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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
* ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 28, 1995
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 1-3657
_________________________________
WINN-DIXIE STORES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0514290
(State of other jurisdiction of ( IRS Employer
incorporation or organization) Identification No.)
5050 Edgewood Court, Jacksonville, Florida 32254-3699
(Address of principal executive offices) (Zip Code)
Area Code (904) 783-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock Par Value $1.00 Per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
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 * No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form or any amendment to this Form
10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing sale price of common stock on July 31, 1995
as reported on the New York Stock Exchange was approximately $2,509,203,972.
Shares of common stock held by each executive officer and director and by
principal shareholders filing Schedules 13D and 13G have been excluded in that
such persons may be deemed to be affiliates. The determination of affiliate
status is not necessarily a conclusive determination for other purposes.
As of July 31, 1995, registrant had outstanding 75,540,202 shares of common
stock.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's Proxy
Statement in respect to the 1995 Annual Meeting of Shareholders are incorporated
by reference in Part III hereof, as more specifically described herein.
PART I
ITEM 1: BUSINESS
General
Winn-Dixie Stores, Inc., organized in Florida on December 26, 1928, is a major
food retailer with 1,175 stores in fourteen states and the Bahama Islands.
According to published reports of sales at June 28, 1995 the Company was the
fifth largest in United States supermarket sales.
All of the Company's subsidiaries except Bahamas Supermarkets Limited are
wholly-owned. Except where the context indicates otherwise, the term "Company"
includes the parent company and all of its subsidi- aries, collectively.
Financial information on industry segments and lines of business is omitted
because, apart from the principal business of operating retail self-service food
stores, the Company had no other lines of business or industry segments.
Store Formats and Business Strategy
The business of the Company is the operation of a chain of retail self-service
food stores which sell groceries, meats, seafood, fresh produce, deli/bakery,
pharmaceuticals and general merchandise items. The Company's stores offer broad
lines of merchandise, including nationally advertised and private label brands
and unbranded merchandise (principally meats, seafood and produce), and
generally operate on the basis of competitive pricing. Food items sold include
dry groceries, dairy products, baked goods, meats, poultry, fish, fresh fruit,
vegetables, frozen foods and other items commonly marketed by retail food
stores. The Company's stores also sell many general merchandise items, such as
magazines, soaps, paper products, health and cosmetic products, hardware and
numerous small household items. Many locations have ancillary departments such
as pharmacies, photo labs, dry cleaners and in-store banks. At June 28, 1995,
the Company operated 1,175 retail stores of which 433 were located in Florida,
129 in North Carolina, 126 in Georgia, 87 in Alabama, 82 in South Carolina, 74
in Louisiana, 69 in Texas, 60 in Kentucky, 34 in Virginia, 21 in Ohio, 19 in
Tennessee, 18 in Mississippi, 14 in the Bahamas, 7 in Oklahoma and 2 in Indiana.
Such stores were operated under the names of "Winn-Dixie" (730), "Marketplace"
(407), "Thriftway" (25), "The City Meat Markets" (12) and "Buddies" (1).
Support and Other Services
The following table shows the locations of the Company's distribution centers
and its manufacturing and processing plants, as well as the principal products
produced in the plants:
LOCATION FACILITIES
______________________________________________________________________________
ALABAMA
Montgomery Distribution center; Plants: milk bottling and
frozen pizza
FLORIDA
Jacksonville Two distribution centers; Plants: detergents; paper
bags; and coffee, tea and spices
Madison Plant: meat processing
Miami Distribution center; Plant: milk bottling
Orlando Distribution center
Bartow Plant: egg processing
Plant City Plants: ice cream and milk bottling
Pompano Distribution center
Sarasota Distribution center
Tampa Distribution center
GEORGIA
Atlanta Distribution center
Fitzgerald Plants: jams, jellies, mayonnaise, salad dressing,
peanut butter and condiments; canned and bottled
carbonated beverages
Gainesville Plants: oleomargarine; natural cheese cutting and
wrapping, processed cheese and pimento cheese
Valdosta Plants: crackers and cookies; and snacks
KENTUCKY
Louisville Distribution center
LOUISIANA
New Orleans Distribution center
Hammond Distribution center; Plant: milk bottling
NORTH CAROLINA
Charlotte Distribution center
Raleigh Distribution center
High Point Plants: milk bottling and cultured products
SOUTH CAROLINA
Greenville Distribution center; Plants: ice cream and milk
bottling
TEXAS
Fort Worth Distribution center; Plant: milk bottling
BAHAMAS
Nassau Distribution center
An insignificant portion of the production of the coffee, tea, detergent,
cheese, oleomargarine, egg, condiments, carbonated beverage and cookie plants is
sold to others.
Types of products produced by the Company for sale in its stores are described
above. Services provided by the Company such as check cashing are incidental to
the total business.
The Company has not publicly announced, or otherwise made public, information
about any new product or industry segment which would require the investment of
a material amount of the assets of the Company or which otherwise is material.
Sources of available raw materials are factors which do not affect the Company
in any different manner than they affect other manufacturers and processors of
the goods identified.
Patents and trademarks owned by the Company are not of material importance to
its operations.
Seasonality does not materially affect the business of the Company. However,
due to the influx of winter residents to the Sunbelt, Florida in particular, and
increased purchases of food items for the Thanksgiving and Christmas holiday
seasons, there is a seasonal sales increase during the period of November -
April each fiscal year.
The Company and other food retailers have no unusual working capital
requirements.
The business of the Company is not dependent upon a single or a few customers.
The Company does not sell goods or services in an amount which equals 10 percent
or more of the Company's consolidated sales to any single customer or group of
customers under common control or to any affiliated group of customers.
Backlog ordering is not a factor in the business of the Company.
No portion of the business of the Company is subject to renegotiation of profits
or termination of contracts or subcontracts at the election of any government.
Marketing and Competition
In all areas in which the Company operates, the business is highly competitive
with local and national food chain stores as well as with independent stores and
markets. Many factors enter into the competition, including price, quality of
goods and services, product mix and convenience.
The retail food industry is extremely competitive. Each division faces somewhat
different competitive conditions. The following table lists the major
competitors for each division.
Division Major Competitors
Jacksonville Publix, Albertson's, Piggly Wiggly (Bruno), Food Lion,
Super K
Tampa/Sarasota Publix, Kash N Karry, Albertson's, Food Lion, Wal-Mart
Supercenter, U-Save
Montgomery Bruno, Delchamps, Wal-Mart Supercenter
Miami/Pompano Publix, XTRA, Sedano's, Albertson's
Orlando Publix, Albertson's, Goodings, Food Lion, Wal-Mart
Supercenter
Greenville Food Lion, Bi-Lo, Super K, Publix, Harris-Teeter
Raleigh Food Lion, Harris-Teeter, Kroger, Hannaford, U-Krops
Charlotte Food Lion, Harris-Teeter, Bi-Lo
Atlanta Kroger, Ingles, A&P, Cub, Publix, Harris-Teeter
Midwest Kroger, Wal-Mart Supercenter, Biggs
New Orleans Delchamps, Schwegmans, Albertson's
Fort Worth Kroger, Albertson's, Minyards, Food Lion, Randall's,
Wal-Mart Supercenter
Bahamas Supervalu
Additionally, local chains and wholesaler-supported independents are well
represented in all regions.
Winn-Dixie is considered a major competitor in all geographic areas in which it
competes.
The Company did not spend a material amount on Company-sponsored research and
development activities or on Company-sponsored research activities relating to
the development of new products, services or techniques, or the improvement of
existing products, services or techniques during any of the years in the
three-year period ended June 28, 1995.
Government Regulation
The Company's compliance with federal, state and local provisions which have
been enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment has not
had, and is not expected to have, a material effect on its capital expenditures,
earnings or competitive position.
Associates
At the end of fiscal 1995, the Company had 47,000 full-time and 76,000 part-time
associates.
