UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the fiscal year ended December 28, 2002
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ______________ to ______________
Florida 59-0324412
------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
3300 Airport Road
Lakeland, Florida 33811
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock $1.00 Par Value
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( )
Indicate by check mark whether the Registrant is an accelerated filer.
The aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 4, 2003 was approximately $3,981,441,272.
The number of shares of Registrant's common stock outstanding as of March 4, 2003 was 190,482,495.
DOCUMENTS INCORPORATED BY REFERENCE
Pages 2 through 9 of Proxy Statement solicited for the 2003 Annual Meeting of Stockholders to be held on May 13, 2003 are incorporated by reference in Items 10, 11, 12 and 13 of Part III hereof.
PART I
Publix Super Markets, Inc. is based in Lakeland, Florida and was incorporated in Florida on December 27, 1921. Publix Super Markets, Inc. and its wholly owned subsidiaries, hereinafter collectively referred to as the "Company," are in the business of operating retail food supermarkets in Florida, Georgia, South Carolina, Alabama and Tennessee. The Company has no other lines of business or industry segments.
The Company's supermarkets sell groceries, dairy, produce, deli, bakery, meat, seafood, housewares and health and beauty care items. Many supermarkets also have pharmacy and floral departments. In addition, the Company has agreements with commercial banks to operate in many of its supermarkets.
The Company's lines of merchandise include a variety of nationally advertised and private label brands, as well as unbranded merchandise such as produce, meat and seafood. Private label items are produced in the Company's manufacturing facilities or are manufactured for the Company by outside suppliers.
The Company manufactures dairy, bakery and deli products. The Company's dairy plants are located in Lakeland and Deerfield Beach, Florida, and Lawrenceville, Georgia. The bakery and deli plants are located in Lakeland, Florida. The Company receives the food and non-food items it distributes from many sources. These products are generally available in sufficient quantities to enable the Company to adequately satisfy its customers. The Company believes that its sources of supply of these products and raw materials used in manufacturing are adequate for its needs and that it is not dependent upon a single or relatively few suppliers.
The Company operated 741 supermarkets at the end of 2002, compared with 684 at the beginning of the year. In 2002, 76 supermarkets were opened, 19 supermarkets were closed, and 91 supermarkets were expanded or remodeled. The net increase in square footage was 2.7 million square feet or 8.8% since 2001. At the end of 2002, the Company had 565 supermarkets located in Florida, 137 in Georgia, 28 in South Carolina, seven in Alabama and four in Tennessee. Also, as of year end, the Company had 27 supermarkets under construction in Florida, six in Georgia, four in South Carolina, three in Alabama and three in Tennessee. Additionally, during 2002 the Company operated four convenience stores and a fulfillment center to support an online grocery shopping service.
The Company is engaged in a highly competitive industry. Competition is
based primarily on price, quality of goods and service, convenience and product
mix. The Company's primary competition throughout its market areas is with
several national and regional chains, independent supermarkets, supercenters,
membership warehouse clubs and mass merchandisers. The Company anticipates
continued competitor format innovation and location additions in 2003.
The influx of winter residents to Florida and increased purchases of food during the traditional Thanksgiving, Christmas and Easter holidays typically results in seasonal sales increases between November and April of each year.
The Company has experienced no significant changes in the kinds of products sold or in its methods of distribution since the beginning of the fiscal year.
The Company had approximately 123,000 employees at the end of 2002, compared with 126,000 at the end of 2001. Of this total, approximately 67,000 at the end of 2002 and 69,700 at the end of 2001 were not full-time employees.
Compliance by the Company with Federal, state and local environmental protection laws during 2002 had no material effect upon capital expenditures, earnings or the competitive position of the Company.
At year end, the Company operated approximately 33.6 million square feet of supermarket space. The Company's supermarkets vary in size. Current supermarkets prototypes range from 27,000 to 61,000 square feet. Supermarkets are often located in strip shopping centers where the Company is the anchor tenant.
The Company supplies its supermarkets from eight distribution centers located in Lakeland, Miami, Jacksonville, Sarasota, Orlando, Deerfield Beach and Boynton Beach, Florida, and Lawrenceville, Georgia.
The majority of the Company's supermarkets are leased. Substantially all of these leases will expire during the next 20 years. However, in the normal course of business, it is expected that the leases will be renewed or replaced by leases on other properties. At 70 locations, both the building and land are owned and at 32 other locations, the building is owned while the land is leased.
The Company's corporate offices, distribution facilities and manufacturing plants are owned with no outstanding debt.
All of the Company's properties are well maintained and in good operating condition and are suitable and adequate for operating its business.
The Company is a party in various legal claims and actions considered in the normal course of business. In the opinion of management, the ultimate resolution of these legal proceedings will not have a material adverse effect on the Company's financial condition, results of operations or cash flows.
None
Served as
Nature of Family Officer of
Relationship Company
Name Age Position Between Officers Since
---- --- -------- ---------------- -----
Charles H. Jenkins, Jr. 59 Chief Executive Cousin of 1974
Officer William E. Crenshaw
William E. Crenshaw 52 President Cousin of 1990
Charles H. Jenkins, Jr.
Hoyt R. Barnett 59 Vice Chairman 1977
John A. Attaway, Jr. 44 General Counsel 2000
and Secretary
Jesse L. Benton 60 Vice President 1988
David E. Bornmann 45 Vice President 1998
David E. Bridges 53 Vice President 2000
Joseph W. Carvin 52 Vice President 1998
R. Scott Charlton 44 Vice President 1992
G. Gino DiGrazia 40 Vice President 2002
and Controller
David S. Duncan 49 Vice President 1999
William V. Fauerbach 56 Vice President 1997
John R. Frazier 53 Vice President 1997
Linda S. Hall 43 Vice President 2002
M. Clayton Hollis, Jr. 46 Vice President 1994
Mark R. Irby 47 Vice President 1989
Tina P. Johnson 43 Senior Vice President 1990
Linda S. Kane 37 Vice President and 2000
Assistant Secretary
James J. Lobinsky 63 Senior Vice President 1992
Thomas M. McLaughlin 52 Vice President 1994
Sharon A. Miller 59 Assistant Secretary 1992
Robert H. Moore 60 Vice President 1994
Dale S. Myers 50 Vice President 2001
Thomas M. O'Connor 55 Senior Vice President 1992
David P. Phillips 43 Chief Financial 1990
Officer and Treasurer
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Served as
Nature of Family Officer of
Relationship Company
Name Age Position Between Officers Since
---- --- -------- ---------------- -----
James H. Rhodes II 58 Vice President 1995
Daniel M. Risener 62 Senior Vice 1985
President and
Chief Information
Officer
Richard J. Schuler II 47 Vice President 2000
Edward T. Shivers 63 Vice President 1985
Sandra J. Woods 43 Vice President 2002
and Controller
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The terms of all officers expire at the annual meeting of the Company in May 2003.
Charles H. Jenkins, Jr. Chairman of the Executive Committee of the Company to
June 2000, Chairman of the Executive Committee and
Chief Operating Officer to May 2001, Chief Executive
Officer thereafter.
William E. Crenshaw President of the Company.
