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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 26, 1996
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:
Title of each class Name of each exchange
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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 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 June 28, 1996
as reported on the New York Stock Exchange was approximately $3,170,479,387.
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 June 28, 1996 registrant had outstanding 151,684,943 shares of common
stock.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's Proxy
Statement in respect to the 1996 Annual Meeting of Shareholders are incorporated
by reference in Part III hereof, as more specifically described herein.
PART I
ITEM 1: BUSINESS
Business
General
Winn-Dixie Stores, Inc., organized in Florida on December 26, 1928, is a major
food retailer with 1,178 stores in fourteen states and the Bahama Islands.
According to published reports of sales at June 26, 1996 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 subsidiaries, 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 26, 1996,
the Company operated 1,178 retail stores of which 431 were located in Florida,
128 in North Carolina, 123 in Georgia, 91 in Alabama, 82 in South Carolina, 75
in Louisiana, 70 in Texas, 61 in Kentucky, 32 in Virginia, 24 in Tennessee, 21
in Ohio, 17 in Mississippi, 14 in the Bahamas, 7 in Oklahoma and 2 in Indiana.
Such stores were operated under the names of "Winn-Dixie" (634), "Marketplace"
(504), "Thriftway" (27), "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 manufacturing 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 Publix, Kash N Karry, Albertson's, Food Lion, Wal-Mart
Supercenter, U-Save
Montgomery Bruno, Delchamps, Wal-Mart Supercenter
Miami Publix, Sedano's, Albertson's
Orlando Publix, Albertson's, Goodings, Food Lion, Wal-Mart Supercenter,
Super K
Raleigh Food Lion, Harris-Teeter, Kroger, Hannaford, U-Krops
Charlotte Food Lion, Harris-Teeter, Bi-Lo, Super K, Publix
Atlanta Kroger, Ingles, A&P, Cub, Publix, Harris-Teeter, Wal-Mart
Supercenter
Midwest Kroger, Wal-Mart Supercenter, Biggs, Meijers
New Orleans Delchamps, Schwegmans, Albertson's
Fort Worth Kroger, Albertson's, Minyards, Food Lion, Randall's, Wal-Mart
Supercenter
Bahamas Super Value
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 26, 1996.
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 1996, the Company had 50,000 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.
ITEM 2: PROPERTIES
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 - 2019; Charlotte - 2019; Greenville - 2019; Jacksonville
(Edgewood) - 2019; Louisville - 2019; Sarasota - 2019; Miami - 2018;
Montgomery - 2018; New Orleans - 2018; Raleigh - 2018; Tampa - 2018;
Fort Worth - 2016; Hammond - 2016; Jacksonville (Commonwealth) - 2011;
Nassau - 2011; Orlando - 2005 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 under contract for sale.
The Company's Valdosta cracker and cookie, and snacks bakeries; 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; Miami
milk bottling plant; 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. In addition, the Company is a party to various proceedings arising
under federal, state or local regulations protecting the environment.
Management is of the opinion that any liability which might result from any such
claim, lawsuit or proceeding will not have a material adverse 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 26, 1996.
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 06-26-96 OFFICE HELD POSITION WINN-DIXIE
A. Dano Davis 51 Chairman of the Board 1988 1968
and Principal Executive Officer
James Kufeldt 58 President 1988 1961
C. H. McKellar 58 Executive Vice President 1988 1957
E. T. Walters 62 Senior Vice President 1989 1959
C. E. Winge 51 Senior Vice President 1988 1963
T. E. McDonald 59 Senior Vice President 1986 1955
H. E. Hess 56 Senior Vice President 1988 1958
R. P. McCook 43 Financial Vice President 1984 1984
and Principal Financial Officer
L. H. May 51 Vice President 1989 1964
E. E. Zahra, Jr. 49 Vice President and General
Counsel 1995 1995
D. H. Bragin 52 Treasurer 1985 1961
R. J. Brocato 52 Vice President 1993 1963
R. D. Buday 53 Vice President 1995 1971
W. C. Calkins 57 Vice President 1987 1958
J. W. Critchlow 49 Vice President 1988 1967
R. J. Ehster 55 Vice President 1983 1958
D. G. Lafever 47 Vice President 1990 1966
H. E. Miller 64 Vice President 1984 1956
J. R. Pownall 59 Vice President 1986 1955
L. J. Sadlowski 55 Vice President 1983 1961
R. A. Sevin 53 Vice President 1987 1961
B. B. Tripp 59 Vice President 1987 1954
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 & MacRae
L.L.P., 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 June 28, 1996 was 56,148.
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-17 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 12 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 26, 1996.
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, August 30,
1996 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 12 included herein.
