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EX-32.2 - EXHIBIT 32.2 - PUBLIX SUPER MARKETS INCa2q2020exhibit322.htm
EX-32.1 - EXHIBIT 32.1 - PUBLIX SUPER MARKETS INCa2q2020exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - PUBLIX SUPER MARKETS INCa2q2020exhibit312.htm
EX-31.1 - EXHIBIT 31.1 - PUBLIX SUPER MARKETS INCa2q2020exhibit311.htm
 



  
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 2020
Commission File Number: 000-00981
 publixlogorev2a12.jpg
PUBLIX SUPER MARKETS, INC.
(Exact name of Registrant as specified in its charter)
Florida
 
59-0324412
(State of incorporation)
 
(I.R.S. Employer Identification No.)
 
 
3300 Publix Corporate Parkway
Lakeland, Florida
 
33811
(Address of principal executive offices)
 
(Zip Code)
(863) 688-1188
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
Yes    X          No         
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.
Yes    X          No         
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer            Accelerated filer           Non-accelerated filer    X    
Smaller reporting company            Emerging growth company           
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes                 No    X  
The number of shares of the Registrant’s common stock outstanding as of July 15, 2020 was 700,789,000.

 





PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts are in thousands, except par value)
(Unaudited)
 
June 27, 2020
 
December 28, 2019
ASSETS
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,423,493

 
 
 
763,382

 
Short-term investments
 
566,920

 
 
 
438,105

 
Trade receivables
 
725,568

 
 
 
737,093

 
Inventories
 
1,868,544

 
 
 
1,913,310

 
Prepaid expenses
 
65,747

 
 
 
75,710

 
Total current assets
 
4,650,272

 
 
 
3,927,600

 
Long-term investments
 
9,459,373

 
 
 
7,988,280

 
Other noncurrent assets
 
442,883

 
 
 
441,938

 
Operating lease right-of-use assets
 
2,977,399

 
 
 
2,964,780

 
Property, plant and equipment
 
15,699,381

 
 
 
15,222,409

 
Accumulated depreciation
 
(6,383,465
)
 
 
 
(6,037,887
)
 
Net property, plant and equipment
 
9,315,916

 
 
 
9,184,522

 
 
 
$
26,845,843

 
 
 
24,507,120

 
LIABILITIES AND EQUITY
 
Current liabilities:
 
 
 
 
 
 
 
Accounts payable
 
$
2,155,743

 
 
 
1,984,761

 
Accrued expenses:
 
 
 
 
 
 
 
Contributions to retirement plans
 
406,751

 
 
 
581,699

 
Self-insurance reserves
 
155,066

 
 
 
149,082

 
Salaries and wages
 
297,204

 
 
 
148,662

 
Other
 
661,588

 
 
 
461,427

 
Current portion of long-term debt
 
53,354

 
 
 
39,692

 
Current portion of operating lease liabilities
 
340,461

 
 
 
335,391

 
Federal and state income taxes
 
491,016

 
 
 

 
Total current liabilities
 
4,561,183

 
 
 
3,700,714

 
Deferred income taxes
 
710,607

 
 
 
682,484

 
Self-insurance reserves
 
230,293

 
 
 
226,727

 
Accrued postretirement benefit cost
 
119,738

 
 
 
120,015

 
Long-term debt
 
124,764

 
 
 
131,997

 
Operating lease liabilities
 
2,605,433

 
 
 
2,603,206

 
Other noncurrent liabilities
 
154,820

 
 
 
140,633

 
Total liabilities
 
8,506,838

 
 
 
7,605,776

 
Common stock related to Employee Stock Ownership Plan (ESOP)
 
3,566,704

 
 
 
3,259,230

 
Stockholders’ equity:
 
 
 
 
 
 
 
Common stock of $1 par value. Authorized 1,000,000 shares;
issued 711,636 shares in 2020 and 706,552 shares in 2019
 
711,636

 
 
 
706,552

 
Additional paid-in capital
 
4,005,969

 
 
 
3,758,066

 
Retained earnings
 
13,914,526

 
 
 
12,317,478

 
Treasury stock at cost, 10,811 shares in 2020
 
(532,522
)
 
 
 

 
Accumulated other comprehensive earnings
 
201,492

 
 
 
81,289

 
Common stock related to ESOP
 
(3,566,704
)
 
 
 
(3,259,230
)
 
Total stockholders’ equity
 
14,734,397

 
 
 
13,604,155

 
Noncontrolling interests
 
37,904

 
 
 
37,959

 
Total equity
 
18,339,005

 
 
 
16,901,344

 
 
 
$
26,845,843

 
 
 
24,507,120

 

See accompanying notes to condensed consolidated financial statements.     
1



PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except per share amounts)
(Unaudited)

 
 
Three Months Ended
 
 
June 27, 2020
 
June 29, 2019
Revenues:
 
 
 
 
 
 
 
Sales
 
$
11,389,065

 
 
 
9,348,444

 
Other operating income
 
79,498

 
 
 
98,472

 
Total revenues
 
11,468,563

 
 
 
9,446,916

 
Costs and expenses:
 
 
 
 
 
 
 
Cost of merchandise sold
 
8,155,674

 
 
 
6,812,590

 
Operating and administrative expenses
 
2,235,844

 
 
 
1,954,888

 
Total costs and expenses
 
10,391,518

 
 
 
8,767,478

 
Operating profit
 
1,077,045

 
 
 
679,438

 
Investment income
 
674,463

 
 
 
145,142

 
Other nonoperating (loss) income, net
 
(3,170
)
 
 
 
17,282

 
Earnings before income tax expense
 
1,748,338

 
 
 
841,862

 
Income tax expense
 
381,283

 
 
 
180,805

 
Net earnings
 
$
1,367,055

 
 
 
661,057

 
Weighted average shares outstanding
 
703,036

 
 
 
716,529

 
Earnings per share
 
$
1.94

 
 
 
0.92

 


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
(Unaudited)

 
 
Three Months Ended
 
 
June 27, 2020
 
June 29, 2019
Net earnings
 
$
1,367,055

 
 
 
661,057

 
Other comprehensive earnings:
 
 
 
 
 
 
 
Unrealized gain on debt securities net of income taxes of $88,664 and $19,817 in 2020 and 2019, respectively.
 
260,078

 
 
 
58,130

 
Reclassification adjustment for net realized (gain) loss on debt securities net of income taxes of $(749) and $13 in 2020 and 2019, respectively.
 
(2,195
)
 
 
 
37

 
Adjustment to postretirement benefit obligation net of income taxes of
$278 in 2020.
 
