<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended September 26, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period
from ____________ to ______________
Commission File Number 0-981
----------------------------
PUBLIX SUPER MARKETS, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Florida 59-0324412
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1936 George Jenkins Blvd.
Lakeland, Florida 33815
- --------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (941) 688-1188
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--------- ---------
The number of shares outstanding of the Registrant's common stock, $1.00
par value, as of October 30, 1998 was 216,763,389.
Page 1 of 10 pages
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
<TABLE>
<CAPTION>
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts are in thousands, except share amounts)
ASSETS
September 26, 1998 December 27, 1997
------------------ -----------------
(Unaudited)
<S> <C> <C>
Current Assets
- --------------
Cash and cash equivalents $ 694,060 $ 530,018
Short-term investments 13,824 46,847
Trade receivables 60,032 71,318
Merchandise inventories 597,756 638,044
Deferred tax assets 53,876 66,402
Prepaid expenses 4,118 2,153
---------- ----------
Total Current Assets 1,423,666 1,354,782
---------- ----------
Long-term investments 409,429 331,659
Other noncurrent assets 9,137 9,036
Property, plant and equipment 2,897,842 2,757,707
Accumulated depreciation (1,189,243) (1,158,204)
---------- ----------
Total Assets $3,550,831 $3,294,980
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
- -------------------
Accounts payable $ 581,820 $ 562,536
Accrued contributions to retirement plans 149,733 138,858
Accrued salaries and wages 77,543 47,367
Accrued self-insurance reserves 78,236 57,415
Accrued nonrecurring charge 2,417 69,249
Federal and state income taxes 9,097 15,583
Other 129,220 97,094
---------- ----------
Total Current Liabilities 1,028,066 988,102
---------- ----------
Deferred tax liabilities, net 118,146 114,807
Self-insurance reserves 91,034 90,068
Accrued postretirement benefit cost 47,256 42,612
Other noncurrent liabilities 32,176 40,092
Stockholders' Equity
- --------------------
Common stock of $1 par value. Authorized
300,000,000 shares; issued 220,458,183
shares at September 26, 1998 and 217,419,178
shares at December 27, 1997 220,458 217,419
Additional paid-in capital 236,374 100,757
Reinvested earnings 1,904,231 1,696,659
---------- ----------
2,361,063 2,014,835
Less treasury shares of 3,943,280
at September 26, 1998, at cost (130,136) ---
Accumulated other comprehensive earnings 3,226 4,464
---------- ----------
Total Stockholders' Equity 2,234,153 2,019,299
---------- ----------
Total Liabilities and Stockholders'
Equity $3,550,831 $3,294,980
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except per share and share amounts)
Three Months Ended
September 26, 1998 September 27, 1997
------------------ ------------------
(Unaudited)
<S> <C> <C>
Revenues $ 2,932,792 $ 2,710,522
Other income, net 28,549 26,809
------------ ------------
Total revenues 2,961,341 2,737,331
------------ ------------
Costs and expenses
Cost of merchandise sold, including store
occupancy, warehousing and delivery
expenses 2,199,616 2,067,928
Operating and administrative expenses 626,834 561,217
------------ ------------
Total costs and expenses 2,826,450 2,629,145
------------ ------------
Earnings before income tax expense 134,891 108,186
Income tax expense 47,360 38,836
Net earnings $ 87,531 $ 69,350
============ ============
Weighted average number of common
shares outstanding 217,133,830 218,740,721
============ ============
Net earnings per common share $ .40 $ .32
============ ============
Cash dividends per common share none none
</TABLE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
Three Months Ended
September 26, 1998 September 27, 1997
------------------ ------------------
(Unaudited)
<S> <C> <C>
Net earnings $ 87,531 $ 69,350
Other comprehensive earnings - net
unrealized gain (loss) on investment
securities available-for-sale, net
of tax benefit of $623 in 1998 and
tax expense of $684 in 1997 (993) 1,088
------------ ------------
Comprehensive earnings $ 86,538 $ 70,438
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except per share and share amounts)
Nine Months Ended
September 26, 1998 September 27, 1997
------------------ ------------------
(Unaudited)
<S> <C> <C>
Revenues
- --------
Sales $ 8,926,952 $ 8,299,068
Other income, net 94,424 85,028
------------ ------------
Total revenues 9,021,376 8,384,096
------------ ------------
Costs and expenses
- ------------------
Cost of merchandise sold, including store
occupancy, warehousing and delivery