(2) Financial Statement Schedules:
See "Index to Consolidated Financial Statements, Supporting
Schedules and Supplemental Data"on page 12 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
Number Description of Exhibit Incorporated by
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. 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 Previously filed as Exhibit 3.2
amended through June 21, 1995. to Form 10-K for the year ended
June 28, 1995, which Exhibit is
herein incorporated by
reference.*
9.1 Agreement of Shareholders of D.D.I., Previously filed as Exhibit 9.1
Inc.(formerly Vadis Investments, Inc.) June 30, 1993, which Exhibit is
dated April 19, 1989.
to Form 10-K for the year ended
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, June 30, 1993, which Exhibit is
effective June 27, 1991. to Form 10-K for the year ended
herein incorporated by
reference.*
10.2.1 Restricted Stock Plan, effective Previously filed as Exhibit
June 29, 1995. 10.2.1 to Form 10-Q for the
quarter ended January 10, 1996,
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 10.6
July 1, 1994. to Form 10-K for the year ended
June 29, 1994, which Exhibit is
herein incorporated by
reference.*
10.5 Management Security Plan as amended
and restated effective June 30,1982.
10.5.1 Amendment effective May 1, 1992 to
Management Security Plan.
10.6 Senior Corporate Officer's Management
Security Plan as amended and restated
effective June 30,1982.
10.6.1 Amendment effective May 1, 1992 to Senior
Corporate Officer's Management Security
Plan.
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 26, 1996.
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 9, 1996
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 9, 1996
(A. Dano Davis ) Executive Officer) and Director
JAMES KUFELDT President and Director August 9, 1996
(James Kufeldt)
RICHARD P. MCCOOK Financial Vice President August 9, 1996
(Richard P. McCook) (Principal Financial Officer)
DAVID H. BRAGIN Treasurer August 9, 1996
(David H. Bragin) (Principal Accounting Officer)
ROBERT D. DAVIS Director August 9, 1996
(Robert D. Davis)
Director
(T. Wayne Davis)
CHARLES H. MCKELLAR Director August 9, 1996
(Charles H. McKellar)
RADFORD D. LOVETT Director August 9, 1996
(Radford D. Lovett)
CHARLES P. STEPHENS Director August 9, 1996
(Charles P. Stephens)
ARMANDO M. CODINA Director August 9, 1996
(Armando M. Codina)
DAVID F. MILLER Director August 9, 1996
(David F. Miller)
Director
(Carleton T. Rider)
JULIA B. NORTH Director August 9, 1996
(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 26, 1996, June 28, 1995 and June 29, 1994 F-5
Consolidated Balance Sheets, June 26, 1996 and June 28, 1995 F-6
Consolidated Statements of Cash Flows, Years ended
June 26, 1996, June 28, 1995 and June 29, 1994 F-7
Consolidated Statements of Shareholders' Equity, Years ended
June 26, 1996, June 28, 1995 and June 29, 1994 F-8
Notes to Consolidated Financial Statements F-9
Financial Statement Schedules:
Independent Auditors' Report on Financial Statement Schedules S-1
II Consolidated Valuation and Qualifying Accounts, Years ended
June 26, 1996, June 28, 1995 and June 29, 1994 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
1996 1995 1994 19931992
Dollars in millions except per share data
Sales
Net sales . . . . . . . . . . $ 12,955 11,788 11,082 10,832 10,337
Percent increase. . . . . . . 9.9 6.4 2.3 4.8 2.6
Average annual sales per store . $ 11.0 10.0 9.6 9.4 8.7
Earnings Summary
Gross profit. . . . . . . . . $ 3,093 2,723 2,534 2,446 2,360
Percent of sales . . . . . . 23.9 23.1 22.9 22.6 22.8
LIFO charge (credit). . . . . $ 10 7 (2) 1 (11)
Operating and administrative expenses. $ 2,803 2,462 2,270 2,197 2,137
Percent of sales . . . . . . 21.6 20.9 20.5 20.3 20.7
Net earnings. .. . . . . . . $ 256 232 216 236 196
Per Share. . . . . . . . . . $ 1.69 1.56 1.45 1.56 1.28
Percent of net earnings to sales. . . 2.0 2.0 2.0 2.2 1.9
Percent of net earnings to average equity. 19.9 20.3 21.2 24.6 21.9
EBITDA . . . . . . . . . . . . $ 656.9 569.3 520.2 522.9 469.9
Dividends
Dividends paid. . . . . . . . $ 134.0 116.5 107.4 100.5 92.0
Percent of net earnings . . . 52.4 50.2 49.7 42.5 46.9
Per share (present rate $0.96) . $ .885 .78 .72 .66 .60
Common Stock (WIN)
Total shares outstanding (000,000). . 151.7 151.1 148.4 150.0 153.8
NYSE-Stock price range
Common - High. . . . . . . . $ 38.38 28.94 33.88 39.88 22.32
Low. . . . . $ 28.06 21.32 21.75 20.82 17.32
Financial Data
Cash flow information:
Net cash provided by operating activities .$ 559.4 416.4 436.3 213.0 338.3
Net cash used in investing activities . . .$ 390.4 381.5 214.7 81.4 216.9