Bahamas
All sales are to customers within the United States and the Bahama Islands. The
Company exports an insignificant amount of merchandise to its subsidiaries in
the Bahamas which operate 14 retail food stores as outlined above.
Stores
All of the retail stores operated by the Company are on premises occupied on a
rental basis. See "Note 9 of the Notes to Consolidated Financial Statements",
page F-14, included herein.
Support Properties
The warehousing and distribution centers are rented under leases due to expire
as follows: Atlanta - 2020; Greenville - 2020; Jacksonville (Edgewood) - 2020;
Louisville - 2020; Miami - 2017; Montgomery - 2017; New Orleans - 2017; Raleigh
- 2017; Sarasota - 2017; Tampa - 2017; Fort Worth - 2016; Hammond - 2016;
Jacksonville (Commonwealth) - 2011; Orlando - 2005; Charlotte - 2004 and Pompano
- 2003. All of these contain renewal options, which vary from lease to lease.
The Deep South plant in Orlando, Florida, is no longer in operation and has been
replaced with a new facility. This property is now owned in fee by the Company
and is being held for sale.
The Company's Valdosta cracker and cookie bakery; Fort Worth dairy plant;
Madison meat processing plant; Plant City ice cream and milk bottling plants;
Miami reclaim center; and Gainesville oleomargarine and cheese processing and
packaging plants are owned in fee.
The Company's Greenville ice cream and milk bottling plants; Jacksonville
coffee, tea and spices processing, detergent and bag plants; Montgomery milk
bottling plant; and Hammond milk bottling plant are situated at the leased
warehousing and distribution center locations in those cities. The Bartow egg
processing plant; High Point milk bottling and cultured products plants;
Montgomery frozen pizza plant; and the Fitzgerald jam, jellies, mayonnaise,
salad dressing, peanut butter and condiments and canned and bottled carbonated
beverage plants are rented under leases.
All of the above support properties are considered to be in excellent condition.
ITEM 3: LEGAL PROCEEDINGS
There are pending against the Company various claims and lawsuits arising in the
normal course of business, including suits charging violations of certain civil
rights laws.
The U.S. Environmental Protection Agency has notified the Company that it is
one of the many potentially responsible parties (PRPs) for cleanup of two
designated Superfund sites located in Tampa, Florida, three such sites in
Jacksonville, Florida (2 related sites), one site in Madison, Florida, one site
in Charlotte, North Carolina and one site in Pembrook Park, Florida. The
Company may be a PRP for cleanup of one non- Superfund site in Tarrant County,
Texas. Although cleanup costs are believed to be substantial, accurate
estimates will not be available until studies have been completed at the sites.
The Company has entered into orders by consent with numerous other PRPs to
conduct studies and do cleanup for three of the Superfund sites and is
negotiating an agreement with PRPs who are under an order at two other Superfund
sites to determine the most cost-effective way to clean up such sites. Although
under federal statutes the Company is jointly and severally liable for cleanup
costs at each location, the Company's share of total costs is estimated not to
exceed $400,000 for four of the Superfund sites and the Texas site.
The Company believes it is not a responsible party for cleanup of the Madison,
Florida, and Tarrant County, Texas, sites and has no estimate of costs for those
matters. Other than these two and the New Mexico site mentioned below, these
involve wastes the Company paid to be properly disposed and were mishandled by
disposal companies or public disposal sites.
At one of the Tampa sites, the Company is one of 14 parties named as respondents
in a Unilateral Administrative Order for Remedial Design and Remedial Action
under 47 U.S.C. Section 9606(a) relating to a disposal site formerly operated
by Hillsborough County, Florida. The parties are ordered to operate, maintain
and monitor a water cleaning system and perform Remedial Design for the site.
The costs to the Company are estimated at $50,000 in fiscal year 1995 with some
credits still available for this year, with additional annual costs for an
indefinite period thereafter.
The Company is also involved in the cleanup of a fuel tank leak at a New Mexico
site formerly owned by it. The cleanup costs are to be prorated with others on
the basis of the total time of ownership of the participants. The Company's
share is 15% of the total costs estimated to be less than $150,000, with minimal
annual monitoring costs thereafter.
It is the Company's policy to accrue and charge against earnings the
environmental cleanup costs when it is probable that a liability has been
incurred and an amount can be reasonably estimated, including evaluation of the
other PRPs' ability to pay. The Company believes its ultimate liability as to
these environmental matters will not necessitate significant capital outlays,
will not materially affect the annual earnings of the Company, nor cause
material changes in the Company's business. It is not possible to quantify
future environmental costs because many issues relate to actions by third
parties or changes in environmental regulation.
Although the amount of liability with respect to all other claims and lawsuits
cannot be ascertained, management is of the opinion that any resulting liability
will not have a material effect on the Company's consolidated earnings or
financial position.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the quarter
ended June 28, 1995.
Executive Officers of the Registrant
Set forth below is certain information concerning the executive officers of the
Company:
YEAR YEAR FIRST
AGE IN APPOINTED EMPLOYED
YEARS AT TO CURRENT BY
NAME 06-28-95 OFFICE HELD POSITION WINN-DIXIE
A. Dano Davis 50 Chairman of the Board and 1988 1968
Principal Executive Officer
James Kufeldt 57 President 1988 1961
C. H. McKellar 57 Executive Vice President 1988 1957
E. T. Walters 61 Senior Vice President 1989 1959
C. E. Winge 50 Senior Vice President 1988 1963
T. E. McDonald 58 Senior Vice President 1986 1955
H. E. Hess 55 Senior Vice President 1988 1958
R. P. McCook 42 Financial Vice President and 1984 1984
Principal Financial Officer
L. H. May 50 Vice President 1989 1964
E. E. Zahra, Jr. 48 Vice President and General 1995 1995
Counsel
D. H. Bragin 51 Treasurer 1985 1961
R. J. Brocato 51 Vice President 1993 1963
R. D. Buday 52 Vice President 1995 1971
W. C. Calkins 56 Vice President 1987 1958
J. W. Critchlow 48 Vice President 1988 1967
R. J. Ehster 54 Vice President 1983 1958
D. G. Lafever 46 Vice President 1990 1966
H. E. Miller 63 Vice President 1984 1956
J. R. Pownall 58 Vice President 1986 1955
L. J. Sadlowski 54 Vice President 1983 1961
R. A. Sevin 52 Vice President 1987 1961
B. B. Tripp 58 Vice President 1987 1954
D. L. Whitford 47 Vice President 1991 1964
All of the officers listed above, with the exception of E. E. Zahra, Jr., have
been employed for the past five years in either the same capacity as listed, or
in a position with the Company which was consistent in occupation with the
present assignment. Prior to becoming General Counsel, Mr. Zahra was the
managing partner of the Jacksonville office of LeBoeuf, Lamb, Greene and MacRae
LLP, an international law firm.
Officers are elected annually by the Board of Directors and serve for a one-year
period or until their successors are elected. No officers have employment
contracts with the Company.
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The principal market on which the Company's common stock is traded is the New
York Stock Exchange. The number of record holders of the Company's common stock
as of July 31, 1995 was 44,562.
Information required by this Item concerning sales prices of the Company's
common stock and the frequency and amount of dividends is hereby incorporated by
reference to "Note 12 of the Notes to Consolidated Financial Statements", page
F-18 included herein.
ITEM 6: SELECTED FINANCIAL DATA
The information required by this Item is on page F-1 included herein.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is on page F-2 included herein.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data are as set forth in the "Index to
Consolidated Financial Statements, Supporting Schedules and Supplemental Data"
on page 13 included herein.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no disagreements on accounting and financial disclosure between
the Company and its auditors within the 24 months prior to June 28, 1995.
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11: EXECUTIVE COMPENSATION
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by these Items are incorporated herein by reference to
the Company's definitive proxy statement to be filed on, or before, September 1,
1995 in connection with its Annual Meeting of Shareholders.
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Financial Statements and Schedules:
(a) Exhibit and Financial Statements and Schedules
(1) Financial Statements:
See Index to Consolidated Financial Statements, Supporting
Schedules and Supplemental Data on page 13 included herein.