expenses 6,718,159 6,349,237
Operating and administrative expenses 1,843,166 1,650,406
------------ ------------
Total costs and expenses 8,561,325 7,999,643
------------ ------------
Earnings before income tax expense 460,051 384,453
Income tax expense 165,102 139,554
------------ ------------
Net earnings $ 294,949 $ 244,899
============ ============
Weighted average number of common
shares outstanding 217,586,570 219,348,046
============ ============
Net earnings per common share $ 1.36 $ 1.12
============ ============
Cash dividends per common share $ .20 $ .15
============ ============
</TABLE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
Nine Months Ended
September 26, 1998 September 27, 1997
------------------ ------------------
(Unaudited)
<S> <C> <C>
Net earnings $ 294,949 $ 244,899
Other comprehensive earnings - net
unrealized gain (loss) on investment
securities available-for-sale, net of
tax benefit of $777 in 1998 and tax
expense of $1,419 in 1997 (1,238) 2,260
------------ ------------
Comprehensive earnings $ 293,711 $ 247,159
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
Nine Months Ended
September 26, 1998 September 27, 1997
------------------ ------------------
(Unaudited)
<S> <C> <C>
Cash Flows From Operating Activities
- ------------------------------------
Cash received from customers $8,996,901 $8,360,837
Cash paid to employees and suppliers (8,204,380) (7,690,641)
Income taxes paid (154,946) (152,046)
Payment for self-insured claims (89,068) (80,575)
Other, net 36,706 27,663
---------- ----------
Net Cash Provided by Operating Activities 585,213 465,238
---------- ----------
Cash Flows From Investing Activities
- ------------------------------------
Payment for property, plant and equipment (249,644) (183,808)
Payment for investment securities -
available-for-sale (163,324) (429,378)
Proceeds from sale of investment securities -
available-for-sale 110,515 296,075
Other, net 4,085 2,159
---------- ----------
Net Cash Used in Investing Activities (298,368) (314,952)
---------- ----------
Cash Flows From Financing Activities
- ------------------------------------
Proceeds from sale of common stock 87,742 48,364
Payment for acquisition of common stock (166,662) (98,417)
Dividends paid (43,752) (33,003)
Other, net (131) (238)
---------- ----------
Net Cash Used in Financing Activities (122,803) (83,294)
---------- ----------
Net increase in cash and cash equivalents 164,042 66,992
Cash and cash equivalents at beginning of
period 530,018 457,405
---------- ----------
Cash and cash equivalents at end of period $ 694,060 $ 524,397
========== ==========
See accompanying notes to condensed consolidated financial statements.
-5-
<PAGE>
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying condensed consolidated
financial statements include all adjustments deemed necessary to fairly
reflect the financial position, results of operations and changes in
cash flows of the Company for the interim periods presented. These
condensed consolidated financial statements should be read in
conjunction with the fiscal 1997 Form 10-K Annual Report of the
Company.
2. Due to the seasonal nature of the Company's business, the results for
the three months and nine months ended September 26, 1998 are not
necessarily indicative of the results for the entire 1998 fiscal year.
3. Certain 1997 amounts have been reclassified to conform with the 1998
presentation.
4. In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 130, "Reporting Comprehensive
Income," (SFAS 130) effective for fiscal years beginning after
December 15, 1997. SFAS 130 sets forth standards for the reporting of
comprehensive income (earnings) in the financial statements.
Comprehensive earnings includes net earnings and other comprehensive
earnings. Other comprehensive earnings includes revenues, expenses,
gains and losses that have been excluded from net earnings and recorded
directly in the stockholders' equity section of the balance sheet.
Accumulated other comprehensive earnings consists of net unrealized
gains on investment securities available-for-sale. The following is a
summary of the change in the balance of accumulated other comprehensive
earnings as of September 26, 1998 (amounts are in thousands):
Balance as of beginning of year $4,464
Current period change (1,238)
------
Balance as of September 26, 1998 $3,226
======
5. In the Company's Form 10-K for the fiscal year ended December 27, 1997,
the Company disclosed two purported class action suits, the Dyer
and Middleton cases. No material developments have occurred in he Dyer or
Middleton cases since the Form 10-K filing, except as reported in the
Company's Form 10-Q for the quarterly period ended June 27, 1998.