Net cash used in financing activities . . .$ 167.3 35.9 212.4 128.7 109.2
Capital expenditures, net . . $ 362.0 371.6 277.7 194.8 164.5
Depreciation and amortization. . $ 248.3 200.9 157.4 141.1 126.9
Working capital . . . . . . . $ 388.7 414.9 486.2 540.0 539.4
Current ratio . . . . . . . . 1.4 1.4 1.6 1.6 1.7
Total assets. . . . . . . . . $ 2,649 2,472 2,145 2,058 1,966
Obligations under capital leases. . . $ 61 78 85 87 90
Shareholders' equity. . . . . $ 1,342 1,231 1,056 980 941
Book value per share. . . . . $ 8.85 8.14 7.12 6.54 6.12
Stores
In operation at year-end. . . 1,178 1,175 1,1591,151
1,189
Opened and acquired during year. 61 108 60 40 35
Closed or sold during year. . 58 92 66 78 53
Enlarged or remodeled during year . . 128 86 87 73 65
New/enlarged/remodeled in last five years. . 743 654 535 475 464
Percent to total stores in operation. . . . 63.1 55.7 46.2 41.3 39.0
Year-end retail square footage (000,000) . . 45.7 43.8 40.7 39.0 38.6
Average store size at year-end (000). 38.8 37.3 35.1 33.9 32.4
Other Year-end Data
Associates (000). . . . . . . 126 123 112 105 102
Shareholder accounts (000). . 56.3 44.8 39.5 41.4 42.8
Shareholders per store. . . . 48 38 34 36 36
Taxes
Federal, state and local. . . $ 288 261 261 255 233
Per share . . . . . . . . . . $ 1.90 1.75 1.75 1.68 1.52
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 1996 were $13.0 billion, compared to $11.8 billion for 1995 and $11.1
billion for 1994. This reflects a 9.9%, 6.4% and 2.3% increase in sales per
year for 1996, 1995 and 1994, respectively. Average weekly store sales
increased 8.4%, 6.8% and 5.0% for each of the last three fiscal years, while
comparable store sales increased 4.4%, 3.0% and 2.0% per year for 1996, 1995 and
1994, respectively. Fourth quarter sales were $3.0 billion, $2.9 billion and
$2.6 billion for 1996, 1995 and 1994, respectively. For the fourth quarter,
average store sales increased 4.5% in 1996, 9.5% in 1995 and 3.6% in 1994.
Comparable store sales for the fourth quarter increased 1.7%, 3.8% and 1.4% in
1996, 1995 and 1994, respectively.
In fiscal year 1996, the Company opened and acquired 61 stores averaging 48,500
square feet, enlarged or remodeled 128 stores and closed 58 stores, averaging
29,400 square feet.
As a percent of sales, gross profit margins were 23.9%, 23.1% and 22.9% in
fiscal 1996, 1995 and 1994, 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 $9.9 million
pre-tax decrease in gross profit in 1996, a pre-tax decrease in gross profit of
$7.3 million in 1995 and a pre-tax increase in gross profit of $2.0 million in
1994.
Operating and administrative expenses, as a percent of sales, were 21.6%, 20.9%
and 20.5% in fiscal 1996, 1995 and 1994, respectively. Our major increases in
operating and administrative expenses are due to a higher payroll percentage in
our larger stores, advertising, insurance premiums, occupancy cost and
depreciation expense.
Cash discounts and other income amounted to $118.0 million, $106.9 million and
$98.1 million in 1996, 1995 and 1994, respectively. The increase in 1996 and
1995 is due to an increase in cash discounts resulting from an increase
in purchases of merchandise for resale and gains from the disposal of capital
assets. Gains (losses) on the sales of securities and other assets amounted to
none for 1996 and 1995 compared to $(3.2) million in 1994. Investment income
amounted to $0.6 million, $0.5 million and $4.0 million in fiscal 1996, 1995 and
1994, respectively.
Interest expense totaled $21.2 million, $14.3 million and $14.3 million in
fiscal 1996, 1995 and 1994, respectively. Interest expense primarily reflects a
computation of interest on capital lease obligations and short-term borrowings.
The 1996 increase in other interest expense is due to an increase in short-term
borrowings.
Earnings before income taxes were $387.3 million, $354.0 million and $348.5
million in fiscal 1996, 1995 and 1994, respectively. The 1996 increase in
pre-tax earnings is primarily a result of an increase in operating income.
The 1995 increase is the result of an increase in gross profit margin from a
better inventory mix and an increase in cash discounts and other income. The
effective income tax rates were 34.0%, 34.4% and 38.0% for fiscal 1996, 1995 and
1994, respectively.
Net earnings amounted to $255.6 million, or $1.69 per share for 1996, $232.2
million, or $1.56 per share for 1995 and $216.1 million, or $1.45 per share for
1994. The LIFO calculations decreased net earnings by $6.0 million,
or $0.04 per share in 1996, decreased net earnings by $4.6 million, or $0.03
per share for 1995 and increased net earnings by $1.1 million, or $0.01 per
share for 1994.
