WINN-DIXIE STORES, INC.
5050 EDGEWOOD COURT o JACKSONVILLE, FLORIDA 32254-3699
Notice of Annual Meeting of Shareholders
To be held October 6, 1999
To all Shareholders of Winn-Dixie Stores, Inc.:
Notice is Hereby Given that the Annual Meeting of Shareholders of
Winn-Dixie Stores, Inc. (the "Company") will be held at the headquarters office
of the Company, 5050 Edgewood Court, Jacksonville, Florida at 9:00 a.m., local
time, on Wednesday, October 6, 1999, for the following purposes:
1. To elect three Class III Directors for terms expiring in 2002.
2. To approve amendments to the Revised Winn-Dixie Stock Purchase Plan
for Employees.
3. To ratify the appointment by the Board of Directors of the Company of
KPMG LLP as auditors of the Company for the fiscal year commencing
July 1, 1999.
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Notice is Further Given that the Board of Directors has fixed July 30,
1999, as the record date, and only holders of the Company's Common Stock of
record at the close of business on that date will be entitled to notice of, and
to vote at, the Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
/s/ JUDITH W. DIXON
---------------
Judith W. Dixon
Secretary
Jacksonville, Florida
September 3, 1999
EACH SHAREHOLDER IS URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY. IN
THE EVENT A SHAREHOLDER DECIDES TO ATTEND THE MEETING, THE SHAREHOLDER MAY, IF
SO DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
<PAGE>
WINN-DIXIE STORES, INC.
5050 Edgewood Court o Jacksonville, Florida 32254-3699
PROXY STATEMENT AND CONSOLIDATED FINANCIAL STATEMENTS
for
Annual Meeting of Shareholders
To be held October 6, 1999
-----------------------
GENERAL INFORMATION
The Board of Directors of Winn-Dixie Stores, Inc. (the "Company")
solicits your proxy for use at the 1999 Annual Meeting of Shareholders to be
held on Wednesday, October 6, 1999, at the Company's headquarters office at the
address above, commencing at 9:00 a.m., local time, and any adjournments
thereof. A form of proxy is enclosed. Any shareholder who executes and delivers
the proxy may revoke it at any time prior to its use.
The cost of soliciting the proxies will be borne by the Company.
Directors, officers and employees of the Company may solicit proxies by
telephone, telegram or personal interview. In addition, the Company will pay,
upon the request of brokers, dealers, banks and voting trustees, and their
nominees, who are holders of record of shares of the Company's stock on the
record date referred to below, the reasonable expenses incurred by them for
mailing copies of the Annual Report, this Notice of Meeting and Proxy Statement
and the enclosed form of proxy to the beneficial owners of such shares of stock.
The Annual Report of the Company to its shareholders for the 1998-99
fiscal year is being mailed with this Proxy Statement to shareholders entitled
to vote at the Annual Meeting. The approximate date on which this Proxy
Statement and form of proxy are first being sent or given to shareholders is
September 3, 1999.
Securities and Exchange Commission ("SEC") rules require that an annual
report precede or be included with the Company's proxy materials. Shareholders
with multiple accounts may be receiving more than one annual report, which is
costly to the Company and may be inconvenient to these shareholders.
Shareholders who have not yet authorized the Company to discontinue mailing
extra reports may now do so by marking the appropriate box on the proxy card for
selected accounts. Such an election will take effect at the end of the Company's
1999-2000 fiscal year. At least one account must continue to receive an annual
report. Eliminating these duplicate mailings will not affect receipt of future
proxy statements and proxy cards nor the mailing of dividend checks, dividend
reinvestment statements, or special notices. To resume the mailing of an annual
report to an account, please make a written request to: First Chicago Trust
Company of New York, P. O. Box 2500, Jersey City, New Jersey 07303-2500.
VOTING PROCEDURES
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of Directors to serve until the 2002
Annual Meeting of Shareholders, shareholders voting by proxy may vote in favor
of all nominees, withhold their votes as to all nominees or withhold their votes
as to specific nominees. With respect to the other proposals to be voted upon,
shareholders may vote in favor of a proposal, against a proposal or may abstain
from voting. Shareholders should specify their choices on the enclosed form of
proxy. If no specific instructions are given with respect to the matters to be
acted upon, the shares represented by a signed proxy will be voted FOR the
election of all nominees, FOR the proposal to amend the Revised Winn-Dixie Stock
Purchase Plan for Employees, and FOR the proposal to ratify the appointment of
KPMG LLP as independent auditors. Directors will be elected by a plurality of
the votes cast by the shareholders voting in person or by proxy at the Annual
Meeting. Approval of the amendments to the Revised Winn-Dixie Stock Purchase
Plan for Employees and the proposal to ratify the appointment of KPMG LLP, will
require the affirmative vote of the holders of a majority of the shares of
Common Stock voting on the proposal in person or by proxy at the Annual Meeting.
Abstentions are not included in determining whether the requisite number of
affirmative votes are received for the proposals. Broker non-votes will not be
included in vote
1
<PAGE>
totals and will have no effect on the outcome of any vote. A broker non-vote
generally occurs when a broker who holds shares in street-name for a customer
does not have authority to vote on certain non-routine matters because its
customer has not provided any voting instructions on the matter.
If a shareholder is a participant in the Dividend Reinvestment Plan of
Winn-Dixie Stores, Inc., the proxy card serves as voting instruction for the
number of full shares in the dividend reinvestment plan account, as well as
other shares registered in the participant's name. If a shareholder is a
participant in the Winn-Dixie Stores, Inc. Profit Sharing/401(k) Plan (the
"Profit Sharing Plan"), the proxy card also will serve as voting instruction for
the trustee of the Profit Sharing Plan where all accounts are registered in the
same name. If voting instructions are not received for shares in the Profit
Sharing Plan, those shares will be voted in the same proportion as the shares in
such plan for which voting instructions are received.
Only owners of record of shares of Common Stock of the Company at the close
of business on July 30, 1999, are entitled to vote at the meeting or
adjournments or postponements thereof. Each owner of record on the record date
is entitled to one vote for each share of Common Stock of the Company so held.
On July 30, 1999, there were 148,607,206 shares of Common Stock of the Company
issued and outstanding.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board is divided into three classes of Directors. Each class of
Directors is elected to serve for a term of three years, so that the terms of
office of approximately one-third of the Directors will expire each year. At the
Annual Meeting of Shareholders, three Directors are to be elected in Class III
to hold office until the 2002 Annual Meeting of Shareholders or until their
successors are elected and qualified. The persons designated as nominees for
election as Directors in Class III are Armando M. Codina, Radford D. Lovett and
Julia B. North. Each of such nominees currently is a Director of the Company.
James Kufeldt retired from his positions as Director and President of the
Company effective August 31, 1999. At that time, the Board amended the By-Laws
of the Company to reduce the number of Directors from eleven to ten. David F.
Miller, who has been a Director of the Company since 1987 and whose term expires
in 2000, is retiring as a Director in October, 1999, in accordance with the
Company's general policy that Directors retire at the age of seventy. A
successor to fill the vacancy that will be created by Mr. Miller's retirement
has not been designated. It is expected that sometime after the 1999 Annual
Meeting the Board will either elect a successor to fill the vacancy or amend the
By-Laws of the Company to reduce the number of Directors.
Should any one or more of these nominees become unable to serve for any
reason, or for good cause will not serve, which is not anticipated, the Board of
Directors may, unless the Board by resolution provides for a lesser number of
Directors, designate substitute nominees, in which event the persons named in
the enclosed proxy will vote proxies that otherwise would be voted for the named
nominees for the election of such substitute nominee or nominees.
Certain information with respect to each of the nominees and Directors
relating to principal occupations and directorships, and the approximate number
of shares of the Company's Common Stock beneficially owned by them, directly or
indirectly, has been furnished to the Company by such nominees and Directors.
The Board of Directors recommends a vote FOR all three nominees.
2
<PAGE>
BOARD OF DIRECTORS OF WINN-DIXIE STORES, INC.
Has Been a
Director
Name, Principal Occupation for Age as of Continuously
The Past Five Years, Directorships June 30, 1999 Since
CLASS III DIRECTOR NOMINEES
FOR TERMS EXPIRING IN 2002
Armando M. Codina - For more than the last five years,
Chairman of the Board and Chief Executive Officer of Codina Group,
Inc.; also a Director of Quaker Oats Company, BellSouth
Corporation, AMR, Inc. and FPL Group,Inc................... 52 1987
Radford D. Lovett - For more than the last five years,
Chairman of the Board of Commodores Point Terminal
Corporation; also a Director of First Union
Corporation, American Heritage Life Investment
Corporation, Florida Rock Industries, Inc. and
FRP Properties, Inc........................................ 65 1983
Julia B. North - October 1997 to June 1999, President
and CEO of VSI Enterprises, Inc.; April 1996 to October
1997, President of Consumer Services, a business unit of
BellSouth Telecommunications, Inc.; for more than five
years prior thereto, Vice President of BellSouth
Telecommunications, Inc.; also a Director of ChoicePoint,
Inc., VSI Enterprises, Inc. and Wisconsin Energy, Inc. .... 51 1994
INCUMBENT CLASS I DIRECTORS
WHOSE TERMS EXPIRE IN 2001
A. Dano Davis - For more than the last five years,
Chairman of the Board and Principal Executive Officer
of the Company; President of the Company since August,
1999; with the Company since 1968; also a
Director of First Union Corporation and
American Heritage Life Investment Corporation.............. 54 1981
T. Wayne Davis - For more than the last five years,
a private investor; with the Company 1971-1987; Chairman
of the Board of Transit Group, Inc.; also a Director of
Enstar Group, Inc. and Modis Professional Services, Inc.... 52 1981
Carleton T. Rider - August 1993 to date, Senior
Administrator, Mayo Foundation; 1985 to July 1993,
Administrator, Mayo Clinic Jacksonville; also a Director
of St. Luke's Hospital, Jacksonville, Florida.............. 54 1992
Charles P. Stephens - For more than the last five years,
Vice President, Director and a principal stockholder of
Norman W. Paschall Co., Inc. (brokers, importers, exporters
and processors of textile fibers and by-products).......... 61 1982
3
<PAGE>
Has Been a
Director
Name, Principal Occupation for Age as of Continuously
The Past Five Years, Directorships June 30, 1999 Since
INCUMBENT CLASS II DIRECTORS WHOSE
TERMS EXPIRE IN 2000
Robert D. Davis - For more than the last five years,
Chairman of the Board of D.D.I., Inc.; with the Company
1955-1990; also a Director of American Heritage Life
Investment Corporation.................................... 67 1972
Charles H. McKellar - For more than the last five
years, Executive Vice President of the Company;
with the Company since 1957............................... 61 1988
David F. Miller - May 1997 to date, private investor;
March 1996 to May 1997, President and Chief Operating
Officer of What-A-World, Inc.; March 1990 to March 1997,
Chairman of the Board of PureIce of the South, Inc.;
prior to that time was Vice Chairman of the Board of
J.C. Penney Company, Inc. and President and Chief
Operating Officer of J.C. Penney Stores and Catalog....... 70 1987
The Company was founded by Messrs. A. D. Davis, James E. Davis, M. Austin
Davis and Tine W. Davis (the "Founding Brothers"), all of whom are deceased. Mr.
A. Dano Davis, the Company's Chairman, Principal Executive Officer and
President, is the son of Mr. James E. Davis. Mr. Robert D. Davis is the son of
Mr. A. D. Davis. Mr. T. Wayne Davis is the son of Mr. Tine W. Davis. Mr. Charles
P. Stephens is the son-in-law of Mr. M. Austin Davis.
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of the
Company's Common Stock by each person who, as of June 30, 1999, is known to the
Company to be the beneficial owner of 5% or more of the Common Stock.
Name and Amount and
Address Nature of Percent
Of Beneficial Beneficial of
Owner Ownership Class
------------------------ --------------- --------
Davis Family (1) 58,955,718 39.68
c/o D.D.I., Inc.
4310 Pablo Oaks Court
Jacksonville, FL 32224
(1) Certain relatives of the Founding Brothers, trusts, estates, corporations
and other entities involving them and their associates (collectively, the
"Davis Family") own beneficially for the Davis Family, directly or
indirectly, the shares listed in this table. These shares include those
listed for Messrs. A. Dano, Robert D. and T. Wayne Davis and Charles P.
Stephens in the following table setting forth the beneficial ownership by
directors, nominees and executive officers. The figure excludes 58,532
shares, those in excess of the pro rata beneficial interest of the Davis
Family in 100,000 shares held by American Heritage Life Investment
Corporation.
4
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the
Company's Common Stock by each of the directors and nominees, each of the
executive officers named in the Summary Compensation Table and all of the
Company's directors and executive officers as a group as of June 30, 1999.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership (1)
Direct or Indirect
With Sole Indirect with
Voting and Shared Voting
Investment And Investment Percent
Name of Beneficial Owner Power Power Total Of Class
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Armando M. Codina 21,372 21,372 *
A. Dano Davis 954,328 5,710,082 6,664,410 4.49
Robert D. Davis 255,589 8,435,926 8,691,515 5.85
T. Wayne Davis 366,414 2,097,966 2,464,380 1.66
Richard J. Ehster 32,779 32,779 *
Howard E. Hess 83,643 83,643 *
James Kufeldt 417,808 14,740 432,548 0.29
Radford D. Lovett 12,193 12,193 *
Charles H. McKellar 153,161 153,161 0.1
David F. Miller 800 800 *
Harold E. Miller 34,225 34,225 *
Julia B. North 5,731 5,731 *
Carleton T. Rider 2,655 2,655 *
Charles P. Stephens 22,358 2,736,090 2,758,448 1.86
Directors and Executive
Officers as a Group (32
persons) 3,005,121 18,994,804 21,999,925 14.81
</TABLE>
- --------------------
* Less than .1% of issued and
outstanding shares of Common Stock of the
Company.
(1) Includes shares held by the wives and children of certain of the persons
named, as to which such persons disclaim beneficial ownership. The numbers of
such shares so disclaimed are as follows: Robert D. Davis, 1,048,190; T. Wayne
Davis, 353,859; Richard J. Ehster, 100; Howard E. Hess, 10,912; James Kufeldt,
14,740; Radford D. Lovett, 148; Charles H. McKellar, 10,566; Carleton T. Rider,
900; and Charles P. Stephens, 2,736,070. The holdings set forth above exclude
36,494,491 shares of Common Stock of the Company, included in the Davis Family
holdings shown on page 4 hereof, held by various entities as to which one or
more of A. Dano Davis, A. Dano Davis' wife, Robert D. Davis, T. Wayne Davis,
Charles P. Stephens and Charles P. Stephens' wife have direct or indirect voting
and/or investment powers, but no pecuniary interests, and as to which they
disclaim beneficial ownership.
The holdings set forth above include restricted shares awarded as Long-Term
Incentive Awards pursuant to the Company's Officer Compensation Program. Certain
shares included are subject to forfeiture if certain performance goals are not
met within the three fiscal-year period expiring June 30, 1999, as follows: Mr.
Kufeldt, 5,552 shares; Mr. McKellar, 4,045 shares; Mr. Ehster, 924 shares; Mr.
