and December 27, 1997 approximated their respective fair values.
(4) Investments
-----------
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such designation as of each balance
sheet date. Debt securities are classified as held-to-maturity when the
Company has the positive intent and ability to hold the securities to
maturity. Held-to-maturity securities are stated at cost, adjusted for
amortization of premiums and accretion of discounts to maturity. Such
amortization and accretion is included in other income, net. The Company
had no held-to-maturity securities as of December 26, 1998 and December 27,
1997.
All of the Company's debt securities and marketable equity securities are
classified as available-for-sale. Available-for-sale securities are carried
at fair value, with the unrealized gains and losses, net of tax, reported
as other comprehensive earnings and included as a separate component of
stockholders' equity. The cost of debt securities in this category is
adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization and accretion is included in other income, net.
Realized gains and losses and declines in value judged to be
other-than-temporary on available-for-sale securities are included in other
income, net. The cost of securities sold is based on the specific
identification method.
Following is a summary of available-for-sale securities as of December 26,
1998 and December 27, 1997:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
(Amounts are in thousands)
1998:
Tax-free bonds .... $247,751 2,501 661 249,591
Taxable bonds ..... 9,252 65 1,009 8,308
Equity securities.. 130,872 3,868 5,026 129,714
-------- ----- ----- -------
$387,875 6,434 6,696 387,613
======== ===== ===== =======
1997:
Tax-free bonds .... $231,517 1,185 775 231,927
Taxable bonds ..... 4,940 21 46 4,915
Equity securities.. 134,782 7,456 574 141,664
-------- ----- ------- -------
$371,239 8,662 1,395 378,506
======== ===== ======= =======
3 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
For the fiscal years ended December 26, 1998 and December 27, 1997, the
realized gains on sales of available-for-sale securities totaled $4,176,000
and $1,540,000, respectively, and the realized losses totaled $11,416,000
and $1,125,000, respectively.
The amortized cost and estimated fair value of debt and marketable equity
securities classified as available-for-sale as of December 26, 1998 and
December 27, 1997, by expected maturity, are as follows:
1998 1997
-------------------- --------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---- ----- ---- -----
(Amounts are in thousands)
Due in one year or less .... $ 2,351 2,042 46,722 46,847
Due after one year through
three years .............. 36,832 37,519 26,200 26,624
Due after three years ...... 217,820 218,338 163,535 163,371
-------- ------- ------- -------
257,003 257,899 236,457 236,842
Equity securities .......... 130,872 129,714 134,782 141,664
-------- ------- ------- -------
$387,875 387,613 371,239 378,506
======== ======= ======= =======
(5) Accumulated Other Comprehensive Earnings
----------------------------------------
Accumulated other comprehensive earnings consists of net unrealized gains
(losses) on investment securities available-for-sale. Following is a
summary of the change in the balance of accumulated other comprehensive
earnings as of December 26, 1998 and December 27, 1997:
1998 1997
---- ----
(Amounts are in thousands)
Balance as of beginning of year..... $4,464 1,343
Current period change .............. (4,625) 3,121
------ -----
Balance as of end of year ............. $ (161) 4,464
====== =====
(6) Postretirement Benefits
-----------------------
The Company provides life insurance benefits for salaried and hourly
full-time employees. Such employees retiring from the Company on or after
attaining age 55 and having ten years of credited full-time service are
entitled to postretirement life insurance benefits. The Company funds the
life insurance benefits on a pay-as-you-go basis. During 1998, 1997 and
1996, the Company made benefit payments to beneficiaries of retirees of
approximately $1,361,000, $1,271,000 and $1,420,000, respectively.