814

 
 
 

 
Comprehensive earnings
 
$
1,625,752

 
 
 
719,224

 




See accompanying notes to condensed consolidated financial statements.     
2



PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except per share amounts)
(Unaudited)

 
 
Six Months Ended
 
 
June 27, 2020
 
June 29, 2019
Revenues:
 
 
 
 
 
 
 
Sales
 
$
22,617,602

 
 
 
19,022,641

 
Other operating income
 
157,912

 
 
 
184,385

 
Total revenues
 
22,775,514

 
 
 
19,207,026

 
Costs and expenses:
 
 
 
 
 
 
 
Cost of merchandise sold
 
16,193,243

 
 
 
13,778,982

 
Operating and administrative expenses
 
4,353,615

 
 
 
3,892,031

 
Total costs and expenses
 
20,546,858

 
 
 
17,671,013

 
Operating profit
 
2,228,656

 
 
 
1,536,013

 
Investment income
 
343,618

 
 
 
512,329

 
Other nonoperating income, net
 
13,754

 
 
 
36,595

 
Earnings before income tax expense
 
2,586,028

 
 
 
2,084,937

 
Income tax expense
 
551,638

 
 
 
442,909

 
Net earnings
 
$
2,034,390

 
 
 
1,642,028

 
Weighted average shares outstanding
 
704,897

 
 
 
716,277

 
Earnings per share
 
$
2.89

 
 
 
2.29

 


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
(Unaudited)

 
 
Six Months Ended
 
 
June 27, 2020
 
June 29, 2019
Net earnings
 
$
2,034,390

 
 
 
1,642,028

 
Other comprehensive earnings:
 
 
 
 
 
 
 
Unrealized gain on debt securities net of income taxes of $41,760 and $40,109 in 2020 and 2019, respectively.
 
122,495

 
 
 
117,651

 
Reclassification adjustment for net realized (gain) loss on debt securities net of income taxes of $(1,337) and $113 in 2020 and 2019, respectively.
 
(3,921
)
 
 
 
330

 
Adjustment to postretirement benefit obligation net of income taxes of
$556 in 2020.
 
1,629

 
 
 

 
Comprehensive earnings
 
$
2,154,593

 
 
 
1,760,009

 


See accompanying notes to condensed consolidated financial statements.         
3


PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
(Unaudited)

 
 
Six Months Ended
 
 
June 27, 2020
 
June 29, 2019
Cash flows from operating activities:
 
 
 
 
 
 
 
Cash received from customers
 
$
22,659,014

 
 
 
19,109,152

 
Cash paid to employees and suppliers
 
(19,177,711
)
 
 
 
(16,671,028
)
 
Income taxes paid
 
(25,981
)
 
 
 
(265,296
)
 
Self-insured claims paid
 
(176,148
)
 
 
 
(184,324
)
 
Dividends and interest received
 
118,684

 
 
 
101,159

 
Other operating cash receipts
 
155,659

 
 
 
182,159

 
Other operating cash payments
 
(9,819
)
 
 
 
(9,858
)
 
Net cash provided by operating activities
 
3,543,698

 
 
 
2,261,964

 
Cash flows from investing activities:
 
 
 
 
 
 
 
Payment for capital expenditures
 
(574,003
)
 
 
 
(651,213
)
 
Proceeds from sale of property, plant and equipment
 
3,441

 
 
 
3,360

 
Payment for investments
 
(2,433,868
)
 
 
 
(1,662,396
)
 
Proceeds from sale and maturity of investments
 
1,195,829

 
 
 
1,103,933

 
Net cash used in investing activities
 
(1,808,601
)
 
 
 
(1,206,316
)
 
Cash flows from financing activities:
 
 
 
 
 
 
 
Payment for acquisition of common stock
 
(775,114
)
 
 
 
(590,708
)
 
Proceeds from sale of common stock
 
133,824

 
 
 
153,478

 
Dividends paid
 
(437,342
)
 
 
 
(401,387
)
 
Repayment of long-term debt
 
(5,617
)
 
 
 
(4,984
)
 
Other, net
 
9,263

 
 
 
9,299

 
Net cash used in financing activities
 
(1,074,986
)
 
 
 
(834,302
)
 
Net increase in cash and cash equivalents
 
660,111

 
 
 
221,346

 
Cash and cash equivalents at beginning of period
 
763,382

 
 
 
599,264

 
Cash and cash equivalents at end of period
 
$
1,423,493

 
 
 
820,610

 


See accompanying notes to condensed consolidated financial statements.     (Continued)
4


PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
(Unaudited)
 
 
 
Six Months Ended
 
 
June 27, 2020
 
June 29, 2019
Reconciliation of net earnings to net cash
provided by operating activities:
 
 
 
 
 
 
 
Net earnings
 
$
2,034,390

 
 
 
1,642,028

 
Adjustments to reconcile net earnings to net cash
provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
 
359,268

 
 
 
350,976

 
Increase in last-in, first out (LIFO) reserve
 
31,975

 
 
 
20,468

 
Retirement contributions paid or payable
in common stock
 
201,713

 
 
 
200,329

 
Deferred income taxes
 
(12,856
)
 
 
 
107,238

 
Loss on disposal and impairment of long-lived assets
 
80,888

 
 
 
2,794

 
Gain on investments
 
(242,440
)
 
 
 
(423,599
)
 
Net amortization of investments
 
21,566

 
 
 
23,252

 
Changes in operating assets and liabilities
providing (requiring) cash:
 
 
 
 
 
 
 
Trade receivables
 
11,525

 
 
 
1,466

 
Inventories
 
12,791

 
 
 
47,803

 
Other assets
 
6,153

 
 
 
21,055

 
Accounts payable and accrued expenses
 
511,455

 
 
 
210,727

 
Federal and state income taxes
 
523,158

 
 
 
59,815

 
Other liabilities
 
4,112

 
 
 
(2,388
)
 
Total adjustments
 
1,509,308

 
 
 
619,936

 
Net cash provided by operating activities
 
$
3,543,698

 
 
 
2,261,964

 



See accompanying notes to condensed consolidated financial statements.         
5


PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts are in thousands, except per share amounts)
(Unaudited)

 
 
Common Stock
 
Additional
Paid-in
Capital
 
Retained Earnings
 
Common Stock (Acquired from) Sold to Stock-
holders
Accumu-
lated Other Compre-
hensive Earnings
 (Losses)
Common Stock Related to ESOP
 
Total Stock-
holders’
Equity
2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at December 28, 2019
 
$
706,552

 
3,758,066

 
12,317,478

 
 

 
 
81,289

 
 
(3,259,230
)
 