Hess, 1,687 shares and Mr. Miller, 794 shares. Such shares are included because
the determination of whether such performance goals have been met is not made
until the audited financials for the Company for the 1998-99 fiscal year have
been completed, which occurs in early fiscal year 1999-2000. Certain other
shares are subject to forfeiture if certain performance goals are not met within
the three fiscal-year period expiring June 28, 2000, as follows: Mr. Kufeldt,
5,342 shares; Mr. McKellar, 3,892 shares; Mr. Ehster, 889 shares; Mr. Hess,
1,623 shares and Mr. Miller, 764 shares. Certain other shares are subject to
forfeiture if certain performance goals are not met within the three fiscal-year
period expiring June 27, 2001, as follows: Mr. Kufeldt, 5,240 shares; Mr.
McKellar, 2,590 shares; Mr. Ehster, 1,205 shares; Mr. Hess, 1,747 shares; and
Mr. Miller, 1,156 shares. The holdings for the 24 officers within the Directors
and Executive Officers group total 76,416 restricted shares.
The holdings set forth above include equivalent shares credited to the Stock
Equivalent Accounts of Directors under the Directors' Deferred Fee Plan (see
"Director's Fees"): Mr. Codina, 13,412 equivalent shares; Mr. R. D. Davis, 6,521
equivalent shares; Mr. T. W. Davis, 2,099 equivalent shares; Mr. Lovett, 12,193
equivalent shares; Mr. Rider, 1,755 equivalent shares; and Ms. North, 5,331
equivalent shares. These holdings are payable only in cash upon retirement.
The holdings set forth above also include the equivalent of 7,077 shares
credited to Mr. Kufeldt's account and 9,500 shares credited to Mr. McKellar's
account, allocated by each of them to the Company stock fund within the Profit
Sharing Plan, and a total of 37,993 shares for all executive officers as a group
in such fund.
These holdings further include shares under options granted on June 22, 1994,
which are now exercisable, of 50,000 shares for Mr. Kufeldt. These holdings also
include shares under additional options granted on June 19, 1996, which are not
presently exercisable, of 10,000 shares for Mr. Ehster, 12,000 shares for Mr.
Hess, 25,000 shares for Mr. Kufeldt, 20,000 shares for Mr. McKellar, and 10,000
shares for Mr. Miller. These holdings further include shares granted on June 15,
1998, which are not presently exercisable, of 6,741 shares for Mr. Ehster, 9,774
shares for Mr. Hess, 29,323 shares for Mr. Kufeldt, 14,493 shares for Mr.
McKellar, and 6,471 shares for Mr. Miller. All of these share options are more
fully described in the table on options on page 8.
5
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the SEC and the New York Stock Exchange. Officers, directors and greater than
ten percent shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on its review of
the copies of such forms received by it and written representations from certain
reporting persons that no Forms 5 were required for them, the Company believes
that during the Company's most recently completed fiscal year ended on June 30,
1999, all filing requirements applicable to its officers, directors, and greater
than ten percent beneficial owners were met, except that Mr. Raymond C. Lunn,
Jr., Vice-President of the Company, filed a Form 4 that was approximately seven
days late due to an inadvertent oversight.
MEETINGS OF THE BOARD AND COMMITTEES
During the most recently completed fiscal year, the Board of Directors held
four regular meetings and took action by unanimous written consent in lieu of a
meeting four times. The Board of Directors has Audit, Nominating and
Compensation Committees. The Audit Committee and Compensation Committee each
held two meetings, during the 1998-99 fiscal year. The Nominating Committee did
not meet. All current Directors attended at least 75% of the meetings of the
Board and of the committees on which they served.
The Audit Committee is composed of Mr. David F. Miller, Chairman, and
Messrs. Armando M. Codina, Radford D. Lovett, Carleton T. Rider and Charles P.
Stephens, and Ms. Julia B. North. The Audit Committee, whose members are not
officers, employees, or retired employees of the Company, reviews the scope and
results of the audit, approves types of non-audit services provided to the
Company and recommends selection of the Company's independent auditors. It also
reviews the scope of internal audits, systems of internal controls and
accounting policies and procedures.
The Nominating Committee is composed of Mr. T. Wayne Davis, Chairman, and
Messrs. A. Dano Davis, Robert D. Davis, Radford D. Lovett and Charles P.
Stephens. The Nominating Committee recommends qualified candidates to fill
vacancies on the Board of Directors and will consider nominees recommended by
shareholders, who may submit names and biographical data and qualifications in
writing to the Secretary of the Company.
The Compensation Committee, composed of Mr. Radford D. Lovett, Chairman,
and Messrs. Armando M. Codina and Carleton T. Rider and Ms. Julia B. North,
approves the Company's compensation strategy to ensure that management employees
are awarded appropriately for their contributions to Company growth and
profitability and that the compensation strategy supports organization
objectives and shareholder interests. The Committee also establishes and reviews
the salary, annual incentive, long-term incentive, and benefit plans for
officers and other management employees. The Compensation Committee, whose
members are not officers, employees or retired employees of the Company,
established and reviewed whether performance goals were met under the Company's
Officer Compensation Programs for stock and cash compensation to be awarded for
fiscal year 1998-99. The activities of the Compensation Committee are described
further in the Report on Executive Compensation beginning on page 9.
DIRECTORS' FEES
Directors are paid a retainer fee of $12,000 per annum plus $3,000 for
attendance at each regular meeting of the Board of Directors. Directors also are
paid $1,000 for each action by written consent in lieu of a meeting. Members of
the Audit, Nominating, and Compensation Committees are paid $3,000 for each
committee meeting attended. Travel expenses of Directors incurred in traveling
to Committee and Board of Directors' meetings also are reimbursed by the
Company. Members of the Board of Directors who also are employees are not paid
Director's fees or fees for attending Committee meetings.
6
<PAGE>
A Director may elect to defer payment of all or any part of the above fees
until termination as a Director under a Deferred Fee Plan for Directors
effective June 30, 1988, with fees credited to an Income Account at a prime rate
of interest or to a Stock Equivalent Account based on the closing market price
of the Company's Common Stock on the date fees are earned. The deferred fees are
payable only in cash in a single payment or annual installments upon retirement.
Directors Codina, Lovett, Rider, T. Wayne Davis and North elected to participate
in the Deferred Fee Plan during all or part of the 1998-99 fiscal year.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation
of the Principal Executive Officer and the five other most highly compensated
executive officers who served in such capacities as of June 30, 1999, which was
the end of the last completed fiscal year.
<TABLE>
<CAPTION>
Annual Compensation Long-term Compensation Awards(1)
--------------------- ----------------------------------
Fiscal Year Restricted Long-Term All Other
Ended Last Stock Incentive Compensa-
Name and Wednesday Salary (2) Award(3) Plan tion (4)
Principal Position in June ($) Bonus ($) ($) Options(#) Payouts ($) ($)
- ----------------------- ------------- ------------ ------------ ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
A. Dano Davis 1999 500,000 - - - - 36,547
Chairman of the Board 1998 397,952 202,062 - - - 41,347
and Principal 1997 384,494 218,635 - - - 47,011
Executive Officer
James Kufeldt 1999 580,000 - 198,976 29,323 134,762 40,914
President 1998 397,952 202,062 192,247 - 153,435 41,270
1997 384,494 218,635 188,478 25,000 137,241 45,531
Charles H. McKellar 1999 430,000 - 144,968 14,493 98,183 30,381
Executive Vice 1998 362,420 129,376 140,066 - 111,788 34,654
President 1997 350,164 144,185 137,319 20,000 99,990 36,617
Howard E. Hess 1999 290,000 32,971 60,450 9,774 40,154 21,158
Senior Vice President 1998 201,500 94,921 58,406 - 45,718 21,870
1997 194,686 95,414 56,160 12,000 40,893 20,020
Harold E. Miller 1999 240,000 147,461 28,463 6,471 17,739 25,030
Vice President 1998 142,313 148,082 27,500 - 20,197 48,742
1997 137,500 126,125 24,810 10,000 17,625 20,563
Richard J. Ehster 1999 250,000 89,360 33,120 6,741 21,701 373,554
Vice President 1998 165,600 138,282 32,000 - 25,074 21,670
(Retired, June 1999) 1997 160,000 139,000 30,351 10,000 22,427 78,490
</TABLE>
---------------
(1) Long-term compensation amounts are shown for years in which paid,
although earned in the prior year.
(2) Includes compensation amounts earned during the fiscal year but
deferred under the Company's 401(k) plan and amounts contributed under
the Company's Senior Corporate Officers' Management Security Plan (Mr.
A. Dano Davis, $7,467; Mr. Kufeldt, $9,632; Mr. McKellar, $9,906; Mr.
Hess, $10,154; and Mr. Ehster, $5,414).
(3) Dividends are paid on restricted shares at the ordinary rate. Value is
determined based upon the closing market price of the Company's Common
Stock on the date of grant. The aggregate of restricted shares held
and their value at June 30, 1999, were: Mr. A. Dano Davis, no shares;
Mr. Kufeldt, 16,134 shares, $595,990; Mr. McKellar, 10,527 shares,
$388,867; Mr. Hess, 5,057 shares, $186,806; Mr. Miller, 2,714 shares,
$100,255 and Mr. Ehster, 3,018 shares, $111,485. These shares all
vest, if at all, over a period of three fiscal years from grant if
certain performance goals are attained. The values above do not
reflect the risk of forfeiture.
(4) Includes (a) Company contributions to the Company's Profit Sharing
Plan of $7,416 for each of the named officers; (b) Company matching
payments under the Company's 401(k) Plan of $2,400 for each of the
named officers; and (c) merchandising contest awards of $4,514 for Mr.
Miller and $353,860 for Mr. Ehster. Also includes (a) Company
contributions to the Company's Supplemental Retirement Plan ("SRP")
for the 1998-99 fiscal year of $16,419 for Mr. Davis, $19,730 for Mr.
Kufeldt, $12,454 for Mr. McKellar, $6,481 for Mr. Hess, $6,026 for Mr.
Miller and $5,516 for Mr. Ehster and (b) Company matching 401(k)
payments under the Company's SRP for the 1998-99 fiscal year of
$10,312 for Mr. Davis, $11,368 for Mr. Kufeldt, $8,111 for Mr.
McKellar, $4,861 for Mr. Hess, $4,674 for Mr. Miller and $4,362 for
Mr. Ehster.
7
<PAGE>
Option Grants During the Fiscal Year Ended June 30, 1999
The following table sets forth all options to acquire shares of the
Company's Common Stock granted to the named executive officers effective June
15, 1998, relating to fiscal years ended June 30, 1999, and later.
<TABLE>
<CAPTION>
Individual Grants (1) Potential realizable
------------------------------------------------------------------------------------- value at assumed annual
rates of stock price
appreciation for
option term (2)
Percent of total -------------------------
options granted Exercise or
Options to associates Base price Expiration
Name Granted (#) in fiscal year ($/Sh) date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C> <C>
A. Dano Davis --- --- --- --- --- ---
James Kufeldt 29,323 16.2% 41.506 01/15/05 472,368 1,124,888
Charles H. McKellar 14,493 8.0% 41.506 01/15/05 233,470 555,980
Howard E. Hess 9,774 5.4% 41.506 01/15/05 157,451 374,950
Harold E. Miller 6,471 3.6% 41.506 01/15/05 104,242 248,240
Richard J. Ehster 6,741 3.7% 41.506 01/15/05 108,592 258,598
</TABLE>
(1) The exercise price was the market value of the Company=s Common Stock
on the date of grant. The grant was at the end of the prior fiscal
year, but related to the year ended June 30, 1999, and thereafter.
Options are exercisable on and after such date the Company has earned
an average return on equity of 17% or more for three consecutive fiscal
years, if the option was outstanding throughout the three consecutive
fiscal years. The officer must remain employed during the option
period, but the option may be exercised to the extent vested within
three months after cessation of employment for any reason other than
death, for which the period to exercise is one year. These options will
become exercisable on June 27, 2001, if earned.
(2) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of
their term using 5 percent and 10 percent appreciation rates set by the
Securities and Exchange Commission, compounded annually. These amounts,
therefore, are not intended to forecast possible future appreciation,
if any, of the Company=s stock price. Additionally, these values do not
take into consideration the provisions of the options providing for
nontransferability, vesting requirements or termination of the options
following termination of employment.
Option Exercises and Fiscal Year-End Values
The following table sets forth all stock options exercised by the named
executives during the fiscal year ended June 30, 1999, and the number and value
of unexercised options held by such executive officers at fiscal year end.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Value Options at FY-End (#) Options at FY-End ($)(1)
Acquired on Realized -----------------------------------------------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- -------------- -------------- --------------- ---------------- --------------- ----------------
<S> <C> <C> <C>
A. Dano Davis --- --- --- --- --- ---
James Kufeldt 50,000 1,159,375 50,000 54,323 725,000 57,813
Charles H. McKellar --- --- --- 34,493 --- 46,250
Howard E. Hess --- --- --- 22,274 --- 28,906
Harold E. Miller --- --- --- 16,471 --- 23,125
Richard J. Ehster --- --- --- 16,741 --- 23,125
</TABLE>
- -------------
(1) The closing price of the Company's Common Stock of $36.94 as reported on
the New York Stock Exchange composite tape on June 30, 1999, less the
exercise price, was used in calculating the value of unexercised options.
The exercise price for the presently exercisable shares held by James
Kufeldt is $22.44 for 50,000 shares. For information on the unexercisable
options see footnote 1 on page 5. The exercise prices for such options
granted in 1996 and 1998 are $34.63 and $41.50 per share, respectively.
8
<PAGE>
Long-Term Incentive Plans - Awards In Last Fiscal Year
In connection with the 1998-99 fiscal year Company's Officer Compensation
Program, the Company provided its officers with an opportunity to earn shares of
the Company's Common Stock and a contingent cash payment through a
Performance-based Restricted Stock Plan. The restricted stock awards and
contingent cash payments under the Plan were designed to motivate the Company's
officers to make decisions and to act in the best interest of the Company's
shareholders by having the restricted stock vest when the Company's average
total shareholder return is greater than the average total shareholder return of
its peer group for a particular period. The awards made during fiscal year
1998-1999 cover the three-year period ending in fiscal year 2000-2001. These
restricted stock awards are listed in the Summary Compensation Table.
Consulting Agreement
On August 31, 1999, James Kufeldt retired from his positions as Director
and President of the Company. On that date the Company entered into an agreement
with Mr. Kufeldt whereby Mr. Kufeldt will perform consulting services for the
Company on an as-needed basis over a three-year period (the "Consulting
Agreement"). The Consulting Agreement contains provisions that prohibit Mr.
Kufeldt from disclosing confidential information, competing with the Company and
soliciting Company employees, customers or suppliers during the term of the
Consulting Agreement. In accordance with the Consulting Agreement, Mr. Kufeldt
received a lump sum payment of $45,760 on August 31, 1999, and will receive
three annual lump sum cash payments of $400,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during the most
recently completed fiscal year were Radford D. Lovett, Chairman, and Messrs.