F-2
Liquidity and Capital Resources.
The Company's financial condition remains sound and strong at year end. Cash
and cash equivalents amounted to $32.2 million, $30.4 million and $31.5 million
at the end of fiscal years 1996, 1995 and 1994, respectively. Cash provided
by operating activities amounted to $559.4 million in 1996, $416.4 million in
1995 and $436.3 million in 1994.
Net capital expenditures totaled $362.0 million, $371.6 million and $277.7 in
fiscal 1996, 1995 and 1994, respectively. These expenditures were for new store
locations, store enlargements and remodelings, and the expansion of warehouse
facilities. Total capital investment in Company retail and support facilities,
including operating leases, is estimated to be $600 million in 1996 and
projected to be $750 million in 1997. The Company has no material construction
or purchase commitments outstanding as of June 26, 1996.
Working capital amounted to $388.7 million and $414.9 million at the end of
fiscal years 1996 and 1995, respectively. Inventories on a FIFO (first-in,
first-out) basis increased $29.4 million in 1996 and $108.0 million in 1995.
The increase is primarily due to the increase in the number of stores and our
store enlargement program, both in 1996 and 1995.
The Company has an authorized $300 million commercial paper program. In support
of this program, or as an independent source of funds, the Company also has $340
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 were no
amounts outstanding against the bank lines of credit at the end of 1996 as
compared to $5.0 million at the end of 1995. There was $110.0 million in
commercial paper outstanding at the end of 1996, compared to $125.0 million in
commercial paper outstanding at the end of 1995. The average interest rate on
the commercial paper outstanding on June 26, 1996 was 5.5% as compared to 6.1%
on June 28, 1995.
Excluding capital lease obligations, the Company had no outstanding long-
term debt as of June 26, 1996 or June 28, 1995.
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 is a party to various proceedings arising under federal, state and
local regulations protecting the environment. Management is of the opinion that
any liability which might result from any such proceedings will not have a
material adverse effect on the Company's consolidated earnings or financial
position.
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 26, 1996 and June 28, 1995, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the years in the three-year period ended June 26, 1996. 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 26, 1996 and June 28, 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended June 26, 1996, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Certified Public Accountants
Jacksonville, Florida
July 29, 1996
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 26, 1996, June 28, 1995 and June 29, 1994
1996 1995 1994
Amounts in thousands except per share data
Net sales $ 12,955,488 11,787,843 11,082,169
Cost of sales, including warehousing
and delivery expense 9,862,244 9,064,536 8,547,681
Gross profit on sales 3,093,244 2,723,307 2,534,488
Operating and administrative expenses 2,802,712 2,461,883 2,269,803
Operating income 290,532 261,424 264,685
Cash discounts and other income, net 118,038 106,901 98,085
408,570 368,325 362,770
Interest:
Interest on capital lease obligations 8,199 10,086 11,285
Other interest 13,046 4,244 2,986
Total interest 21,245 14,330 14,271
Earnings before income taxes 387,325 353,995 348,499
Income taxes 131,691 121,808 132,382
Net earnings $ 255,634 232,187 216,117
Earnings per share $ 1.69 1.56 1.45
See accompanying notes to consolidated financial statements.
F-5
CONSOLIDATED BALANCE SHEETS
June 26, 1996 and June 28, 1995
1996 1995
Amounts in thousands
Assets
Current Assets:
Cash and cash equivalents $ 32,208 30,414
Trade and other receivables, less allowance for
doubtful items of $1,860,000 ($1,105,000 in 1995) 158,445 151,912
Merchandise inventories at lower of cost or market
less LIFO reserve of $222,341,000
($212,485,000 in 1995) 1,179,126 1,159,584
Prepaid expenses 131,161 103,135
Total current assets 1,500,940 1,445,045
Investments and other assets:
Cash surrender value of life insurance, net 55,769 41,411
Other assets 70,322 58,873
Total investments and other assets 126,091 100,284
Deferred income taxes 22,732 29,025
Net property, plant and equipment 998,849 897,823
$ 2,648,612 2,472,177
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 599,297 555,551
Short-term borrowings 110,000 130,000
Reserve for insurance claims and self-insurance 61,760 59,373
Accrued wages and salaries 84,691 77,396
Accrued rent 62,237 54,888
Accrued expenses 148,715 130,285
Current obligations under capital leases 2,974 3,298
Income taxes 42,554 19,331
Total current liabilities 1,112,228 1,030,122
Obligations under capital leases 60,853 77,653
Defined benefit plan 34,197 28,328
Reserve for insurance claims and self-insurance 97,209 103,384
Other liabilities 1,829 2,098
Shareholders' equity:
Common stock of $1 par value. Authorized
200,000,000 shares; issued 151,684,943 shares in
1996 and 151,121,974 shares in 1995 151,685 75,561
Retained earnings 1,190,611 1,155,031
Total shareholders' equity 1,342,296 1,230,592
Commitments and contingent liabilities (Note 10)
$ 2,648,612 2,472,177
See accompanying notes to consolidated financial statements.