13,604,155

Comprehensive earnings
 

 

 
667,335

 
 

 
 
(138,494
)
 
 

 
528,841

Dividends, $0.30 per share
 

 

 
(211,847
)
 
 

 
 

 
 

 
(211,847
)
Contribution of 7,398 shares to retirement plan
 
4,977

 
242,724

 

 
 
114,054

 
 

 
 

 
361,755

Acquisition of 9,142 shares from stockholders
 

 

 

 
 
(442,509
)
 
 

 
 

 
(442,509
)
Sale of 2,239 shares to stockholders
 
107

 
5,179

 

 
 
104,062

 
 

 
 

 
109,348

Change for ESOP related shares
 

 

 

 
 

 
 

 
 
(444,014
)
 
(444,014
)
Balances at March 28, 2020
 
711,636

 
4,005,969

 
12,772,966

 
 
(224,393
)
 
 
(57,205
)
 
 
(3,703,244
)
 
13,505,729

Comprehensive earnings
 

 

 
1,367,055

 
 

 
 
258,697

 
 

 
1,625,752

Dividends, $0.32 per share
 

 

 
(225,495
)
 
 

 
 

 
 

 
(225,495
)
Acquisition of 6,714 shares from stockholders
 

 

 

 
 
(332,605
)
 
 

 
 

 
(332,605
)
Sale of 492 shares to stockholders
 

 

 

 
 
24,476

 
 

 
 

 
24,476

Change for ESOP related shares
 

 

 

 
 

 
 

 
 
136,540

 
136,540

Balances at June 27, 2020
 
$
711,636

 
4,005,969

 
13,914,526

 
 
(532,522
)
 
 
201,492

 
 
(3,566,704
)
 
14,734,397




See accompanying notes to condensed consolidated financial statements.         
6


PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts are in thousands, except per share amounts)
(Unaudited)

 
 
Common Stock
 
Additional
Paid-in
Capital
 
Retained Earnings
 
Common Stock (Acquired from) Sold to Stock-
holders
Accumu-
lated Other Compre-
hensive Earnings
(Losses)
Common Stock Related to ESOP
 
Total Stock-
holders’
Equity
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at December 29, 2018
 
$
715,445

 
3,458,004

 
10,840,654

 
 

 
 
(55,762
)
 
 
(3,134,999
)
 
11,823,342

Comprehensive earnings
 

 

 
980,971

 
 

 
 
59,814

 
 

 
1,040,785

Dividends, $0.26 per share
 

 

 
(185,835
)
 
 

 
 

 
 

 
(185,835
)
Contribution of 8,587 shares to retirement plans
 
5,605

 
235,017

 

 
 
127,329

 
 

 
 

 
367,951

Acquisition of 7,802 shares from stockholders
 

 

 

 
 
(333,857
)
 
 

 
 

 
(333,857
)
Sale of 2,641 shares to stockholders
 
621

 
26,019

 

 
 
86,556

 
 

 
 

 
113,196

Change for ESOP related shares
 

 

 

 
 

 
 

 
 
(375,184
)
 
(375,184
)
Balances at March 30, 2019
 
721,671

 
3,719,040

 
11,635,790

 
 
(119,972
)
 
 
4,052

 
 
(3,510,183
)
 
12,450,398

Comprehensive earnings
 

 

 
661,057

 
 

 
 
58,167

 
 

 
719,224

Dividends, $0.30 per share
 

 

 
(215,552
)
 
 

 
 

 
 

 
(215,552
)
Acquisition of 5,790 shares from stockholders
 

 

 

 
 
(256,851
)
 
 

 
 

 
(256,851
)
Sale of 904 shares to stockholders
 

 
6

 

 
 
40,276

 
 

 
 

 
40,282

Change for ESOP related shares
 

 

 

 
 

 
 

 
 
159,560

 
159,560

Balances at June 29, 2019
 
$
721,671

 
3,719,046

 
12,081,295

 
 
(336,547
)
 
 
62,219

 
 
(3,350,623
)
 
12,897,061



See accompanying notes to condensed consolidated financial statements.         
7


PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(1)
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Publix Super Markets, Inc. and subsidiaries (Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, the accompanying statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these statements include all adjustments that are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations. Due to the seasonal nature of the Company’s business and the impact of the coronavirus pandemic, the results of operations for the three and six months ended June 27, 2020 are not necessarily indicative of the results for the entire 2020 fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2019.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(2)
Fair Value of Financial Instruments
The fair value of certain of the Company’s financial instruments, including cash and cash equivalents, trade receivables and accounts payable, approximates their respective carrying amounts due to their short-term maturity.
The fair value of investments is based on market prices using the following measurement categories:
Level 1 – Fair value is determined by using quoted prices in active markets for identical investments. Investments included in this category are equity securities (exchange traded funds and individual equity securities).
Level 2 – Fair value is determined by using other than quoted prices. By using observable inputs (for example, benchmark yields, interest rates, reported trades and broker dealer quotes), the fair value is determined through processes such as benchmark curves, benchmarking of like securities and matrix pricing of corporate, state and municipal bonds by using pricing of similar bonds based on coupons, ratings and maturities. Investments included in this category are primarily debt securities (tax exempt and taxable bonds), including restricted investments in taxable bonds held as collateral.
Level 3 – Fair value is determined by using other than observable inputs. Fair value is determined by using the best information available in the circumstances and requires significant management judgment or estimation. No investments are currently included in this category.
Following is a summary of fair value measurements for investments as of June 27, 2020 and December 28, 2019:
 
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
 
 
(Amounts are in thousands)
June 27, 2020
 
$
10,026,293

 
2,064,634

 
7,961,659

 

December 28, 2019
 
8,426,385

 
2,028,547

 
6,397,838

 