Hoyt R. Barnett Executive Vice President and Trustee of the Profit
Sharing Plan of the Company to August 1998, Executive
Vice President, Trustee of the Profit Sharing Plan and
Trustee of the Employee Stock Ownership Plan to
January 1999, Vice Chairman, Trustee of the Profit
Sharing Plan and Trustee of the Employee Stock
Ownership Plan to December 1999, Vice Chairman,
Trustee of the Employee Stock Ownership Plan
thereafter.
John A. Attaway, Jr. Corporate Counsel of the Company to May 2000, General
Counsel and Secretary thereafter.
Jesse L. Benton Vice President of the Company.
David E. Bornmann Business Development Manager - Corporate Purchasing of
the Company to October 1998, Vice President
thereafter.
David E. Bridges Regional Director of Retail Operations - Lakeland
Division of the Company to July 2000, Vice President
thereafter.
Joseph W. Carvin Human Resources Counsel of the Company to June 1998,
Director of Human Resources and Employment Law to
November 1998, Vice President thereafter.
R. Scott Charlton Vice President of the Company.
G. Gino DiGrazia Director of Business Analysis and Reporting to May
2002, Vice President and Controller thereafter.
David S. Duncan Director of Facility Services of the Company to
November 1999, Vice President thereafter.
William V. Fauerbach Vice President of the Company.
John R. Frazier Vice President of the Company.
Linda S. Hall Director of Internal Audit to November 2002, Vice
President thereafter.
M. Clayton Hollis, Jr. Vice President of the Company.
Mark R. Irby Vice President of the Company.
Tina P. Johnson Senior Vice President of the Company and Trustee of
the 401(k) Plan - Publix Stock Fund (Publix stock
portion).
Linda S. Kane Manager of Business Analysis and Reporting of the
Company to May 1998, Director of Benefits
Administration to June 2000, Director of Benefits
Administration and Assistant Secretary to May 2002,
Vice President and Assistant Secretary thereafter.
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Name Business Experience During Last Five Years
---- ------------------------------------------------------
James J. Lobinsky Senior Vice President of the Company.
Thomas M. McLaughlin Vice President of the Company.
Sharon A. Miller Director of Administration and Assistant Secretary of
the Company.
Robert H. Moore Vice President of the Company.
Dale S. Myers Regional Director of Retail Operations - Lakeland
Division of the Company to July 2001, Vice President
thereafter.
Thomas M. O'Connor Vice President of the Company to November 1999, Senior
Vice President thereafter.
David P. Phillips Vice President Finance and Treasurer of the Company to
July 1999, Chief Financial Officer and Treasurer
thereafter.
James H. Rhodes II Vice President of the Company.
Daniel M. Risener Vice President of the Company to July 1999, Senior
Vice President and Chief Information Officer
thereafter.
Richard J. Schuler II Miami Distribution Manager of the Company to June
2000, Vice President thereafter.
Edward T. Shivers Vice President of the Company.
Sandra J. Woods Director of Corporate Accounting to May 2002, Vice
President and Controller thereafter.
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PART II
Substantially all transactions of the Company's common stock have been among the Company, its employees, former employees, their families and the benefit plans established for the Company's employees. The market price of the Company's common stock is determined by the Board of Directors based upon quarterly appraisals prepared by an independent appraiser. The market price for 2002 and 2001 was as follows:
2002 2001
---- ----
January - February $41.00 $47.00
March - April 41.00 48.25
May - July 44.00 48.50
August - October 40.00 47.50
November - December 37.00 41.00
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As of March 4, 2003, the approximate number of holders of the Company's common stock was 90,000.
The Company paid cash dividends of $.33 per share of common stock in 2002 and $.32 per share in 2001. Payment of dividends is within the discretion of the Company's Board of Directors and depends on, among other factors, earnings, capital requirements and the operating and financial condition of the Company. It is believed that comparable cash dividends will be paid in the future.
Item 6. Five Year Summary of Selected Financial Data
-----------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Sales:
Sales $15,930,602 15,284,229 14,575,031 13,068,900 12,067,125
Percent increase 4.2% 4.9% 11.5% 8.3% 7.5%
Comparable store sales
percent (decrease)
increase (0.7%) 3.9% 4.1% 5.7% 4.0%
Earnings:
Gross profit $ 4,319,977 3,983,942 3,762,854 3,294,188 2,935,707
Earnings before income
tax expense $ 1,002,830 826,823 823,553 719,569 584,388
Net earnings $ 632,404 530,421 530,406 462,409 378,274
Net earnings as a
percent of sales 3.97% 3.47% 3.64% 3.54% 3.13%
Common stock:
Weighted average
shares outstanding 194,466,212 202,171,794 210,145,666 216,160,316 217,383,413
Basic and diluted
earnings per
common share,
based on weighted
average shares
outstanding $ 3.25 2.62 2.52 2.14 1.74
Cash dividends per
share $ .33 .32 .27 .22 .20
Financial data:
Capital expenditures $ 635,891 656,422 558,133 512,658 357,754
Working capital $ 96,018 33,739 176,776 515,257 467,385
Current ratio 1.07 1.03 1.14 1.47 1.46
Total assets $ 4,789,602 4,408,187 4,250,067 4,101,192 3,644,523
Stockholders' equity $ 3,008,068 2,762,551 2,662,435 2,676,144 2,327,632
Stores:
Number of supermarkets 741 684 647 614 586
Number of convenience
stores 4 2 - - -
NOTE: Amounts are in thousands, except shares outstanding, per share amounts
and number of stores. Fiscal year 2000 includes 53 weeks. All other
years include 52 weeks.
Certain prior year amounts have been reclassified to conform to the 2002
presentation.
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As of December 28, 2002, the Company operated 741 supermarkets representing approximately 33.6 million square feet of retail space. Additionally, during 2002 the Company operated four convenience stores and a fulfillment center to support an online grocery shopping service. The Company's primary competition throughout its market areas is with several national and regional chains, independent supermarkets, supercenters, membership warehouse clubs and mass merchandisers.
At the end of fiscal year 2002, the Company had 565 supermarkets located in Florida, 137 in Georgia, 28 in South Carolina, seven in Alabama and four in Tennessee. The Company opened 51 supermarkets in Florida, 13 supermarkets in Georgia, five supermarkets in South Carolina, four supermarkets in Tennessee and three supermarkets in Alabama during 2002.
Cash and cash equivalents and short-term and long-term investments totaled approximately $591.9 million at December 28, 2002, compared to $592.6 million and $830.6 million at December 29, 2001 and December 30, 2000, respectively. Net cash provided by operating activities was approximately $1,211 million for the year ended December 28, 2002, as compared with $1,060.8 million and $1,054.8 million for the years ended December 29, 2001 and December 30, 2000, respectively. Any net cash in excess of the amount needed for current operations is invested in short-term and long-term investments.