-6-
<PAGE>
PUBLIX SUPER MARKETS, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
- ----------------------------------------------------------------------------
Results of Operations
- ---------------------
Liquidity and Capital Resources
- -------------------------------
Operating activities continue to be the Company's primary
source of liquidity. Net cash provided by operating
activities was approximately $585.2 million in the nine months
ended September 26, 1998, as compared with $465.2 million in
the nine months ended September 27, 1997. Cash and cash
equivalents totaled $694.1 million as of September 26, 1998.
Capital expenditures totaled $249.6 million in the nine
months ended September 26, 1998. These expenditures were
primarily incurred in connection with the opening of 24 new
stores and the remodeling or enlarging of 26 stores which
added 1.05 million square feet. In addition, the Company
closed six stores. Capital expenditures in the nine months
ended September 27, 1997, totaled $183.8 million. These
expenditures were primarily incurred in connection with
the opening of 25 new stores and the remodeling or enlarging
of 15 stores which added .95 million square feet. In addition,
the Company closed four stores.
The Company has budgeted approximately $90.4 million for
the remainder of 1998 for new store construction and the
remodeling or enlarging of several existing stores. The
capital budget is subject to continuing change and review.
The remaining capital expenditures are expected to be financed
by internally generated funds and current liquid assets.
Cash generated in excess of the amount needed for current
operations and capital expenditures is invested in short-term
and long-term investments. Management believes the Company's
liquidity will continue to be strong.
Operating Results
- -----------------
Sales increased 8.2% in the third quarter of 1998 to
$2,932.8 million, an increase of $222.3 million compared to
the same quarter in 1997. This represents an increase of
$119.4 million or 4.4% additional sales from stores that were
open for all of both quarters (comparable stores) and
additional sales of $102.9 million or 3.8% from the net impact
of new and closed stores since June 28, 1997.
Sales increased 7.6% in the nine months ended September 26,
1998, to $8,927.0 million, an increase of $627.9 million over
the nine months ended September 27, 1997. This reflects an
increase of $299.0 million or 3.6% in sales from comparable
stores and sales of $328.9 million or 4.0% from the net impact
of new and closed stores since the beginning of 1997.
Cost of merchandise sold including store occupancy,
warehousing and delivery expenses, as a percentage of sales,
was approximately 75.0% and 76.3% in the quarters ended
September 26, 1998 and September 27, 1997, respectively. These
cost of sales percentages were 75.3% and 76.5% for the nine
months ended September 26, 1998 and September 27, 1997,
respectively. The decreases in cost of merchandise sold, as a
percentage of sales, are due to buying and merchandising
efficiencies.
Operating and administrative expenses, as a percentage of
sales, were approximately 21.4% and 20.7% for the quarters
ended September 26, 1998, and September 27, 1997,
respectively. The operating and administrative expenses, as a
percentage of sales, were 20.6% and 19.9% for the nine months
ended September 26, 1998 and September 27, 1997, respectively.
The significant components of operating and administrative
expenses are payroll costs, employee benefits and
depreciation.
-7-
<PAGE>
PUBLIX SUPER MARKETS, INC.
Year 2000
- ---------
The Company has developed a plan to address
potential problems within the Company's operations that could
result from the century change in the Year 2000. The plan
addresses three main areas: information technology (IT)
systems, non-IT systems (including embedded systems), and
supply chain readiness (including inventory and non-inventory
suppliers). To oversee the plan, the Company has established
a Year 2000 Project Office. The Project Office is staffed
with representatives from the Company's Information Systems
Department and outside consultants. Additional consultants
are used on an as needed basis.
The Project Office has identified potential deficiencies
related to Year 2000 in the Company's IT systems, both
hardware and software, and is in the process of addressing
them through upgrades, replacements, and other remediation.
The Company believes that it is approximately 55%
complete with this process. With respect to non-IT systems
and other equipment with date sensitive operating controls
such as manufacturing equipment, security, and other
similar systems, the Company is in the process of identifying
and addressing those items which may require upgrades,
replacements, and other remediation. The Company believes
that it is approximately 35% complete with this process.
The Company estimates that all critical IT and non-IT
systems will be Year 2000 compliant by
approximately March 31, 1999.
As for third parties, the Company is in the process of
identifying and contacting key outside suppliers, both
inventory and non-inventory, to determine to the extent
practical the degree of such third-parties' Year 2000
compliance and to develop strategies for working with them.