F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 26, 1996, June 28, 1995 and June 29, 1994
1996 1995 1994
Amounts in thousands
Cash flows from operating activities:
Net earnings $ 255,634 232,187 216,117
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 248,287 200,931 157,392
Deferred income taxes (7,698) 10,360 4,414
Defined benefit plan 5,869 5,476 3,398
Reserve for insurance claims and self-insurance (3,788) (3,170) 624
Change in cash from:
Receivables (6,533) 14,101 (9,264)
Merchandise inventories (19,542) (69,900) (17,432)
Prepaid expenses (14,037) (1,392) 1,754
Accounts payable 42,199 23,474 23,616
Income taxes 23,223 (10,456) 11,825
Other current accrued expenses 35,829 14,772 43,830
Net cash provided by operating activities 559,443 416,383 436,274
Cash flows from investing activities:
Purchases of property, plant and equipment, net (361,961) (371,563) (277,657)
Decrease (increase) in investments and other assets (28,413) (9,928) 62,938
Net cash used in investing activities (390,374) (381,491) (214,719)
Cash flows from financing activities:
Increase (decrease) in short-term borrowings (20,000) 120,500 (70,500)
Payment on notes payable - (17,008) -
Payments on capital lease obligations (3,077) (3,111) (3,122)
Purchase of common stock (51,581) (34,896) (39,993)
Proceeds of sales under associates' stock purchase 40,205 15,297 2,871
Dividends paid (134,042) (116,506) (107,384)
Other 1,220 (205) 5,722
Net cash used in financing activities (167,275) (35,929) (212,406)
Increase (decrease) in cash and cash equivalents 1,794 ( 1,037) 9,149
Cash and cash equivalents at the beginning of the year 30,414 31,451 22,302
Cash and cash equivalents at end of the year $ 32,208 30,414 31,451
Supplemental cash flow information:
Interest paid $ 14,569 16,213 15,366
Interest and dividends received $ 8,049 1,510 4,059
Income taxes paid $ 114,572 121,904 115,788
See accompanying notes to consolidated financial statements.
F-7
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended June 26, 1996, June 28, 1995 and June 29, 1994
1996 1995 1994
Amounts in thousands
Common stock:
Beginning of year $ 75,561 74,176 74,956
Add par value of shares issued for associates' stock purchase
plan, acquisition and management incentive plan 2,149 2,044 19
Add par value of common stock issued in connection with
2-for-1 stock split 75,580 - -
Deduct par value of common stock acquired 1,605 659 799
End of year 151,685 75,561 74,176
Retained earnings:
Beginning of year 1,155,031 981,509 905,362
Net earnings 255,634 232,187 216,117
Deduct excess of cost over par value of common stock
acquired 49,976 34,237 39,194
Deduct cash dividends on common stock of $0.885, $0.78
and $0.72 per share in 1996, 1995, and 1994 respectively 134,042 116,506 107,384
Deduct excess of cost over par value of shares issued in
connection with 2-for-1 stock split 75,580 - -
Add excess of cost over par value of shares issued for
associates' stock purchase plan, acquisition and
management incentive plan 50,172 100,962 3,792
Add (deduct) associates' stock loans, net of payments (14,330) (8,839) 2,871
Other 3,702 (45) (55)
End of year. 1,190,611 1,155,031 981,509
Total shareholders' equity $ 1,342,296 1,230,592 1,055,685
See accompanying notes to consolidated financial statements.
F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies and Other Information.
(a) Fiscal Year: The fiscal year ends on the last Wednesday in June.
Fiscal years ended 1996, 1995 and 1994 comprised 52 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.
(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
short-term borrowings approximates fair value because of their
short-term maturity. See Note 6(b) for information on interest rate
swap agreements.
(g) Income Taxes: Deferred tax asset s 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 and $1,000,000 for workers' compensation. Self-insurance
reserves are established for property losses with a maximum annual
aggregate of $5,000,000 and a $100,000 per occurrence deductible
after the aggregate is obtained. The Company is insured for
insurance costs in excess of these limits.
(i) 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, the disclosure of contingent assets and liabilities
at 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.
F-9
(j) 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
(k) Store Opening and Closing Costs: The costs of opening new stores and
closing of old stores are charged to earnings in the year incurred.
(l) Earnings Per Share: The number of shares used in the calculation for
1996, 1995 and 1994 amounted to 151,577,205, 149,434,006 and
149,288,072, respectively, which is the weighted average number of
shares of common stock outstanding during each year. All share and
per share amounts have been retroactively restated to reflect the
2-for-1 stock split effected on November 10,1995.