Armando M. Codina and Carleton T. Rider and Ms. Julia B. North. During such
time, no member of the Compensation Committee was a current or former officer or
employee of the Company and no executive officer of the Company served as a
director or as a member of the compensation or equivalent committee of another
entity, one of whose executive officers served as a director of the Company or
on the Company's Compensation Committee.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that incorporated future filings, including this Proxy Statement, the
following sections titled "Report on Executive Compensation" and "Stock
Performance Graph" shall not be incorporated by reference into any such filings.
REPORT ON EXECUTIVE COMPENSATION
The Company's compensation for its executive officers reflects the overall
compensation philosophy of the Company to fairly compensate executives for their
performance and contributions to the Company and to motivate executives to
achieve the Company's performance goals. After extensive review of comparative
compensation andfinancial performance data of competitors of the Company, input
from numerous management employees and assistance from compensation consultants,
a revised Officer Compensation Program was approved by the Board of Directors
and by the Shareholders last year at the 1998 Annual Meeting of Shareholders.
This Program became effective in fiscal year 1998-1999. The Program was
comprised of base salary, annual incentives and long-term incentives. The
long-term incentives arose under a Performance-Based Restricted Stock Plan and a
Key Employee Stock Option Plan ("KESOP"). The 1998-99 Officer Compensation
Program did not affect the long-term incentives that had been previously granted
under the Company's prior officer compensation program, including grants under
the Restricted Stock Plan, a Performance Unit Plan and KESOP.
1998-99 Officer Compensation Program
The 1998-99 Officer Compensation Program was distinctly performance-based.
It was composed of comparatively conservative salaries and competitive annual
incentives, and was weighted towards performance-based, long-term compensation
for all of the Company's senior officers.
9
<PAGE>
Base Salary and Annual Incentives
Base compensation changes under the 1998-99 Program were based primarily
upon comparative market data, with positions assigned to ranges based on such
data. The compensation levels for the Principal Executive Officer and the other
executives named in the Summary Compensation Table were determined for both base
salary and annual incentive targets by the Compensation Committee on July 27,
1998.
The performance goals for annual incentive awards were based on how actual
performance compared to sales and pre-tax profit goals set forth in a business
plan adopted at the beginning of the fiscal year. Each participant was assigned
a threshold target and superior incentive opportunity as a percentage of salary.
Cash awards could range from 0% to 200+% of the participant's target incentive
opportunity. The performance review included the performance of the
participant's business unit, overall Company performance and (except for the
Principal Executive Officer, President and Executive Vice President) individual
objectives.
Long-Term Incentive
Long-term incentive compensation was provided during fiscal year 1998-99
through the Company's Performance-Based Restricted Stock Plan and KESOP. Under
the Performance-Based Restricted Stock Plan, grants of restricted stock that pay
dividends are given to the participants, but these shares do not vest unless and
until certain performance requirements are met over a pre-determined period. The
performance measure established by the Compensation Committee beginning with
fiscal year 1998-99 under the Performance-Based Restricted Stock Plan was based
upon a comparative three-year average total shareholder return ("TSR"). The TSR
is the measure utilized in the Stock Performance Graph in the Company's Annual
Proxy Statement. The peer group used for comparison purpose is the same as that
used for the Stock Performance Graph, which is the Standard & Poor's Retail
(Food Chains) Index Group. Recipients of performance-based restricted stock
grants are eligible to receive a contingent cash payment equal to the initial
grant value of their awarded restricted shares, if the shares vest. The cash
payment is designed to satisfy all or a portion of the federal and state income
tax obligations of the recipient resulting from the vesting of the restricted
stock.
The KESOP allows performance-based stock options to be granted to officers
and other key employees selected by the Compensation Committee. Performance
goals under the KESOP are based on a specified percentage return on equity as
determined by the Compensation Committee, exercisable on and after such date as
the Compensation Committee determines. On July 27, 1998, effective June 15,
1998, options were granted for fiscal year 1998-99. The options granted are set
forth in the table on page 8. Such options may not be fully exercised unless the
Company earns a 17% return on equity over a three-year period.
For participants to remain eligible for grants under the Performance-Based
Restricted Stock Plan and the KESOP, they must maintain a certain ownership
interest in the Company's stock. The amount that must be held is based on a
multiple of the participants' respective salaries and range from a high of ten
times the base salary for the Principal Executive Officer and the President, to
a low of two times the base salary for certain other corporate officers.
The Chairman of the Board and Principal Executive Officer of the Company,
Mr. A. Dano Davis, for the fiscal year ended June 30, 1999, received a 25.6%
increase in base compensation from the prior fiscal year. Because of his
substantial stock ownership, Mr. Davis again chose not to participate in the
restricted stock aspects of the 1998-99 Officer Compensation Program's long-term
incentive compensation for the 1998-99 fiscal year. Had he participated, the
grants made in June of 1998 for fiscal year 1998-99 and later would have been in
the amount of approximately $187,500 of value of restricted stock and a cash
payment of $187,500, contingent on the stock vesting. The Principal Executive
Officer normally would participate in these plans. If Mr. Davis had participated
in fiscal year 1998-99, his compensation would have equaled approximately 86.2%
of that of the Company's President, Mr. James Kufeldt, as shown in the Summary
Compensation Table on page 7.
Also included in the Company's compensation for its executive officers are
various employee benefits. Generally, the benefits offered to such persons serve
a different purpose than do the other components of compensation. In general,
these benefits provide protection against financial loss that can result from
illness, disability or death. Benefits offered to these employees are mainly
those that are offered to the Company's other
10
<PAGE>
employees, with some variation primarily to promote tax efficiency and
replacement of benefit opportunities lost due to regulatory limits.
Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended (the
"Code"), precludes a public corporation from taking a federal income tax
deduction for compensation paid in excess of $1 million per year to certain
covered officers. Generally, covered officers would include the Company's
Chairman of the Board and Principal Executive Officer and the four other
officers named each year in the Summary Compensation Table in the Proxy
Statement. The limitation does not apply to performance-based compensation,
provided certain conditions are satisfied. The Committee believes that any
compensation realized in connection with the Annual Incentive Plan,
Performance-Based Restricted Stock Plan and KESOP, as they currently operate,
and in connection with the long-term incentives of the prior officer
compensation program, will continue to be deductible as performance-based
compensation. The Compensation Committee, however, retains the authority to
authorize payments that may not be deductible under the Code if it believes such
payments would be in the best interest of the Company and its shareholders.
This report is submitted by the members of the Compensation Committee:
Radford D. Lovett, Chairman; Armando M. Codina; Carleton T. Rider; and Julia B.
North.
STOCK PERFORMANCE GRAPH
The following graph sets forth the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock during the
preceding five fiscal years ended June 30, 1999, compared with the cumulative
total returns of the S & P 500 Index and the S & P Retail (Food Chains) Index.
The comparison assumes $100 was invested on June 30, 1994, in the Company's
Common Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG WINN-DIXIE STORES, INC., THE S & P 500 INDEX
AND THE S&P RETAIL STORES (FOOD CHAINS) INDEX (1)
Starting
Basis
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
WINN-DIXIE $100 $137 $174 $189 $265 $197
S&P 500 $100 $126 $159 $214 $279 $342
S & P RETAIL STORES - $100 $122 $168 $183 $260 $280
(FOOD CHAINS)
Assumes Initial Investment of $100 and reinvestment of dividends
Note: Total Returns Based on Market Capitalization
Data and chart furnished by Zacks Investment Research, Inc.
_______________
(1) Includes, but is not limited to, the following companies: Albertson's,
American Stores, Giant Food Class A, Great A&P, Kroger and Winn-Dixie.
11
<PAGE>
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
American Heritage Life Insurance Company (the "Insurance Company") is a
wholly-owned subsidiary of American Heritage Life Investment Corporation, of
which Messrs. A. Dano Davis, Robert D. Davis and Radford D. Lovett are
directors. The Company is self-insured for purposes of employee group, medical,
accident and sickness insurance, with the Insurance Company providing
administrative services and expenses. During the fiscal year ended June 30,
1999, the Company paid the Insurance Company $4,670,904 for administrative
services, state premium taxes and expenses of the group medical and accident
plan. The Company also paid the Insurance Company $15,776,103 in net premiums on
life insurance policies and $19,860,393 in interest on policy loans to fund the
corporate senior officers management security plan for 36 officers (including 21
executive officers) and a similar contributory plan for 582 other eligible key
management personnel. These plans also provide benefits to 420 former
participants who have retired, terminated employment or are currently ineligible
to participate in the plans, and beneficiaries of deceased participants.
In the fiscal year ended June 30, 1999, the Company received payments from
D.D.I., Inc., a Florida corporation controlled by the Davis Family, in the
aggregate amount of $65,771 for group insurance and office expenses.
AGREEMENT OF SHAREHOLDERS
OF
D.D.I., INC.
On April 19, 1989, an Agreement of Shareholders (the "Agreement") was
entered into by a Florida corporation now known as D.D.I., Inc. ("DDI") and its
shareholders to make provision for future disposition, voting and transfer of
its shares. DDI, which, as of June 30, 1999, owned directly and indirectly
40,817,358 shares of Common Stock of the Company, is controlled by the Davis
Family. Such shares are included in the Davis Family holdings shown on page 4
hereof.
Subject to certain exceptions, the Agreement prohibits disposition of DDI
shares by a DDI shareholder except with the written consent of DDI and all of
the other DDI shareholders. If any DDI shareholder desires to make a disposition
of shares of DDI, such shareholder must offer the shares to DDI, and if DDI does
not purchase all of the shares, then to the other DDI shareholders. The
Agreement also restricts transfers in the event of death, divorce, change in
beneficial interest in a trust or involuntary disposition and sets out
procedures for establishing fair market value, termination of the Agreement,
selection of a Board of Directors of DDI and increasing the capital surplus of
DDI, if necessary, to purchase DDI shares.
DDI shareholders who are parties to the Agreement include Robert D. Davis,
A. Dano Davis, T. Wayne Davis, and Charles P. Stephens, spouses, children,
grandchildren, relatives, in-laws, trusts for the benefit of Davis Family
members, and corporations and other entities controlled by them.
PROPOSAL 2 - APPROVAL OF THE STOCK
PURCHASE PLAN FOR EMPLOYEES, AS AMENDED
The Company has in effect the Revised Winn-Dixie Stock Purchase Plan for
Employees (the "Plan"), under which the Company through a Board of Directors'
Committee (the "Committee"), may grant options to eligible employees to purchase
shares of the Company's Common Stock. Eligible employees include those employees
who (i) have been employed by the Company or a subsidiary of the Company for at
least one year prior to the date of grant of such options, (ii) are of legal age
to purchase stock in the state of their residence and (iii) are actively
employed by the Company or a subsidiary of the Company at the date of grant of
such options. The total number of shares available for issuance under the Plan
is 36,173,236, of which 33,780,610 shares previously have been issued, leaving a
balance of 2,392,626 shares for future offerings.
Under the Plan, the Board of Directors has the power to add to, amend or
repeal any of the provisions of the Plan provided that such actions do not
affect the rights of holders of outstanding options and provided further that
any changes to the terms of Articles II through VII of the Plan (except the
number of shares which may be purchased during any one calendar year) are
approved by the shareholders of the Company.
12
<PAGE>
On August 2, 1999, the Board of Directors approved various amendments to
the Plan the primary purpose of which was to provide more flexibility for the
Committee to determine the manner in which the options may be offered and
exercised. The amendments also address the shareholder approval requirements for
Plan changes. These amendments are marked on the copy of the Plan attached
hereto as Exhibit A. Although only some of the amendments require shareholder
approval, under certain laws and regulations the amendments as a whole may be
considered to have created a new plan requiring shareholder approval within 12
months of such change. Thus, the shareholders are being asked to approve the
entire Plan, as proposed to be amended. In the event the Company's shareholders
do not adopt the proposed amendments, the contemplated amendments shall become
null and void and the Plan, as in effect prior to the amendments, shall continue
in full force and effect.
Description of Amendments
Under the current Plan, the Committee determines on the first business day
of each month whether or not to grant options for that month and, if options are
granted, what the option price per share shall be. Under the current Plan, the
exercise price may not be less than 85% of the fair market value of the stock at
the time the option is granted (which is limited to the first business day of
the month), nor less than one dollar. The options, and the corresponding right
to purchase the Company's stock, expire at the close of business on the last
business day of the month in which the options are granted. This provides a very
limited time frame in which the Company may grant, and the eligible employees
may exercise, options under the Plan.
The amendments would allow the Committee to determine the period during
which an eligible employee can exercise the granted options, rather than the
exercise period being limited to the month in which the options are granted. The
amendments would also allow the Committee to determine the option price provided
that the option price is not less than the fair market value of the stock either
on the date of grant or date of exercise of the option, rather than being
limited to the market value on the date of grant. In accordance with applicable
tax law, the amendments provide that the option price cannot be less than 85% of
the fair market value of the stock on the date the option is granted or the date
on which the option is exercised, whichever is lower.
The Board also has approved amendments to the option exercise provisions of
the Plan that give the Committee more flexibility in determining at the time of
grant the methods of, and conditions under which, options may be exercised.
These amendments allow the Committee to determine at the time of grant the
procedure to be followed if there is not a sufficient number of shares available
during the offering period. Further, under the amendments, the Committee would
determine at the time of grant whether any shares purchased under the Plan may
only be resold by tender to the Company.
The Plan provides that changes to the terms of Articles II through VII of
the Plan (except the number of shares that may be purchased during any one
calendar year) must be approved by the shareholders of the Company. Under the
proposed amendments, the Plan would be revised to provide that any future
changes that require shareholder approval under applicable law or the rules of
the New York Stock Exchange, must be approved by the shareholders of the
Company.
Description of Plan as Proposed to be Amended
The following summary of the Plan, as proposed to be amended, is qualified
in its entirety by reference to the text of the Plan, which is attached hereto
as Exhibit A. Under the proposed amended Plan, the Committee determines from
time-to-time whether or not to grant options and, if options are to be granted,
what the option price per share will be. If any options are granted, they are
granted to all eligible employees. Subject to the share limitations of the Plan,
each eligible employee is granted an option to purchase up to a maximum number
of shares of stock as may be determined by the Committee. In addition, there are
other limitations required by law with respect to employees to whom options may
be granted and as to the number of shares that may be covered by such options.
The option price, exercise period, option payment provisions and all other terms
and conditions of the options will be uniform among all eligible employees.
13
<PAGE>
The options expire at the end of the option period established by the
Committee. Because all eligible employees have the same ability to participate
in the Plan and the decision of whether to exercise options granted under the
Plan is an individual investment decision of the eligible employees, it is not
possible to determine the benefits that the executive officers of the Company
will receive under the Plan.
The Committee is authorized to set forth the methods in which eligible
employees may exercise their rights under the Plan. These may include any or all
of the following three methods or such other methods as the Committee may
determine: (i) tendering the full cash purchase price; (ii) tendering at least
$1.00 per share and executing and delivering a promissory note payable to the
Company for the balance of the purchase price; or (iii) tendering the balance of
a participant's account established to hold employee payroll deductions during
the offering period. If the promissory note method is authorized, eligible
employees may purchase up to a maximum of 50 shares by executing and delivering
a non-interest bearing promissory note and, subject to approval by the Committee
in its discretion from time-to-time at the time of granting options, up to 25
shares by executing and delivering an interest bearing promissory note, the
terms of which are determined by the Committee.
