UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 25, 2021
Commission File Number: 000-00981
PUBLIX SUPER MARKETS, INC.
(Exact name of Registrant as specified in its charter)
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| Florida |
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59-0324412 |
| (State of incorporation) |
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(I.R.S. Employer Identification No.) |
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3300 Publix Corporate Parkway
Lakeland, Florida
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33811 |
| (Address of principal executive offices) |
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(Zip Code) |
(863) 688-1188
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.
Yes X No
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer X
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No X
The number of shares of the Registrant’s common stock outstanding as of October 15, 2021 was 686,731,000.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts are in thousands, except par value)
(Unaudited)
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September 25, 2021 |
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December 26, 2020 |
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| ASSETS |
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| Current assets: |
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Cash and cash equivalents
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$ |
1,171,532 |
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673,483 |
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Short-term investments
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774,261 |
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682,965 |
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Trade receivables
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797,918 |
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917,531 |
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Inventories
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1,938,382 |
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2,033,792 |
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Prepaid expenses
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86,486 |
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110,025 |
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Total current assets
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4,768,579 |
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4,417,796 |
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| Long-term investments |
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12,582,694 |
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10,605,234 |
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| Other noncurrent assets |
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424,354 |
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415,103 |
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| Operating lease right-of-use assets |
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2,959,937 |
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2,965,424 |
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| Property, plant and equipment |
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17,171,048 |
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16,256,993 |
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| Accumulated depreciation |
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(7,032,289) |
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(6,566,473) |
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Net property, plant and equipment
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10,138,759 |
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9,690,520 |
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$ |
30,874,323 |
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28,094,077 |
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| LIABILITIES AND EQUITY |
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| Current liabilities: |
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Accounts payable
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$ |
2,411,056 |
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2,414,798 |
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Accrued expenses:
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Contributions to retirement plans
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547,114 |
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639,581 |
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Self-insurance reserves
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186,061 |
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161,223 |
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Salaries and wages
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380,475 |
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197,721 |
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Other
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771,741 |
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499,970 |
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Current portion of long-term debt
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36,068 |
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36,392 |
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Current portion of operating lease liabilities
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354,792 |
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345,805 |
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| Income taxes |
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— |
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71,354 |
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Total current liabilities
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4,687,307 |
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4,366,844 |
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| Deferred income taxes |
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1,012,201 |
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772,722 |
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| Self-insurance reserves |
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252,017 |
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235,858 |
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| Accrued postretirement benefit cost |
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130,064 |
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131,356 |
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| Long-term debt |
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112,220 |
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123,835 |
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| Operating lease liabilities |
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2,572,350 |
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2,588,258 |
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| Other noncurrent liabilities |
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535,601 |
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589,340 |
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Total liabilities
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9,301,760 |
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8,808,213 |
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| Common stock related to Employee Stock Ownership Plan (ESOP) |
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3,823,072 |
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3,484,549 |
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| Stockholders’ equity: |
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Common stock of $1 par value. Authorized 1,000,000 shares;
issued 695,725 shares in 2021 and 690,982 shares in 2020
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695,725 |
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690,982 |
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Additional paid-in capital
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4,291,484 |
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4,005,969 |
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Retained earnings
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16,972,382 |
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14,343,865 |
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Treasury stock at cost, 8,405 shares in 2021
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(516,367) |
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— |
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| Accumulated other comprehensive earnings |
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86,732 |
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200,951 |
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Common stock related to ESOP
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(3,823,072) |
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(3,484,549) |
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Total stockholders’ equity
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17,706,884 |
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15,757,218 |
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| Noncontrolling interests |
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42,607 |
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44,097 |
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| Total equity |
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21,572,563 |
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19,285,864 |
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$ |
30,874,323 |
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28,094,077 |
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See accompanying notes to condensed consolidated financial statements.