8


PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(3)
Investments
(a)
Debt Securities
In 2020, the Company adopted the Accounting Standards Update (ASU) requiring companies to recognize credit losses on debt securities in earnings as an allowance that is reevaluated each reporting period. The Company adopted the ASU on a prospective basis as of December 29, 2019. Prior to the adoption of the ASU, credit losses in which the Company did not expect to recover the cost of the debt security were recognized in earnings as an other-than-temporary impairment. The adoption of the ASU did not have an effect on the Company’s financial position, results of operations or cash flows.
Debt securities are classified as available-for-sale and measured at fair value. The Company evaluates debt securities on an individual security basis to determine if an unrealized loss is due to a credit loss or other factors, including interest rate fluctuations. The collectability of debt securities is evaluated based on criteria that include the extent to which the cost (cost of the debt security adjusted for amortization of premium or accretion of discount) exceeds fair value, the credit rating of the issuer or security, the failure of the issuer to make scheduled principal or interest payments and the financial health and prospects of the issuer or security.
Credit losses on debt securities the Company does not intend to sell and will not be required to sell prior to any anticipated recovery are recognized in earnings through an allowance. The allowance is measured as the difference between the present value of expected cash flows and the cost of the debt security, limited to the difference between the cost and the fair value of the debt security. Expected cash flows are discounted using the debt security’s effective interest rate. Subsequent changes to the allowance are recognized in earnings in the period of the change. Credit losses on debt securities the Company intends to sell or will be required to sell prior to any anticipated recovery are recognized in earnings and measured as the difference between the cost and the fair value of the debt security.
Other unrealized losses on debt securities the Company does not intend to sell and will not be required to sell prior to any anticipated recovery are reported in other comprehensive earnings net of income taxes and included as a component of stockholders’ equity. Other unrealized losses on debt securities the Company intends to sell or will be required to sell prior to any anticipated recovery are recognized in earnings and measured as the difference between the cost and the fair value of the debt security.
Following is a summary of debt securities as of June 27, 2020 and December 28, 2019:
 
 
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
 
(Amounts are in thousands)
June 27, 2020
 
 
 
 
 
 
 
 
Tax exempt bonds
 
$
666,943

 
9,507

 
6

 
676,444

Taxable bonds
 
6,335,759

 
276,047

 
10,253

 
6,601,553

Restricted investments
 
167,452

 
15,791

 

 
183,243

 
 
$
7,170,154

 
301,345

 
10,259

 
7,461,240

December 28, 2019
 
 
 
 
 
 
 
 
Tax exempt bonds
 
$
767,931

 
3,429

 
130

 
771,230

Taxable bonds
 
5,002,036

 
120,132

 
1,443

 
5,120,725

Restricted investments
 
169,983

 
10,101

 

 
180,084

 
 
$
5,939,950

 
133,662

 
1,573

 
6,072,039

The Company maintains restricted investments primarily for the benefit of the Company’s insurance carrier related to self-insurance reserves. These investments are held as collateral and not used for claim payments.


9


PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



The cost and fair value of debt securities by expected maturity as of June 27, 2020 and December 28, 2019 are as follows:
 
 
June 27, 2020
 
December 28, 2019
 
 
Cost
 
Fair
Value
 
Cost
 
Fair
Value
 
 
(Amounts are in thousands)
Due in one year or less
 
$
563,109

 
566,920

 
437,236

 
438,105

Due after one year through five years
 
4,615,681

 
4,778,702

 
3,836,333

 
3,900,904

Due after five years through ten years
 
1,986,843

 
2,110,774

 
1,661,143

 
1,727,594

Due after ten years
 
4,521

 
4,844

 
5,238

 
5,436

 
 
$
7,170,154

 
7,461,240

 
5,939,950

 
6,072,039

The Company had no debt securities with credit losses as of June 27, 2020.
Following is a summary of debt securities with other unrealized losses by the time period impaired as of June 27, 2020 and December 28, 2019:
 
 
Less Than
12 Months
 
 
12 Months
or Longer
 
 
Total
 
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
 
(Amounts are in thousands)
 
June 27, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax exempt bonds
 
$
23,433

 
 
6

 
 

 
 

 
 
23,433

 
 
6

 
Taxable bonds
 
824,691

 
 
10,209

 
 
7,513

 
 
44

 
 
832,204

 
 
10,253

 
 
 
$
848,124

 
 
10,215

 
 
7,513

 
 
44

 
 
855,637

 
 
10,259

 
December 28, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax exempt bonds
 
$
48,462

 
 
11

 
 
99,976

 
 
119

 
 
148,438

 
 
130

 
Taxable bonds
 
573,315

 
 
888

 
 
197,641

 
 
555

 
 
770,956

 
 
1,443

 
 
 
$
621,777

 
 
899

 
 
297,617

 
 
674

 
 
919,394

 
 
1,573

 
There are 36 debt securities contributing to the total unrealized losses of $10,259,000 as of June 27, 2020. Unrealized losses related to debt securities are primarily due to increases in interest rates that occurred since the debt securities were purchased. The Company continues to receive scheduled principal and interest payments on these debt securities.
(b)
Equity Securities
Equity securities are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in earnings (fair value adjustment). The fair value of equity securities was $2,565,053,000 and $2,354,346,000 as of June 27, 2020 and December 28, 2019, respectively.



10


PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(c)
Investment Income
Net realized gain on the sale of investments represents the difference between the cost and the proceeds from the sale of debt and equity securities. The net realized gain on the sale of investments excludes the net gain or loss on the sale of equity securities previously recognized through the fair value adjustment, which is presented separately in the following table.
Following is a summary of investment income for the three and six months ended June 27, 2020 and June 29, 2019:
 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
 
(Amounts are in thousands)
Interest and dividend income
 
$
46,910

 
 
46,714

 
 
101,178

 
 
88,730

 
Net realized gain on sale of investments
 
106,150

 
 
66,233

 
 
108,464

 
 
70,444

 
 
 
153,060

 
 
112,947

 
 
209,642

 
 
159,174

 
Fair value adjustment, due to net unrealized gain, on equity securities held at end of period
 
597,408

 
 
4,969

 
 
209,981

 
 
319,317

 
Net (gain) loss on sale of equity securities previously recognized through fair value adjustment
 
(76,005
)
 
 
27,226

 
 
(76,005
)
 
 
33,838

 
 
 
$
674,463

 
 
145,142

 
 
343,618

 
 
512,329

 
(4)
Consolidation of Joint Ventures and Long-Term Debt
From time to time, the Company enters into a joint venture (JV), in the legal form of a limited liability company, with certain real estate developers to partner in the development of a shopping center with the Company as the anchor tenant. The Company consolidates certain of these JVs in which it has a controlling financial interest. As of June 27, 2020, the carrying amounts of the assets and liabilities of the consolidated JVs were $164,282,000 and $80,714,000, respectively. As of December 28, 2019, the carrying amounts of the assets and liabilities of the consolidated JVs were $154,659,000 and $78,472,000, respectively. The assets are owned by and the liabilities are obligations of the JVs, not the Company, except for a portion of the long-term debt of certain JVs guaranteed by the Company. The JVs are financed with capital contributions from the members, loans and/or the cash flows generated by the JV owned shopping centers once in operation. Total earnings attributable to noncontrolling interests for 2020 and 2019 were immaterial. The Company’s involvement with these JVs does not have a significant effect on the Company’s financial condition, results of operations or cash flows.
The Company’s long-term debt results primarily from the consolidation of loans of certain JVs and loans assumed in connection with the acquisition of certain shopping centers with the Company as the anchor tenant. No loans were assumed during the six months ended June 27, 2020 and June 29, 2019. Maturities of JV loans range from June 2020 through April 2027 and have variable interest rates based on a LIBOR index plus 175 to 250 basis points. Maturities of assumed shopping center loans range from December 2020 through January 2027 and have fixed interest rates ranging from 3.7% to 7.5%.