The Committee, in its discretion, may require that any shares purchased
pursuant to the Plan must first be tendered to the Company before such shares
can be sold. The Committee also may set the terms and conditions of the tender.
The maximum number of shares that may be sold pursuant to the Plan, as well
as the number of shares that may be purchased pursuant to the exercise of any
option outstanding thereunder, are subject to anti-dilution provisions in the
event of stock splits, certain stock dividends and similar events. Options
granted pursuant to the Plan may not be sold, pledged, assigned or transferred
by their holders. Upon the death of such holder, the option immediately ceases
and terminates.
Any changes to the Plan requiring shareholder approval under applicable law
or the rules of the New York Stock Exchange must be approved by the shareholders
of the Company. If shareholder approval is not obtained, the changes shall not
become effective and any Plan provision attempted to be changed shall continue
in full force and effect.
Federal Income Tax Consequences
For federal income tax purposes, an employee will not realize income at the
date of grant or date of exercise of an option. If no disposition of shares
acquired pursuant to an option is made within two years of the date of grant or
within one year from the date of exercise of the option, then upon subsequent
disposition of the stock, ordinary income will be realized by the employee to
the extent of the lesser of (i) the amount by which the fair market value of the
stock at such disposition exceeds the price paid, or (ii) the amount by which
the fair market value of the stock on the date of grant exceeds the option
price. No income tax deduction will be allowed the Company for shares
transferred to an employee, provided such shares are held for the periods
described above. If the shares are disposed of within the periods described
above, the employee will recognize ordinary income for the taxable year of the
disposition equal to the excess of the fair market value of the shares on the
date of exercise over the price paid, and the Company will, generally, be
entitled to a deduction equal to the amount of ordinary income recognized by the
employee. Any additional gain will be capital gain to the employee.
General Information
The net proceeds from the sale of Common Stock pursuant to the Plan will be
added to the general funds of the Company. The Company is unable to state at
this time for what purposes such proceeds may be used other than as working
capital.
At June 30, 1999, the Company and its wholly owned subsidiaries had
approximately 132,000 employees of whom approximately 74,000 (including 21
executive officers, 2 of whom are also Directors of the Company) were eligible
employees under the Plan.
14
<PAGE>
The closing price of the Company's stock as reported on the New York Stock
Exchange Composite Listing on June 30, 1999, was $36.94 per share. The market
value of the 2,392,626 shares remaining available for sale under the Plan on
that date was $88,383,604.
The Board of Directors recommends a vote FOR Proposal 2.
PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Action is to be taken at the Annual Meeting of Shareholders with respect to
the ratification of the appointment by the Board of Directors of the Company of
KPMG LLP as independent public accountants to audit the financial statements of
the Company for the fiscal year commencing July 1, 1999. KPMG LLP has been
regularly employed by the Company for many years to examine its books and
accounts and for other purposes, for which services their customary fees have
been paid.
Representatives of KPMG LLP are expected to be present at the Annual
Meeting and will have an opportunity to make such statements as they may desire.
Such representatives are expected to be available to respond to appropriate
questions from shareholders.
The Board of Directors recommends a vote FOR Proposal 3.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholders are hereby notified that if they wish a proposal to be
included in the Company's Proxy Statement and form of proxy relating to the 2000
annual meeting of shareholders, a written copy of their proposal must be
received at the principal executive offices of the Company, 5050 Edgewood Court,
Jacksonville, Florida 32254-3699, no later than April 28, 2000. To ensure prompt
receipt by the Company, proposals should be sent by certified mail return
receipt requested. Proposals must comply with the proxy rules relating to
shareholder proposals in order to be included in the Company's proxy materials.
Shareholders who wish to submit a proposal for consideration at the Company's
2000 annual meeting of shareholders but who do not wish to submit the proposal
for inclusion in the Company's proxy statement pursuant to Rule 14a-8 as
promulgated under the Securities Exchange Act of 1934, as amended, must deliver
a copy of their proposal to the Company at its principal executive offices, 5050
Edgewood Court, Jacksonville, Florida 32254-3699, no later than July 13, 2000.
MISCELLANEOUS
The Company's audited financial statements and certain other financial
information for its fiscal year ended June 30, 1999, are included as pages F-1
to F-27, inclusive, annexed to this Proxy Statement.
As of the date of this Proxy Statement, Management does not know of any
other matter that will come before the meeting. In the event that any other
matter properly comes before the meeting and the Company did not receive notice
of such matter by July 12, 1999, then the persons named in the enclosed form of
proxy will be deemed to have discretionary authority to vote all proxies in
accordance with their judgment on such matter.
By Order of the Board of Directors
/S/ JUDITH W. DIXON
---------------
Judith W. Dixon
Secretary
September 3, 1999
EACH SHAREHOLDER IS URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY. IN
THE EVENT A SHAREHOLDER DECIDES TO ATTEND THE MEETING, THE SHAREHOLDER MAY, IF
SO DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
15
<PAGE>
EXHIBIT A
WINN-DIXIE STORES, INC.
REVISED STOCK PURCHASE PLAN FOR EMPLOYEES
ARTICLE I
Designation and Purpose of the Plan
The Plan shall be known as the "Revised Winn-Dixie Stock Purchase Plan for
Employees" (the "Plan"). The purpose of the Plan is to encourage employees of
Winn-Dixie Stores, Inc. (the "Company") and of any "Subsidiary" (a corporation
in which all of the outstanding shares of capital stock of every class shall, at
the time or times in question, be owned by the Company or any other Subsidiary
of the Company) to purchase and own the Common Stock of Winn-Dixie Stores, Inc.,
thereby promoting their increased interest in the Company's affairs, growth and
development.
ARTICLE II
Shares Available for Purchase
Subject to the anti-dilution provisions contained herein, a maximum of
36,173,236 shares of the Company's Common Stock, having a par value of $1.00 per
share, as constituted on November 30, 1995 (the "Stock"), whether presently
authorized and unissued or held in the Company's treasury or hereafter
reacquired by the Company, may be issued and sold upon the exercise of options
granted subsequent to October 2, 1964 pursuant to the Plan ("Options"). Such
36,173,236 shares shall consist of the 34,173,236 shares of the Company's Common
Stock heretofore authorized to be so issued and sold, including shares which
were authorized to be issued and sold upon the exercise of options granted
pursuant to the Company's now terminated Stock Purchase Plan for Employees
(adopted in 1958), as amended (the "1958 Plan"), which were not so issued and
sold, plus an additional 2,000,000 shares.
In the event that the Stock shall be split up, divided or otherwise
reclassified into a greater number of shares of Stock or of any other class of
Common Stock of the Company, the term "Stock" shall thereafter mean the Common
Stock of the Company into which the shares of Stock were so split up, divided or
otherwise reclassified; and the maximum number of shares of stock that may be
issued and sold under the Plan, and the remaining number of shares of Stock that
may thereafter be sold pursuant to the Plan or made subject to Options granted
to any Eligible Employee pursuant to the Plan, shall be correspondingly
increased. In case any dividend payable in shares of Stock is paid to the
holders of outstanding shares of Stock, the remaining number of shares of Stock
which may thereafter be sold pursuant to the Plan, and the remaining number of
shares of Stock which may thereafter be made subject to Options granted to any
Eligible Employee pursuant to the Plan shall be increased by the percentage
which the number of shares of Stock so paid as a dividend bears to the total
number of shares of Stock outstanding immediately prior to the payment of such
dividend; provided, however, that no such increase shall be made with respect to
any dividend aggregating less than 20% of the total number of shares of Stock
outstanding immediately prior to the payment thereof.
A-1
<PAGE>
ARTICLE III
Eligible Employees
Options may be granted under the Plan only to employees of the Company or
of a Subsidiary, (1) who have an employment date of not less than one year prior
to the date of the offering, (2) who are of legal age to purchase stock in the
state of their residence, and (3) who are actively employed at the date of the
offering. "Actively employed" means on the payroll and not on leave of absence
(including workers' compensation, medical, military or other leaves). Such
employees are herein called "Eligible Employees."
ARTICLE IV
Option Price
The exercise price per share of Stock covered by any Option granted
pursuant to the Plan shall be determined by the Committee referred to in Article
V hereof, but shall be not less than the lesser of (1) 85% of the fair market
value of the Stock at the time such Option is granted or (2) an amount which
under the terms of the Option is not less than 85% of the fair market value of
the stock at the time the Option is exercised.
ARTICLE V
Granting of Options
A committee appointed by the Board of Directors of the Company, consisting
of two or more members of the Board of Directors (the "Committee") shall, by
decision of a majority thereof, determine from time to time in its sole and
final discretion until such time as all shares of Stock available for purchase
under the Plan have been sold, whether or not to grant Options to Eligible
Employees and, if Options are to be granted, the date on which such Options
shall be granted, the option price per share, the period of time during which
the Options can be exercised (not to exceed 27 months or a period of 5 years if
the exercise price per share of Stock covered by the Option will be no less than
85% of the fair market value of such Stock at the time of exercise of the
Option) and such other terms and conditions as the Committee, in its sole
discretion, deems appropriate.
If any Options are granted as aforesaid, Options shall be granted to all
employees who are Eligible Employees as of the date the Options are granted,
upon the following terms and conditions:
1. The Committee shall have the authority to limit the maximum number of
shares to be issued and sold upon the exercise of Options granted at
any time to a number not to exceed the number of shares then
authorized for sale pursuant to the Plan. Each Eligible Employee shall
be granted an Option for the purchase of such maximum number of shares
as the Committee may determine; provided, however, that no Eligible
Employee shall be granted an Option if such Employee, immediately
after the grant of such Option, would own, within the meaning of
Section 423(b)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or of a "parent
corporation" or "subsidiary corporation" of the Company, as defined in
Section 424(e) and (f) of the Code; and provided further, that no
employee shall be granted an Option which would permit such employee's
rights to
A-2
<PAGE>
purchase shares of stock of any class of the Company or of a "parent
corporation" or of a "subsidiary corporation" of the Company (as
defined above) pursuant to all employee stock purchase plans of the
Company and of any such "parent corporation" or "subsidiary
corporation" to accrue at a rate which would exceed an aggregate of
$25,000 of fair market value of such securities (determined at the
time such Option is granted) in any calendar year.
2. The Option price, exercise period, Option payment provisions and all
other terms and conditions of the Options shall be uniform for all
Eligible Employees.
ARTICLE VI
Options Not Transferable
No Option granted to an employee to purchase shares of Stock pursuant to
the Plan may be sold, pledged, assigned or transferred in any manner during such
employee's lifetime, and upon the death of such employee said Option shall
immediately cease and terminate.
ARTICLE VII
Amendment, Suspension and Termination of the Plan
The Board of Directors of the Company shall have the power at any time to
add to, amend or repeal any of the provisions of the Plan, to suspend the
operation of the entire Plan or of any provision or provisions thereof for any
period or periods or to terminate the Plan in whole or in part, provided,
however, that no such addition, amendment, repeal, suspension or termination
shall in any way affect the rights of the holders of outstanding Options to
purchase shares of stock in accordance with the provisions hereof; and provided,
further, that any such addition, amendment or repeal which requires shareholder
approval pursuant to applicable law or the rules of the New York Stock Exchange
shall be subject to approval by the Stockholders of the Company or such
addition, amendment or repeal shall be null and void and any provision so
attempted to be changed shall continue in full force and effect.
ARTICLE VIII
Provisions with Respect to Granting of Options
Options shall be granted pursuant to the Plan only in accordance with the
provisions set forth in Article V and this Article VIII of the Plan.
For the purpose of determining whether an employee has been employed by the
Company and/or one or more Subsidiaries for less than one year, there shall be
included in the term of such employee's employment any period of employment by
any person, firm, organization or corporation all of whose outstanding shares of
capital stock of every class and/or all or substantially all of whose operating
assets and/or business shall have been acquired by the Company and/or one or
more of its Subsidiaries prior to the time as of which such determination is
made, and transfer from the employment of the Company to that of a Subsidiary or
vice versa, or from the employment of one Subsidiary to that of another
Subsidiary, shall not constitute a termination or interruption of the continuity
of employment.
A-3
<PAGE>
If the Committee shall determine to grant Options as provided in the Plan,
such determination, and the exercise price per share of Stock covered thereby,
shall be communicated to all Eligible Employees within a reasonable time
thereafter in such manner as the Committee in its sole discretion shall deem
advisable.
No option shall be granted pursuant to the Plan unless a Registration
Statement under the Securities Act of 1933, as amended, with respect to the
shares of Stock covered thereby shall have been filed with the Securities and
Exchange Commission or unless an exemption from registration in accordance with
regulations duly promulgated by said Commission under said Act shall then be
applicable, and no Option granted pursuant to the Plan shall be exercisable, and
no shares of Stock shall be sold or issued upon the exercise of any Option,
unless such a Registration Statement shall be in effect and a prospectus with
respect to such shares, which at the time of such exercise, sale or issue, as
the case may be, meets the requirements of Section 10(a) of said Act, shall then
be available for delivery to Eligible Employees or unless an exemption from
registration in accordance with regulations duly promulgated by said Commission
under said Act shall then be applicable.
ARTICLE IX
Exercise of Options
The Committee shall determine upon the granting of Options, the methods
under which Eligible Employees may purchase shares of Stock upon exercise of
Options, which may include, but is not limited to, any or all of the following
three methods:
1. Any Eligible Employee who holds an Option may exercise said Option at
any time during which it is outstanding and not yet expired in whole
at any one time, or in part from time to time (provided that each
exercise shall be for ten or more shares of stock), by delivering a
duly executed subscription agreement to the Company or its duly
authorized agent or representative, such subscription agreement to be
accompanied by payment in full in cash for such shares at the exercise
price per share therefor.
2. Any Eligible Employee who holds an Option may exercise said Option at
any time during which it is outstanding and not yet expired to the
extent of a maximum of 50 shares (but subject to the proviso that each
such exercise shall be in increments of 5 shares but not less than 10
shares), by delivering a duly executed subscription agreement to the
Company or its duly authorized agent or representative, such
subscription agreement to be accompanied by payment in cash in the
amount of at least $1.00 per share for each share purchased and by the
Eligible Employee's non-interest bearing promissory note for the
balance of the price of the shares to which such note relates at the
exercise price per share therefor. No Eligible Employee may purchase
more than an aggregate of 50 shares pursuant to Options granted
whether at one time or from time to time, through payment by such
non-interest bearing promissory note. Subject to approval by the
Committee in its discretion from time to time at the time of granting
such Options, any Eligible Employee who holds an Option and who has
theretofore purchased the maximum of 50 shares through the delivery of
a non-interest bearing promissory note as provided in paragraph 2
above may exercise said Option at any time during the month for which
it was granted, to the extent of a maximum of 25 shares (but subject
to the provision that each such exercise shall be for 10, 15, 20 or 25
shares), by delivering a duly executed subscription agreement to the
Company or its duly authorized agent or representative, such
subscription agreement to be accompanied by payment in cash
A-4
<PAGE>
in the amount of at least $1.00 per share for each share purchased and
by the Eligible Employee's promissory note, bearing interest at the
rate determined by the Committee at the time of granting such Option,
for the balance of the price of the shares to which such note relates
at the exercise price per share therefor. No Eligible Employee may
purchase more than an aggregate of 25 shares pursuant to Options
granted after October 31, 1978 whether at one time or from time to
time, through payment by such interest bearing promissory notes.