The Company expects to have a better understanding of the Year
2000 readiness of these third parties over the next several
months.
The Company anticipates spending approximately $41.9
million to address Year 2000 issues. This includes the
estimated costs of all equipment upgrades, software
modifications, the salaries of employees, and the
fees of consultants addressing the issues. As of
September 26, 1998, approximately $11.4 million of this
amount has been spent. The funds to pay for addressing Year
2000 issues will be from liquid investment funds currently on
hand. The Company believes that the cost of addressing the
Year 2000 issues will not have a material effect on the
Company's consolidated financial position or results of
operations.
Should the Company or any third party with whom the Company
has a significant business relationship have a systems failure
due to the century change, the Company believes that the most
significant impact would likely be the inability, with respect
to a store or group of stores, to conduct operations due to a
power failure, to timely deliver inventory, to receive certain
products from vendors, or to electronically process sales to
the customer at the store level. The Company does not expect
any such event to be material. However, the Company is in the
process of developing contingency plans for such events and
estimates such plans will be finalized by approximately March
31, 1999.
-8-
<PAGE>
PUBLIX SUPER MARKETS, INC.
Cautionary Note Regarding Forward-Looking Statements
- ----------------------------------------------------
From time to time, information provided by the Company,
including written or oral statements made by its
representatives, may contain forward-looking information about
the future performance of the Company which is based on
management's assumptions and beliefs in light of the
information currently available to them. When used in this
document, the words "plan," "estimate," "project," "intend"
and "believe" and other similar expressions, as they relate to
the Company, are intended to identify such forward-looking
statements. These forward-looking statements are subject to
uncertainties and other factors that could cause actual
results to differ materially from those statements including,
but not limited to: competitive practices and pricing in the
food and drug industries generally and particularly in the
Company's principal markets; changes in the general economy;
changes in consumer spending; and other factors affecting the
Company's business in or beyond the Company's control. These
factors include changes in the rate of inflation, changes in
state and Federal legislation or regulations, adverse
determinations with respect to litigation or other claims,
ability to recruit and train employees, ability to construct
new stores or complete remodels as rapidly as planned,
stability of product costs, and issues arising from addressing
Year 2000 IT and non-IT problems. Other factors and
assumptions not identified above could also cause the actual
results to differ materially from those set forth in the
forward-looking statements. The Company assumes no obligation
to update publicly these forward-looking statements.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
In the Company's Form 10-K for the fiscal year ended
December 27, 1997, the Company disclosed two purported class
action suits, the Dyer and Middleton cases. No material
developments have occurred in the Dyer or Middleton cases
since the Form 10-K filing, except as reported in the
Company's Form 10-Q for the quarterly period ended June 27,
1998.
Item 6(a). Exhibits
- --------------------
27. Financial Data Schedule for the nine months ended
September 26, 1998.
Item 6(b). Reports on Form 8-K
- -------------------------------
No reports on Form 8-K were filed during the three months
ended September 26, 1998.
-9-
<PAGE>
PUBLIX SUPER MARKETS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed in its behalf by the undersigned thereunto duly
authorized.
PUBLIX SUPER MARKETS, INC.
Date: November 6, 1998 /s/ S. Keith Billups
--------------------------------------
S. Keith Billups, Secretary
Date: November 6, 1998 /s/ David P. Phillips
--------------------------------------
David P. Phillips, Vice President Finance
and Treasurer (Principal Financial and
Accounting Officer)
-10-
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for the nine months ended September 26, 1998, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> SEP-26-1998
<EXCHANGE-RATE> 1
<CASH> 694,060
<SECURITIES> 13,824
<RECEIVABLES> 60,032
<ALLOWANCES> 0
<INVENTORY> 597,756
<CURRENT-ASSETS> 1,423,666
<PP&E> 2,897,842
<DEPRECIATION> (1,189,243)
<TOTAL-ASSETS> 3,550,831
<CURRENT-LIABILITIES> 1,028,066
<BONDS> 0
0
0
<COMMON> 220,458
<OTHER-SE> 2,013,695
<TOTAL-LIABILITY-AND-EQUITY> 3,550,831
<SALES> 8,926,952
<TOTAL-REVENUES> 9,021,376
<CGS> 6,718,159
<TOTAL-COSTS> 8,561,325
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 460,051
<INCOME-TAX> 165,102
<INCOME-CONTINUING> 294,949
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 294,949
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.36