1
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except per share amounts)
(Unaudited)
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Three Months Ended |
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September 25, 2021 |
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September 26, 2020 |
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| Revenues: |
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| Sales |
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$ |
11,919,567 |
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11,052,138 |
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| Other operating income |
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87,595 |
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84,271 |
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| Total revenues |
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12,007,162 |
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11,136,409 |
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| Costs and expenses: |
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| Cost of merchandise sold |
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8,711,636 |
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8,003,016 |
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| Operating and administrative expenses |
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2,386,006 |
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2,257,070 |
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| Total costs and expenses |
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11,097,642 |
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10,260,086 |
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| Operating profit |
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|
909,520 |
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|
876,323 |
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| Investment income |
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|
130,328 |
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|
265,295 |
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| Other nonoperating income, net |
|
|
21,968 |
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|
18,169 |
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| Earnings before income tax expense |
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|
1,061,816 |
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1,159,787 |
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| Income tax expense |
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|
204,910 |
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|
242,203 |
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| Net earnings |
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$ |
856,906 |
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917,584 |
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| Weighted average shares outstanding |
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|
688,872 |
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698,843 |
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| Earnings per share |
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$ |
1.24 |
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1.31 |
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
(Unaudited)
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Three Months Ended |
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September 25, 2021 |
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September 26, 2020 |
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| Net earnings |
|
|
$ |
856,906 |
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917,584 |
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| Other comprehensive earnings: |
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Unrealized (loss) gain on debt securities net of income taxes of $(4,292) and $1,860 in 2021 and 2020, respectively.
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(12,611) |
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5,456 |
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Reclassification adjustment for net realized gain on debt securities net of income taxes of $(2,133) and $(1,254) in 2021 and 2020, respectively.
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(6,258) |
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(3,678) |
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Adjustment to postretirement benefit obligation net of income taxes of $470 and $277 in 2021 and 2020, respectively.
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1,378 |
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|
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|
814 |
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| Comprehensive earnings |
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|
$ |
839,415 |
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|
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|
920,176 |
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See accompanying notes to condensed consolidated financial statements.
2
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts are in thousands, except per share amounts)
(Unaudited)
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Nine Months Ended |
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September 25, 2021 |
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|
September 26, 2020 |
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| Revenues: |
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| Sales |
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$ |
35,416,585 |
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|
33,669,740 |
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| Other operating income |
|
|
277,873 |
|
|
|
|
|
242,183 |
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| Total revenues |
|
|
35,694,458 |
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|
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|
33,911,923 |
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| Costs and expenses: |
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| Cost of merchandise sold |
|
|
25,610,936 |
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|
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|
24,196,259 |
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| Operating and administrative expenses |
|
|
7,013,040 |
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|
|
|
6,610,685 |
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| Total costs and expenses |
|
|
32,623,976 |
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|
|
|
30,806,944 |
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| Operating profit |
|
|
3,070,482 |
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|
|
|
3,104,979 |
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| Investment income |
|
|
1,153,309 |
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|
|
|
608,913 |
|
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|
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|
|
|
|
|
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| Other nonoperating income, net |
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|
53,227 |
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|
31,923 |
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| Earnings before income tax expense |
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|
4,277,018 |
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|
3,745,815 |
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| Income tax expense |
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|
915,615 |
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|
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|
793,841 |
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| Net earnings |
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$ |
3,361,403 |
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|
|
|
2,951,974 |
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| Weighted average shares outstanding |
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|
690,720 |
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|
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|
702,879 |
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| Earnings per share |
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$ |
4.87 |
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|
|
4.20 |
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|
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|
|
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in thousands)
(Unaudited)
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| |
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Nine Months Ended |
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| |
|
September 25, 2021 |
|
|
September 26, 2020 |
|
| Net earnings |
|
|
$ |
3,361,403 |
|
|
|
|
|
2,951,974 |
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| Other comprehensive earnings: |
|
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|
|
|
|
|
|
|
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|
Unrealized (loss) gain on debt securities net of income taxes of $(35,156) and $43,620 in 2021 and 2020, respectively.
|
|
|
(103,182) |
|
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|
|
|
127,951 |
|
|
|
|
Reclassification adjustment for net realized gain on debt securities net of income taxes of $(5,149) and $(2,591) in 2021 and 2020, respectively.
|
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|
(15,174) |
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|
(7,599) |
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|
Adjustment to postretirement benefit obligation net of income taxes of $1,410 and $833 in 2021 and 2020, respectively.
|
|
|
4,137 |
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|
|
|
|
2,443 |
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| Comprehensive earnings |
|
|
$ |
3,247,184 |
|
|
|
|
|
3,074,769 |
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|
See accompanying notes to condensed consolidated financial statements.