3. Any Eligible Employee who holds an Option that is outstanding and not
yet expired may authorize a payroll deduction from his/her pay for
each payday during the time he/she holds such Option, to be deposited
in a non-interest bearing account maintained by the Company for the
purpose of funding the Eligible Employee's purchase of stock upon the
exercise of an Option; provided that such Eligible Employee only may
authorize a payroll deduction at the rate of 1% to 10% of his/her base
pay, in effect, as of the date such deduction is authorized by the
Eligible Employee. The Eligible Employee may exercise the Option at
any time that it is outstanding and has not yet expired by delivering
a duly executed subscription agreement to the Company or its duly
authorized agent or representative such subscription agreement to be
accompanied by written notice from the Eligible Employee directing the
Company to apply the Eligible Employee's account balance to the
purchase of whole shares of stock pursuant to the exercise of the
Option. Any excess in such account after the payment of the stock
acquired upon the exercise of an Option will be refunded to the
Eligible Employee.
All payroll deductions made for a participant shall be credited to the
participant's account under the Plan which will be maintained by the Company. A
participant may not make any separate cash payment into his/her account. A
participant may elect payroll deductions to fund the purchase of stock pursuant
to the exercise of an Option only with respect to wages not yet earned. A
participant may not change the amount of his/her payroll deductions. Upon the
exercise of the Option, all payroll deductions for the participant shall cease.
If a participant goes on an authorized leave of absence, such participant may
elect to withdraw the balance of his/her account, discontinue payroll deductions
but remain a participant in the Plan during such leave of absence or authorize
deductions to be made from any payments by the Company to the participant, if
any. At any time, a participant may terminate his or her account and receive the
balance of his/her account in full.
Payment for any shares purchased otherwise than through delivery of
promissory notes or the application of payroll deduction accounts as provided in
paragraphs 2 and 3 above, or such other method as the Committee may determine,
shall be made in cash as provided in paragraph 1 above.
The Committee may require at the time of granting the Options that the
shares purchased pursuant to the exercise of an Option can be sold by the
Eligible Employee who purchased such shares or any successor in interest in the
event of such Eligible Employee's death, only by means of their tender to the
Company upon the following terms and conditions or such other terms and
conditions as the Committee may determine:
If such tender shall occur during the period of two years following the
purchase of the shares of Stock so purchased, the Company, if it shall accept
such tender, shall pay for such shares the same price paid to the Company by the
Eligible Employee therefor. If such tender shall occur more than two years after
the purchase of the shares of Stock so purchased, the Company, if it shall
accept such tender, shall pay for such shares the market price of such shares on
the date of the receipt by the Company of their tender to the Company.
A-5
<PAGE>
In the subscription agreement such Eligible Employee shall agree with the
Company that certificates for shares of Stock so purchased by such Employee may
bear the following legend:
"The shares of the Common Stock of Winn-Dixie Stores, Inc. represented by
this certificate are subject to the provisions of Article IX of the Revised
Stock Purchase Plan for Employees, as amended, of Winn-Dixie Stores, Inc.
Such shares may be sold by the holder thereof only by means of their tender
to Winn-Dixie Stores, Inc. for the applicable consideration set forth in
such Article IX, unless the Company shall not accept the tender of such
shares, in which case the shares may be sold by the holder thereof, free of
any restrictions or limitations."
In any case in which payment is made in part by promissory note, any
certificate representing the shares of Stock purchased shall be issued in the
name of the Eligible Employee so purchasing the same and shall be endorsed by
the Eligible Employee in blank (or accompanied by a duly executed stock power)
and delivered to and pledged with the Company as security for the note, and a
pledge agreement shall be entered into by such Eligible Employee and the
Company. The pledge agreement shall provide that (i) no certificate for pledged
shares of Stock shall be redelivered to the pledgor until the promissory note
(together with all interest thereon, if any) has been paid in full and (ii)
provided that there has been no default under the terms and provisions of the
promissory note, the Company will not cause the certificate for the pledged
shares of Stock to be transferred out of the name of the pledgor and the pledgor
shall have the right to vote such shares of Stock at all meetings of the
stockholders of the Company and shall receive all cash dividends paid on such
shares. The pledge agreement shall contain such other provisions as the Company
may deem advisable.
The principal of the promissory note shall be payable in equal installments
payable weekly or monthly depending upon whether the pledgor is paid on a weekly
or monthly basis, of such amount as may be determined by the payroll department
(which equal installments shall, in each case, be payable over a period of three
years), and the pledgor shall give a written authorization to such payroll
department, on such form or forms as may be furnished by the Company,
authorizing the deduction each week or month, as the case may be, during the
term of the note of the amount of such weekly or monthly installment. Interest,
if any, on the unpaid portion of such promissory note shall accrue from the date
thereof at the rate per annum determined by the Committee at the time of
granting the Option to which such promissory note relates. The amount of accrued
interest payable, if any, on each payment date shall be added to the amount
payable on account of principal, and shall be included in the payroll deduction
referred to in the preceding sentence. If the pledgor shall cease to be employed
by the Company and/or its Subsidiaries, the pledgor shall continue to make the
same payments as were made while the pledgor was so employed until the
promissory note shall be paid in full.
In the event of a default in the prompt payment of accrued interest on or
any installment due on the principal of, any promissory note, unless such
interest or installment shall have been paid prior to the expiration of 10 days
after notice of such default to the pledgor, the principal balance, if not
already due and payable, shall become due and payable and the Company shall
thereafter be entitled:
(a) To collect and receive all dividends on the pledged shares; and
(b) To sell or cause to be sold at such price or prices as the Company may
deem best all or any of the pledged shares, without demand of
performance or notice of intention to sell.
The proceeds of any such sale and any monies collected, received or
otherwise realized by the Company from the pledged shares, shall be applied as
follows:
A-6
<PAGE>
(a) To the expenses of such sale or realization and all other expenses of
the Company under the pledge agreement;
(b) To the payment of accrued interest, if any, then due and payable on
the note;
(c) To the payment of the principal of the note; and
(d) Any balance thereafter remaining shall be paid to the pledgor or to
whomsoever may be lawfully entitled to receive the same.
In the event that the balance due from the pledgor at the time of any
default exceeds the net proceeds from such sale, the pledgor shall be and remain
liable for such excess.
The date on which a duly executed subscription agreement shall be received
by the Company or its duly authorized agent or representative, in accordance
with any of the above methods, shall be deemed to be the "Date of Subscription"
with respect to the shares subscribed for, for all purposes of the Plan.
ARTICLE X
Conditions on the Exercise of Options
The exercise of Options shall be subject to the following conditions:
1. Each employee exercising an Option must on each Date of Subscription
be an Eligible Employee.
2. In case there shall not be a sufficient number of shares of Stock
available, either because of the limitations imposed by Article II
hereof, or because the Committee shall have limited the maximum number
of shares to be issued and sold in accordance with the provisions of
subparagraph 1 of the second paragraph of Article V hereof, to issue
all of the shares otherwise issuable upon the exercise of Options,
subscriptions pursuant to the exercise of Options shall be filled in
any manner determined by the Committee.
A-7
<PAGE>
ARTICLE XI
Pledged Stock
In the case of those shares payment for which was made in whole or in part
by promissory note, said shares shall be immediately redelivered to the Company
and pledged as security for the promissory note as provided in Article IX
hereof.
ARTICLE XII
Rights of Employees
An Eligible Employee shall not have any rights as a stockholder of the
Company by virtue of any Option until the date of issue of the shares of Stock
purchased by such Eligible Employee pursuant to its exercise.
ARTICLE XIII
Interpretation of the Plan
Determinations of the Committee as to any question which may arise with
respect to the interpretation or administration of any provisions of the Plan
shall, unless otherwise determined by the Board of Directors of the Company, be
final. The Company may prescribe administrative rules under the Plan.
A-8
<PAGE>
WINN-DIXIE STORES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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-6
Report of Management F-7
Consolidated Statements of Earnings, Years ended
June 30, 1999, June 24, 1998 and June 25, 1997 F-8
Consolidated Balance Sheets, June 30, 1999 and June 24, 1998 F-9
Consolidated Statements of Cash Flows, Years ended
June 30, 1999, June 24, 1998 and June 25, 1997 F-10
Consolidated Statements of Shareholders' Equity, Years ended
June 30, 1999, June 24, 1998 and June 25, 1997 F-11
Notes to Consolidated Financial Statements F-12
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
1999* 1998 1997 1996 1995
Dollars in millions except per share data
<S> <C> <C> <C> <C> <C> <C>
Sales
Net sales........................................... $ 14,137 13,617 13,219 12,955 11,788
Percent increase.................................... 3.8 3.0 2.0 9.9 6.4
Average annual sales per store...................... $ 11.9 11.7 11.3 11.0 10.0
Earnings Summary
Gross profit........................................ $ 3,801 3,624 3,316 3,093 2,723
Percent of sales.................................. 26.9 26.6 25.1 23.9 23.1
LIFO charge (credit)................................ $ 4 (12) 3 10 7
Operating and administrative expenses............... $ 3,594 3,375 3,094 2,803 2,462
Percent of sales.................................. 25.4 24.8 23.4 21.6 20.9
Net earnings........................................ $ 182 199 204 256 232
Basic earnings per share.......................... $ 1.23 1.34 1.36 1.69 1.55
Diluted earnings per share........................ $ 1.23 1.33 1.36 1.68 1.55
Percent of net earnings to sales.................... 1.3 1.5 1.5 2.0 2.0
Percent of net earnings to average equity........... 13.1 14.7 15.3 19.9 20.3
EBITDA ................................................ $ 618.5 676.7 632.8 656.9 569.3
EBITDAR .............................................. $ 961.4 985.9 911.6 914.9 791.5
Dividends
Dividends paid...................................... $ 151.2 150.9 144.2 134.0 116.5
Percent of net earnings............................. 82.9 76.0 70.5 52.4 50.2
Per share (present rate $1.02)...................... $ 1.02 1.02 .96 .885 .78
Common Stock (WIN)
Total shares outstanding (000,000).................. 148.6 148.5 148.9 151.7 151.1
NYSE - Stock price range
Common - High................................... $ 52.19 59.25 42.38 38.38 28.94
Low.................................... $ 28.63 33.69 29.88 28.06 21.32
Financial Data
Cash flow information:
Net cash provided by operating activities......... $ 436.4 464.5 413.9 556.9 414.2
Net cash used in investing activities............. $ 335.1 325.9 477.7 387.9 379.3
Net cash provided by (used in) financing activities $ (100.0) (129.2) 45.7 (167.3) (35.9)
Capital expenditures, net........................... $ 345.7 369.6 423.1 362.0 371.6
Depreciation and amortization....................... $ 292.4 330.4 291.2 248.3 200.9
Working capital..................................... $ 250.7 228.6 195.4 388.7 414.9
Current ratio....................................... 1.2 1.2 1.1 1.4 1.4
Total assets........................................ $ 3,149 3,069 2,921 2,649 2,472
Obligations under capital leases.................... $ 38 49 54 61 78
Comprehensive income................................ $ 182.6 199.4 206.4 - -
Shareholders' equity................................ $ 1,411 1,369 1,337 1,342 1,231
Book value per share................................ $ 9.50 9.22 8.98 8.85 8.14
Stores
In operation at year-end............................ 1,188 1,168 1,174 1,178 1,175
Opened and acquired during year..................... 79 84 83 61 108
Closed or sold during year.......................... 59 90 87 58 92
Enlarged or remodeled during year................... 64 136 79 128 86
New/enlarged/remodeled in last five years........... 908 912 805 743 654
Percent to total stores in operation.............. 76.4 78.1 68.6 63.1 55.7
Year-end retail square footage (000,000)............ 52.0 49.6 47.8 45.7 43.8
Average store size at year-end (000)................ 43.7 42.4 40.7 38.8 37.3
Other Year-end Data
Associates (000).................................... 132 139 136 126 123
Shareholder accounts (000).......................... 48.1 52.0 55.2 56.3 44.8
Shareholders per store.............................. 40 45 47 48 38
Taxes
Federal, state and local............................ $ 308 302 285 288 261
Per diluted share................................... $ 2.07 2.03 1.90 1.89 1.74
</TABLE>
F-1
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Sales for fiscal 1999, a 53 week year, were $14.1 billion, compared to
$13.6 billion and $13.2 billion for the 52 week years of 1998 and 1997,
respectively. This reflects a 3.8%, 3.0% and 2.0% increase in sales per year for
1999, 1998 and 1997, respectively. Average store sales increased 2.1%, 3.0% and
1.8% for each of the last three fiscal years, while identical store sales
decreased 0.9%, 0.3% and 0.9% for 1999, 1998 and 1997, respectively. Sales for
the 13 week fourth quarter of 1999 were $3.5 billion, compared to $3.3 billion
and $3.1 billion for the 12 week fourth quarter of 1998 and 1997, respectively.
For the fourth quarter, average store sales decreased 1.9% in 1999, increased
7.0% in 1998 and increased 1.2% in 1997. Identical store sales for the fourth
quarter decreased 3.9% in 1999, increased 3.1% in 1998 and decreased 1.8% in
1997.
In fiscal year 1999, the Company continued to increase its average store
size by opening and acquiring 79 stores, averaging 51,100 square feet, enlarging
or remodeling 64 stores and closing 59 smaller stores, averaging 33,600 square
feet.
As a percent of sales, gross profit margins were 26.9%, 26.6% and 25.1% in
fiscal 1999, 1998 and 1997, respectively. Operating margins improved with an
increase in the number of larger stores, added service departments and improved
pricing. Gross profit increased $1.2 million in the fourth quarter and $3.5
million for the year due to the change in depreciable lives as noted below.
During the second quarter of fiscal 1999, the Company voluntarily recalled
certain franks and sliced luncheon meats manufactured by its wholly-owned
subsidiary, Dixie Packers, Inc. As a result of this recall, year-to-date
operating margins were negatively impacted by approximately $20.0 million.
Approximately 86% of the Company's inventories are valued under the LIFO
(last-in, first-out) method. The LIFO calculations resulted in a pre-tax
decrease in gross profit of $4.4 million in 1999, an increase of $12.1 million
in 1998 and a decrease of $2.7 million in 1997.
Operating and administrative expenses, as a percent of sales, were 25.4%,
24.8% and 23.4% in fiscal 1999, 1998 and 1997, respectively. Our expenses were
impacted by increased training costs associated with our emphasis toward
increased customer service, occupancy costs and our "While You're at the
Marketplace" marketing campaign. During the second quarter of fiscal 1999, the
Company increased the estimated useful lives used to compute depreciation for
certain assets, principally store equipment (5 to 8 years) and leaseholds (8 to
15 years). Store equipment and leaseholds associated with larger, full-service
store formats are expected to have a longer life because of the types of
equipment and the expected timing of store remodels. In addition, the change
resulted in useful lives more consistent with the predominant industry practices
for these types of assets. The change has been accounted for as a change in
estimate and resulted in a reduction in operating and administrative expenses of
$15.7 million for the 13 weeks ended June 30, 1999 and $45.8 million for the 53
weeks ended June 30, 1999.