11


PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(5)
Retirement Plan
The Company has a trusteed, noncontributory Employee Stock Ownership Plan (ESOP) for the benefit of eligible employees. Since the Company’s common stock is not traded on an established securities market, the ESOP includes a put option for shares of the Company’s common stock distributed from the ESOP. Shares are distributed from the ESOP primarily to separated vested participants and certain eligible participants who elect to diversify their account balances. Under the Company’s administration of the ESOP’s put option, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value for a specified time period after distribution of the shares from the ESOP. The fair value of distributed shares subject to the put option totaled $375,565,000 and $287,328,000 as of June 27, 2020 and December 28, 2019, respectively. The cost of the shares held by the ESOP totaled $3,191,139,000 and $2,971,902,000 as of June 27, 2020 and December 28, 2019, respectively. Due to the Company’s obligation under the put option, the distributed shares subject to the put option and the shares held by the ESOP are classified as temporary equity in the mezzanine section of the condensed consolidated balance sheets and totaled $3,566,704,000 and $3,259,230,000 as of June 27, 2020 and December 28, 2019, respectively. The fair value of the shares held by the ESOP totaled $8,984,877,000 and $8,585,189,000 as of June 27, 2020 and December 28, 2019, respectively.

(6)
Accumulated Other Comprehensive Earnings (Losses)
A reconciliation of the changes in accumulated other comprehensive earnings (losses) net of income taxes for the three months ended June 27, 2020 and June 29, 2019 is as follows:
 
 
Investments
 
Postretirement Benefit
 
Accumulated Other Comprehensive Earnings (Losses)
 
 
 
(Amounts are in thousands)
 
2020
 
 
 
 
 
 
 
 
 
 
 
 
Balances at March 28, 2020
 
 
$
(40,803
)
 
 
 
(16,402
)
 
 
 
(57,205
)
 
Unrealized gain on debt securities
 
 
260,078

 
 
 

 
 
 
260,078

 
Net realized gain on debt securities reclassified to investment income
 
 
(2,195
)
 
 
 

 
 
 
(2,195
)
 
Adjustment to postretirement benefit obligation
 
 

 
 
 
814

 
 
 
814

 
Net other comprehensive earnings
 
 
257,883

 
 
 
814

 
 
 
258,697

 
Balances at June 27, 2020
 
 
$
217,080

 
 
 
(15,588
)
 
 
 
201,492

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
 
 
 
Balances at March 30, 2019
 
 
$
10,781

 
 
 
(6,729
)
 
 
 
4,052

 
Unrealized gain on debt securities
 
 
58,130

 
 
 

 
 
 
58,130

 
Net realized loss on debt securities reclassified to investment income
 
 
37

 
 
 

 
 
 
37

 
Net other comprehensive earnings
 
 
58,167

 
 
 

 
 
 
58,167

 
Balances at June 29, 2019
 
 
$
68,948

 
 
 
(6,729
)
 
 
 
62,219

 


12


PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



A reconciliation of the changes in accumulated other comprehensive earnings (losses) net of income taxes for the six months ended June 27, 2020 and June 29, 2019 is as follows:
 
 
Investments
 
Postretirement Benefits
 
Accumulated Other Comprehensive Earnings (Losses)
 
 
 
(Amounts are in thousands)
 
2020
 
 
 
 
 
 
 
 
 
 
 
 
Balances at December 28, 2019
 
 
$
98,506

 
 
 
(17,217
)
 
 
 
81,289

 
Unrealized gain on debt securities
 
 
122,495

 
 
 

 
 
 
122,495

 
Net realized gain on debt securities reclassified to investment income
 
 
(3,921
)
 
 
 

 
 
 
(3,921
)
 
Adjustment to postretirement benefit obligation
 
 

 
 
 
1,629

 
 
 
1,629

 
Net other comprehensive earnings
 
 
118,574

 
 
 
1,629

 
 
 
120,203

 
Balances at June 27, 2020
 
 
$
217,080

 
 
 
(15,588
)
 
 
 
201,492

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
 
 
 
Balances at December 29, 2018
 
 
$
(49,033
)
 
 
 
(6,729
)
 
 
 
(55,762
)
 
Unrealized gain on debt securities
 
 
117,651

 
 
 

 
 
 
117,651

 
Net realized loss on debt securities reclassified to investment income
 
 
330

 
 
 

 
 
 
330

 
Net other comprehensive earnings
 
 
117,981

 
 
 

 
 
 
117,981

 
Balances at June 29, 2019
 
 
$
68,948

 
 
 
(6,729
)
 
 
 
62,219

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(7)
Subsequent Event
On July 1, 2020, the Company declared a quarterly dividend on its common stock of $0.32 per share or $224,300,000, payable August 3, 2020 to stockholders of record as of the close of business July 15, 2020.