3
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
(Unaudited)
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| |
|
|
Nine Months Ended |
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| |
|
September 25, 2021 |
|
|
September 26, 2020 |
|
| Cash flows from operating activities: |
|
|
|
|
|
|
|
|
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|
|
Cash received from customers
|
|
|
$ |
35,626,167 |
|
|
|
|
|
33,730,192 |
|
|
|
|
Cash paid to employees and suppliers
|
|
|
(30,926,435) |
|
|
|
|
|
(28,969,545) |
|
|
|
| Income taxes paid |
|
|
(668,248) |
|
|
|
|
|
(613,861) |
|
|
|
|
Self-insured claims paid
|
|
|
(364,315) |
|
|
|
|
|
(272,717) |
|
|
|
|
Dividends and interest received
|
|
|
201,996 |
|
|
|
|
|
181,287 |
|
|
|
|
Other operating cash receipts
|
|
|
275,448 |
|
|
|
|
|
238,978 |
|
|
|
|
Other operating cash payments
|
|
|
(17,892) |
|
|
|
|
|
(14,414) |
|
|
|
|
Net cash provided by operating activities
|
|
|
4,126,721 |
|
|
|
|
|
4,279,920 |
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Payment for capital expenditures
|
|
|
(983,331) |
|
|
|
|
|
(894,319) |
|
|
|
|
Proceeds from sale of property, plant and equipment
|
|
|
10,309 |
|
|
|
|
|
3,862 |
|
|
|
|
Payment for investments
|
|
|
(2,503,504) |
|
|
|
|
|
(4,239,533) |
|
|
|
|
Proceeds from sale and maturity of investments
|
|
|
1,237,953 |
|
|
|
|
|
2,238,071 |
|
|
|
|
Net cash used in investing activities
|
|
|
(2,238,573) |
|
|
|
|
|
(2,891,919) |
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
Payment for acquisition of common stock
|
|
|
(832,446) |
|
|
|
|
|
(1,091,145) |
|
|
|
|
Proceeds from sale of common stock
|
|
|
197,768 |
|
|
|
|
|
194,894 |
|
|
|
|
Dividends paid
|
|
|
(732,886) |
|
|
|
|
|
(661,606) |
|
|
|
|
Repayment of long-term debt
|
|
|
(22,548) |
|
|
|
|
|
(8,600) |
|
|
|
|
Other, net
|
|
|
13 |
|
|
|
|
|
17,872 |
|
|
|
|
Net cash used in financing activities
|
|
|
(1,390,099) |
|
|
|
|
|
(1,548,585) |
|
|
|
| Net increase (decrease) in cash and cash equivalents |
|
|
498,049 |
|
|
|
|
|
(160,584) |
|
|
|
| Cash and cash equivalents at beginning of period |
|
|
673,483 |
|
|
|
|
|
763,382 |
|
|
|
| Cash and cash equivalents at end of period |
|
|
$ |
1,171,532 |
|
|
|
|
|
602,798 |
|
|
|
See accompanying notes to condensed consolidated financial statements. (Continued)
4
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Nine Months Ended |
|
|
| |
|
September 25, 2021 |
|
|
September 26, 2020 |
|
|
Reconciliation of net earnings to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
| Net earnings |
|
|
$ |
3,361,403 |
|
|
|
|
|
2,951,974 |
|
|
|
|
Adjustments to reconcile net earnings to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
588,336 |
|
|
|
|
|
545,180 |
|
|
|
| Increase in last-in, first-out (LIFO) reserve |
|
|
70,138 |
|
|
|
|
|
32,449 |
|
|
|
| Retirement contributions paid or payable in common stock |
|
|
321,775 |
|
|
|
|
|
308,387 |
|
|
|
|
Deferred income taxes
|
|
|
278,374 |
|
|
|
|
|