(2) Financial Statement Schedules:
See Index to Consolidated Financial Statements, Supporting
Schedules and Supplemental Data on page 13 included herein.
Exhibits:
Certain of the following exhibits which have heretofore been filed with the
Securities and Exchange Commission under the Securities Act of 1933 or the
Securities Exchange Act of 1934 and which are designated in prior filings as
noted below, are hereby incorporated by reference and made a part hereof:
Exhibit Incorporated by
Number Description of Exhibit Reference From
3.1 Restated Articles of Incorporation as Previously filed as Exhibit 3.1
filed with the Secretary of State of to Form 10-K for the year ended
Florida. June 30, 1993, which Exhibit is
herein incorporated by
reference.*
3.1.1 Amendment adopted October 7, 1992, to Previously filed as Exhibit
Restated Articles of Incorporation. 3.1.1 to Form 10-K for the year
ended June 30, 1993, which
Exhibit is herein incorporated
by reference.*
3.1.2 Amendment adopted October 5, 1994, to Previously filed as Exhibit
Restated Articles of Incorporation. 3.1.2 to Form 10-Q for the
quarter ended January 11, 1995,
which Exhibit is herein
incorporated by reference.*
3.2 Restated By-Laws of the Registrant as
amended through June 21, 1995.
9.1 Agreement of Shareholders of D.D.I., Previously filed as Exhibit 9.1
Inc. (formerly Vadis Investments, Inc.) to Form 10-K for the year ended
dated April 19, 1989. June 30, 1993, which Exhibit is
herein incorporated by
reference.*
10.1 Annual Officer Incentive Compensation Previously filed as Exhibit 10.2
Plan as amended, effective June 17, to Form 10-K for the year ended
1991. June 30, 1993, which Exhibit is
herein incorporated by
reference.*
10.2 Long-term Officer Incentive Previously filed as Exhibit 10.3
Compensation Plan as amended, to Form 10-K for the year ended
effective June 27, 1991. June 30, 1993, which Exhibit is
herein incorporated by
reference.*
10.3 Key Employee Stock Option Plan Previously filed as Exhibit 10.5
effective January 24, 1990, as to Form 10-K for the year ended
amended through October 7, 1992. June 30, 1993, which Exhibit is
herein incorporated by
reference.*
10.3.1 Amendment adopted June 22, 1994 to Previously filed as Exhibit
Key Employee Stock Option Plan 10.5.1 to Form 10-Q for the
quarter ended January 11, 1995,
which Exhibit is herein
incorporated by reference.*
10.3.2 Amendment adopted July 25, 1994 to Previously filed as Exhibit
Key Employee Stock Option Plan 10.5.2 to Form 10-Q for the
quarter ended January 11, 1995,
which Exhibit is herein
incorporated by reference.*
10.4 Supplemental Retirement Plan dated Previously filed as Exhibit
July 1, 1994. 10.6 to Form 10-K for the year
ended June 29, 1994, which
Exhibit is herein incorporated
by reference.*
11.1 Computation of Earnings Per Share.
21.1 Subsidiaries of Winn-Dixie Stores, Inc.
23.1 Consent of KPMG Peat Marwick LLP.
* Incorporated herein by reference as indicated
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the quarter
ended June 28, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WINN-DIXIE STORES, INC.
By A. DANO DAVIS
A. Dano Davis, Chairman
Date August 25, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934 this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
A. DANO DAVIS Chairman (Principal August 25, 1995
A. Dano Davis ) Executive Officer) and Director
JAMES KUFELDT President and Director August 25, 1995
(James Kufeldt)
RICHARD P. MCCOOK Financial Vice President August 25, 1995
(Richard P. McCook) (Principal Financial Officer)
DAVID H. BRAGIN Treasurer (Principal Accounting August 25, 1995
(David H. Bragin) Officer)
ROBERT D. DAVIS Director August 25, 1995
(Robert D. Davis)
Director
(T. Wayne Davis)
CHARLES H. MC KELLAR Director August 25, 1995
(Charles H. McKellar)
RADFORD D. LOVETT Director August 25, 1995
(Radford D. Lovett)
CHARLES P. STEPHENS Director August 25, 1995
(Charles P. Stephens)
Director
(Armando M. Codina)
DAVID F. MILLER Director August 25, 1995
(David F. Miller)
Director
(Carleton T. Rider)
JULIA B. NORTH Director August 25, 1995
(Julia B. North)
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS,
SUPPORTING SCHEDULES AND SUPPLEMENTAL DATA
Selected Financial Data F-1
Management's Discussion and Analysis of Financial Condition
and Results of Operations F-2
Consolidated Financial Statements and Supplemental Data:
Independent Auditors' Report F-4
Report of Management F-4
Consolidated Statements of Earnings, Years ended
June 28, 1995, June 29, 1994 and June 30, 1993 F-5
Consolidated Balance Sheets, June 28, 1995 and June 29, 1994 F-6
Consolidated Statements of Cash Flows, Years ended
June 28, 1995, June 29, 1994 and June 30, 1993 F-7
Consolidated Statements of Shareholders' Equity, Years
ended June 28, 1995, June 29, 1994 and June 30, 1993 F-8
Notes to Consolidated Financial Statements F-9
Financial Statement Schedules:
Independent Auditors' Report on Financial Statement Schedules S-1
VIII Consolidated Valuation and Qualifying Accounts, Years
ended June 28, 1995, June 29, 1994 and June 30, 1993 S-2
All other schedules are omitted either because they are not applicable or
because information required therein is shown in the Financial Statements or
Notes thereto.
SELECTED FINANCIAL DATA
1995 1994 1993 1992 1991
Dollars in millions except per share data
Sales
Net sales $ 11,788 11,082 10,832 10,337 10,074
Percent increase 6.4 2.3 4.8 2.6 3.4
Average annual sales per store $ 10 9.6 9.4 8.7 8.3
Earnings Summary
Gross profit $ 2,723 2,534 2,446 2,360 2,261
Percent of sales 23.1 22.9 22.6 22.8 22.4
LIFO charge (credit) $ 7 -2 1 -11 9
Operating and administrative expenses $ 2,462 2,270 2,197 2,137 2,100
Percent of sales 20.9 20.5 20.3 20.7 20.8
Net earnings $ 232 216 236 196 171
Per share $ 3.11 2.9 3.11 2.55 2.2
Percent of net earnings to sales 2 2 2.2 1.9 1.7
Percent of net earnings to average equity 20.2 21.2 24.4 21.6 20.4
EBITDA $ 569.3 520.2 522.9 469.9 386
Dividends
Dividends paid $ 116.5 107.4 100.5 92 84.1
Percent of net earnings 50.2 49.7 42.5 46.9 49.2
Per share (present rate $1.68) $ 1.56 1.44 1.32 1.2 1.08
Common Stock (WIN)
Total shares outstanding (000,000) 75.6 74.2 75 76.9 77.1
NYSE-Stock price range
Common - High $ 57.88 67.75 79.75 44.63 41.25
Low $ 42.63 43.5 41.63 34.63 29
Financial Data
Cash flow information:
Net cash provided by operating activities $ 416.4 436.3 213 338.3 190.8
Net cash used in investing activities $ 381.5 214.7 81.4 216.9 55.1
Net cash used in financing activities $ 35.9 212.4 128.7 109.2 135.8
Capital expenditures, net $ 371.6 277.7 194.8 164.5 154.7
Depreciation and amortization $ 200.9 157.4 141.1 126.9 113.4
Working capital $ 425.5 488 544.7 550.8 435.8
Current ratio 1.4 1.6 1.6 1.7 1.6
Total assets $ 2,483 2,147 2,063 1,977 1,817
Obligations under capital leases $ 78 85 87 90 97
Shareholders' equity $ 1,241 1,057 985 952 860
Book value per share $ 16.43 14.26 13.14 12.39 11.15
Stores
In operation at year-end 1,175 1,159 1,151 1,189 1,207
Opened and acquired during year 108 60 40 35 46
Closed or sold during year 92 66 78 53 56
Enlarged or remodeled during year 86 87 73 65 54
New/enlarged/remodeled in last five years 654 535 475 464 481
Percent to total stores in operation 55.7 46.2 41.3 39 39.9
Year-end retail square footage (000,000) 43.8 40.7 39 38.6 37.9
Average store size at year-end (000) 37.3 35.1 33.9 32.4 31.4
Other Year-end Data
Associates (000) 123 112 105 102 106
Shareholder accounts (000) 44.8 39.5 41.4 42.8 39.4
Shareholders per store 38 34 36 36 33
Taxes
Federal, state and local $ 261 261 255 233 207
Per share $ 3.49 3.5 3.35 3.04 2.65
53 Weeks
Includes 14 stores from Bahamas consolidation
F-1
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations.