Net cash used in investing activities was approximately $625.5 million for the year ended December 28, 2002, as compared with $557.1 million and $594.8 million for the years ended December 29, 2001 and December 30, 2000, respectively. The primary use of net cash in investing activities was funding capital expenditures. During the year ended December 28, 2002, capital expenditures totaled approximately $635.9 million. These expenditures were primarily incurred in connection with the opening of 57 net new supermarkets (76 new supermarkets opened and 19 supermarkets closed) and remodeling or expanding 91 supermarkets. Net new supermarkets added an additional 2.7 million square feet in the year ended December 28, 2002, an 8.8% increase. Significant expenditures were also incurred in the expansion of warehouses, new offices and new or enhanced information technology applications. Additionally, during 2002 the Company opened two convenience stores. During the year ended December 29, 2001, capital expenditures totaled approximately $656.4 million. These expenditures were primarily incurred in connection with the opening of 37 net new supermarkets (52 new supermarkets opened and 15 supermarkets closed) and remodeling or expanding 79 supermarkets. Net new supermarkets added an additional 1.7 million square feet in the year ended December 29, 2001, a 5.8% increase. Significant expenditures were also incurred in the expansion of warehouses in Lakeland, Florida and the development of an online grocery shopping service, PublixDirect. Additionally, during 2001 the Company opened two convenience stores. During the year ended December 30, 2000, capital expenditures totaled approximately $558.1 million. These expenditures were primarily incurred in connection with the opening of 33 net new supermarkets (46 new supermarkets opened and 13 supermarkets closed) and remodeling or expanding 69 supermarkets. Net new supermarkets added an additional 1.5 million square feet in the year ended December 30, 2000, a 5.3% increase. Significant expenditures were also incurred in the expansion of warehouses in Lakeland, Florida.
In 2003, the Company plans to open approximately 69 supermarkets. Although real estate development is unpredictable, the Company's 2003 new store growth represents a reasonable estimate of anticipated future growth. Capital expenditures for 2003, consisting of new supermarkets, warehouses, remodeling and expanding of certain existing supermarkets and new or enhanced information technology applications, are expected to be approximately $600 million. This capital program is subject to continuing change and review. The 2003 capital expenditures are expected to be financed by internally generated funds, liquid assets or the committed line of credit described below. In the normal course of operations, the Company replaces supermarkets and closes supermarkets that are not meeting performance expectations. The impact of future supermarket closings is not expected to be material.
Net cash used in financing activities was approximately $589.3 million for the year ended December 28, 2002, as compared with $645.9 million and $693.1 million for the years ended December 29, 2001 and December 30, 2000, respectively. The primary use of net cash in financing activities was funding net common stock repurchases. The Company currently repurchases common stock at the stockholders' request in accordance with the terms of the Company's Employee Stock Purchase Plan. Net common stock repurchases totaled approximately $523.7 million for the year ended December 28, 2002, as compared with $579.6 million and $635 million for the years ended December 29, 2001 and December 30, 2000, respectively. The Company expects to continue to repurchase its common stock, as offered by its stockholders from time to time, at its then currently appraised value. However, such purchases are not required and the Company retains the right to discontinue them at any time.
The Company paid cash dividends on its common stock of $65.4 million or $.33 per share, $66.3 million or $.32 per share and $57.8 million or $.27 per share in 2002, 2001 and 2000, respectively.
In December 2002, the Company renewed an agreement for a committed line of credit totaling $100 million. This 364-day line of credit facility is available to fund liquidity requirements if necessary. The interest rate is based on LIBOR or prime. There were no amounts outstanding on this line of credit as of December 28, 2002.
Based on the Company's financial position, it is expected that short-term and long-term borrowings would be readily available to support the Company's liquidity requirements if needed.
The following are summaries of contractual obligations and other commercial commitments as of December 28, 2002:
Payments Due by Period
----------------------
Less Than 1 - 3 4 - 5 After
Total 1 Year Years Years 5 Years
----- ------ ----- ----- -------
(Amounts are in thousands)
Contractual Obligations -
Operating leases $3,411,993 264,817 766,059 467,019 1,914,098
========== ======= ======= ======= =========
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Amount of Commitment Expiration by Period
-----------------------------------------
Total
Amounts Less Than 1 - 3 4 - 5 After
Committed 1 Year Years Years 5 Years
--------- ------ ----- ----- -------
(Amounts are in thousands)
Other Commercial Commitments
----------------------------
Trade letters of credit $ 5,856 5,856 --- --- ---
Standby letters of credit (1) 104,896 72,425 32,471 --- ---
-------- ------ ------ ----- -----
Total letters of credit $110,752 78,281 32,471 --- ---
======== ====== ====== ===== =====
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(1) Includes standby letters of credit of $103.4 million for the benefit of the Company's insurance carriers for the self-insured portion of workers' compensation and fleet liability. The estimated amounts of these liabilities are included in the Company's consolidated balance sheets.
The Company has purchase commitments for materials, supplies, services and fixed assets as part of the normal course of business. In the aggregate, such commitments are not at prices in excess of current market rates.
The Company's fiscal year ends on the last Saturday in December. Fiscal years 2002 and 2001 included 52 weeks and fiscal year 2000 included 53 weeks.
Sales for 2002 were $15.9 billion as compared with $15.3 billion in 2001, an increase of $646.4 million or a 4.2% increase. This reflects a decrease of $107 million or 0.7% in comparable store sales (supermarkets open for the same weeks in both periods, including replacement supermarkets) and an increase of $753.4 million or 4.9% from net new supermarkets since the beginning of 2001. During the first quarter of 2002, the Company modified its calculation of comparable store sales to include replacement supermarkets. The comparable store sales calculation was modified to improve the comparability of this key performance measure to others in the food retailing industry. If the current comparable store sales calculation had been used for the year ended December 29, 2001, the comparable store sales increase would have been 3.9%, as compared to the previously reported comparable store sales increase of 3.2%. Sales for 2001 were $15.3 billion as compared with $14.6 billion in 2000, a 4.9% increase. After excluding sales of $288.8 million for the extra week included in fiscal 2000, this reflects an increase of $550 million or 3.9% in comparable store sales and sales of $448 million or 3.1% from net new supermarkets since the beginning of 2000. Sales for 2000 were $14.6 billion as compared with $13.1 billion in 1999, an 11.5% increase. This reflects an increase of $288.8 million or 2.2% in sales from an additional week included in the 2000 fiscal year, $535.8 million or 4.1% in comparable store sales and sales of $681.5 million or 5.2% from net new supermarkets since the beginning of 1999.
Due to the events of September 11, 2001, there has been a general decline in tourism. The decline in tourism has continued to impact sales in the Company's supermarkets in seasonal locations during the 2002 fiscal year.
Cost of merchandise sold including certain store occupancy, warehousing and delivery expenses, as a percentage of sales, was approximately 72.9% in 2002 as compared with 73.9% and 74.2% in 2001 and 2000, respectively. In 2002, 2001 and 2000, cost of merchandise sold decreased as a percentage of sales primarily due to increased margins from retail pricing strategies as well as continuing improvements in buying practices including centralized product procurement, promotional efficiencies including category management and more efficient distribution channels.
Operating and administrative expenses, as a percentage of sales, were approximately 21.6% in 2002 and 2001, and approximately 21.2% in 2000. Decreases in payroll and other expenses were offset by increases in employee benefit costs and certain facilities costs.
In recent years, the impact of inflation on the Company's food prices has been lower than the overall increase in the Consumer Price Index.
During the fourth quarter of 2000, an $11.7 million expense was recorded to cover the settlement of class action litigation against the Company involving alleged violations of the Federal Civil Rights Act and Florida law with respect to certain of the Company's black employees and former black employees. The expense recorded covers the full cost of the settlement, including agreed payments to class members and their counsel, as well as the estimated cost of implementing and complying with the procedures agreed to be established under the settlement. The impact of the expense recorded on net earnings was approximately $5.7 million or $.03 per share for fiscal 2000.