13



Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The Company is engaged in the retail food industry and as of June 27, 2020 operated 1,251 supermarkets in Florida, Georgia, Alabama, South Carolina, Tennessee, North Carolina and Virginia. For the six months ended June 27, 2020, 16 supermarkets were opened (including four replacement supermarkets) and 82 supermarkets were remodeled. Four supermarkets were closed during the period. The replacement supermarkets that opened during the six months ended June 27, 2020 replaced one supermarket closed during the same period and three supermarkets closed during a previous period. One of the supermarkets closed in 2020 will be replaced on site in a subsequent period and two supermarkets will not be replaced. In the normal course of operations, the Company replaces supermarkets and closes supermarkets that are not meeting performance expectations. The impact of future supermarket closings is not expected to be material.
Coronavirus Pandemic Impact
On March 13, 2020, the coronavirus pandemic was declared a national emergency. The coronavirus pandemic has resulted in national, state and local authorities mandating or recommending isolation measures for large portions of the population, including mandatory business restrictions and closures. These measures, which were necessary to slow the spread of the virus and protect lives, have resulted in significant job losses and are expected to have serious adverse impacts on domestic and foreign economies for an unknown length of time. The effect of economic stabilization efforts, including government payments to affected citizens and industries, is uncertain.
The Company has been classified as an essential business in all locations in which it operates and has remained open to serve the needs of its customers. It is a priority of the Company to continue to serve its customers in a way that protects the health and safety of its employees and customers. The Company estimates that its sales for the three and six months ended June 27, 2020 increased approximately $1.5 billion and $2.5 billion, respectively, due to the impact of the coronavirus pandemic. The Company incurred additional payroll related, transportation and other costs to meet the significant sales demand and protect the health and safety of its employees and customers. The profit on the incremental sales resulting from increased customer purchases of food and cleaning supplies more than offset the additional costs incurred. The future impact of the coronavirus pandemic is uncertain and difficult to predict.
Results of Operations
Sales
Sales for the three months ended June 27, 2020 were $11.4 billion as compared with $9.3 billion for the three months ended June 29, 2019, an increase of $2,040.6 million or 21.8%. The increase in sales for the three months ended June 27, 2020 as compared with the three months ended June 29, 2019 was primarily due to the impact of the coronavirus pandemic. The Company estimates that its sales for the three months ended June 27, 2020 increased approximately $1.5 billion or 16.1% due to the impact of the coronavirus pandemic. Comparable store sales (supermarkets open for the same weeks in both periods, including replacement supermarkets) for the three months ended June 27, 2020 increased 19.9% primarily due to the impact of the coronavirus pandemic. Sales for supermarkets that are replaced on site are classified as new supermarket sales since the replacement period for the supermarket is generally 9 to 12 months.
Sales for the six months ended June 27, 2020 were $22.6 billion as compared with $19.0 billion for the six months ended June 29, 2019, an increase of $3,595.0 million or 18.9%. The increase in sales for the six months ended June 27, 2020 as compared with the six months ended June 29, 2019 was primarily due to the impact of the coronavirus pandemic. The Company estimates that its sales for the six months ended June 27, 2020 increased approximately $2.5 billion or 13.1% due to the impact of the coronavirus pandemic. Comparable store sales for the six months ended June 27, 2020 increased 17.1% primarily due to the impact of the coronavirus pandemic.
Gross profit
Gross profit (sales less cost of merchandise sold) as a percentage of sales was 28.4% and 27.1% for the three months ended June 27, 2020 and June 29, 2019, respectively. Gross profit as a percentage of sales was 28.4% and 27.6% for the six months ended June 27, 2020 and June 29, 2019, respectively. The increase in gross profit as a percentage of sales for the three and six months ended June 27, 2020 as compared with the three and six months ended June 29, 2019 was primarily due to reduced shrink and volume driven efficiencies related to the impact of the coronavirus pandemic.


14



Operating and administrative expenses
Operating and administrative expenses as a percentage of sales were 19.6% and 20.9% for the three months ended June 27, 2020 and June 29, 2019, respectively. Operating and administrative expenses as a percentage of sales were 19.2% and 20.5% for the six months ended June 27, 2020 and June 29, 2019, respectively. The decrease in operating and administrative expenses as a percentage of sales for the three and six months ended June 27, 2020 as compared with the three and six months ended June 29, 2019 was primarily due to volume driven efficiencies related to the impact of the coronavirus pandemic.
Operating profit
Operating profit as a percentage of sales was 9.5% and 7.3% for the three months ended June 27, 2020 and June 29, 2019, respectively. Operating profit as a percentage of sales was 9.9% and 8.1% for the six months ended June 27, 2020 and June 29, 2019, respectively. The increase in operating profit as a percentage of sales for the three and six months ended June 27, 2020 as compared with the three and six months ended June 29, 2019 was primarily due to the increase in gross profit as a percentage of sales and the decrease in operating and administrative expenses as a percentage of sales.
Investment income
Investment income was $674.5 million and $145.1 million for the three months ended June 27, 2020 and June 29, 2019, respectively. The increase in investment income for the three months ended June 27, 2020 as compared with the three months ended June 29, 2019 was primarily due to the increase in net unrealized gains on equity securities. Excluding the impact of net unrealized gains on equity securities in 2020 and 2019, investment income would have been $153.1 million and $112.9 million for the three months ended June 27, 2020 and June 29, 2019, respectively.
Investment income was $343.6 million and $512.3 million for the six months ended June 27, 2020 and June 29, 2019, respectively. The decrease in investment income for the six months ended June 27, 2020 as compared with the six months ended June 29, 2019 was primarily due to the decrease in net unrealized gains on equity securities. Excluding the impact of net unrealized gains on equity securities in 2020 and 2019, investment income would have been $209.6 million and $159.2 million for the six months ended June 27, 2020 and June 29, 2019, respectively.
Other nonoperating income (loss), net
Other nonoperating loss, net for the three months ended June 27, 2020 was $3.2 million as compared with other nonoperating income, net for the three months ended June 29, 2019 of $17.3 million. Other nonoperating income, net was $13.8 million and $36.6 million for the six months ended June 27, 2020 and June 29, 2019, respectively. The changes in other nonoperating income (loss), net were primarily due to the Company offering two months of rent relief in the second quarter of 2020 to tenants in Company owned shopping centers that were impacted by the coronavirus pandemic.
Income tax expense
The effective income tax rate was 21.8% and 21.5% for the three months ended June 27, 2020 and June 29, 2019, respectively. The increase in the effective income tax rate for the three months ended June 27, 2020 as compared with the three months ended June 29, 2019 was primarily due to the decreased impact of permanent deductions and credits due to the increase in earnings before income tax expense. The effective income tax rate was 21.3% and 21.2% for the six months ended June 27, 2020 and June 29, 2019, respectively. The effective income tax rate for the six months ended June 27, 2020 as compared with the six months ended June 29, 2019 remained relatively unchanged.
Net earnings
Net earnings were $1,367.1 million or $1.94 per share and $661.1 million or $0.92 per share for the three months ended June 27, 2020 and June 29, 2019, respectively. Net earnings as a percentage of sales were 12.0% and 7.1% for the three months ended June 27, 2020 and June 29, 2019, respectively. Net earnings and earnings per share for the three months ended June 27, 2020 and June 29, 2019 were impacted by net unrealized gains on equity securities. Excluding the impact of net unrealized gains on equity securities in 2020 and 2019, net earnings would have been $978.3 million or $1.39 per share and 8.6% as a percentage of sales for the three months ended June 27, 2020 and $637.0 million or $0.89 per share and 6.8% as a percentage of sales for the three months ended June 29, 2019. Excluding the impact of net unrealized gains on equity securities in 2020 and 2019, the increase in net earnings as a percentage of sales for the three months ended June 27, 2020 as compared with the three months ended June 29, 2019 was primarily due to the impact of the coronavirus pandemic.