F-2
<PAGE>
Results of Operations, continued
Cash discounts and other income amounted to $118.9 million, $115.4 million
and $119.4 million in 1999, 1998 and 1997, respectively.
Interest expense totaled $29.6 million, $28.5 million and $22.1 million in
fiscal 1999, 1998 and 1997, respectively. Interest expense primarily reflects a
computation of interest on capital lease obligations and short-term borrowings.
The 1999 and 1998 increase in interest expense is due to an increase in
short-term borrowings.
Earnings before income taxes were $296.5 million, $317.8 million and $319.4
million in fiscal 1999, 1998 and 1997, respectively. The 1999 and 1998 decrease
in pre-tax earnings is primarily a result of the increase in operating expenses
as previously mentioned. The effective income tax rates were 38.5%, 37.5% and
36.0% for fiscal 1999, 1998 and 1997, respectively. The effective tax rate
during fiscal 1998 and 1997 reflects a change made by the Health Insurance
Portability and Accountability Act of 1996 whereby certain deductions for
interest relating to indebtedness with respect to certain Corporate Owned Life
Insurance (COLI) policies are being phased out over a three-year period.
Net earnings amounted to $182.3 million, or $1.23 per diluted share for
1999, $198.6 million, or $1.33 per diluted share for 1998 and $204.4 million, or
$1.36 per diluted share for 1997. The LIFO calculations decreased net earnings
by $2.7 million, or $.02 per diluted share in 1999, increased net earnings by
$7.4 million, or $0.05 per diluted share in 1998 and decreased net earnings by
$1.6 million, or $0.01 per diluted share in 1997.
Liquidity and Capital Resources
The Company's financial condition remains sound and strong at year end.
Cash and cash equivalents amounted to $24.7 million, $23.6 million and $14.1
million at the end of fiscal years 1999, 1998 and 1997, respectively. Cash
provided by operating activities amounted to $436.4 million in 1999, $464.5
million in 1998 and $413.9 million in 1997.
Net capital expenditures totaled $345.7 million, $369.6 million and $423.1
million in fiscal 1999, 1998 and 1997, 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 $800.0 million in
fiscal 1999 and projected to be $500.0 million in fiscal 2000. The Company has
no material construction or purchase commitments outstanding as of June 30,
1999.
Working capital amounted to $250.7 million and $228.6 million at the end of
fiscal years 1999 and 1998, respectively. Inventories on a FIFO (first-in,
first-out) basis increased $24.6 million in 1999 and $143.6 million in 1998.
F-3
<PAGE>
Liquidity and Capital Resources, continued
The Company has an authorized $500.0 million commercial paper program. In
support of this program, or as an independent source of funds, the Company also
has $482.0 million of short-term lines of credit. These lines of credit are
available at any time during the year and are renewable on an annual basis.
There was $300.0 million in commercial paper outstanding at the end of 1999,
compared to $420.0 million in commercial paper outstanding at the end of 1998.
The average interest rate on the commercial paper outstanding on June 30, 1999
was 5.4%, compared to 5.6% on June 24, 1998. Short-term borrowings against our
bank lines of credit were $165.0 million as of June 30, 1999 as compared to none
on June 24, 1998. The interest rate on the bank lines of credit on June 30,
1999, was 5.5%. The carrying amount of short-term borrowings approximates fair
value because of their short-term maturity. As such, the Company is not exposed
to a significant amount of interest rate risk. Excluding capital lease
obligations, the Company had no outstanding long-term debt as of June 30, 1999
or June 24, 1998.
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 continually evaluates its strategy to provide for its
short-term and long-term borrowing needs.
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 that might result from any such proceedings will not have a
material adverse effect on the Company's financial condition or results of
operations.
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.
Year 2000 Compliance
In 1996, the Company created a Year 2000 Project Office to address
potential problems within the Company's operations, which could result from the
century change in the Year 2000. The Project Office was authorized by the
Company's Executive Committee, is staffed primarily with representatives of the
Company's Corporate Information Systems Department, and has access to key
associates in all areas of the Company's operations. The Project Office also
uses outside consultants on an as-needed basis.
F-4
<PAGE>
Year 2000 Compliance, continued
To address the Year 2000 issues, the Project Office is identifying all
computer-based systems and applications (including embedded systems) that might
not be Year 2000 compliant; determining what revisions or replacements would be
necessary to achieve compliance and prioritizing and implementing the revisions
or replacements; conducting tests necessary to verify that the revised systems
are operational; and transitioning the compliant systems into the everyday
operations of the Company. Management believes that these actions are
approximately eighty-five percent (85%) complete. Winn-Dixie estimates that all
critical systems will be compliant with the century change by September 30,
1999.
The Company has budgeted approximately $26.3 million to address the Year
2000 issues, which includes the estimated costs of all modifications, the
salaries of associates and the fees of consultants addressing the issues.
Approximately $22.9 million of this amount had been expended through June 30,
1999.
As a part of the Year 2000 review, the Company is examining its
relationships with certain key outside vendors and others with whom it has
significant business relationships to determine to the extent practical the
degree of such parties' Year 2000 compliance and to develop strategies for
working with them through the century change. The Company does not have a
relationship with any third-party vendor which is material to the operations of
the Company and, therefore, believes that the failure of any such party to be
Year 2000 compliant would not have a material adverse effect on the Company.
Should the Company or a third party with whom the Company deals have a
systems failure due to the century change, the Company believes that the most
significant impact would likely be the inability to timely deliver inventory to
a group of stores or to electronically process sales to the customer at store
level. While the Company does not expect any such impact to be material, it is
developing contingency plans for alternative methods of product delivery and
transaction processing and estimates that such plans will be finalized by
September 30, 1999.
Cautionary Statement Regarding Forward-Looking Information and Statements
This Annual Report on Form 10-K contains certain information that
constitutes "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act, which involves risks and uncertainties. Actual
results may differ materially from the results described in the forward-looking
statements. When used in this document, the words, "estimate," "project,"
"intend," "believe," and other similar expressions, as they relate to the
Company, are intended to identify such forward-looking statements. Such
statements reflect the current views of the Company and are subject to certain
risks and uncertainties that include, but are not limited to, growth,
competition, inflation, pricing and margin pressures, law and taxes. Please
refer to discussions of these and other factors in this Annual Report and other
Company filings with the Securities and Exchange Commission. The Company
disclaims any intent or obligation to update publicly these forward-looking
statements, whether as a result of new information, future events or otherwise.
F-5
<PAGE>
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 30, 1999 and June 24, 1998, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the years in the three-year period ended June 30, 1999. 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 30, 1999 and June 24, 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended June 30, 1999, in conformity with generally accepted
accounting principles.
KPMG LLP
Jacksonville, Florida
August 2, 1999
F-6
<PAGE>
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 divisional operations 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-7
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended June 30, 1999, June 24, 1998 and June 25, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
--------------- -------------- ---------------
Amounts in thousands except per share data
<S> <C> <C> <C> <C>
Net sales..................................................... $ 14,136,503 13,617,485 13,218,715
Cost of sales, including warehousing and delivery expense..... 10,335,590 9,993,568 9,902,862
--------------- -------------- ---------------
Gross profit on sales...................................... 3,800,913 3,623,917 3,315,853
Operating and administrative expenses......................... 3,593,651 3,374,905 3,093,767
Consolidation and distribution facility closing charge........ - 18,080 -
--------------- -------------- ---------------
Operating income........................................... 207,262 230,932 222,086
Cash discounts and other income, net.......................... 118,866 115,395 119,435
--------------- -------------- ---------------
326,128 346,327 341,521
--------------- -------------- ---------------
Interest:
Interest on capital lease obligations...................... 5,152 6,528 7,055
Other interest............................................. 24,496 22,007 15,024
--------------- -------------- ---------------
Total interest........................................... 29,648 28,535 22,079
--------------- -------------- ---------------
Earnings before income taxes.................................. 296,480 317,792 319,442
Income taxes.................................................. 114,145 119,172 114,999
--------------- -------------- ---------------
Net earnings.................................................. $ 182,335 198,620 204,443
=============== ============== ===============
Basic earnings per share...................................... $ 1.23 1.34 1.36
=============== ============== ===============
Diluted earnings per share.................................... $ 1.23 1.33 1.36
=============== ============== ===============
</TABLE>
* 53 Weeks
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1999 and June 24, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- ---------------
Amounts in thousands
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents................................................. $ 24,746 23,566
Trade and other receivables, less allowance for doubtful items of
$3,615,000 ($2,623,000 in 1998)........................................ 188,314 146,166
Merchandise inventories at lower of cost or market less LIFO reserve
of $217,274,000 ($212,869,000 in 1998)................................. 1,425,098 1,404,917
Prepaid expenses.......................................................... 159,832 161,141
-------------- ---------------
Total current assets.................................................... 1,797,990 1,735,790
-------------- ---------------
Investments and other assets:
Cash surrender value of life insurance, net............................... 24,072 38,789
Other assets.............................................................. 104,452 101,661
-------------- ---------------
Total investments and other assets...................................... 128,524 140,450
-------------- ---------------
Deferred income taxes........................................................ - 22,626
Net property, plant and equipment............................................ 1,222,633 1,169,848
-------------- ---------------
$ 3,149,147 3,068,714
============== ===============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable.......................................................... $ 662,172 660,539
Short-term borrowings..................................................... 465,000 420,000
Reserve for insurance claims and self-insurance........................... 75,461 71,779
Accrued wages and salaries................................................ 108,826 107,590
Accrued rent.............................................................. 99,734 96,987
Accrued expenses.......................................................... 122,641 135,287
Current obligations under capital leases.................................. 2,751 2,908
Income taxes.............................................................. 10,739 12,119
-------------- ---------------
Total current liabilities............................................... 1,547,324 1,507,209
-------------- ---------------
Obligations under capital leases............................................. 38,493 48,580
Defined benefit plan......................................................... 41,234 37,102
Reserve for insurance claims and self-insurance.............................. 92,256 93,514
Other liabilities............................................................ 18,761 13,426
-------------- ---------------
Shareholders' equity:
Common stock of $1 par value. Authorized 400,000,000 shares; issued
148,576,865 shares in 1999 and 148,530,736 shares in 1998............... 148,577 148,531
Retained earnings......................................................... 1,259,597 1,220,679
Accumulated other comprehensive income.................................... 3,069 2,760
Associates' stock loans.................................................. (164) (3,087)
-------------- ---------------
Total shareholders' equity.............................................. 1,411,079 1,368,883
-------------- ---------------
Commitments and contingent liabilities (Notes 6, 8, 9 and 13)
$ 3,149,147 3,068,714
============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
F-9
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 1999, June 24, 1998 and June 25, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
------------- ------------- -------------
Amounts in thousands
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings................................................. $ 182,335 198,620 204,443
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization............................ 292,414 330,408 291,236
Deferred income taxes.................................... 17,684 (17,040) (17,988)
Defined benefit plan..................................... 4,132 3,650 3,919
Reserve for insurance claims and self-insurance.......... 2,424 10,291 (3,967)
Stock compensation plans................................. 2,459 (1,398) 10,086
Change in cash from:
Receivables............................................ (42,148) 29,513 (17,234)
Merchandise inventories................................ (20,181) (155,702) (70,089)
Prepaid expenses....................................... 8,596 3,813 (314)
Accounts payable....................................... (1,191) 56,191 3,914
Income taxes........................................... (1,380) (20,804) (9,631)
Other current accrued expenses......................... (8,783) 26,952 19,533
------------- ------------- -------------
Net cash provided by operating activities............ 436,361 464,494 413,908
------------- ------------- -------------
Cash flows from investing activities:
Purchases of property, plant and equipment, net.............. (345,723) (369,636) (423,105)
Decrease (increase) in investments and other assets.......... 10,582 43,785 (54,548)
------------- ------------- -------------
Net cash used in investing activities................ (335,141) (325,851) (477,653)
------------- ------------- -------------
Cash flows from financing activities:
Increase in short-term borrowings............................ 45,000 40,000 270,000
Payments on capital lease obligations........................ (2,583) (2,653) (2,713)
Purchase of common stock..................................... (1,337) (21,055) (94,500)
Proceeds of sales under associates' stock purchase plan...... 2,923 8,747 13,111
Dividends paid............................................... (151,231) (150,923) (144,165)
Other........................................................ 7,188 (3,309) 3,920
------------- ------------- -------------
Net cash provided by (used in) financing activities.. (100,040) (129,193) 45,653
------------- ------------- -------------
Increase (decrease) in cash and cash equivalents................ 1,180 9,450 (18,092)
Cash and cash equivalents at the beginning of the year.......... 23,566 14,116 32,208
------------- ------------- -------------
Cash and cash equivalents at end of the year.................... $ 24,746 23,566 14,116
============= ============= =============
Supplemental cash flow information:
Interest paid................................................ $ 21,958 20,316 17,840
Interest and dividends received.............................. $ 1,072 1,449 1,183
Income taxes paid............................................ $ 94,858 152,652 142,684
============= ============= =============
</TABLE>
* 53 Weeks
See accompanying notes to consolidated financial statements.
F-10
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended June 30, 1999, June 24, 1998 and June 25, 1997
<TABLE>
<CAPTION>
Accumulated
Other Associates' Total
Common Retained Comprehensive Stock Shareholders
Stock Earnings Income Loans Equity
(Amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
-------------- -------------- ------------------ --------------- ---------------
Balances at June 26, 1996 $ 151,685 1,215,556 - (24,945) 1,342,296
-------------- -------------- ------------------ --------------- ---------------
Comprehensive income:
Net earnings.......................... - 204,443 - - 204,443
Unrealized gain on securities,
net of tax....................... - - 1,964 - 1,964
-------------- --------------- ----------------- --------------- ---------------
Total comprehensive income............ - 204,443 1,964 - 206,407
Cash dividends, $0.96 per share.......... - (144,165) - - (144,165)
Common stock issued and stock
compensation expense.................. 135 7,461 - - 7,596
Common stock acquired.................... (2,949) (91,551) - - (94,500)
Stock options exercised.................. 5 (745) - - (740)
Associates' stock loans, payments........ - - - 13,111 13,111
Other.................................... - 7,489 - - 7,489
-------------- --------------- ----------------- --------------- ---------------
Balances at June 25, 1997 148,876 1,198,488 1,964 (11,834) 1,337,494
-------------- --------------- ----------------- --------------- ---------------
Comprehensive income:
Net earnings.......................... - 198,620 - - 198,620
Unrealized gain on securities,
net of tax........................ - - 796 - 796
-------------- --------------- ----------------- --------------- ---------------
Total comprehensive income............ - 198,620 796 - 199,416
Cash dividends, $1.02 per share.......... - (150,923) - - (150,923)
Common stock issued and stock
compensation expense.................. 76 (1,212) - - (1,136)
Common stock acquired.................... (501) (20,554) - - (21,055)
Stock options exercised.................. 80 (4,999) - - (4,919)
Associates' stock loans, payments........ - - - 8,747 8,747
Other.................................... - 1,259 - - 1,259
-------------- --------------- ----------------- --------------- ---------------
Balances at June 24, 1998 148,531 1,220,679 2,760 (3,087) $ 1,368,883
-------------- --------------- ----------------- --------------- ---------------
Comprehensive income:
Net earnings.......................... - 182,335 - - 182,335
Unrealized gain on securities,
net of tax........................ - - 309 - 309
-------------- --------------- ----------------- --------------- ---------------
Total comprehensive income............ - 182,335 309 - 182,644
Cash dividends, $1.02 per share.......... - (151,231) - - (151,231)
Common stock issued and stock
compensation expense.................. 33 2,189 - - 2,222
Common stock acquired.................... (37) (1,300) - - (1,337)
Stock options exercised.................. 50 1,004 - - 1,054
Associates' stock loans, payments........ - - - 2,923 2,923
Other.................................... - 5,921 - - 5,921
============== =============== ================= =============== ===============
Balances at June 30, 1999 $ 148,577 1,259,597 3,069 (164) $ 1,411,079
============== =============== ================= =============== ===============
</TABLE>
See accompanying notes to consolidated financial statements
F-11
<PAGE>
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 year 1999 is comprised of 53 weeks. Fiscal years ended 1998 and
1997 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) 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.