Net earnings were $632.4 million or $3.25 per share, $530.4 million or $2.62 per share and $530.4 million or $2.52 per share for 2002, 2001 and 2000, respectively.
In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 143, "Accounting for Asset Retirement Obligations," (SFAS 143) effective for fiscal years beginning after June 15, 2002. SFAS 143 addresses the financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS 143 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets. The Company would also record a corresponding asset which is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The adoption of SFAS 143 is not expected to have a material effect on the Company's financial condition, results of operations or cash flows.
In July 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," (SFAS 146) effective for exit or disposal activities initiated after December 31, 2002. SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized at fair value when the liability is incurred rather than at the date of a commitment to an exit or disposal plan. The adoption of SFAS 146 is not expected to have a material effect on the Company's financial condition, results of operations or cash flows.
In November 2002, the Financial Accounting Standards Board issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," (FIN 45) effective for guarantees issued or modified after December 31, 2002. FIN 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees such as standby letters of credit. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair market value of the obligations it assumes under that guarantee and must disclose that information in its interim and annual financial statements. The Company does not have any guarantees as defined in FIN 45 therefore, the adoption of FIN 45 will have no effect on the Company's financial condition, results of operations or cash flows.
In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 148, "Accounting for Stock-Based Compensation," (SFAS 148) effective for fiscal years ending after December 15, 2002. SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require disclosures in both interim and annual financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company does not have any stock-based employee compensation therefore, the adoption of SFAS 148 will have no effect on the Company's financial condition, results of operations or cash flows.
The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company's significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements. The Company believes the following critical accounting policies reflect its more significant judgments and estimates used in the preparation of its consolidated financial statements:
The Company also from time to time holds investments in joint ventures, partnerships or other equity investments for which evaluation of the existence and quantification of other-than-temporary declines in value may be required. Realized gains and losses and declines in value judged to be other-than-temporary on other investments are included in investment income, net.
From time to time, certain information provided by the Company, including written or oral statements made by its representatives, may contain forward-looking information as defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking information includes statements 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, the words "plan," "estimate," "project," "intend," "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 regulation, adverse determinations with respect to litigation or other claims, ability to recruit and retain employees, ability to construct new stores or complete remodels as rapidly as planned and stability of product costs. Other factors and assumptions not identified above could also cause the actual results to differ materially from those set forth in the forward-looking statements. The Company assumes no obligation to update publicly these forward-looking statements.
The Company does not utilize financial instruments for trading or other speculative purposes, nor does it utilize leveraged financial instruments. The Company does not consider to be material the potential losses in future earnings, fair values and cash flows from reasonably possible near-term changes in interest rates.
The Company's financial statements, together with the independent auditors' report thereon, are included in the section following Part IV of this report.
None
PART III
Certain information concerning the directors and executive officers of the Company is incorporated by reference to pages 2 through 7 of the Proxy Statement of the Company (2003 Proxy Statement) which the Company intends to file no later than 120 days after its fiscal year end. Certain information concerning the executive officers of the Company is set forth in Part I under the caption "Executive Officers of the Company."
The Company has adopted a Code of Ethical Conduct for Financial Managers that applies to the Company's principal executive officer, principal financial officer, principal accounting officer or controller and all persons performing similar functions. A copy of the Code of Ethical Conduct for Financial Managers is attached as Exhibit 14.
Information regarding executive compensation is incorporated by reference to pages 7 through 9 of the 2003 Proxy Statement.
Information regarding security ownership is incorporated by reference to pages 5 through 7 of the 2003 Proxy Statement.
Information regarding certain relationships and related transactions is incorporated by reference to pages 3, 6 and 7 of the 2003 Proxy Statement.
Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 and 15d-14. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic SEC filings. There have been no significant changes in the Company's internal controls or in other factors which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.
PART IV
3(b). Amended and Restated By-laws of the Company are incorporated by reference to the exhibits to the quarterly report of the Company on Form 10-Q for the quarter ended June 29, 2002.
10. Employment Agreement dated August 28, 1998, between William H. Vass and the Company, effective January 1, 1999 is incorporated by reference to the exhibits to the Annual Report of the Company on Form 10-K for the year ended December 26, 1998.
10. Indemnification Agreement, in the form attached as an exhibit to the quarterly report of the Company on Form 10-Q for the quarter ended March 31, 2001, between the Company and all of its directors and officers as reported in the quarterly reports of the Company on Form 10-Q for the quarters ended March 31, 2001, June 30, 2001, September 29, 2001 and June 29, 2002. Such subsequent indemnified director and officer are listed as follows:
Sherrill W. Hudson
Linda S. Hall
10.1 Non-Employee Directors Stock Purchase Plan Summary Plan Description, as registered in the Form S-8 filed with the Securities and Exchange Commission on June 21, 2001, is incorporated by reference to the exhibits to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 2001.
14. Code of Ethics.
21. Subsidiaries of the Registrant.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PUBLIX SUPER MARKETS, INC.
March 6, 2003 By: /s/ John A. Attaway, Jr.
--------------------------
John A. Attaway, Jr.
Secretary
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Carol Jenkins Barnett Director March 6, 2003
---------------------------
Carol Jenkins Barnett
/s/ Hoyt R. Barnett Vice Chairman and Director March 6, 2003
---------------------------
Hoyt R. Barnett
/s/ Joan G. Buccino Director March 6, 2003
---------------------------
Joan G. Buccino
/s/ William E. Crenshaw President and Director March 6, 2003
---------------------------
William E. Crenshaw
/s/ Mark C. Hollis Director March 6, 2003
---------------------------
Mark C. Hollis
/s/ Sherrill W. Hudson Director March 6, 2003
---------------------------
Sherrill W. Hudson
Chief Executive Officer and
Director
/s/ Charles H. Jenkins, Jr. (Principal Executive Officer) March 6, 2003
---------------------------
Charles H. Jenkins, Jr.
|
Chairman of the Board and
/s/ Howard M. Jenkins Director March 6, 2003 --------------------------- Howard M. Jenkins |
Senior Vice President
/s/ Tina P. Johnson and Director March 6, 2003
---------------------------
Tina P. Johnson
/s/ E. Vane McClurg Director March 6, 2003
---------------------------
E. Vane McClurg
/s/ Kelly E. Norton Director March 6, 2003
---------------------------
Kelly E. Norton
Chief Financial Officer
and Treasurer
(Principal Financial and
/s/ David P. Phillips Accounting Officer) March 6, 2003
---------------------------
David P. Phillips
|
CERTIFICATIONS PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Charles H. Jenkins, Jr., certify that:
1. I have reviewed this annual report on Form 10-K of Publix Super Markets, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 6, 2003 /s/ Charles H. Jenkins, Jr. --------------------------- Charles H. Jenkins, Jr. Chief Executive Officer |
I, David P. Phillips, certify that:
1. I have reviewed this annual report on Form 10-K of Publix Super Markets, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 6, 2003 /s/ David P. Phillips ----------------------- David P. Phillips Chief Financial Officer |
PUBLIX SUPER MARKETS, INC.