(m) Stock-Based Compensation: During fiscal year 1996, the Company adopted
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (FASB Statement No.123), which establishes a
fair value based method of accounting for stock-based compensation
plans. Prior to fiscal year 1996, the Company followed the intrinsic
value method set forth in APB Opinion 25, "Accounting for Stock Issued
to Employees." The adoption of this Standard in 1996 had no material
effect on the Company's financial statements (see Notes 7 and 8).
(n) New Accounting Standard: In March 1995, the Financial Accounting
Standards Board issued Financial Accounting Standard No.121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," which requires impairment losses
to be recorded on long-lived assets used in operations when indicators
of impairment are present and the flows estimated to be generated by
those assets are less than the asset's carrying amount. This
Standard also addresses the accounting for long-lived assets that are
expected to be disposed of. The Company has historically reserved for
losses related to the impairment of long-term assets. The adoption of
this Standard in 1996 had no material effect on the Company's
financial statements.
(o) Reclassification: Loans to associates for the purchase of Company
stock has been reclassified as a reduction of shareholders' equity
rather than a current asset. Certain prior year amounts have been
reclassified to conform with the presentation adopted in 1996.
2. Accounts Receivable.
Accounts receivable at year-end were as follows:
1996 1995
Amounts in thousands
Trade and other receivables $ 78,698 67,183
Construction advances 81,607 85,834
160,305 153,017
Less: Allowance for doubtful items. 1,860 1,105
$ 158,445 151,912
3. Inventories.
At June 26, 1996, inventories valued by the LIFO method would have been
$222,341,000 higher ($212,485,000 higher at June 28, 1995) 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 26, 1996, reported net
earnings would have been $6,022,000 or $0.04 per share higher ($4,625,000
or $0.03 per share higher in 1995 and $1,088,000 or $0.01 per share lower
in 1994).
F-10
4. Property, Plant and Equipment.
Property, plant and equipment consists of the following:
1996 1995
Amounts in thousands
Land $ 2,459 2,441
Buildings 25,962 25,368
Furniture, fixtures, machinery and equipment 1,915,937 1,735,949
Transportation equipment 117,242 122,322
Improvements to leased premises 397,464 333,460
Construction in progress 49,493 44,349
2,508,557 2,263,889
Less: Accumulated depreciation and amortization 1,553,990 1,425,601
954,567 838,288
Leased property under capital leases, less
accumulated amortization of $37,373,000
($40,779,000 in 1995) 44,282 59,535
Net property, plant and equipment $ 998,849 897,823
The Company had no non-cash additions to leased property for 1996 and 1995 as
compared to $10.3 million for 1994.
5. Income Taxes.
The provision for income taxes consisted of:
Current Deferred Total
Amounts in thousands
1996
Federal $ 117,136 (7,523) 109,613
State 22,251 (173) 22,078
$ 139,387 (7,696) 131,691
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
The following reconciles the above provision to the Federal statutory income
tax rate:
1996 1995 1994
Federal statutory income tax rate 35.0 % 35.0 % 35.0 %
State and local income taxes, net of
federal income tax benefits 3.5 4.3 3.8
Other tax credits (0.2) (1.1) (1.1)
Life insurance (3.1) (2.1) (1.1)
Other, net (1.2) (1.7) 1.4
34.0 % 34.4 % 38.0 %
F-11
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.
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred liabilities at June 26, 1996, June 28,
1995 and June 29, 1994 are presented below:
1996 1995 1994
Amounts in thousands
Deferred tax assets:
Reserve for insurance claims and self-insurance $ 58,501 60,050 61,766
Reserve for vacant store leases 10,319 7,738 11,248
Unearned promotional allowance 7,568 3,642 3,909
Reserve for accrued vacations 9,278 8,827 8,021
State net operating loss carry forwards 6,962 7,174 6,683
Excess of book over tax depreciation 10,026 9,088 9,283
Excess of book over tax rent expense 1,133 923 902
Excess of book over tax retirement expense 10,750 8,046 7,127
Uniform capitalization of inventory 5,181 4,602 4,418
Other, net 25,464 14,824 13,406
Total gross deferred tax assets 145,182 124,914 126,763
Less: Valuation allowance 6,896 6,487 6,325
Net deferred tax assets 138,286 118,427 120,438
Deferred tax liabilities:
Excess of tax over book depreciation (18,514) (16,036) (8,811)
Bahamas subsidiary foreign earnings (11,506) (11,535) (9,375)
Other, net (13,429) (3,717) (4,753)
Total gross deferred tax liabilities (43,449) (31,288) (22,939)
Net deferred tax assets $ 94,837 87,139 97,499
Current deferred income taxes of $72,105,000 and $58,114,000 for 1996 and 1995,
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 $300.0 million
Commercial Paper Program. As of June 26, 1996, there was $110.0
million outstanding as compared to $125.0 million outstanding on June
28, 1995. The average interest rate on the commercial paper outstanding
on June 26, 1996 was 5.5% as compared to 6.1% on June 28, 1995. The
Company also has short-term lines of credit totaling $340.0 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 26, 1996, there were no amounts outstanding under these bank
lines of credit, compared to $5.0 million outstanding on June 28, 1995.