(6,772) |
|
|
|
| Loss on disposal and impairment of long-lived assets |
|
|
57,167 |
|
|
|
|
|
90,686 |
|
|
|
| Gain on investments |
|
|
(1,009,691) |
|
|
|
|
|
(460,674) |
|
|
|
|
Net amortization of investments
|
|
|
58,055 |
|
|
|
|
|
36,077 |
|
|
|
|
Changes in operating assets and liabilities providing
(requiring) cash:
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
119,626 |
|
|
|
|
|
(40,411) |
|
|
|
|
Inventories
|
|
|
25,272 |
|
|
|
|
|
(133,183) |
|
|
|
|
Other assets
|
|
|
(2,828) |
|
|
|
|
|
100,693 |
|
|
|
|
Accounts payable and accrued expenses
|
|
|
282,482 |
|
|
|
|
|
773,652 |
|
|
|
| Income taxes |
|
|
(42,690) |
|
|
|
|
|
73,103 |
|
|
|
|
Other liabilities
|
|
|
19,302 |
|
|
|
|
|
8,759 |
|
|
|
| Total adjustments |
|
|
765,318 |
|
|
|
|
|
1,327,946 |
|
|
|
| Net cash provided by operating activities |
|
|
$ |
4,126,721 |
|
|
|
|
|
4,279,920 |
|
|
|
See accompanying notes to condensed consolidated financial statements.
5
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts are in thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Common
Stock (Acquired
from) Sold to
Stock-
holders
|
Accumu-
lated Other Compre-
hensive
Earnings
(Losses)
|
Common
Stock
Related to
ESOP
|
|
Total
Stock-
holders’
Equity
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 26, 2020 |
|
$ |
690,982 |
|
|
4,005,969 |
|
|
14,343,865 |
|
|
|
— |
|
|
|
200,951 |
|
|
|
(3,484,549) |
|
|
15,757,218 |
|
|
Comprehensive earnings |
|
— |
|
|
— |
|
|
1,495,093 |
|
|
|
— |
|
|
|
(107,752) |
|
|
|
— |
|
|
1,387,341 |
|
|
Dividends, $0.32 per share
|
|
— |
|
|
— |
|
|
(220,975) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(220,975) |
|
|
Contribution of 6,786 shares to
retirement plan
|
|
4,743 |
|
|
285,438 |
|
|
— |
|
|
|
118,388 |
|
|
|
— |
|
|
|
— |
|
|
408,569 |
|
|
Acquisition of 5,731 shares from
stockholders
|
|
— |
|
|
— |
|
|
— |
|
|
|
(340,092) |
|
|
|
— |
|
|
|
— |
|
|
(340,092) |
|
|
Sale of 1,515 shares to stockholders
|
|
— |
|
|
5 |
|
|
— |
|
|
|
90,877 |
|
|
|
— |
|
|
|
— |
|
|
90,882 |
|
|
Change for ESOP related shares |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(560,684) |
|
|
(560,684) |
|
|
Balances at March 27, 2021 |
|
695,725 |
|
|
4,291,412 |
|
|
15,617,983 |
|
|
|
(130,827) |
|
|
|
93,199 |
|
|
|
(4,045,233) |
|
|
16,522,259 |
|
|
Comprehensive earnings |
|
— |
|
|
— |
|
|
1,009,404 |
|
|
|
— |
|
|
|
11,024 |
|
|
|
— |
|
|
1,020,428 |
|
|
Dividends, $0.37 per share
|
|
— |
|
|
— |
|
|
(256,562) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(256,562) |
|
|
Acquisition of 4,059 shares from
stockholders
|
|
— |
|
|
— |
|
|
— |
|
|
|
(248,145) |
|
|
|
— |
|
|
|
— |
|
|
(248,145) |
|
|
Sale of 721 shares to stockholders
|
|
— |
|
|
72 |
|
|
— |
|
|
|
43,950 |
|
|
|
— |
|
|
|
— |
|
|
44,022 |
|
|
Change for ESOP related shares |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
184,578 |
|
|
184,578 |
|
|
Balances at June 26, 2021 |
|
695,725 |
|
|
4,291,484 |
|
|
16,370,825 |
|
|
|
(335,022) |