Index to Consolidated Financial Statements and Schedule
Independent Auditors' Report
Consolidated Financial Statements:
Consolidated Balance Sheets - December 28, 2002 and December 29, 2001
Consolidated Statements of Earnings - Years ended December 28, 2002, December 29, 2001 and December 30, 2000
Consolidated Statements of Comprehensive Earnings - Years ended December 28, 2002, December 29, 2001 and December 30, 2000
Consolidated Statements of Stockholders' Equity - Years ended December 28, 2002, December 29, 2001 and December 30, 2000
Consolidated Statements of Cash Flows - Years ended December 28, 2002, December 29, 2001 and December 30, 2000
Notes to Consolidated Financial Statements
The following consolidated financial statement schedule of the Company for the years ended December 28, 2002, December 29, 2001 and December 30, 2000 is submitted herewith:
Schedule:
II - Valuation and Qualifying Accounts
All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
The Board of Directors and Stockholders
Publix Super Markets, Inc.:
We have audited the consolidated financial statements of Publix Super Markets, Inc. and subsidiaries (the "Company") as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 Publix Super Markets, Inc. and subsidiaries as of December 28, 2002 and December 29, 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 28, 2002, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG LLP
Tampa, Florida
February 25, 2003
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 28, 2002 and
December 29, 2001
Assets 2002 2001
------ ---- ----
(Amounts are in thousands)
Current assets:
Cash and cash equivalents $ 207,523 211,296
Short-term investments 6,713 5,176
Trade receivables 188,077 171,878
Merchandise inventories 922,243 840,115
Deferred tax assets 57,383 54,172
Prepaid expenses 4,263 3,001
---------- ---------
Total current assets 1,386,202 1,285,638
---------- ---------
Long-term investments 377,616 376,118
Other noncurrent assets 950 6,841
Property, plant and equipment:
Land 162,552 132,518
Buildings and improvements 1,034,854 899,277
Furniture, fixtures and equipment 2,620,704 2,267,850
Leasehold improvements 745,468 651,467
Construction in progress 134,072 191,695
---------- ---------
4,697,650 4,142,807
Less accumulated depreciation 1,672,816 1,403,217
---------- ---------
Net property, plant and equipment 3,024,834 2,739,590
---------- ---------
$4,789,602 4,408,187
========== =========
See accompanying notes to consolidated financial statements. (Continued)
|
PUBLIX SUPER MARKETS, INC.
Consolidated Balance Sheets
December 28, 2002 and
December 29, 2001
Liabilities and Stockholders' Equity 2002 2001
------------------------------------ ---- ----
(Amounts are in thousands,
except share amounts)
Current liabilities:
Accounts payable $ 686,634 693,473
Accrued expenses:
Salaries and wages 63,906 56,560
Contribution to retirement plans 248,605 232,925
Self-insurance reserves 102,722 103,048
Other 172,186 152,863
---------- ---------
Total accrued expenses 587,419 545,396
---------- ---------
Federal and state income taxes 16,131 13,030
---------- ---------
Total current liabilities 1,290,184 1,251,899
Deferred tax liabilities, net 238,573 172,440
Self-insurance reserves 176,895 137,474
Accrued postretirement benefit cost 69,062 70,151
Other noncurrent liabilities 6,820 13,672
---------- ---------
Total liabilities 1,781,534 1,645,636
---------- ---------
Stockholders' equity:
Common stock of $1 par value. Authorized
300,000,000 shares; issued and outstanding
189,167,769 shares in 2002 and 197,111,536
shares in 2001 189,168 197,112
Additional paid-in capital 421,019 343,834
Reinvested earnings 2,397,634 2,226,768
---------- ---------
3,007,821 2,767,714
Accumulated other comprehensive earnings 247 (5,163)
---------- ---------
Total stockholders' equity 3,008,068 2,762,551
Commitments and contingencies --- ---
---------- ---------
$4,789,602 4,408,187
========== =========
See accompanying notes to consolidated financial statements.
|
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Earnings
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
2002 2001 2000
---- ---- ----
(Amounts are in thousands, except shares
outstanding and per share amounts)
Revenues:
Sales $ 15,930,602 15,284,229 14,575,031
Other operating income 96,062 85,790 77,710
------------ ----------- -----------
Total revenues 16,026,664 15,370,019 14,652,741
------------ ----------- -----------
Costs and expenses:
Cost of merchandise sold, including
certain store occupancy, warehousing
and delivery expenses 11,610,625 11,300,287 10,812,177
Operating and administrative
expenses 3,446,448 3,301,652 3,083,122
------------ ----------- -----------
Total costs and expenses 15,057,073 14,601,939 13,895,299
------------ ----------- -----------
Operating profit 969,591 768,080 757,442
------------ ----------- -----------
Investment income, net 16,477 38,353 50,426
Other income, net 16,762 20,390 15,685
------------ ----------- -----------
Earnings before income tax expense 1,002,830 826,823 823,553
Income tax expense 370,426 296,402 293,147
------------ ----------- -----------
Net earnings $ 632,404 530,421 530,406
============ =========== ===========
Weighted average number of common
shares outstanding 194,466,212 202,171,794 210,145,666
=========== =========== ===========
Basic and diluted earnings per common
share based on weighted average
shares outstanding $ 3.25 2.62 2.52
============ =========== ===========
|
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Comprehensive Earnings
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Net earnings $632,404 530,421 530,406
Other comprehensive earnings
Unrealized (loss) gain on investment
securities available-for-sale,
net of tax effect of ($456),
$1,704 and ($1,253) in 2002,
2001 and 2000, respectively (726) 2,713 (1,995)
Reclassification adjustment for net
realized loss on investment securities
available-for-sale, net of tax effect
of $3,854, $170 and $595 in 2002, 2001
and 2000, respectively 6,136 270 948
-------- ------- -------
Comprehensive earnings $637,814 533,404 529,359
======== ======= =======
See accompanying notes to consolidated financial statements.
|
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Stockholders' Equity
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
Common
stock
acquired Accumulated Total
Additional from other stock-
Common paid-in Reinvested stock- comprehensive holders'
stock capital earnings holders earnings equity
----- ------- -------- ------- -------- ------
(Amounts are in thousands, except per share and share amounts)
Balances at December 25, 1999 $215,568 196,352 2,271,323 --- (7,099) 2,676,144
Comprehensive earnings for the year --- --- 530,406 --- (1,047) 529,359
Cash dividends, $.27 per share --- --- (57,816) --- --- (57,816)
Contribution of 3,319,596 shares to
retirement plans --- 1,505 --- 148,251 --- 149,756
Acquired 16,464,016 shares from stockholders --- --- --- (751,479) --- (751,479)
Sale of 2,549,273 shares to stockholders 347 15,090 --- 101,034 --- 116,471
Retirement of 10,941,939 shares (10,942) --- (491,252) 502,194 --- ---
-------- ------- --------- ------- ------ ---------
Balances at December 30, 2000 204,973 212,947 2,252,661 --- (8,146) 2,662,435
Comprehensive earnings for the year --- --- 530,421 --- 2,983 533,404
Cash dividends, $.32 per share --- --- (66,284) --- --- (66,284)
Contribution of 4,404,719 shares to
retirement plans --- 1,738 --- 210,855 --- 212,593
Acquired 14,249,727 shares from stockholders --- 357 --- (670,665) --- (670,308)
Sale of 1,983,741 shares to stockholders 2,744 128,792 --- (40,825) --- 90,711
Retirement of 10,605,219 shares (10,605) --- (490,030) 500,635 --- ---
-------- ------- --------- ------- ------ ---------
Balances at December 29, 2001 197,112 343,834 2,226,768 --- (5,163) 2,762,551
Comprehensive earnings for the year --- --- 632,404 --- 5,410 637,814
Cash dividends, $.33 per share --- --- (65,439) --- --- (65,439)
Contribution of 4,801,677 shares to
retirement plans 1,809 72,350 --- 122,710 --- 196,869
Acquired 14,558,822 shares from stockholders --- (703) --- (597,776) --- (598,479)
Sale of 1,813,378 shares to stockholders 137 5,538 --- 69,077 --- 74,752
Retirement of 9,890,943 shares (9,890) --- (396,099) 405,989 --- ---
-------- ------- --------- ------- ------ ---------
Balances at December 28, 2002 $189,168 421,019 2,397,634 --- 247 3,008,068
======== ======= ========= ======= ====== =========
See accompanying notes to consolidated financial statements.