(b)Interest Rate Swap: The Company has entered into interest rate swap
agreements to reduce the impact of changes in rental payments on retail
locations, distribution facilities and manufacturing facilities that
have a lease term of 25 years and whose primary rent expense fluctuates
with the commercial paper interest rate. At June 26, 1996, 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 on June
30, 1996, 1998, 2002 and 2004. 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 on
June 30, 1996 and June 30, 1998. 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 26, 1996, are below the
7.7% rate of these contracts, the estimated negative value of these
swaps was approximately $7.5 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 not less than the greater of
85% of the fair market value at the date of grant or $1.00. During fiscal
year 1996, 1,069,251 shares of common stock were sold to associates at an
aggregate price of $54,531,801. There are 392,626 shares of the Company's
common stock available for the grant of options under the Plan.
Under FASB Statement No. 123, purchase discounts granted to associates are
recognized as compensation cost over the vesting period. The 1996
compensation cost that has been charged against net income was $2.0 million.
Under APB Opinion 25, no compensation cost was recorded in 1995 or 1994.
8. Stock Options.
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 1,000,000 shares. Under this plan adopted by
the Board of Directors on June 22, 1992, options to acquire 226,000 shares of
common stock were granted to key employees at an exercise price of $21.063
per share. Of the options granted, 113,000 became exercisable on June 30,
1993. The remaining 113,000 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 2,000,000 shares. This amendment was
approved by shareholders on October 5, 1994. Under this plan, options to
acquire 466,000 shares at an exercise price of $22.438 per share were granted
to key employees. Of the options granted, 233,000 shares became exercisable
on June 28, 1995 and the remaining 233,000 shares are exercisable on June
27, 1996, if earned. These options expire on January 15, 2001. Also, an
additional option to acquire 8,000 shares at $27.938 was granted on June 21,
1995. This option is exercisable on June 27, 1996, if earned, and will
expire on January 15, 2001.
Changes in options under these plans during the years ended June 26, 1996,
June 28, 1995 and June 29, 1994 were as follows:
Number of Option Price
Shares Per Share
Outstanding - June 30, 1993 490,000 $14.250-21.063
Granted 466,000 $22.438
Exercised - -
Canceled - -
Outstanding - June 29, 1994 956,000 $14.250-22.438
Granted 8,000 $27.938
Exercised (58,000) $14.250-21.063
Canceled (30,000) $22.438
Outstanding - June 28, 1995 876,000 $14.250-27.938
Granted - $ -
Exercised (236,000) $14.250-22.438
Canceled (10,000) $22.438
Outstanding - June 26, 1996 630,000 $21.063-27.938
Exercisable - June 26, 1996 389,000 $21.063-22.438
Shares available for additional grant 928,000
Options granted under the Company's Key Employee Stock Option Plan are
exercisable upon the achievement of specified operating results. The
Company's adoption of FASB Statement No. 123 in fiscal 1996 did not
materially impact the Company's financial statements, which historically
have reflected compensation expense under APB Opinion 25.
9. Leases.
(a) Leasing Arrangements: There were 1,432 leases in effect on store
locations and other properties at June 26, 1996. Of these 1,432 leases,
52 store leases and 2 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 26, 1996 June 28, 1995
Amounts in thousands
Store facilities $ 65,933 74,653
Warehouses and manufacturing facilities 15,722 25,661
81,655 100,314
Less: Accumulated amortization 37,373 40,779
$ 44,282 59,535
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 26, 1996.
Capital Operating
Amounts in thousands
Fiscal Year:
1997 $ 11,345 265,851
1998 11,140 258,856
1999 10,731 254,271
2000 10,539 250,010
2001 10,545 243,925
Later years 77,949 2,341,514
Total minimum lease payments 132,249 3,614,427
Less: Amount representing estimated taxes,
maintenance and insurance costs included
in total minimum lease payments 3,707
Net minimum lease payments 128,542
Less: Amount representing interest 64,715
Present value of net minimum lease payments $ 63,827
Rental payments under operating leases including, where applicable, real
estate taxes and other expenses are as follows:
1996 1995 1994
Amounts in thousands
Minimum rentals $ 254,705 218,921 190,830
Contingent rentals 3,320 3,323 3,352
$ 258,025 222,244 194,182
F-15
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 $62,200,000,
$55,250,000 and $54,225,000 in 1996, 1995 and 1994, respectively.
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 140 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 578 qualified associates of the Company. Total
MSP cost charged to operations was $4,942,000, $4,979,000 and $4,557,000
in 1996, 1995 and 1994, respectively. The projected benefit obligation at
June 26, 1996 was approximately $35,146,000. The effective discount rate
used in determining the net periodic MSP cost was 8.0% for 1996, 1995
and 1994.
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 $154,438,000 and
$141,416,000 at June 26, 1996 and June 28, 1995, respectively.