4 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
Net postretirement benefit cost consists of the following components:
1998 1997 1996
---- ---- ----
(Amounts are in thousands)
Service cost attributed to service
during the year........................... $3,124 2,533 1,980
Interest cost on postretirement
benefit obligation........................ 4,097 3,755 3,208
Net amortization............................ 386 300 330
------ ----- -----
Net periodic postretirement benefit cost.... $7,607 6,588 5,518
====== ===== =====
Following is a summary of the change in the accrued postretirement benefit
cost as of December 26, 1998 and December 27, 1997:
1998 1997
---- ----
(Amounts are in thousands)
Accrued postretirement benefit cost as of
beginning of year................................. $42,612 37,295
Service cost attributed to service during the year.. 3,124 2,533
Interest cost on postretirement benefit obligation.. 4,097 3,755
Net amortization.................................... 386 300
Payments to beneficiaries........................... (1,361) (1,271)
------- ------
Accrued postretirement benefit cost as of
end of year....................................... $48,858 42,612
======= ======
Following is a reconciliation of the amounts recognized in the Company's
consolidated balance sheets as of December 26, 1998 and December 27, 1997:
1998 1997
---- ----
(Amounts are in thousands)
Accumulated postretirement benefit obligation:
Retirees.......................................... $20,532 18,417
Fully eligible active plan participants........... 14,002 11,966
Other active plan participants.................... 27,403 23,634
------- ------
Accumulated postretirement benefit obligation....... 61,937 54,017
Unrecognized net loss............................... (13,079) (11,405)
------- ------
Accrued postretirement benefit cost................. $48,858 42,612
======= ======
5 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
Following are the actuarial assumptions that were used in the calculation
of the year end accumulated postretirement benefit obligation:
1998 1997 1996
---- ---- ----
Discount rate.......................... 7.00% 7.25% 7.75%
Salary increase rate................... 4.00% 4.00% 4.00%
The change in the discount rate from 7.25% to 7.00% in 1998 increased the
accumulated postretirement benefit obligation by $552,000 and is expected
to increase annual postretirement benefit costs by $38,000 beginning in
1999. The change in the discount rate from 7.75% to 7.25% in 1997 increased
the accumulated postretirement benefit obligation by $4,438,000.
(7) Retirement Plans
----------------
The Company has a trusteed, noncontributory profit sharing plan for the
benefit of eligible employees. The amount of the Company's contribution to
this plan is determined by the Board of Directors. The contribution cannot
exceed 15% of compensation paid to participants. The expense recorded for
contributions to this plan amounted to $73,048,000 in 1998, $69,420,000 in
1997 and $49,010,000 in 1996.
The Company has an Employee Stock Ownership Plan (ESOT). Annual
contributions to the ESOT are determined by the Board of Directors and can
be made in Company stock or cash. The expense recorded for contributions to
the plan amounted to $73,048,000 in 1998, $69,420,000 in 1997 and
$60,818,000 in 1996.
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 6% of their annual compensation, subject to certain
maximum contribution restrictions. The Company may make a discretionary
annual matching contribution to eligible participants of this plan as
determined by the Board of Directors. During 1998, 1997 and 1996, the Board
of Directors approved a match of 50% of eligible contributions up to 3% of
eligible wages not to exceed a maximum of $750 per employee. The match,
which is made in the subsequent year, is in the form of common stock of the
Company. The expense recorded for the Company's match to the 401(k) plan
was approximately $11,484,000, $9,275,000 and $7,421,000 in 1998, 1997 and
1996, respectively.
The Company intends to continue its retirement plans indefinitely; however,
the right to modify, amend, terminate or merge these plans has been
reserved. In the event of termination, all amounts contributed under the
plans must be paid to the participants or their beneficiaries. The Company
has announced its intention to merge the profit sharing plan into the ESOT,
effective December 31, 1999.
(8) Nonrecurring Charge
-------------------
An $89.0 million nonrecurring charge was recorded in the fourth quarter of
1996 to cover the settlements 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 retail employees and
certain other allegations resulting from a notice of charge issued by the
Equal Employment Opportunity Commission. The nonrecurring charge covers the
full cost of the settlements, including the 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
settlements.