|
PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Cash flows from operating activities:
Cash received from customers $ 16,031,205 15,394,511 14,677,659
Cash paid to employees and suppliers (14,325,863) (13,887,440) (13,240,262)
Dividends and interest received 27,363 42,228 56,358
Income taxes paid (307,799) (293,877) (276,433)
Payment for self-insured claims (204,190) (182,180) (153,021)
Other operating cash receipts 919 873 826
Other operating cash payments (10,649) (13,364) (10,367)
------------ ---------- ----------
Net cash provided by operating
activities 1,210,986 1,060,751 1,054,760
------------ ---------- ----------
Cash flows from investing activities:
Payment for property, plant and
equipment (635,891) (656,422) (558,133)
Proceeds from sale of property, plant
and equipment 15,512 2,550 4,390
Payment for investment securities -
available-for-sale (AFS) (265,381) (173,061) (111,143)
Proceeds from sale and maturity of
investment securities - AFS 259,622 285,072 75,349
Net proceeds from (investment in)
joint ventures and other investments 644 (15,289) (5,286)
Other, net 32 48 39
------------ ---------- ----------
Net cash used in investing activities (625,462) (557,102) (594,784)
------------ ---------- ----------
Cash flows from financing activities:
Proceeds from sale of common stock 74,752 90,711 116,471
Payment for acquisition of common stock (598,479) (670,308) (751,479)
Dividends paid (65,439) (66,284) (57,816)
Other, net (131) --- (262)
------------ ---------- ----------
Net cash used in financing activities (589,297) (645,881) (693,086)
------------ ---------- ----------
Net decrease in cash and cash equivalents (3,773) (142,232) (233,110)
Cash and cash equivalents at beginning
of year 211,296 353,528 586,638
------------ ---------- ----------
Cash and cash equivalents at end of year $ 207,523 211,296 353,528
============ ========== ==========
See accompanying notes to consolidated financial statements. (Continued)
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PUBLIX SUPER MARKETS, INC.
Consolidated Statements of Cash Flows
(Continued)
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings $ 632,404 530,421 530,406
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 309,793 259,682 226,950
Retirement contributions paid or payable
in common stock 213,722 196,582 218,790
Deferred income taxes 59,526 19,163 19,542
Loss on sale of property, plant and
equipment 28,977 20,966 15,683
Loss on sale of investments 9,990 439 1,543
Self-insurance reserves in excess of
current payments 39,095 47,004 24,008
Postretirement accruals (less than)
in excess of current payments (1,089) 7,165 7,251
Decrease in advance purchase allowances (6,721) (4,333) (6,261)
Other, net 3,120 3,077 3,922
Change in cash from:
Trade receivables (16,199) 1,873 6,892
Merchandise inventories (82,128) (25,130) (45,531)
Prepaid expenses (1,262) (727) 168
Accounts payable and accrued expenses 18,657 21,207 54,225
Federal and state income taxes 3,101 (16,638) (2,828)
---------- --------- ---------
Total adjustments 578,582 530,330 524,354
---------- --------- ---------
Net cash provided by operating activities $1,210,986 1,060,751 1,054,760
========== ========= =========
See accompanying notes to consolidated financial statements.
|
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
December 28, 2002, December 29, 2001
and December 30, 2000
(Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
All of the Company's debt and marketable equity securities are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as other comprehensive earnings and included as a separate component of stockholders' equity. The cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in investment income, net. The Company reviews its investments for impairment based on criteria that include the extent to which cost exceeds market value, the duration of the market decline and the financial health of and prospects for the issuer. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income, net. The cost of securities sold is based on the specific identification method.
Interest income is accrued as earned. Dividend income is recognized as income on the ex-dividend date of the stock.
The Company also from time to time holds investments in joint ventures, partnerships or other equity investments for which evaluation of the existence and quantification of other-than-temporary declines in value may be required. Realized gains and losses and declines in value judged to be other-than-temporary on other investments are included in investment income, net.
Buildings and improvements 10 - 40 years Furniture, fixtures and equipment 3 - 20 years Leasehold improvements 10 - 40 years |
Maintenance and repairs are charged to operating expenses as incurred. Expenditures for renewals and betterments are capitalized. The gain or loss realized on disposed assets or assets to be disposed of is recorded in operating and administrative expenses in the consolidated statements of earnings.
2 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
3 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
If the first-in, first-out method of valuing inventories had been used by the Company to value all inventories, inventories and current assets would have been higher than reported by approximately $117,581,000, $119,809,000 and $112,606,000 as of December 28, 2002, December 29, 2001 and December 30, 2000, respectively. Also, net earnings would have decreased by approximately $1,142,000 or less than $.01 per share in 2002 and increased by approximately $3,625,000 or less than $.02 per share in 2001 and approximately $1,584,000 or less than $.01 per share in 2000.
The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:
The carrying amount of the Company's other financial instruments as of December 28, 2002 and December 29, 2001 approximated their respective fair values.
All other investments are accounted for using the equity method. The carrying amount of other investments approximates fair value.
4 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
Following is a summary of investments as of December 28, 2002 and December
29, 2001:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
2002 (Amounts are in thousands)
----
Available-for-sale:
Tax exempt bonds $152,207 2,068 2,322 151,953
Taxable bonds 123,185 1,988 570 124,603
Equity securities 72,110 2,290 3,052 71,348
-------- ----- ------ -------
347,502 6,346 5,944 347,904
Other investments 36,425 --- --- 36,425
-------- ----- ------ -------
$383,927 6,346 5,944 384,329
======== ===== ====== =======
2001
----
Available-for-sale:
Tax exempt bonds $213,066 1,162 8,590 205,638
Taxable bonds 28,211 139 594 27,756
Equity securities 111,351 4,766 5,287 110,830
-------- ----- ------ -------
352,628 6,067 14,471 344,224
Other investments 37,070 --- --- 37,070
-------- ----- ------ -------
$389,698 6,067 14,471 381,294
======== ===== ====== =======
|
The realized gains on sales of available-for-sale securities totaled approximately $5,957,000, $6,218,000 and $1,388,000 for the fiscal years ended December 28, 2002, December 29, 2001 and December 30, 2000, respectively, and the realized losses totaled approximately $15,947,000, $6,657,000 and $2,931,000, respectively.