Sales for 1995 were $11.8 billion, compared to $11.1 billion for 1994, up 6.4%.
Average weekly store sales increased 6.8% for the year, while identical store
sales increased 3.0%. Sales for the fourth quarter of 1995 were $2.9 billion,
compared to $2.6 billion for the fourth quarter of 1994, up 11.5%. For the
quarter, average store sales increased 9.5%, while identical store sales
increased 3.8%. Sales for the fourth quarter were positively affected by
approximately 1.0% due to Easter falling in the fourth quarter versus the third
quarter last year. Excluding the acquisition of Thriftway, sales for the year
would have been $11.7 billion, an increase of 5.3%, and for the fourth quarter,
$2.8 billion, an increase of 7.0%.
In fiscal year 1995, the Company opened and acquired 108 stores averaging 47,100
square feet, enlarged or remodeled 86 stores and closed 92 stores, averaging
27,300 square feet.
As a percent of sales, gross profit margins were 23.1%, 22.9% and 22.6% in
fiscal 1995, 1994 and 1993, respectively. The increase in gross profit margins
is a result of an improved inventory mix in our larger stores. Approximately
91% of the Company's inventories are valued under the LIFO (last-in, first-out)
method. The LIFO calculations resulted in a $7.3 million pre-tax decrease in
gross profit in 1995, a pre-tax increase in gross profit of $2.0 million in 1994
and a pre-tax decrease in gross profit of $0.5 million in 1993.
Operating and administrative expenses, as a percent of sales, were 20.9%, 20.5%
and 20.3% in fiscal 1995, 1994 and 1993, respectively. Our major increases in
operating and administrative expenses are due to a higher payroll percentage in
our larger stores, insurance premiums, occupancy cost and depreciation expense.
Cash discounts and other income amounted to $106.9 million, $98.1 million and
$132.4 million in 1995, 1994 and 1993, respectively. The increase in 1995 is
due to an increase in cash discounts resulting from an increase in purchases of
merchandise for resale. The decrease in 1994 is attributable to a reduction in
financial income, including the elimination of dividends from our Bahamas
subsidiary. Gains (losses) on the sales of securities and other assets amounted
to $0.0 million in 1995, $(3.2) million in 1994 and $4.5 million in 1993.
Investment income amounted to $0.5 million, $4.0 million and $8.4 million in
fiscal 1995, 1994 and 1993, respectively.
Interest expense totaled $14.3 million, $14.3 million and $18.1 million in
fiscal 1995, 1994 and 1993, respectively. Interest expense primarily reflects a
computation of interest on capital lease obligations. The 1995 increase in
other interest expense is due to an increase in short-term borrowings. The 1994
decrease in other interest expense was due to a decrease in short term
borrowings.
Earnings before income taxes were $354.0 million, $348.5 million and $363.7
million in fiscal 1995, 1994 and 1993, respectively. The 1995 increase in
pre-tax earnings is primarily a result of an increase in gross profit margin
from a better inventory mix and an increase in cash discounts and other income.
The decrease in pretax earnings in 1994 was primarily the result of a decrease
in other income. The effective income tax rates were 34.4%, 38.0% and 35.0% for
fiscal 1995, 1994 and 1993, respectively.
Net earnings amounted to $232.2 million, or $3.11 per share for 1995, $216.1
million, or $2.90 per share for 1994 and $236.4 million, or $3.11 per share for
1993. The LIFO calculations decreased net earnings by $4.6 million, or $0.06
per share in 1995, increased earnings by $1.1 million, or $0.01 per share for
1994 and decreased net earnings by $0.3 million, or $0.00 per share for 1993.
F-2
Liquidity and Capital Resources.
The Company's financial condition remains very sound and very strong. Cash and
cash equivalents amounted to $30.4 million at year-end. Cash provided by
operating activities amounted to $416.4 million in 1995, $436.3 million in 1994
and $213.0 million in 1993.
Net capital expenditures totaled $371.6 million, compared to $277.7 million for
the previous year. These expenditures were for new store locations, store
enlargements and remodelings, and the expansion of a warehouse facility. Total
capital investment in Company retail and support facilities, including operating
leases, is estimated to be $650 million in 1995 and projected to be $700 million
in 1996. The Company has no material construction or purchase commitments
outstanding as of June 28, 1995.
Working capital amounted to $425.5 million, $488.0 million and $544.7 million
for 1995, 1994 and 1993, respectively. Inventories on a FIFO (first-in,
first-out) basis increased $108.0 million, primarily due to the increase in the
number of stores and our store enlargement program.
The Company has an authorized $200 million commercial paper program. In support
of these programs, or as an independent source of funds, the Company also has
$265 million of short- term lines of credit. These lines of credit are
available at any time during the year and are renewable on an annual basis.
There was $5.0 million borrowed against the bank lines of credit at the end of
1995 as compared to $9.5 million at the end of 1994. There was $125.0 million
in commercial paper outstanding at the end of 1995. There was no commercial
paper outstanding at the end of 1994.
Excluding capital lease obligations, the Company had no outstanding long-term
debt as of June 28, 1995 or June 29, 1994.
The Company's cash flow from operations and available credit facilities are
considered adequate to fund both the short-term and long-term capital needs of
the Company.
The Company has been notified as one of the many Potentially Responsible Parties
by the Environmental Protection Agency with respect to the clean up of hazardous
wastes at seven Superfund sites and one additional site. The Company is in the
process of determining the potential liability and the most cost-effective way
to clean up such sites. The Company believes its ultimate liability as to these
environmental matters will not necessitate significant capital outlays, will not
materially affect the annual earnings of the Company, nor cause material changes
in the Company's business.
Impact of Inflation.
Winn-Dixie's primary costs, inventory and labor, increase with inflation.
Recovery of these costs has to come from improved operating efficiencies and, to
the extent permitted by our competition, through improved gross profit margins.
F-3
INDEPENDENT AUDITORS' REPORT
The Shareholders and the Board of Directors
Winn-Dixie Stores, Inc.:
We have audited the accompanying consolidated balance sheets of Winn-Dixie
Stores, Inc. and subsidiaries as of June 28, 1995 and June 29, 1994, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the years in the three-year period ended June 28, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Winn-Dixie Stores,
Inc. and subsidiaries at June 28, 1995 and June 29, 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended June 28, 1995, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Certified Public Accountants
Jacksonville, Florida
July 31, 1995
REPORT OF MANAGEMENT
The Company is responsible for the preparation, integrity and objectivity of the
consolidated financial statements and related information appearing in the
Annual Report. The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis and include amounts that are based on management's best estimates and
judgments.
Management is also responsible for maintaining a system of internal controls
that provides reasonable assurance that the accounting records properly reflect
the transactions of the Company, that assets are safeguarded and that the
consolidated financial statements present fairly the financial position and
operating results. As part of the Company's controls, the internal audit staff
conducts examinations in each of the retail and manufacturing divisions of the
Company.
The Audit Committee of the Board of Directors, composed entirely of outside
directors, meets periodically to review the results of audit reports and other
accounting and financial reporting matters with the independent certified public
accountants and the internal auditors.