(d) 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 86% 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.
(e) Marketable Securities: Included in investments and other assets were
$32,466,000 at June 30, 1999, and $29,110,000 at June 24, 1998,
consisting principally of marketable equity securities categorized as
available-for-sale. Available-for-sale securities are recorded at fair
value. Unrealized holding gains and losses, net of the related tax
effect, are excluded from earnings and reported as a separate
component of shareholders' equity until realized. A decline in the
fair value of available-for-sale securities below cost that is deemed
other than temporary is charged to earnings, resulting in the
establishment of a new cost basis for the security. Realized gains and
losses are included in earnings and are derived using the specific
identification method for determining the cost of securities sold.
(f) Financial Instruments: Interest rate swaps are accounted for under the
accrual method. Net interest paid or received on these instruments is
included in operating and administrative expense. See Note 6(b) for
additional information on interest rate swap agreements.
(g) Income Taxes: Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using the enacted tax rates in effect for
the year in which those temporary differences are expected to be
recovered or settled.
F-12
<PAGE>
1. Summary of Significant Accounting Policies and Other Information, continued
(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 $3,000,000 and a $100,000 per occurrence deductible after
the aggregate is obtained. The Company is insured for losses 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.
(j) Property, Plant and Equipment: Property, plant and equipment are
stated at historical cost. Depreciation is provided over the estimated
useful lives by the straight-line method. Transportation equipment is
based on lives varying from three to ten years. Warehouse and
manufacturing equipment is based on lives varying from five to ten
years. 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.
During the second quarter of fiscal 1999, the Company increased the
estimated useful lives used to compute depreciation for certain
assets, principally store equipment (5 to 8 years) and leaseholds (8
to 15 years). Store equipment and leaseholds associated with larger,
full-service store formats are expected to have a longer life because
of the types of equipment and the expected timing of store remodels.
In addition, the change results in useful lives more consistent with
the predominant industry practices for these types of assets. The
change has been accounted for as a change in estimate and resulted in
an increase in earnings before income tax of $49.3 million ($30.1
million after tax, or $0.20 per diluted share) for the year ended June
30, 1999.
The Company reviews its property, plant and equipment for impairment
whenever events or changes in circumstances indicate the carrying
value of an asset may not be recoverable. Recoverability is measured
by comparison of the carrying amount to the net cash flows expected to
be generated by the asset.
F-13
<PAGE>
1. Summary of Significant Accounting Policies and Other Information, continued
(k) Store Opening and Closing Costs: The costs of opening new stores and
closing old stores are charged to earnings in the year incurred.
(l) Earnings Per Share: The Company adopted Statement of Financial
Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128") during
the second quarter of fiscal 1998. The adoption of this statement did
not materially affect the Company's earnings per share. All prior
period earnings per share amounts have been restated to conform with
the provisions of SFAS 128.
The following weighted average number of shares of common stock were
used in the calculations for earnings per share. The diluted weighted
average number of shares includes the net shares that would be issued
upon the exercise of stock options using the treasury stock method.
1999 1998 1997
-------- ------- -------
Basic 148,309,653 148,504,349 149,820,029
Diluted 148,680,198 148,866,167 150,231,820
(m) Comprehensive Income: The Company adopted the provisions of Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), effective June 25, 1998. SFAS 130 relates to the
change in the equity of a business during a reporting period from
transactions of the business. Comprehensive income for the year was
approximately $182.6 million, $199.4 million and $206.4 million for
1999, 1998 and 1997, respectively. These amounts differ from net
income due to changes in the net unrealized holding gains (losses)
generated from available-for-sale securities.
(n) Stock-Based Compensation: The Company follows Statement of Financial
Accounting Standard No. 123, "Accounting for Stock-Based Compensation"
("SFAS 123"), which establishes a fair value based method of
accounting for stock-based compensation plans. (see Note 7).
F-14
<PAGE>
1. Summary of Significant Accounting Policies and Other Information, continued
(o) Business Reporting Segments: During fiscal 1999, the Company adopted
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" ("SFAS 131"). SFAS
131 provides for the disclosure of financial information disaggregated
by the way management organizes the segments of the enterprise for
making operating decisions. Based on the information monitored by the
Company's operating decision makers to manage the business, the
Company has identified that its operations are within one reportable
segment. Accordingly, financial information on industry segments is
omitted because, apart from the principal business of operating retail
self-service food stores, the Company has no other industry segments.
All sales of the Company are to customers within the United States and
the Bahama Islands. All assets of the Company are located within the
United States and the Bahama Islands. Sales and assets related to and
located in the Bahama Islands represents less than 1% of the Company's
total sales and assets.
(p) New Accounting Pronouncements: In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"). SFAS 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments
embedded in other contracts, and hedging activities. The Company
intends to adopt SFAS 133 in the first quarter of fiscal year 2001.
The Company is still determining how SFAS 133 will impact the
financial statements.
(q) Reclassification: Certain prior year amounts have been reclassified to
conform with the current year's presentation.
F-15
<PAGE>
2. Accounts Receivable
Accounts receivable at year-end were as follows:
1999 1998
-------------- ---------------
Amount in thousands
Trade and other receivables...... $ 96,984 90,672
Construction advances............ 94,945 58,117
-------------- -------------
191,929 148,789
Less: Allowance for doubtful items.. 3,615 2,623
-------------- -------------
$ 188,314 146,166
============== =============
3. Inventories
At June 30, 1999, inventories valued by the LIFO method would have been
$217,274,000 higher ($212,869,000 higher at June 24, 1998) if they were
stated at the lower of FIFO cost or market. If the FIFO method
inventory valuation had been used, reported net earnings would have
been $2,691,000, or $0.02 per diluted share higher, $7,411,000, or
$0.05 per diluted share lower and $1,624,000, or $0.01 per diluted
share higher in 1999, 1998 and 1997, respectively.
4. Property, Plant and Equipment
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
1999 1998
------------- ---------------
Amounts in thousands
<S> <C> <C> <C>
Land.............................................................. $ 11,343 11,343
Buildings......................................................... 29,134 28,739
Furniture, fixtures, machinery and equipment...................... 2,575,459 2,356,376
Transportation equipment.......................................... 140,715 132,381
Improvements to leased premises................................... 502,256 457,931
Construction in progress.......................................... 54,878 69,365
------------- ---------------
3,313,785 3,056,135
Less: Accumulated depreciation and amortization.................. 2,117,034 1,919,432
------------- ---------------
1,196,751 1,136,703
Leased property under capital leases, less accumulated
amortization of $33,291,000 ($36,568,000 in 1998)............. 25,882 33,145
------------- ---------------
Net property, plant and equipment................................. $ 1,222,633 1,169,848
============= ===============
</TABLE>
The Company had no non-cash additions to leased property for 1999 or 1998.
F-16
<PAGE>
5. Income Taxes
The provision for income taxes consisted of:
<TABLE>
<CAPTION>
Current Deferred Total
------------- -------------- -------------
Amounts in thousands
<S> <C> <C> <C> <C>
1999
Federal..................................... $ 79,270 16,110 95,380
State....................................... 17,191 1,574 18,765
------------- -------------- -------------
$ 96,461 17,684 114,145
============= ============== =============
1998
Federal..................................... $ 115,109 (15,779) 99,330
State....................................... 21,103 (1,261) 19,842
------------- -------------- -------------
$ 136,212 (17,040) 119,172
============= ============== =============
1997
Federal..................................... $ 115,347 (17,440) 97,907
State....................................... 17,640 (548) 17,092
------------- -------------- -------------
$ 132,987 (17,988) 114,999
============= ============== =============
</TABLE>
The following reconciles the above provision to the Federal statutory
income tax rate:
<TABLE>
<CAPTION>
1999 1998 1997
------------ -------------- --------------
<S> <C> <C> <C>
Federal statutory income tax rate.................... 35.0% 35.0% 35.0%
State and local income taxes, net of federal
income tax benefits............................... 4.4 3.8 3.1
Tax credits.......................................... (0.6) (0.6) (0.6)
Life insurance....................................... 0.7 (0.2) (2.1)
Other, net........................................... (1.0) (0.5) 0.6
------------ -------------- --------------
38.5% 37.5% 36.0%
============ ============== ==============
</TABLE>
The effective tax rate for 1998 and 1997 reflects a change made by the
Health Insurance Portability and Accountability Act of 1996 whereby
certain deductions for interest relating to indebtedness with respect
to certain corporate owned life insurance (COLI) policies are being
phased out over a three-year period.
In addition to the provision for income taxes presented above, the
Company recorded deferred taxes of $265,000, $551,000 and $1,105,000 in
fiscal 1999, 1998 and 1997, respectively, related to the unrealized
gain on marketable securities.
F-17
<PAGE>
5. Income Taxes, continued
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred liabilities at June
30, 1999, June 24, 1998 and June 25, 1997 are presented below:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------- ------------
Amounts in thousands
<S> <C> <C> <C>
Deferred tax assets:
Reserve for insurance claims and self-insurance.......... $ 62,429 61,160 57,169
Reserve for vacant store leases.......................... 20,511 20,137 14,521
Unearned promotional allowance........................... 3,143 6,844 12,520
Reserve for accrued vacations............................ 14,225 14,172 10,145
State net operating loss carry forwards.................. 12,929 9,249 7,410
Excess of book over tax depreciation..................... 12,196 10,985 11,033
Excess of book over tax rent expense..................... 1,084 1,058 1,482
Excess of book over tax retirement expense............... 17,009 14,757 12,565
Uniform capitalization of inventory...................... 9,684 7,796 6,797
Other, net............................................... 43,213 38,066 31,366
------------ -------------- ------------
Total gross deferred tax assets........................ 196,423 184,224 165,008
Less: Valuation allowance............................. 12,401 9,154 7,314
------------ -------------- ------------
Net deferred tax assets................................ 184,022 175,070 157,694
------------ -------------- ------------
Deferred tax liabilities:
Excess of tax over book depreciation..................... (31,098) (11,958) (16,312)
Undistributed earnings of the Bahamas subsidiary......... (14,347) (12,616) (10,680)
Other comprehensive income............................... (1,921) (1,656) (1,105)
Other, net............................................... (26,397) (20,632) (17,879)
------------ -------------- ------------
Total gross deferred tax liabilities................... (73,763) (46,862) (45,976)
------------ -------------- ------------
Net deferred tax assets................................ $ 110,259 128,208 111,718
============ ============== ============
</TABLE>
Current deferred income taxes of $112,869,000 and $105,582,000 for 1999
and 1998, respectively, are included in prepaid expenses in the
accompanying consolidated balance sheets. Noncurrent deferred income
taxes of $689,000 for fiscal 1999 are included in other liabilities 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-18
<PAGE>
6. Financing
(a) Credit Arrangements: The Company has available a $500.0 million
commercial paper program. As of June 30, 1999, there was $300.0
million outstanding, compared to $420.0 million outstanding on June
24, 1998. The average interest rate on the commercial paper
outstanding on June 30, 1999, was 5.4% as compared to 5.6% on June 24,
1998. The Company also has short-term lines of credit totaling $482.0
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. Short-term borrowings against our bank lines of credit were
$165.0 million as of June 30, 1999 as compared to none on June 24,
1998. The interest rate on the bank lines of credit on June 30, 1999,
was 5.5%. The carrying amount of short-term borrowings approximates
fair value because of their short-term maturity. As such, the Company
is not exposed to a significant amount of interest rate risk.
(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 (CP) interest rate. At June 30,
1999, the Company had outstanding four interest rate swap agreements,
having a notional principal amount of $50.0 million each, with an
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 7.19% interest rate. The interest rate swap
agreements mature on June 30, 2004, 2005, 2006 and 2007. The counter
party to these interest rate swap agreements exposes the Company to
credit loss in the event of nonperformance. However, the Company does
not anticipate nonperformance by the counter party.
Since current short-term interest rates at June 30, 1999 are below the
7.19% rate of these contracts, the estimated negative value of these
swaps was approximately $7.9 million.
F-19
<PAGE>
7. Stock Compensation Plans
The Company has an employee stock purchase plan, long-term incentive
stock compensation plans and a performance based stock option plan.
Under SFAS 123, purchase discounts for the employee stock purchase
plan, the fair value at date of grant for the long-term incentive
stock compensation plans and the performance based stock option plan
are charged to compensation costs over the vesting or performance
period.
The per share fair value of the fiscal 1999 and 1997 grants under the
performance based stock option plan were estimated on the date of the
grant using the Black-Scholes option pricing model under the following
assumptions: risk-free interest rate of 5.4 % and 7.0%; dividend yield
of 2.3% and 2.8%; expected lives of 7 years; and volatility of .30 and
.225, respectively. The per share fair value of these options were
$14.51 and $9.84, respectively.
Compensation costs for these stock compensation plans resulted in
expense of $2.5 million in 1999. Compensation costs resulted in income
of $1.4 million in 1998, primarily due to the reversal of compensation
expense previously recognized for restricted shares that did not vest.
Compensation costs charged against income was $10.1 million in 1997.
(a) Stock Purchase Plan: The Company has a stock purchase plan in effect
for associates. Under the terms of this Plan, the Company may grant
options to purchase shares of the Company's common stock at a price
not less than the greater of 85% of the fair value at the date of
grant or $1.00. There are 2,392,626 shares of the Company's common
stock available for the grant of options under the Plan. Loans to
associates for the purchase of the Company's common stock are reported
in the financial statements as a reduction of Shareholders' Equity,
rather than as a current asset. Loans outstanding were $164,000 and
$3,087,000 at June 30, 1999 and June 24, 1998, respectively.
(b) Stock Compensation Plans: The Company has long-term incentive stock
compensation plans. Under these programs the Company issues restricted
shares of the Company's common stock to eligible management
associates. Restricted shares issued and the weighted average fair
value on the grant date are as follows: 252,097 shares ($41.12) in
1999 (44,547 shares forfeited); 149,743 shares ($37.25) in 1998
(124,195 shares forfeited); and 150,338 shares ($35.21) in 1997
(120,318 shares forfeited). The vesting of these shares is contingent
upon certain specified goals being attained over a three year period.