The net realized gains on other investments totaled approximately $1,903,000, $602,000 and $455,000 for the fiscal years ended December 28, 2002, December 29, 2001 and December 30, 2000, respectively.
5 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The amortized cost and estimated fair value of debt and marketable equity securities classified as available-for-sale and other investments as of December 28, 2002 and December 29, 2001, by expected maturity, are as follows:
2002 2001
-------------------- --------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---- ----- ---- -----
(Amounts are in thousands)
Due in one year or less $ 6,740 6,713 5,373 5,176
Due after one year through
five years 24,749 24,734 19,283 18,541
Due after five years through
ten years 33,975 33,951 19,704 18,350
Due after ten years 209,928 211,158 196,917 191,327
-------- ------- ------- -------
275,392 276,556 241,277 233,394
Equity securities 72,110 71,348 111,351 110,830
Other investments 36,425 36,425 37,070 37,070
-------- ------- ------- -------
$383,927 384,329 389,698 381,294
======== ======= ======= =======
|
The Company provides life insurance benefits for salaried and hourly full-time employees. Such employees retiring from the Company on or after attaining age 55 and having ten years of credited full-time service are entitled to postretirement life insurance benefits. The Company funds the life insurance benefits on a pay-as-you-go basis. Effective January 1, 2002, the Company amended the plan's eligibility requirements. As of October 1, 2001, an employee must have had at least five years of full-time service and the employee's age plus years of credited service must have equaled 65 or greater to retain postretirement life insurance benefits at retirement. In addition, the employee must be at least age 55 with ten years of full-time service at retirement to receive the benefit. The Company made benefit payments to beneficiaries of retirees of approximately $1,879,000, $1,976,000 and $1,165,000 during the fiscal years ended December 28, 2002, December 29, 2001 and December 30, 2000, respectively.
6 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The following tables provide a reconciliation of the changes in the benefit obligations and fair value of plan assets and a statement of the funded status as of December 28, 2002 and December 29, 2001:
2002 2001
---- ----
(Amounts are in thousands)
Change in benefit obligation:
Benefit obligation as of beginning of year $ 55,733 69,343
Service cost 830 3,560
Interest cost 4,035 5,581
Amendments --- (18,746)
Curtailments --- (4,397)
Actuarial loss 3,578 2,368
Benefit payments (1,879) (1,976)
-------- -------
Benefit obligation as of end of year $ 62,297 55,733
======== =======
Change in fair value of plan assets:
Fair value of plan assets as of beginning
of year $ --- ---
Employer contributions 1,879 1,976
Benefit payments (1,879) (1,976)
-------- -------
Fair value of plan assets as of end of year $ --- ---
======== =======
Funded status $(62,297) (55,733)
Unrecognized actuarial loss 7,906 4,328
Unrecognized prior service cost (14,671) (18,746)
-------- -------
Accrued postretirement benefit cost $(69,062) (70,151)
======== =======
|
Following are the actuarial assumptions that were used in the calculation of the year end benefit obligation:
2002 2001 2000
---- ---- ----
Discount rate 6.75% 7.25% 7.75%
Rate of compensation increase 4.00% 4.00% 4.00%
|
Net periodic postretirement benefit cost consists of the following components:
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Service cost $ 830 3,560 3,429
Interest cost 4,035 5,581 4,987
Amortization of prior service cost (4,075) --- ---
------ ----- -----
Net periodic postretirement benefit cost $ 790 9,141 8,416
====== ===== =====
|
Actuarial losses are amortized over the average remaining service life of active participants when the accumulation of such losses exceeds 10% of the greater of the projected benefit obligation or the fair value of plan assets.
7 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The Company has a trusteed, noncontributory Employee Stock Ownership Plan (ESOP) for the benefit of eligible employees. The amount of the Company's discretionary contribution to the ESOP is determined annually by the Board of Directors and can be made in Company common stock or cash. The expense recorded for contributions to this plan was approximately $198,315,000, $181,507,000 and $204,968,000 for the fiscal years ended December 28, 2002, December 29, 2001 and December 30, 2000, respectively.
The Company has a 401(k) plan for the benefit of eligible employees. The 401(k) plan is a voluntary defined contribution plan. Eligible employees may contribute up to 10% of their eligible annual compensation (8% prior to January 1, 2002), subject to the maximum contribution limits established by Federal law. The Company may make a discretionary annual matching contribution to eligible participants of this plan as determined by the Board of Directors. During 2002, 2001 and 2000, the Board of Directors approved a match of 50% of eligible contributions up to 3% of eligible wages, not to exceed a maximum match of $750 per employee. The match, which is determined as of the last day of the plan year and paid in the subsequent plan year, is in common stock of the Company. The expense recorded for the Company's match to the 401(k) plan was approximately $15,407,000, $15,075,000 and $13,822,000 for the fiscal years ended December 28, 2002, December 29, 2001 and December 30, 2000, respectively.
The Company intends to continue its retirement plans; however, the right to modify, amend, terminate or merge these plans has been reserved. In the event of termination, all amounts contributed under the plans must be paid to the participants or their beneficiaries.
The provision for income taxes consists of the following:
Current Deferred Total
------- -------- -----
(Amounts are in thousands)
2002
----
Federal $270,386 50,411 320,797
State 41,510 8,119 49,629
-------- ------ -------
$311,896 58,530 370,426
======== ====== =======
2001
----
Federal $240,433 16,285 256,718
State 36,805 2,879 39,684
-------- ------ -------
$277,238 19,164 296,402
======== ====== =======
2000
----
Federal $233,284 16,761 250,045
State 40,321 2,781 43,102
-------- ------ -------
$273,605 19,542 293,147
======== ====== =======
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8 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
The actual tax expense for the fiscal years ended December 28, 2002, December 29, 2001 and December 30, 2000 differs from the "expected" tax expense for those years (computed by applying the U.S. Federal corporate tax rate of 35% to earnings before income taxes) as follows:
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Computed "expected" tax expense $350,991 289,388 288,243
State income taxes (net of
Federal income tax benefit) 32,259 25,795 28,016
Tax exempt interest (4,088) (8,077) (12,990)
Other, net (8,736) (10,704) (10,122)
-------- ------- -------
$370,426 296,402 293,147
======== ======= =======
|
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of December 28, 2002 and December 29, 2001 are as follows:
2002 2001
---- ----
(Amounts are in thousands)
Deferred tax assets:
Self-insurance reserves $ 99,895 85,645
Advance purchase allowances 12,205 14,767
Postretirement benefit cost 26,636 27,060
Retirement plan contributions 23,636 19,448
Inventory capitalization 8,444 8,794
Other 18,828 12,878
-------- -------
Total deferred tax assets $189,644 168,592
======== =======
Deferred tax liabilities:
Property, plant and equipment,
principally due to depreciation $357,644 280,643
Other 13,190 6,217
-------- -------
Total deferred tax liabilities $370,834 286,860
======== =======
|
The Company expects the results of future operations and the reversal of deferred tax liabilities to generate sufficient taxable income to allow utilization of deferred tax assets; therefore, no valuation allowance has been recorded as of December 28, 2002 and December 29, 2001.