A. Dano Davis Richard P. McCook
Chairman of the Board Financial Vice President
and Principal Executive Officer and Principal Financial Officer
F-4
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended June 28, 1995, June 29, 1994 and June 30, 1993
1995 1994 1993*
Amounts in thousands except per share data
Net sales $ 11,787,843 11,082,169 10,831,535
Cost of sales, including warehousing
and delivery expense 9,064,536 8,547,681 8,385,412
Gross profit on sales 2,723,307 2,534,488 2,446,123
Operating and administrative expenses 2,461,883 2,269,803 2,196,721
Operating income 261,424 264,685 249,402
Cash discounts and other income, net 106,901 98,085 132,398
368,325 362,770 381,800
Interest:
Interest on capital lease obligations 10,086 11,285 11,571
Other interest 4,244 2,986 6,560
Total interest 14,330 14,271 18,131
Earnings before income taxes 353,995 348,499 363,669
Income taxes 121,808 132,382 127,284
Net earnings $ 232,187 216,117 236,385
Earnings per share $ 3.11 2.90 3.11
* 53 Weeks
See accompanying notes to consolidated financial statements.
F-5
CONSOLIDATED BALANCE SHEETS
June 28, 1995 and June 29, 1994
1995 1994
Amounts in thousands
Assets
Current Assets:
Cash and cash equivalents $ 30,414 31,451
Trade and other receivables, less allowance for
doubtful items of $1,105,000 ($834,000 in 1994) 151,912 171,854
Associate stock loans 10,615 1,776
Merchandise inventories at lower of cost or market
reserve of $212,485,000 ($205,172,000 in 1994) 1,159,584 1,058,883
Prepaid expenses 103,135 97,220
Total current assets 1,455,660 1,361,184
Investments and other assets:
Cash surrender value of life insurance, net 41,411 25,094
Other assets 58,873 12,493
Total investments and other assets 100,284 37,587
Deferred income taxes 29,025 41,024
Net property, plant and equipment 897,823 706,779
$ 2,482,792 2,146,574
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 555,551 516,806
Short-term borrowings 130,000 9,500
Reserve for insurance claims and self-insurance 59,373 60,510
Accrued wages and salaries 77,396 68,238
Accrued rent 54,888 58,313
Accrued expenses 130,285 126,550
Current obligations under capital leases 3,298 3,462
Income taxes 19,331 29,787
Total current liabilities 1,030,122 873,166
Obligations under capital leases 77,653 85,374
Defined benefit plan 28,328 22,852
Reserve for insurance claims and self insurance 103,384 105,417
Other liabilities 2,098 2,304
Shareholders' equity:
Common stock of $1 par value Authorized
200,000,000 shares; issued 75,560,987 shares in
1995 and 74,176,356 shares in 1994 75,561 74,176
Retained earnings 1,165,646 983,285
Total shareholders' equity 1,241,207 1,057,461
Commitments and contingent liabilities (Note 10)
$ 2,482,792 2,146,574
See accompanying notes to consolidated financial statements.
F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 28, 1995, June 29, 1994 and June 30, 1993
1995 1994 1993
Amounts in thousands
Cash flows from operating activities:
Net earnings $ 232,187 216,117 236,385
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 200,931 157,392 141,136
Deferred income taxes 10,360 4,414 10,406
Defined benefit plan 5,476 3,398 3,239
Reserve for insurance claims and self-insurance (3,170) 624 (2,303)
Change in cash from:
Receivables 14,101 (9,264) (45,567)
Merchandise inventories (69,900) (17,432) (80,673)
Prepaid expenses (1,392) 1,754 (19,394)
Accounts payable 23,474 23,616 61,942
Income taxes (10,456) 11,825 (27,956)
Other current accrued expenses 14,772 43,830 (64,258)
Net cash provided by operating activities 416,383 436,274 212,957
Cash flows from investing activities:
Purchases of property, plant and equipment, net (371,563) (277,657) (194,786)
Decrease (increase) in investments and other assets (9,928) 62,938 113,397
Net cash used in investing activities (381,491) (214,719) (81,389)
Cash flows from financing activities:
Increase (decrease) in short-term borrowings 120,500 (70,500) 80,000
Payment on notes payable (17,008) -
Payments on capital lease obligations (3,111) (3,122) (2,648)
Purchase of common stock (34,896) (39,993) (123,316)
Proceeds of sales under associates' stock purchase 15,297 2,871 6,691
Dividends paid (116,506) (107,384) (100,518)
Other (205) 5,722 11,059
Net cash used in financing activities (35,929) (212,406) (128,732)
Increase (decrease) in cash and cash equivalents (1,037) 9,149 2,836
Cash and cash equivalents at the beginning of the year 31,451 22,302 19,466
Cash and cash equivalents at end of year $ 30,414 31,451 22,302
Supplemental cash flow information:
Interest paid $ 16,213 15,366 14,546
Interest and dividends received $ 1,510 4,059 15,258
Income taxes paid $ 121,904 115,788 138,576
See accompanying notes to consolidated financial statements.
53 Weeks
F-7
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended June 28, 1995, June 29, 1994 and June 30, 1993
1995 1994 1993
Amounts in thousands
Common stock:
Beginning of year $ 74,176 74,956 76,851
Add par value of shares issued for associate stock purchase
plan, acquisition and management incentive plan 2,044 19 97
Deduct par value of common stock acquired 659 799 1,992
End of year 75,561 74,176 74,956
Retained earnings:
Beginning of year 983,285 910,009 875,328
Net earnings 232,187 216,117 236,385
Deduct excess of cost over par value of common
stock acquired 34,237 39,194 121,324
Deduct cash dividends on common stock of $1.56, $1.44 and
$1.32 per share in 1995, 1994 and 1993, respectively 116,506 107,384 100,518
Consolidation of Bahamas subsidiary - - 17,509
Add excess of cost over par value of shares issued for associate
stock purchase plan, acquisition and management
incentive plan 100,962 3,792 2,697
Deduct other 45 55 68
End of year 1,165,646 983,285 910,009
Total shareholders' equity $ 1,241,207 1,057,461 984,965
See accompanying notes to consolidated financial statements.
53 Weeks
F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies.
(a) Fiscal Year: The fiscal year ends on the last Wednesday in June. The
fiscal year ended 1995 comprised 52 weeks, fiscal year 1994 comprised 52
weeks and fiscal year 1993 comprised 53 weeks.
(b) Basis of Consolidation: The consolidated financial statements include
the accounts of Winn- Dixie Stores, Inc. and its subsidiaries which operate
as a major food retailer in fourteen states and the Bahama Islands.
Effective June 30, 1993, the Company consolidated its Bahamas statements of
earnings in accordance with generally accepted accounting principles. This
investment had previously been accounted for using the cost method. The
retroactive consolidation of the Bahamas operating results did not have a
significant impact on the statements of earnings for all years presented.
Accordingly, the 1993 and prior statements of earnings have not been restated
and the previously unrecorded earnings have been recorded directly to
retained earnings.
(c) Acquisition: On March 26, 1995, the Company acquired Thriftway, Inc., a
twenty-five store supermarket chain operating in Ohio and Kentucky in a
stock-for-stock transaction which is not reflected in the statement of cash
flows. This acquisition has been accounted for using the purchase method.
(d) Cash and Cash Equivalents: Cash equivalents consist of highly liquid
investments with a maturity of three months or less when purchased. Cash and
cash equivalents are stated at cost plus accrued interest, which approximates
market.
(e) Inventories: Inventories are stated at the lower of cost or market. The
"dollar value" last-in, first-out (LIFO) method is used to determine the cost
of approximately 91% of inventories consisting primarily of merchandise in
stores and distribution warehouses. Manufacturing and produce inventories
are valued at the lower of first-in, first-out (FIFO) cost or market.
Elements of cost included in manufacturing inventories consist of material,
direct labor and plant overhead.
(f) Fair Value of Financial Instruments: The carrying amount of the
following financial instruments approximates fair value because of their
short-term maturity: cash and cash equivalents; trade and other receivables;
short-term borrowings; accounts payable and other accruals. See Note 6 (b)
for information on interest rate swap agreements.