6 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
(9) Income Taxes
------------
The provision for income taxes consists of the following:
Current Deferred Total
------- -------- -----
(Amounts are in thousands)
1998:
Federal.............................. $154,384 21,128 175,512
State................................ 26,988 3,614 30,602
-------- ------ -------
$181,372 24,742 206,114
======== ====== =======
1997:
Federal.............................. $156,543 14,792 171,335
State............................... 26,847 2,553 29,400
-------- ------ -------
$183,390 17,345 200,735
======== ====== =======
1996:
Federal.............................. $162,460 (33,073) 129,387
State................................ 27,669 (5,648) 22,021
-------- ------ -------
$190,129 (38,721) 151,408
======== ====== =======
The actual tax expense for 1998, 1997 and 1996 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:
1998 1997 1996
---- ---- ----
(Amounts are in thousands)
Computed "expected" tax expense........ $204,536 194,375 145,804
State income taxes (net of
Federal income tax benefit).......... 19,892 19,108 14,309
Tax exempt interest.................... (11,663) (9,291) (7,066)
Other, net............................. (6,651) (3,457) (1,639)
-------- ------- -------
$206,114 200,735 151,408
======== ======= =======
7 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities as of December
26, 1998 and December 27, 1997 are as follows:
1998 1997
---- ----
(Amounts are in thousands)
Deferred tax assets:
Self-insurance reserves....................... $ 59,906 55,579
Nonrecurring charge........................... 856 26,728
Advance purchase allowances................... 25,347 19,481
Postretirement benefit cost................... 18,857 16,445
Retirement plan contributions................. 14,098 13,390
Inventory capitalization...................... 7,383 7,872
Other......................................... 12,876 10,152
-------- -------
Total deferred tax assets....................... $139,323 149,647
======== =======
Deferred tax liabilities:
Property, plant and equipment,
principally due to depreciation.............. $208,123 197,875
Other......................................... 1,443 177
-------- -------
Total deferred tax liabilities.................. $209,566 198,052
======== =======
The Company expects the results of future operations to generate sufficient
taxable income to allow utilization of deferred tax assets.
(10) Commitments and Contingencies
-----------------------------
(a) Operating Leases
----------------
The Company conducts a major portion of its retail operations from
leased store and shopping center premises generally under 20 year
leases. Contingent rentals paid to lessors of certain store facilities
are determined on the basis of a percentage of sales in excess of
stipulated minimums plus, in certain cases, reimbursement of taxes and
insurance.
Total rental expense, net of sublease rental income, for the years
ended December 26, 1998, December 27, 1997 and December 28, 1996, is
as follows:
1998 1997 1996
---- ---- ----
(Amounts are in thousands)
Minimum rentals.................... $167,536 154,727 135,273
Contingent rentals................. 10,259 9,835 9,892
Sublease rental income............. (6,189) (4,366) (3,572)
-------- ------- -------
$171,606 160,196 141,593
======== ======= =======
8 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
As of December 26, 1998, 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)
1999............... $ 167,236 5,835 161,401
2000............... 166,106 5,405 160,701
2001............... 165,075 4,633 160,442
2002............... 163,559 2,867 160,692
2003............... 161,316 705 160,611
Thereafter......... 1,502,357 1,203 1,501,154
---------- ------ ---------
$2,325,649 20,648 2,305,001
========== ====== =========
The Company also owns shopping centers which are leased to tenants for
minimum monthly rentals plus, in certain instances, contingent
rentals. Contingent rentals received are determined on the basis of a
percentage of sales in excess of stipulated minimums plus, in certain
instances, reimbursement of taxes. Contingent rentals were estimated
at December 26, 1998 and are included in trade receivables. Rental
income was approximately $8,655,000 in 1998, $9,622,000 in 1997 and
$8,983,000 in 1996. The approximate amounts of minimum future rental
payments to be received under operating leases are $7,275,000,
$6,066,000, $4,265,000, $3,070,000 and $2,231,000 for the years 1999
through 2003, respectively, and $4,524,000 thereafter.
(b) Environmental
-------------
The Company accrues for losses associated with environmental
remediation obligations when such losses are probable and reasonably
estimable. Accruals for estimated losses from environmental
remediation obligations generally are recognized no later than
completion of the remedial feasibility study. Such accruals are
adjusted as further information develops or circumstances change.