9 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
Total rental expense for the years ended December 28, 2002, December 29, 2001 and December 30, 2000, is as follows:
2002 2001 2000
---- ---- ----
(Amounts are in thousands)
Minimum rentals $257,258 219,757 200,267
Contingent rentals 8,949 10,529 11,498
Sublease rental income (10,181) (10,148) (8,260)
-------- ------- -------
$256,026 220,138 203,505
======== ======= =======
|
As of December 28, 2002, future minimum lease payments for all noncancelable operating leases and related subleases are as follows:
Minimum Sublease
Rental Rental
Year Commitments Income Net
---- ----------- ------ ---
(Amounts are in thousands)
2003 $ 264,817 9,225 255,592
2004 261,731 7,768 253,963
2005 254,876 6,236 248,640
2006 249,452 4,273 245,179
2007 238,674 1,925 236,749
Thereafter 2,142,443 339 2,142,104
---------- ------ ---------
$3,411,993 29,766 3,382,227
========== ====== =========
|
The Company also owns shopping centers which are leased to tenants for minimum monthly rentals plus, in certain instances, contingent rentals. Contingent rentals received are determined on the basis of a percentage of sales in excess of stipulated minimums plus, in certain instances, reimbursement of taxes, insurance and other expenses. Contingent rentals are included in trade receivables and were approximately $1,024,000 and $1,033,000 as of December 28, 2002 and December 29, 2001, respectively. Rental income was approximately $14,057,000, $12,986,000 and $11,513,000 for the fiscal years ended December 28, 2002, December 29, 2001 and December 30, 2000, respectively. The approximate amounts of minimum future rental payments to be received under noncancelable operating leases are $10,565,000, $8,752,000, $6,430,000, $4,618,000 and $2,737,000 for the years 2003 through 2007, respectively, and $12,701,000 thereafter.
10 (Continued)
PUBLIX SUPER MARKETS, INC.
Notes to Consolidated Financial Statements
Following is a summary of the quarterly results of operations for the fiscal years ended December 28, 2002 and December 29, 2001. All quarters have 13 weeks.
Quarter Ended
----------------------------------------------------
March June September December
----- ---- --------- --------
(Amounts are in thousands, except per share amounts)
2002
----
Revenues $4,217,661 3,847,054 3,867,430 4,094,519
Costs and expenses $3,916,454 3,631,019 3,654,345 3,855,255
Net earnings $ 195,169 141,449 140,701 155,085
Basic and diluted
earnings per common
share, based on
weighted average
shares outstanding $ .99 .72 .73 .81
2001
----
Revenues $3,938,820 3,729,763 3,736,347 3,965,089
Costs and expenses $3,720,245 3,557,971 3,568,910 3,754,813
Net earnings $ 150,886 119,862 116,242 143,431
Basic and diluted
earnings per common
share, based on
weighted average
shares outstanding $ .74 .59 .58 .71
|
11 (Continued)
Schedule II
-----------
PUBLIX SUPER MARKETS, INC.
Valuation and Qualifying Accounts
Years ended December 28, 2002, December 29, 2001
and December 30, 2000
(Amounts are in thousands)
Balance at Additions Deductions Balance at
beginning charged to from end of
Description of year income reserves year
----------- ------- ------ -------- ----
Year ended December 28, 2002
Reserves not deducted from assets:
Self-insurance reserves:
-Current $103,048 203,864 204,190 102,722
-Noncurrent 137,474 39,421 --- 176,895
-------- ------- ------- -------
$240,522 243,285 204,190 279,617
======== ======= ======= =======
Year ended December 29, 2001
Reserves not deducted from assets:
Self-insurance reserves:
-Current $ 84,095 201,133 182,180 103,048
-Noncurrent 109,423 28,051 --- 137,474
-------- ------- ------- -------
$193,518 229,184 182,180 240,522
======== ======= ======= =======
Year ended December 30, 2000
Reserves not deducted from assets:
Self-insurance reserves:
-Current $ 69,356 167,760 153,021 84,095
-Noncurrent 100,154 9,269 --- 109,423
-------- ------- ------- -------
$169,510 177,029 153,021 193,518
======== ======= ======= =======
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Exhibit 14
PUBLIX SUPER MARKETS, INC.
Publix Super Markets, Inc. including its affiliates and subsidiaries ("Publix") is committed to the highest standards of business and ethical conduct. This includes conducting business in accordance with the spirit and letter of applicable laws and regulations. In particular, Publix's financial managers (1) are vested with a higher level of responsibility over the financial affairs of Publix. Financial managers must fulfill this responsibility by adhering to a high ethical standard. This Code provides principles to which Publix's financial managers are expected to adhere and advocate. Publix financial managers agree by their signature below, that they will:
1. Act with honesty and integrity, avoiding actual or apparent conflicts between his or her personal interests and the interests of Publix, including receiving improper personal benefits as a result of his or her position.
2. Manage financial transactions and reporting systems and procedures so that business transactions are properly authorized and completely, timely and accurately recorded on Publix's books and records in accordance with generally accepted accounting principles and established company financial policies.
3. Perform responsibilities with a view to causing periodic reports and other documents filed with the SEC and other public communications to contain information that is full, fair, accurate, complete, timely and not misleading.
4. Establish and maintain processes and procedures to cause compliance with laws, rules and regulations of federal, state, and local governments applicable to Publix.
5. Act in good faith, responsibly, with due care and diligence, without misrepresenting or omitting material facts or allowing independent judgment to be compromised.
6. Respect the confidentiality of information acquired in the course of the performance of his or her responsibilities except when authorized or otherwise legally obligated to disclose.
7. Use corporate assets and resources in a responsible manner.
8. Not use corporate information, corporate assets, corporate opportunities or his or her position with Publix for personal gain.
9. Not compete directly or indirectly with Publix.
10. Comply in all respects with all Publix policies governing ethical conduct and financial reporting.
11. Proactively promote ethical behavior among subordinates and peers.
12. Report material violations of this Code to the General Counsel or the CFO.
Exhibit 14
Publix requires that its financial managers acknowledge and certify the foregoing annually and confirm such certification with the Audit Committee.
The Audit Committee shall have the power to monitor, make determinations, and recommend action to the Board with respect to violations of this Code.
EXECUTED this ____ day of ________________, 2003.
Exhibit 21
PUBLIX SUPER MARKETS, INC.
Subsidiaries of the Registrant
Publix Alabama, LLC (filed in Alabama)
PublixDirect, LLC (filed in Florida)
Publix Asset Management Company (filed in Florida)
Publix Tennessee, LLC (filed in Florida)
Real Sub, LLC (filed in Florida)
Lone Palm Golf Club, LLC (filed in Florida)
Exhibit 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Publix Super Markets, Inc. (the "Company") on Form 10-K for the period ending December 28, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Charles H. Jenkins, Jr., Chief Executive Officer of the Company, certify, to the best of my knowledge, that on the date hereof:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Charles H. Jenkins, Jr. --------------------------- Charles H. Jenkins, Jr. Chief Executive Officer March 6, 2003 |
Exhibit 99.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Publix Super Markets, Inc. (the "Company") on Form 10-K for the period ending December 28, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David P. Phillips, Chief Financial Officer of the Company, certify, to the best of my knowledge, that on the date hereof:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ David P. Phillips ----------------------- David P. Phillips Chief Financial Officer March 6, 2003 |