(g) Income Taxes: Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using the enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled.
(h) Self-insurance: Self-insurance reserves are established for automobile
and general liability, workers' compensation and property loss costs based on
claims filed and claims incurred but not reported, with a maximum per
occurrence of $2,000,000 for automobile and general liability, $1,000,000 for
workers' compensation, $500,000 for property loss, other than windstorm and
flood, and $5,000,000 for damage due to windstorm and flood. The Company is
insured for insurance costs in excess of these limits.
F-9
(i) Depreciation and Amortization: Depreciation of plant and equipment,
which is stated at historical cost, is provided over the estimated useful
lives by the straight-line method or by methods that produce results similar
to the straight-line method. Amortization of improvements to leased premises
is provided principally by the straight-line method over the periods of the
leases or the estimated useful lives of the improvements, whichever is less.
(j) Store Opening and Closing Costs: The costs of opening new stores and
closing of old stores are charged to earnings in the year incurred.
(k) Earnings Per Share: The number of shares used in the calculation for
1995, 1994 and 1993 amounted to 74,717,003, 74,644,036 and 76,119,152,
respectively, which is the weighted average number of shares of common stock
outstanding during each year.
2. Accounts Receivable.
Accounts receivable at year-end were as follows:
1995 1994
Amounts in thousands
Trade and other receivables $ 67,183 52,797
Construction advances 85,834 119,891
153,017 172,688
Less: Allowance for doubtful items 1,105 834
$ 151,912 171,854
3. Inventories.
At June 28, 1995, inventories valued by the LIFO method would have been
$212,485,000 higher ($205,172,000 higher at June 29, 1994) if they were
stated at the lower of FIFO cost or market. If the FIFO method inventory
valuation had been used for the year ended June 28, 1995, reported net
earnings would have been $4,625,000 or $0.06 per share higher ($1,088,000 or
$0.01 per share lower in 1994 and $326,000 or $0.00 per share higher in
1993).
4. Property, Plant and Equipment.
Property, plant and equipment consists of the following:
1995 1994
Amounts in thousands
Land $ 2,441 2,724
Buildings 25,368 23,949
Furniture, fixtures, machinery 1,735,9 1,537,9
and equipment 49 28
Transportation equipment 122,322 104,914
Improvements to leased premises 333,460 267,333
Construction in progress 44,349 45,329
2,263,889 1,982,177
Less: Accumulated depreciation
and amortization 1,425,601 1,342,474
838,288 639,703
Leased property under capital leases, less
accumulated amortization of $40,779,000
($41,429,000 in 1994) 59,535 67,076
Net property, plant and equipment $ 897,823 706,779
The Company had non-cash additions to leased property of $0.0 million, $10.3
million and $1.4 million for 1995, 1994 and 1993, respectively.
F-10
5. Income Taxes.
The provision for income taxes consisted of:
Current Deferred Total
Amounts in thousands
1995
Federal $ 89,648 9,326 98,974
State 21,800 1,034 22,834
$ 111,448 10,360 121,808
1994
Federal $ 108,163 (217) 107,946
State 19,805 4,631 24,436
$ 127,968 4,414 132,382
1993
Federal $ 104,006 7,808 111,814
State 12,872 2,598 15,470
$ 116,878 10,406 127,284
The following reconciles the above provision to the Federal statutory income
tax rate:
1995 1994 1993
Federal statutory income tax rate 35.0 % 35.0 34.0
State and local income taxes, net of
federal income tax benefits 4.3 3.8 2.9
Other tax credits (1.1) (1.1) (0.6)
Other, net (3.8) 0.3 (1.3)
34.4 % 38.0 35.0
The retroactive increase in the federal corporate income tax rate from 34% to
35%, enacted on August 10, 1993 and effective on January 1, 1993, resulted in
additional income tax expense in fiscal 1994. This increase in income tax
expense was offset by an increase in prepaid income taxes resulting from the
federal corporate income tax rate increase as required by Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
The effective tax rate during the fourth quarter of fiscal 1995 reflects the
final settlement with the Internal Revenue Service of transactions pursuant
to Section 1804(e)(4) of the Tax Reform Act of 1986 whereby certain
subsidiaries of the Company were able to utilize the benefits of the net
operating losses of certain unaffiliated corporations.
F-11
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred liabilities at June 28,
1995, June 29, 1994 and June 30, 1993 are presented below:
1995 1994 1993
Amounts in thousands
Deferred tax assets:
Reserve for insurance claims and self-insurance $ 60,050 61,766 62,264
Estimated loss on assets - 372 -
Reserve for vacant store leases 7,738 11,248 8,971
Unearned promotional allowance 3,642 3,909 7,608
Reserve for accrued vacations 8,827 8,021 8,133
State net operating loss carryforwards 7,174 6,683 10,190
Excess of book over tax depreciation 9,088 9,283 9,406
Excess of book over tax rent expense 923 902 3,814
Excess of book over tax retirement expense 8,046 7,127 6,202
Uniform capitalization of inventory 4,602 4,418 4,080
Other, net 14,824 13,034 12,369
Total gross deferred tax assets 124,914 126,763 133,037
Less: Valuation allowance 6,487 6,325 6,406
Net deferred tax assets 118,427 120,438 126,631
Deferred tax liabilities:
Excess of tax over book depreciation (16,036) (8,811) (6,879)
Bahamas subsidiary foreign earnings (11,535) (9,375) (8,967)
Other, net (3,717) (4,753) (8,872)
Total gross deferred tax liabilities (31,288) (22,939) (24,718)
Net deferred tax assets $ 87,139 97,499 101,913
As discussed in Note 1 (b), the Company consolidated its Bahamas operations
effective June 30, 1993. The previously unrecorded earnings (net of deferred
income tax liability of $8,967,000) were recorded directly to retained earnings.
Current deferred income taxes of $58,114,000 and $56,475,000 for 1995 and 1994,
respectively, are included in the prepaid expenses in the accompanying
consolidated balance sheets.
The Company believes the results of future operations will generate sufficient
taxable income to realize the deferred tax assets.
F-12
6. Financing.
(a) Credit Arrangements: The Company has available a $200 million Commercial
Paper Program. As of June 28, 1995, there was $125.0 million outstanding as
compared to no amount outstanding on June 29, 1994. The Company also has
short-term lines of credit totaling $265 million. The lines of credit are
available when needed during the year and are renewable on an annual basis.
The Company is not required to maintain compensating bank balances in
connection with these lines of credit. As of June 28, 1995, there was $5.0
million outstanding under these bank lines of credit, compared to $9.5
million outstanding on June 29, 1994.
(b) Interest Rate Swap: The Company has entered into interest rate swap
agreements to reduce the impact of changes in rental payments which are
indexed to interest rate changes. At June 28, 1995, the Company had
outstanding four interest rate swap agreements, having a notional principal
amount of $50 million each, with an investment bank. These agreements
effectively change the Company's exposure on its leased real estate with
floating rental payments to fixed rental payments based on a 7.7% interest
rate. The interest rate swap agreements mature in June, 1997, June, 1999,
June, 2000 and June, 2001. In addition, the Company has entered into two
additional interest rate swap agreements, having a notional principal amount
of $50 million each, that do not become effective until the termination date
of the interest rate swap agreements that mature in June, 1997 and June,
1999. The Company is exposed to credit loss in the event of nonperformance
by the other party to these interest rate swap agreements. However, the
Company does not anticipate nonperformance by the counterpart.
Since current short-term interest rates at June 28, 1995, are below the 7.7%
rate of these contracts, the estimated negative value of these swaps was
approximately $16.1 million.
7. Common Stock.
The Company has a stock purchase plan in effect for associates. Under the
terms of the Plan, the Company may grant options to associates to purchase
shares of the Company's common stock at a price at least 85% of the fair
market value at the date of grant. During fiscal year 1995, 602,546 shares
of common stock were sold to associates at an aggregate price of $25,909,478.