The 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
$459,583,000 at June 26, 1996 and $367,423,000 at June 28, 1995.
(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. In addition, the
Company is a party to various proceedings arising under federal, state or
local regulations protecting the environment. Management is of the
opinion that any liability which might result from any such claim,
lawsuit or proceeding will not have a material adverse effect on the
Company's consolidated earnings or financial position.
11. Related Party Transactions.
The Company is self-insured for purposes of employee group life, medical,
accident and sickness insurance, with American Heritage Life Insurance
Company, a related party, providing administrative services and expenses for
medical and accident claims. American Heritage Life Insurance Company also
financed the development and expansion of certain retail stores. Total
payments aggregating $25,001,000, $13,442,000 and $15,109,000 were made in
1996, 1995 and 1994, respectively.
F-16
12. Quarterly Results of Operations (Unaudited).
The following is a summary of the unaudited quarterly results of operations
for the years ended June 26, 1996, June 28, 1995 and June 29, 1994:
Quarters Ended
Sept. 20 Jan. 10 April 3 June 26
1996 (12 Weeks) (16 Weeks) (12 Weeks) (12 Weeks)
Dollars in thousands except per share data
Net sales $ 2,934,958 3,972,563 3,035,323 3,012,644
Gross profit on sales $ 677,559 946,312 742,820 726,553
Net earnings $ 45,877 72,460 63,252 74,045
Earnings per share $ 0.30 0.48 0.42 0.49
Net LIFO charge (credit) $ 3,666 2,444 1,833 (1,921)
Net LIFO charge (credit) per share $ 0.03 0.01 0.01 (0.01)
Dividends per share $ 0.140 0.295 0.225 0.225
Market price range $ 30.50-28.06 37.50-29.69 38.38-33.63 35.63-31.88
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. $ 0.27 0.45 0.38 0.45
Net LIFO charge (credit) $ 1,690 2,253 2,816 (2,134)
Net LIFO charge (credit) per share $ 0.01 0.01 0.02 (0.01)
Dividends per share $ 0.13 0.26 0.195 0.195
Market price range $ 26.82-21.32 27.25-24.50 28.57-25.94 28.94-27.32
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 $ 0.24 0.42 0.35 0.44
Net LIFO charge (credit) $ 1,690 2,253 1,690 (6,721)
Net LIFO charge (credit) per share $ 0.01 0.01 0.01 (0.04)
Dividends per share $ 0.12 0.24 0.18 0.18
Market price range $ 33.88-28.00 30.19-24.50 29.19-24.13 26.13-21.75
F-17
12. Quarterly Results of Operations (Unaudited), continued.
During 1996, 1995 and 1994, 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 1.2% to 0.8%, 1.6% to 0.6% and
1.0% to (0.1)%, respectively.
Fourth Quarter Results of Operations
June 26, 1996 June 28, 1995 June 29, 1994
(12 weeks) (12 weeks) (12 weeks)
Amounts in thousands
Net sales $ 3,012,644 2,883,813 2,585,252
Cost of sales 2,286,091 2,202,982 1,977,224
Gross profit on sales 726,553 680,831 608,028
Operating and administrative expenses 647,429 607,460 522,057
Operating income 79,124 73,371 85,971
Cash discounts and other income, net 30,473 25,749 19,166
Interest expense (1,640) (2,083) (1,411)
Earnings before income taxes 107,957 97,037 103,726
Income taxes 33,912 29,303 39,373
Net earnings $ 74,045 67,734 64,353
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-18
INDEPENDENT AUDITORS' REPORT
ON FINANCIAL STATEMENT SCHEDULES
The Shareholders and Board of Directors
Winn-Dixie Stores, Inc.:
Under date of July 29, 1996, we reported on the consolidated balance sheets of
Winn-Dixie Stores, Inc. and subsidiaries as of June 26, 1996 and June 28, 1995,
and the related consolidated statements of earnings, shareholders' equity, and
cash flows for each of the years in the three-year period ended June 26, 1996,
as contained in the annual report on Form 10-K for the year 1996. In connection
with our audits of the aforementioned consolidated financial statements, we also
audited the related consolidated financial statement schedules as listed in the
accompanying index on page 12 of the annual report on Form 10-K for the year
1996. 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 29, 1996
S-1
Schedule II
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
Consolidated Valuation and Qualifying Accounts
Years Ended June 26, 1996, June 28, 1995 and June 29, 1994
(Amounts in thousands)
Balance at Additions Deductions Balance
beginning charged to from at end
Description of year income reserves of year
Year ended June 26, 1996:
Reserves deducted from assets
to which they apply:
Allowance for doubtful receivables $ 1,105 20,150 19,395 1,860
Reserves not deducted from assets:
Reserves for insurance claims
and self-insurance:
-Current $ 59,373 85,744 83,357 61,760
-Noncurrent 103,384 2,039 8,214 97,209
$162,757 87,783 91,571 158,969
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
S-2