F-20
<PAGE>
7. Stock Compensation Plans, continued
(c) Stock Option Plan: Under the Company's Key Employee Stock Option Plan,
2,000,000 shares of the Company's common stock were made available for
grant at an exercise price of no less than the market value at date of
grant. Options granted under this performance based stock option plan
prior to June 1, 1998 are earned over a two year period and options
granted after June 1, 1998 are earned after three years, if certain
performance goals are attained.
Changes in options under this plan during the years ended June 30,
1999, June 24, 1998 and June 25, 1997, were as follows:
<TABLE>
<CAPTION>
Weighted
Average
Number of Option Price
Shares Per Share
----------- ----------------
<S> <C> <C> <C>
Outstanding - June 26, 1996.......................... 630,000 $ 22.04
Granted.............................................. 237,000 $ 34.63
Exercised............................................ (142,000) $ 21.97
Forfeited............................................ (22,000) $ 34.63
----------- ----------------
Outstanding - June 25, 1997.......................... 703,000 $ 25.90
Granted.............................................. - $ -
Exercised............................................ (361,000) $ 22.11
Forfeited............................................ (10,000) $ 34.63
----------- ----------------
Outstanding - June 24, 1998.......................... 332,000 $ 29.76
Granted.............................................. 181,277 $ 41.51
Exercised............................................ (50,000) $ 21.06
Forfeited............................................ (25,842) $ 35.65
----------- ----------------
Outstanding - June 30, 1999.......................... 437,435 $ 35.27
=========== ================
Exercisable - June 30, 1999......................... 77,000 $ 22.44
=========== ================
Shares available for additional grant................ 567,565
===========
</TABLE>
The following table sets forth information regarding options
outstanding at June 30, 1999.
<TABLE>
<CAPTION>
Weighted
Weighted Average
Weighted Average Number Exercise Prices
Number of Average Remaining Life Currently For Currently
Options Exercise Price (Years) Exercisable Exercisable
=============== ============= =============== ============== ============
<S> <C> <C> <C> <C> <C>
77,000 $ 22.44 1.5 77,000 $ 22.44
183,000 34.63 3.5 - -
177,435 41.51 5.5 - -
--------------- ------------- --------------- -------------- ------------
437,435 $ 35.27 4.0 77,000 $ 22.44
=============== ============= =============== ============== ============
</TABLE>
F-21
<PAGE>
8. Leases
(a) Leasing Arrangements: There were 1,454 leases in effect on store
locations and other properties at June 30, 1999. Of these 1,454
leases, 30 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.
(b) Leases: Leased property under capital leases by major classes are:
1999 1998
---- ----
Amounts in thousands
Store facilities............................. $ 43,451 53,991
Warehouses and manufacturing facilities...... 15,722 15,722
---------- ----------
59,173 69,713
Less: Accumulated amortization....... 33,291 36,568
---------- ----------
$ 25,882 33,145
========== ==========
F-22
<PAGE>
8. Leases, continued
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 30, 1999.
Capital Operating
------- ---------
Amounts in thousands
Fiscal Year:
2000.................................... $ 7,824 356,919
2001.................................... 7,829 351,833
2002.................................... 7,890 348,373
2003.................................... 7,890 345,303
2004.................................... 7,284 340,070
Later years............................. 34,348 3,329,313
----------- ------------
Total minimum lease payments.......... 73,065 5,071,811
============
Less: Amount representing estimated
taxes, maintenance and insurance
costs included in total minimum
lease payments............... 1,392
-----------
Net minimum lease payments............ 71,673
Less: Amount representing interest... 30,429
-----------
Present value of net minimum lease
payments.................. $ 41,244
===========
Rental payments under operating leases including, where applicable, real
estate taxes and other expenses are as follows:
1999 1998 1997
---- ---- ----
Amounts in thousands
Minimum rentals.................. $ 341,296 307,289 276,259
Contingent rentals............... 1,581 1,869 2,618
--------- --------- ---------
$ 342,877 309,158 278,877
========= ========= =========
F-23
<PAGE>
9. 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 $67,250,000,
$67,250,000 and $62,250,000 in 1999, 1998 and 1997, 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 86 associates. This group of retirees
bears 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 600 qualified active
associates of the Company and 420 former participants. Total MSP cost
charged to operations was $6,132,000, $5,406,000 and $5,485,000 in
1999, 1998 and 1997, respectively. The projected benefit obligation at
June 30, 1999 was approximately $44,339,000. The effective discount
rate used in determining the net periodic MSP cost was 8.0% for 1999,
1998 and 1997.
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
$204,855,000 and $183,771,000 at June 30, 1999 and June 24, 1998,
respectively.
(c) Supplemental Retirement Plan: The Company has a deferred compensation
Supplemental Retirement Plan in effect for eligible management
associates. At June 30, 1999 and June 24, 1998, the Company's
liability under this program was $14.1 million and $11.8 million,
respectively.
F-24
<PAGE>
9. Commitments and Contingent Liabilities, continued
(d) 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 and various
proceedings arising under federal, state or local regulations
protecting the environment. See Note 13 regarding one of these
lawsuits.
Among the suits charging violations of certain civil rights laws,
there are actions which purport to be class actions and which allege
sexual harassment, retaliation and/or a pattern and practice of
race-based and gender-based discriminatory treatment of employees and
applicants. The plaintiffs seek, among other relief, certification of
the suits as proper class actions, declaratory judgment that the
Company's practices are unlawful, back pay, front pay, benefits and
other compensatory damages, punitive damages, injunctive relief and
reimbursement of attorneys' fees and costs. The Company is committed
to full compliance with all applicable civil rights laws. Consistent
with this commitment, the Company has firm and long-standing policies
in place prohibiting discrimination and harassment. The Company denies
the allegations of the various complaints and is vigorously defending
the actions.
While the ultimate outcome of litigation cannot be predicted with
certainty, in the opinion of management the ultimate resolution of
these actions will not have a material adverse effect on the Company's
financial condition or results of operations.
10. 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. Total payments
aggregating $40,341,000, $29,440,000 and $29,995,000 were made in 1999,
1998 and 1997, respectively.
F-25
<PAGE>
11. Consolidation and Distribution Facility Closing
In 1998, the Company began its consolidation of the accounting
departments to corporate headquarters. The opening of the new
distribution facility in Raleigh, North Carolina, resulted in the
closing and the sale of the older Raleigh distribution facility; the
closing of the Greenville, South Carolina distribution center which is
being converted into a general merchandise and pharmaceutical
distribution center; and the reorganization of the Raleigh and
Charlotte divisions. The Company experienced a nonrecurring
administrative charge totaling $18.1 million (after tax, $11.0 million
or $0.07 per diluted share) due to these activities.
12. Quarterly Results of Operations (Unaudited)
The following is a summary of the unaudited quarterly results of
operations for the years ended June 30, 1999 and June 24, 1998:
<TABLE>
<CAPTION>
Quarters Ended
Sept. 16 Jan. 6 March 31 June 30
1999 (12 Weeks) (16 Weeks) (12 Weeks) (13 Weeks)
---- ---------- ---------- ---------- ----------
Dollars in thousands except per share data
<S> <C> <C> <C> <C> <C>
Net sales............................... $ 3,190,755 4,264,207 3,203,524 3,478,017
Gross profit on sales................... $ 841,275 1,156,000 872,659 930,979
Net earnings............................ $ 14,550 52,359 58,818 56,608
Basic earnings per share................ $ 0.10 0.35 0.40 .38
Diluted earnings per share.............. $ 0.10 0.35 0.40 .38
Net LIFO charge (credit)................ $ 2,444 2,444 1,833 (4,030)
Net LIFO charge (credit) per diluted
share................................. $ 0.01 0.02 0.01 (0.02)
Dividends per share..................... $ 0.170 0.340 0.255 0.255
Market price range...................... $ 52.19-36.25 46.50-28.63 46.69-36.94 38.50-33.06
</TABLE>
<TABLE>
<CAPTION>
Quarters Ended
Sept. 17 Jan. 7 April 1 June 24
1998 (12 Weeks) (16 Weeks) (12 Weeks) (12 Weeks)
---- ---------- ---------- ---------- ----------
Dollars in thousands except per share data
<S> <C> <C> <C> <C> <C>
Net sales............................... $ 3,056,203 4,150,243 3,160,878 3,250,161
Gross profit on sales................... $ 822,823 1,095,557 858,214 847,323
Net earnings............................ $ 47,510 56,128 60,972 34,010
Basic earnings per share................ $ 0.32 0.38 0.41 0.23
Diluted earnings per share.............. $ 0.32 0.38 0.41 0.22
Net LIFO charge (credit)................ $ 3,055 3,055 1,222 (14,743)
Net LIFO charge (credit) per diluted
share................................. $ 0.02 0.02 0.01 (0.10)
Dividends per share..................... $ 0.17 0.34 0.255 0.255
Market price range...................... $ 39.25-33.69 44.13-35.38 59.25-43.56 48.69-36.56
</TABLE>
F-26
<PAGE>
12. Quarterly Results of Operations (Unaudited), continued
During 1999 and 1998, 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 1.1% to 0.3% and 1.2% to
(0.7)%, respectively.
<TABLE>
<CAPTION>
Fourth Quarter Results of Operations
June 30, 1999 June 24, 1998
(13 Weeks) (12 Weeks)
------------------ -----------------
Amounts in thousands
<S> <C> <C> <C>
Net sales............................................... $ 3,478,017 3,250,161
Cost of sales........................................... 2,547,038 2,402,838
----------------- -----------------
Gross profit on sales................................... 930,979 847,323
Operating & administrative expenses..................... 868,563 798,444
Consolidation and distribution facility closing......... - 18,080
----------------- -----------------
Operating income........................................ 62,416 30,799
Cash discounts and other income, net.................... 32,481 28,444
Interest expense........................................ (2,851) (4,827)
----------------- -----------------
Earnings before income taxes............................ 92,046 54,416
Income taxes............................................ 35,438 20,406
----------------- -----------------
Net earnings............................................ $ 56,608 34,010
================= =================
</TABLE>
13. Subsequent Event
In July 1999, the Company, without admitting any wrongdoing, reached a
settlement with the named plaintiffs in a discrimination class action
lawsuit filed on behalf of certain present and former associates. The
settlement has been presented to the U. S. District Court in
Jacksonville, Florida for preliminary approval and class notice. The
settlement amount is approximately $33 million, which the Company will
pay from accruals over the next seven years. In the opinion of
management, the settlement, if approved, will not have a material
impact on the Company's financial condition or results of operations.
F-27
FORM OF PROXY
The Directors recommend a vote FOR Proposals 1, 2 and 3.
FOR WITHHELD
1. Election of Directors
For all nominees listed below.
Class III (2002)
Armando M. Codina, Radford D. Lovett
and Julia B. North
For, except vote withheld from
the following nominee(s):
__________________________________
FOR AGAINST ABSTAIN
2. Approve amendments to the Revised
Winn-Dixie Stock Purchase Plan for
Employees
3. Ratification of KPMG
LLP as auditors.
SPECIAL ACTION
Discontinue Annual Report Mailing for this account due to other accounts at same
address. __________________
SIGNATURE(S)____________________________ Date _____________,1999
Please sign this proxy as name(s) appears above and return it promptly whether
or not you plan to attend the meeting. If signing for a corporation or
partnership or as agent, attorney or fiduciary, indicate the capacity in which
you are signing. If you do attend the meeting and decide to vote by ballot, such
vote will supersede this proxy.
<PAGE>
[LOGO]
Dear Fellow Shareholder:
The 71st Annual Meeting of Shareholders of Winn-Dixie Stores, Inc., will be held
at the headquarters office of the Company at 5050 Edgewood Court, Jacksonville,
Florida, at 9:00 a.m. on Wednesday, October 6, 1999.
The enclosed Notice of Annual Meeting of Shareholders and Proxy Statement
describe the items to be considered and acted upon by the shareholders at the
meeting.
Whether you can or cannot attend, please sign, date and return your proxy form
as soon as possible so that your shares can be voted at the meeting in
accordance with your instructions. If you attend the meeting, you may choose to
revoke your proxy and vote personally. It is important in either case that your
shares be represented.
Sincerely,
/s/ A. Dano Davis
A. Dano Davis
Chairman and Principal Executive Officer
5050 Edgewood Court - Jacksonville, FL 32254-3699
<PAGE>
WINN-DIXIE STORES, INC.
5050 EDGEWOOD COURT - JACKSONVILLE, FLORIDA 32254-3699
Proxy Solicited on Behalf of the Board of Directors for the Annual Meeting of
Shareholders on October 6, 1999.
The undersigned hereby appoints A. DANO DAVIS, ROBERT D. DAVIS and T. WAYNE
DAVIS or any of them, as proxies, with full power of substitution, to vote all
shares of Common Stock that the undersigned would be entitled to vote if
personally present, at the Annual Meeting of Shareholders of the Company on
October 6, 1999, and at any adjournment thereof, upon all subjects that may
properly come before the meeting, including the matters described in the proxy
statement furnished herewith, and any matters of which the Company did not
receive notice by July 12, 1999, subject to any directions indicated on the
other side of this card. If no directions are given, the proxies will vote for
(1) the election of all nominees listed below, (2) the Directors' proposals 2
and 3 listed on the other side of the card, and (3) at their discretion, on any
other matters that may properly come before the meeting or any adjournments
thereof and any matters of which the Company did not receive notice by July 12,
1999. The undersigned hereby revokes any proxy heretofore given to any person or
persons whomsoever (other than the proxies named above) to vote such Common
Stock and ratifies and confirms all that the proxies named above may or shall do
by virtue hereof.
The nominees for election as Class III Directors are: Armando M. Codina, Radford
D. Lovett and Julia B. North.
This card also provides voting instructions for shares held in the dividend
reinvestment plan and, if registrations are identical, shares held in the
Winn-Dixie Stores, Inc. Profit Sharing/401(k) Plan, as described in the proxy
statement.
Your vote is important. Please sign and date on the reverse and return promptly
in the enclosed postage-paid envelope or otherwise to Inspectors of Election,
Winn-Dixie Stores, Inc., P.O. Box 8999, Edison, NJ 08818-9999, so that your
shares can be represented at the meeting.
<PAGE>
Corporate Profile
Winn-Dixie Stores, Inc., is one of the nation's largest retail food
chains. As of June 30, 1999, the Company operated 1,188 supermarkets in
14 states and the Bahamas. The Company also operated a network of
distribution centers, processing and manufacturing plants and a fleet
of trucks, providing a comprehensive support system.
Company Direction
Winn-Dixie is dedicated to providing our customers with the best
quality, variety and service, at competitive prices, and creating
value for our customers, associates and shareholders.
Toward that end, we are engaged in a program of store openings,
enlargements and remodelings to better serve our current and future
customers. We also are adding a variety of new services to our
locations to appeal to the changing needs and tastes of supermarket
shoppers.
Our goal is to be the supermarket of choice in the Sunbelt and we will
aggressively pursue our opportunities to increase our market share
within our operating area.
[LOGO]