There are 265,564 shares of the Company's common stock available for the
grant of options under the Plan.
8. Stock Options.
Under the Company's Key Employee Stock Option Plan adopted by the Board of
Directors on January 4, 1990 and approved by the shareholders on October 3,
1990, options to acquire up to 300,000 shares of common stock may be granted
to key employees at market. On January 24, 1990, options for 206,000 shares
were granted at an exercise price of $28.50 per share. Of the options
granted, 103,000 became exercisable on June 26, 1991 and 103,000 became
exercisable on June 24, 1992. Options under this plan expire on December 31,
1996.
On October 7, 1992, the shareholders approved an amendment to the Company's
Key Employee Stock Option Plan to increase the number of shares of common
stock available for issuance to 500,000 shares. Under this plan adopted by
the Board of Directors on June 22, 1992, options to acquire 113,000 shares of
common stock were granted to key employees at an exercise price of $42.125
per share. Of the options granted, 56,500 became exercisable on June 30,
1993. The remaining 56,500 became exercisable on June 29, 1994. Options
under this plan expire on December 31, 1998.
F-13
8. Stock Options, continued.
On June 22, 1994, the Board of Directors adopted an amendment to the
Company's Key Employee Stock Option Plan to increase the number of shares of
common stock available for issuance to 1,000,000 shares. This amendment was
approved by shareholders on October 5, 1994. Under this plan, options to
acquire 233,000 shares at an exercise price of $44.875 per share were granted
to key employees. Of the options granted, 116,500 shares became exercisable
on June 28, 1995 and the remaining 116,500 shares are not exercisable before
June 27, 1996, if earned. These options expire on January 15, 2001. Also,
an additional option to acquire 4,000 shares at $55.875 was granted on June
21, 1995. This option is not exercisable before June 27, 1996, if earned,
and will expire on January 15, 2001.
Changes in options under these plans during the years ended June 28, 1995,
June 29, 1994 and June 30, 1993 were as follows:
Number of Option Price
Shares Per Share
Outstanding - June 24, 1992 206,000 $28.500
Granted 113,000 $42.125
Exercised (74,000) $28.500
Canceled - -
Outstanding - June 30, 1993 245,000 $28.500-42.125
Granted 233,000 $44.875
Exercised - -
Canceled - -
Outstanding - June 29, 1994 478,000 $28.500-44.875
Granted 4,000 $55.875
Exercised (29,000) $28.500-42.125
Canceled (15,000) $44.875
Outstanding - June 28, 1995 438,000 $28.500-55.875
Exercisable - June 28, 1995 325,000 $28.500-44.875
Shares available for additional grant 459,000
9. Leases.
(a) Leasing Arrangements: There were 1,420 leases in effect on store
locations and other properties at June 28, 1995. Of these 1,420 leases, 59
store leases and 3 warehouse and manufacturing facility leases are classified
as capital leases. Substantially all store leases will expire during the
next twenty years and the warehouse and manufacturing facility leases will
expire during the next twenty-five years. However, in the normal course of
business, it is expected that these leases will be renewed or replaced by
leases on other properties.
The rental payments on substantially all store leases are based on a minimum
rental plus a contingent rental which is based on a percentage of the store's
sales in excess of stipulated amounts. Most of the Company's leases contain
renewal options for five-year periods at fixed rentals.
F-14
9. Leases, continued.
(b) Leases: The following is an analysis of the leased property under
capital leases by major classes:
Asset balances at
June 28, 1995 June 29, 1994
Amounts in thousands
Store facilities $ 74,653 82,844
Warehouses and manufacturing facilities 25,661 25,661
100,314 108,505
Less: Accumulated amortization 40,779 41,429
$ 59,535 67,076
The following is a schedule by year of future minimum lease payments under
capital and operating leases, together with the present value of the net
minimum lease payments as of June 28, 1995:
Operating Capital
Amounts in thousands
Fiscal Year:
1996 $ 13,547 239,543
1997 13,386 233,148
1998 13,145 228,394
1999 12,706 224,121
2000 12,513 219,287
Later years 109,068 2,036,805
Total minimum lease payments 174,365 3,181,298
Less: Amount representing
estimated taxes, maintenance
and insurance costs included
in total minimum lease payments 4,270
Net minimum lease payments 170,095
Less: Amount representing interest 89,144
Present value of net minimum lease payments $ 80,951
Rental payments under operating leases including, where applicable, real
estate taxes and other expenses are as follows:
1995 1994 1993
Amounts in thousands
Minimum rentals $ 218,921 190,830 187,055
Contingent rentals 3,323 3,352 4,282
$ 222,244 194,182 191,337
10. Commitments and Contingent Liabilities.
(a) Associate Benefit Programs: The Company has noncontributory, trusteed
profit sharing retirement programs which are in effect for eligible
associates and may be amended or terminated at any time. Charges to earnings
for contributions to the programs amounted to $55,250,000, $54,225,000 and
$54,985,000 in 1995, 1994 and 1993, respectively.
F-15
10. Commitments and Contingent Liabilities, continued.
In addition to providing profit sharing benefits, the Company makes group
insurance available to early retirees from the time they retire until age 65
when they qualify for Medicare/Medicaid. Currently, the early retiree group
constitutes 134 associates. This group of retirees bear the entire costs of
this plan, which is maintained totally separate from the Company's regular
group insurance plan. The Company reserves the right to modify these
benefits.
(b) Defined Benefit Plan: The Company has a Management Security Plan (MSP),
which is a non-qualified defined benefit plan providing disability, death and
retirement benefits to 557 qualified associates of the Company. Total MSP
cost charged to operations was $4,979,000, $4,557,000 and $3,992,000 in 1995,
1994 and 1993, respectively. The projected benefit obligation at June 28,
1995 was approximately $32,523,000. The effective discount rate used in
determining the net periodic MSP cost was 8.0% for 1995, 1994 and 1993.
Life insurance policies, which are not considered as MSP assets for liability
accrual computations, were purchased to fund the MSP payments. These
insurance policies are shown on the balance sheet at their cash surrender
values, net of policy loans aggregating $141,416,000 and $137,640,000 at June
28, 1995 and June 29, 1994, respectively.
Company holds life insurance on a broad-based group of qualified associates.
These insurance policies are shown on the balance sheet at their cash
surrender value, net of policy loans aggregating $367,423,000 at June 28,
1995 and $216,591,000 at June 29, 1994.
(c) Litigation: There are pending against the Company various claims and
lawsuits arising in the normal course of business, including suits charging
violations of certain civil rights laws.
The U.S. Environmental Protection Agency has notified the Company that it is
one of the many potentially responsible parties (PRPs) for cleanup of two
designated Superfund sites located in Tampa, Florida, three such sites in
Jacksonville (2 related sites), one site in Madison, Florida, one site in
Charlotte, North Carolina and one site in Pembrook Park, Florida. The
Company may be a PRP for cleanup of one non-Superfund site in Tarrant County,
Texas. Although cleanup costs are believed to be substantial, accurate
estimates will not be available until studies have been completed at the
sites.
The Company has entered into orders by consent with numerous other PRPs to
conduct studies and do cleanup for three of the Superfund sites and is
negotiating an agreement with PRPs who are under an order at two other
Superfund sites to determine the most cost-effective way to clean up such
sites. Although under federal statutes the Company is jointly and severally
liable for cleanup costs at each location, the Company's share of total costs
is estimated not to exceed $400,000 for four of the Superfund sites and the
Texas site.
The Company believes it is not a responsible party for cleanup of the
Madison, Florida, and Tarrant County, Texas, sites and has no estimate of
costs for those matters. Other than these two and the New Mexico site
mentioned below, these involve wastes the Company paid to be properly
disposed and were mishandled by disposal companies or public disposal sites.