15



Net earnings were $2,034.4 million or $2.89 per share and $1,642.0 million or $2.29 per share for the six months ended June 27, 2020 and June 29, 2019, respectively. Net earnings as a percentage of sales were 9.0% and 8.6% for the six months ended June 27, 2020 and June 29, 2019, respectively. Net earnings and earnings per share for the six months ended June 27, 2020 and June 29, 2019 were impacted by net unrealized gains on equity securities. Excluding the impact of net unrealized gains on equity securities in 2020 and 2019, net earnings would have been $1,934.5 million or $2.74 per share and 8.6% as a percentage of sales for the six months ended June 27, 2020 and $1,378.7 million or $1.92 per share and 7.2% as a percentage of sales for the six months ended June 29, 2019. Excluding the impact of net unrealized gains on equity securities in 2020 and 2019, the increase in net earnings as a percentage of sales for the six months ended June 27, 2020 as compared with the six months ended June 29, 2019 was primarily due to the impact of the coronavirus pandemic.
Non-GAAP Financial Measures
In addition to reporting financial results for the three and six months ended June 27, 2020 and June 29, 2019 in accordance with GAAP, the Company presents net earnings and earnings per share excluding the impact of equity securities being measured at fair value with net unrealized gains and losses from changes in the fair value recognized in earnings (fair value adjustment). These measures are not in accordance with, or an alternative to, GAAP. The Company excludes the impact of the fair value adjustment since it is primarily due to temporary equity market fluctuations that do not reflect the Company’s operations. The Company believes this information is useful in providing period-to-period comparisons of the results of operations. Following is a reconciliation of net earnings to net earnings excluding the impact of the fair value adjustment for the three and six months ended June 27, 2020 and June 29, 2019:
 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
 
(amounts are in millions, except per share amounts)
Net earnings
 
$
1,367.1

 
 
661.1

 
 
2,034.4

 
 
1,642.0

 
Fair value adjustment, due to net unrealized gain, on equity securities held at end of period
 
(597.4
)
 
 
(5.0
)
 
 
(210.0
)
 
 
(319.3
)
 
Net gain (loss) on sale of equity securities previously recognized through fair value adjustment
 
76.0

 
 
(27.2
)
 
 
76.0

 
 
(33.8
)
 
Income tax expense (1)
 
132.6

 
 
8.1

 
 
34.1

 
 
89.8

 
Net earnings excluding impact of fair value adjustment
 
$
978.3

 
 
637.0

 
 
1,934.5

 
 
1,378.7

 
Weighted average shares outstanding
 
703.0

 
 
716.5

 
 
704.9

 
 
716.3

 
Earnings per share excluding impact of fair value adjustment
 
$
1.39

 
 
0.89

 
 
2.74

 
 
1.92

 
(1) 
Income tax expense is based on the Company’s combined federal and state statutory income tax rates.


16



Liquidity and Capital Resources
Cash and cash equivalents, short-term investments and long-term investments totaled $11,449.8 million as of June 27, 2020, as compared with $9,189.8 million as of December 28, 2019 and $8,478.7 million as of June 29, 2019. The increase from the second quarter of 2019 to the second quarter of 2020 was primarily due to increased sales from the coronavirus pandemic and the deferral of tax payments under various coronavirus tax relief provisions.
Net cash provided by operating activities
Net cash provided by operating activities was $3,543.7 million and $2,262.0 million for the six months ended June 27, 2020 and June 29, 2019, respectively. The increase in net cash provided by operating activities for the six months ended June 27, 2020 as compared with the six months ended June 29, 2019 was primarily due to increased sales from the coronavirus pandemic and the deferral of tax payments under various coronavirus tax relief provisions. Federal income tax payments totaling approximately $365 million were deferred to July 15, 2020. Payroll tax payments totaling approximately $90 million were deferred to 2021 and 2022.
Net cash used in investing activities
Net cash used in investing activities was $1,808.6 million and $1,206.3 million for the six months ended June 27, 2020 and June 29, 2019, respectively. The primary use of net cash in investing activities for the six months ended June 27, 2020 was funding capital expenditures and net increases in investment securities. Capital expenditures for the six months ended June 27, 2020 totaled $574.0 million. These expenditures were incurred in connection with the opening of 16 supermarkets (including four replacement supermarkets) and the remodeling of 82 supermarkets. Expenditures were also incurred for new supermarkets and remodels in progress and new or enhanced information technology hardware and software. For the six months ended June 27, 2020, the payment for investments, net of the proceeds from the sale and maturity of investments, was $1,238.0 million.
Net cash used in financing activities
Net cash used in financing activities was $1,075.0 million and $834.3 million for the six months ended June 27, 2020 and June 29, 2019, respectively. The primary use of net cash in financing activities was funding net common stock repurchases and dividend payments. Net common stock repurchases totaled $641.3 million and $437.2 million for the six months ended June 27, 2020 and June 29, 2019, respectively. The Company currently repurchases common stock at the stockholders’ request in accordance with the terms of the Company’s Employee Stock Purchase Plan (ESPP), Non-Employee Directors Stock Purchase Plan (Directors Plan), 401(k) Plan and ESOP. The amount of common stock offered to the Company for repurchase is not within the control of the Company, but is at the discretion of the stockholders. The Company expects to continue to repurchase its common stock, as offered by its stockholders from time to time, at its then current value. However, with the exception of certain shares distributed from the ESOP, such purchases are not required and the Company retains the right to discontinue them at any time.
Dividends
The Company paid quarterly dividends on its common stock totaling $437.3 million or $0.62 per share and $401.4 million or $0.56 per share during the six months ended June 27, 2020 and June 29, 2019, respectively.
Capital expenditures projection
Capital expenditures for the remainder of 2020 are expected to be approximately $800 million, primarily related to new supermarkets, remodeling existing supermarkets, new or enhanced information technology hardware and software and the acquisition of shopping centers with the Company as the anchor tenant. The shopping center acquisitions are financed with internally generated funds and assumed debt, if prepayment penalties for the debt are determined to be significant. This capital program is subject to continuing change and review.
Cash requirements
In 2020, cash requirements for operations, capital expenditures, common stock repurchases and dividend payments are expected to be financed by internally generated funds or liquid assets. Based on the Company’s financial position, it is expected that short-term and long-term borrowings would be available to support the Company’s liquidity requirements, if needed.