(c) Litigation
----------
A purported class action was filed against the Company on April 3,
1997 in the Federal District court for the Middle District of Florida
(the "Court") by Lemuel Middleton and 15 other present or former
employees of the Company, individually and on behalf of all other
persons similarly situated (the "Middleton case"). In their Complaint,
the plaintiffs allege that the Company has and is currently engaged in
a pattern and practice of race-based discriminatory treatment of black
employees and applicants with respect to hiring, promotion, job
assignment, conditions of employment, and other employment aspects,
all in violation of Federal and state law. Subsequently, three of the
named plaintiffs withdrew their claims with prejudice. The plaintiffs
sought, among other relief, a certification of the suit as a class
action, declaratory and injunctive relief, back pay, front pay,
benefits and other compensatory damages, and punitive damages.
9 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
On June 15, 1998, a Federal magistrate judge recommended certification
as a class action of claims in the Middleton case relating only to
Publix's retail stores in Florida and Georgia. Publix and the
plaintiffs have both objected to the recommendation, with Publix
asking that no class be certified and plaintiffs asking that the class
be expanded. The plaintiffs have also moved to drop all claims for
compensatory and punitive damages asserted in the lawsuit and,
therefore, to withdraw their demand for a jury trial.
On November 6, 1997, another purported class action was filed against
the Company in the Court by Shirley Dyer and five other present or
former employees of the Company, individually and on behalf of all
other persons similarly situated (the "Dyer case"). In their
Complaint, the plaintiffs allege that the Company has violated and is
currently violating Federal and state civil rights statutes by
discriminating against female employees and applicants with respect to
hiring, promotion, training, compensation, discipline, demotion and
termination, and/or retaliation for bringing allegations of
discrimination. The plaintiffs have moved to certify a class of all
female current, former and future Company employees and applicants in
all of the Company's manufacturing plants and distribution centers
with respect to certain claims. The plaintiffs seek, among other
relief, declaratory and injunctive relief, back pay, front pay,
benefits and other compensatory damages, and punitive damages. The
parties have briefed issues relating to class certification and await
the Court's ruling.
On December 8, 1998, another purported class action was filed against
the Company in the Court by Charlene Jones, individually and on behalf
of other persons similarly situated (the "Jones case"). In her
Complaint, the plaintiff alleges that the Company has violated and is
currently violating Federal and state civil rights statutes by
discriminating against female applicants for employment in the
Company's manufacturing plants and distribution centers. The
plaintiffs in the Jones and Dyer cases have asked the Court to combine
the two cases.
The Company denies the allegations of the plaintiffs in the Middleton,
Dyer and Jones cases and is vigorously defending the actions.
The Company is also a party in various legal claims and actions
considered in the normal course of business. Management believes that
the ultimate disposition of these matters will not have a material
effect on the Company's liquidity, results of operations or financial
condition.
10
Schedule II
PUBLIX SUPER MARKETS, INC.
Valuation and Qualifying Accounts
Years ended December 26, 1998, December 27, 1997
and December 28, 1996
(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 26, 1998
Reserves not deducted from assets:
Self-insurance reserves:
-Current............................... $ 57,415 127,479 123,481 61,413
-Noncurrent............................ 90,068 8,888 --- 98,956
-------- ------- ------- -------
$147,483 136,367 123,481 160,369
======== ======= ======= =======
Year ended December 27, 1997
Reserves not deducted from assets:
Self-insurance reserves:
-Current............................... $ 64,250 100,085 106,920 57,415
-Noncurrent............................ 73,336 16,732 --- 90,068
-------- ------- ------- -------
$137,586 116,817 106,920 147,483
======== ======= ======= =======
Year ended December 28, 1996
Reserves not deducted from assets:
Self-insurance reserves:
-Current............................... $ 58,442 109,094 103,286 64,250
-Noncurrent............................ 60,435 12,901 --- 73,336
-------- ------- ------- -------
$118,877 121,995 103,286 137,586
======== ======= ======= =======