F-16
10. Commitments and Contingent Liabilities, continued.
At one of the Tampa sites, the Company is one of 14 parties named as
respondents in a Unilateral Administrative Order for Remedial Design and
Remedial Action under 47 U.S.C. Section 9606(a) relating to a disposal
site formerly operated by Hillsborough County, Florida. The parties are
ordered to operate, maintain and monitor a water cleaning system and
perform Remedial Design for the site. The costs to the Company are
estimated at $50,000 in fiscal year 1995 with some credits still available
for this year, with additional annual costs for an indefinite period
thereafter.
The Company is also involved in the cleanup of a fuel tank leak at a New
Mexico site formerly owned by it. The cleanup costs are to be prorated
with others on the basis of the total time of ownership of the
participants. The Company's share is 15% of the total costs estimated to
be less than $150,000, with minimal annual monitoring costs thereafter.
It is the Company's policy to accrue and charge against earnings the
environmental cleanup costs when it is probable that a liability has been
incurred and an amount can be reasonably estimated, including evaluation of
the other PRPs' ability to pay. The Company believes its ultimate
liability as to these environmental matters will not necessitate
significant capital outlays, will not materially affect the annual earnings
of the Company, nor cause material changes in the Company's business. It
is not possible to quantify future environmental costs because many issues
relate to actions by third parties or changes in environmental regulation.
Although the amount of liability with respect to all other claims and
lawsuits cannot be ascertained, management is of the opinion that any
resulting liability will not have a material effect on the Company's
consolidated earnings or financial position.
11. Related Party Transactions.
The Company is essentially self-insured for purposes of employee group
life, medical, accident and sickness insurance, with The American Heritage
Life Insurance Company, a related party, providing administrative services
and expenses for medical and accident claims. The American Heritage Life
Insurance Company also financed the development and expansion of certain
retail stores. Total payments aggregating $13,442,000, $15,109,000 and
$34,108,000 were made in 1995, 1994 and 1993, respectively.
F-17
12. Quarterly Results of Operations (Unaudited).
The following is a summary of the unaudited quarterly results of operations
for the years ended June 28, 1995, June 29, 1994 and June 30, 1993:
Quarters Ended
Sept. 21 Jan. 11 April 5 June 28
1995 (12 Weeks) (16 Weeks) (12 Weeks) (12 Weeks)
Dollars in thousands except per share data
Net sales $ 2,590,364 3,537,824 2,775,842 2,883,813
Gross profit on sales $ 590,546 809,912 642,018 680,831
Net earnings $ 40,045 67,472 56,936 67,734
Earnings per share $ 0.54 0.91 0.76 0.90
Net LIFO charge (credit) $ 1,690 2,253 2,816 2,134
Net LIFO charge (credit) per shar $ 0.02 0.03 0.04 0.03
Dividends per share $ 0.26 0.52 0.39 0.39
Market price range $ 53.63-42.63 54.50-49.00 57.13-51.88 57.88-54.63
Quarters Ended
Sept. 22 Jan. 12 April 6 June 29
1994 (12 Weeks) (16 Weeks) (12 Weeks) (12 Weeks)
Dollars in thousands except per share data
Net sales $ 2,464,440 3,380,986 2,651,491 2,585,252
Gross profit on sales $ 556,085 766,461 603,914 608,028
Net earnings $ 35,951 63,781 52,032 64,353
Earnings per share $ 0.48 0.85 0.70 0.87
Net LIFO charge (credit) $ 1,690 2,253 1,690 6,721
Net LIFO charge (credit) per shar $ 0.02 0.03 0.02 0.08
Dividends per share $ 0.24 0.48 0.36 0.36
Market price range $ 67.75-56.00 60.38-49.00 58.38-48.25 52.25-43.50
Quarters Ended
Sept. 16 Jan. 6 March 31 June 30
1993 (12 Weeks) (16 Weeks) (12 Weeks) (13 Weeks)
Dollars in thousands except per share data
Net sales $ 2,392,129 3,244,672 2,504,214 2,690,520
Gross profit on sales $ 531,506 726,066 566,615 621,936
Net earnings $ 33,377 63,031 57,199 82,778
Earnings per share $ 0.44 0.82 0.75 1.10
Net LIFO charge (credit) $ 1,688 2,405 1,688 5,455
Net LIFO charge (credit) per shar $ 0.02 0.03 0.02 0.07
Dividends per share $ 0.22 0.44 0.33 0.33
Market price range $ 58.63-41.63 79.50-57.50 79.75-66.75 67.38-52.75
F-18
During 1995, 1994 and 1993, the fourth quarter results reflect a change from the
estimate of inflation used in the calculation of LIFO inventory to the actual
rate experienced by the Company of 1.0% to 0.6%, 1.0% to (0.1)% and 1.0% to 0.1%
respectively.
Fourth Quarter Results of Operations
June 28, 1995 June 29, 1994 June 30, 1993
(12 Weeks) (12 Weeks) (13 Weeks)
Amounts in thousands
Net sales $ 2,883,813 2,585,252 2,690,520
Cost of sales 2,202,982 1,977,224 2,068,584
Gross profit on sales 680,831 608,028 621,936
Operating and administrative expenses 607,460 522,057 523,780
Operating income 73,371 85,971 98,156
Cash discounts and other income, net 25,749 19,166 32,774
Interest expense (2,083) (1,411) (3,579)
Earnings before income taxes 97,037 103,726 127,351
Income taxes 29,303 39,373 44,573
Net earnings $ 67,734 64,353 82,778
The efffective tax rate during the fourth quarter of fiscal 1995 reflects the
final settlement with the Internal Revenue Service of transactions pursuant to
Section 1804(e)(4) of the Tax Reform Act of 1986 whereby certain subsidiaries of
the Company were able to utilize the benefits of the net operating losses of
certain unaffiliated corporations.
F-19
INDEPENDENT AUDITORS' REPORT
ON FINANCIAL STATEMENT SCHEDULES
The Shareholders and Board of Directors
Winn-Dixie Stores, Inc.:
Under date of July 31, 1995, we reported on the consolidated balance sheets of
Winn-Dixie Stores, Inc. and subsidiaries as of June 28, 1995 and June 29, 1994,
and the related consolidated statements of earnings, shareholders' equity, and
cash flows for each of the years in the three-year period ended June 28, 1995,
as con- tained in the annual report on Form 10-K for the year 1995. In
connection with our audits of the aforemen- tioned consolidated financial
statements, we also audited the related consolidated financial statement
schedules as listed in the accompanying index on page 13 of the annual report on
Form 10-K for the year 1995. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statement schedules based on our audits.
In our opinion, such consolidated financial statement schedules, when considered
in relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Certified Public Accountants
Jacksonville, Florida
July 31, 1995
S-1
WINN-DIXIE STORES, INC. AND SUBSIDIARIES Schedule VIII
Consolidated Valuation and Qualifying Accounts
Years ended June 28, 1995, June 29, 1994 and June 30, 1993
(Amounts in thousands)
Balance at Additions Deductions Balance at
beginning charged to from end
Description of year income reserves of year
Year ended June 28, 1995:
Reserves deducted from assets to which they apply:
Allowance for doubtful receivables $ 834 12,783 12,512 1,105
Reserves not deducted from assets:
Reserves for insurance claims and self-insurance:
-Current $ 60,510 81,323 82,460 59,373
-Noncurrent 105,417 - 2,033 103,384
$ 165,927 81,323 84,493 162,757
Year ended June 29, 1994:
Reserves deducted from assets to which they apply:
Allowance for doubtful receivables $ 732 12,126 12,024 834
Reserves not deducted from assets:
Reserves for insurance claims and self-insurance:
-Current $ 65,134 77,488 82,112 60,510
-Noncurrent 100,169 5,248 - 105,417
$ 165,303 82,736 82,112 165,927
Year ended June 30, 1993:
Reserves deducted from assets to which they apply:
Allowance for doubtful receivables $ 613 9,631 9,512 732
Reserves not deducted from assets:
Reserves for insurance claims and self-insurance:
-Current $ 61,641 96,507 93,014 65,134
-Noncurrent 105,965 - 5,796 100,169
$ 167,606 96,507 98,810 165,303
S-2