17



Forward-Looking Statements
From time to time, certain information provided by the Company, including written or oral statements made by its representatives, may contain forward-looking information as defined in Section 21E of the Securities Exchange Act of 1934 (Exchange Act). Forward-looking information includes statements about the future performance of the Company and is based on management’s assumptions and beliefs in light of the information currently available to them, including as it relates to the coronavirus pandemic. When used, the words “plan,” “estimate,” “project,” “intend,” “expect,” “believe,” “will” and other similar expressions, as they relate to the Company, are intended to identify such forward-looking statements. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from those statements including, but not limited to, the following: competitive practices and pricing in the food and drug industries generally and particularly in the Company’s principal markets; results of programs to increase sales, including private label sales; results of programs to control or reduce costs; changes in buying, pricing and promotional practices; changes in shrink management; changes in the general economy, including the economic downturn associated with the coronavirus pandemic; changes in consumer spending; changes in population, employment and job growth in the Company’s principal markets; impacts of a public health crisis or other significant catastrophic event, such as the coronavirus pandemic; and other factors affecting the Company’s business within or beyond the Company’s control. These factors include changes in the rate of inflation, changes in federal, state and local laws and regulations, adverse determinations with respect to litigation or other claims, ability to recruit and retain employees, increases in operating costs including, but not limited to, labor costs, credit card fees and utility costs, particularly electric rates, ability to construct new supermarkets or complete remodels as rapidly as planned and stability of product costs. Other factors and assumptions not identified above could also cause the actual results to differ materially from those set forth in the forward-looking statements. Except as may be required by applicable law, the Company assumes no obligation to publicly update these forward-looking statements.
Item 3.        Quantitative and Qualitative Disclosures About Market Risk
The Company does not utilize financial instruments for trading or other speculative purposes, nor does it utilize leveraged financial instruments. There have been no material changes in the market risk factors from those disclosed in the Company’s Form 10-K for the year ended December 28, 2019.
Item 4.    Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer each concluded that the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information has been accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure. There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation that occurred during the quarter ended June 27, 2020 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.



18



PART II. OTHER INFORMATION
Item 1.    Legal Proceedings
As reported in the Company’s Form 10-K for the year ended December 28, 2019, the Company is subject from time to time to various lawsuits, claims and charges arising in the normal course of business. The Company believes its recorded reserves are adequate in light of the probable and estimable liabilities. The estimated amount of reasonably possible losses for lawsuits, claims and charges, individually and in the aggregate, is considered to be immaterial. In the opinion of management, the ultimate resolution of these legal proceedings will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
Item 1A.    Risk Factors
The Company has identified an additional risk factor to supplement the risk factors disclosed in the Company’s  Form 10-K for the year ended December 28, 2019.
Unfavorable impacts of the coronavirus pandemic or any future public health crisis on operations, customers, employees, suppliers and tenants could adversely affect the Company.
On March 13, 2020, the coronavirus pandemic was declared a national emergency. The coronavirus pandemic has resulted in national, state and local authorities mandating or recommending isolation measures for large portions of the population, including mandatory business restrictions and closures. These measures, which were necessary to slow the spread of the virus and protect lives, have resulted in significant job losses and are expected to have serious adverse impacts on domestic and foreign economies for an unknown length of time. The effect of economic stabilization efforts, including government payments to affected citizens and industries, is uncertain.
The Company’s operations may be adversely impacted by the fear of exposure to or actual effects of the coronavirus. These impacts may include:
operating cost increases due to changes in customer demand, changes in supermarket processes or increased government regulation;
delays in the timing of remodels and opening new supermarkets;
reduced workforce due to illness, quarantine or government mandates impacting the Company’s supermarket, distribution, manufacturing and support operations;
temporary supermarket closings or reduced hours of operation due to reduced workforce, enhanced cleaning processes, increased stocking or government mandates;
supply chain risks from goods produced in areas of significant coronavirus outbreak or disruption from suppliers due to financial or operational difficulties;
reduction in travel, tourism or consumer spending due to government recommendations or mandates, fear of exposure to the coronavirus or adverse economic conditions;
changes in customer demand from discretionary or higher priced products to lower priced products; or
uncertainty as to future operations of tenants in Company owned shopping centers due to adverse economic conditions.
The future impact of the coronavirus pandemic is uncertain and difficult to predict and could adversely affect the Company’s financial condition and results of operations.


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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Shares of common stock repurchased by the Company during the three months ended June 27, 2020 were as follows (amounts are in thousands, except per share amounts):
 
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
 
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
March 29, 2020
through
May 2, 2020
 
 
3,162

 
 
 
$
48.91

 
 
N/A
 
N/A
May 3, 2020
through
May 30, 2020
 
 
2,366

 
 
 
50.10

 
 
N/A
 
N/A
May 31, 2020
through
June 27, 2020
 
 
1,186

 
 
 
50.10

 
 
N/A
 
N/A
 
 
Total
 
 
6,714

 
 
 
$
49.54

 
 
N/A
 
N/A
(1) 
Common stock is made available for sale by the Company only to its current employees and members of its Board of Directors through the ESPP and Directors Plan and to participants of the 401(k) Plan. In addition, common stock is provided to employees through the ESOP. The Company currently repurchases common stock subject to certain terms and conditions. The ESPP, Directors Plan, 401(k) Plan and ESOP each contain provisions prohibiting any transfer for value without the owner first offering the common stock to the Company.
The Company’s common stock is not traded on an established securities market. The amount of common stock offered to the Company for repurchase is not within the control of the Company, but is at the discretion of the stockholders. The Company does not believe that these repurchases of its common stock are within the scope of a publicly announced plan or program (although the terms of the plans discussed above have been communicated to the participants). Thus, the Company does not believe that it has made any repurchases during the three months ended June 27, 2020 required to be disclosed in the last two columns of the table.
Item 3.    Defaults Upon Senior Securities
Not Applicable
Item 4.    Mine Safety Disclosures
Not Applicable
Item 5.    Other Information
Not Applicable


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Item 6.    Exhibits
101
The following financial information from the Quarterly Report on Form 10-Q for the quarter ended June 27, 2020 is formatted in Extensible Business Reporting Language: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Earnings, (iii) Condensed Consolidated Statements of Comprehensive Earnings, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Stockholders’ Equity and (vi) Notes to Condensed Consolidated Financial Statements.



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
 
 
 
 
 
PUBLIX SUPER MARKETS, INC.
 
 
 
 
 
 
 
 
 
 
 
Date:
August 3, 2020
 
/s/  Merriann M. Metz
 
 
 
Merriann M. Metz, Secretary
 
 
 
 
 
 
 
 
 
 
 
Date:
August 3, 2020
 
/s/  David P. Phillips
 
 
 
David P. Phillips, Executive Vice President and Chief Financial Officer (Principal Financial and
Accounting Officer)



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