|
|
|
104,223 |
|
|
|
(3,860,655) |
|
|
17,266,580 |
|
|
Comprehensive earnings |
|
— |
|
|
— |
|
|
856,906 |
|
|
|
— |
|
|
|
(17,491) |
|
|
|
— |
|
|
839,415 |
|
|
Dividends, $0.37 per share
|
|
— |
|
|
— |
|
|
(255,349) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(255,349) |
|
|
Acquisition of 3,893 shares from
stockholders
|
|
— |
|
|
— |
|
|
— |
|
|
|
(244,209) |
|
|
|
— |
|
|
|
— |
|
|
(244,209) |
|
|
Sale of 999 shares to stockholders
|
|
— |
|
|
— |
|
|
— |
|
|
|
62,864 |
|
|
|
— |
|
|
|
— |
|
|
62,864 |
|
|
Change for ESOP related shares |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
37,583 |
|
|
37,583 |
|
|
Balances at September 25, 2021 |
|
$ |
695,725 |
|
|
4,291,484 |
|
|
16,972,382 |
|
|
|
(516,367) |
|
|
|
86,732 |
|
|
|
(3,823,072) |
|
|
17,706,884 |
|
See accompanying notes to condensed consolidated financial statements.
6
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts are in thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Common
Stock (Acquired
from) Sold to
Stock-
holders
|
Accumu-
lated Other Compre-
hensive
Earnings
(Losses)
|
Common
Stock
Related to
ESOP
|
|
Total
Stock-
holders’
Equity
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 28, 2019 |
|
$ |
706,552 |
|
|
3,758,066 |
|
|
12,317,478 |
|
|
|
— |
|
|
|
81,289 |
|
|
|
(3,259,230) |
|
|
13,604,155 |
|
|
Comprehensive earnings |
|
— |
|
|
— |
|
|
667,335 |
|
|
|
— |
|
|
|
(138,494) |
|
|
|
— |
|
|
528,841 |
|
|
Dividends, $0.30 per share
|
|
— |
|
|
— |
|
|
(211,847) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(211,847) |
|
|
Contribution of 7,398 shares to
retirement plan
|
|
4,977 |
|
|
242,724 |
|
|
— |
|
|
|
114,054 |
|
|
|
— |
|
|
|
— |
|
|
361,755 |
|
|
Acquisition of 9,142 shares from
stockholders
|
|
— |
|
|
— |
|
|
— |
|
|
|
(442,509) |
|
|
|
— |
|
|
|
— |
|
|
(442,509) |
|
|
Sale of 2,239 shares to stockholders
|
|
107 |
|
|
5,179 |
|
|
— |
|
|
|
104,062 |
|
|
|
— |
|
|
|
— |
|
|
109,348 |
|
|
Change for ESOP related shares |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(444,014) |
|
|
(444,014) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at March 28, 2020 |
|
711,636 |
|
|
4,005,969 |
|
|
12,772,966 |
|
|
|
(224,393) |
|
|
|
(57,205) |
|
|
|
(3,703,244) |
|
|
13,505,729 |
|
|
Comprehensive earnings |
|
— |
|
|
— |
|
|
1,367,055 |
|
|
|
— |
|
|
|
258,697 |
|
|
|
— |
|
|
1,625,752 |
|
|
Dividends, $0.32 per share
|
|
— |
|
|
— |
|
|
(225,495) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(225,495) |
|
|
Acquisition of 6,714 shares from
stockholders
|
|
— |
|
|
— |
|
|
— |
|
|
|
(332,605) |
|
|
|
— |
|
|
|
— |
|
|
(332,605) |
|
|
Sale of 492 shares to stockholders
|
|
— |
|
|
— |
|
|
— |
|
|
|
24,476 |
|
|
|
— |
|
|
|
— |
|
|
24,476 |
|
|
Change for ESOP related shares |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
136,540 |
|
|
136,540 |
|
|
Balances at June 27, 2020 |
|
711,636 |
|
|
4,005,969 |
|
|
13,914,526 |
|
|
|
(532,522) |
|
|
|
201,492 |
|
|
|
(3,566,704) |
|
|
14,734,397 |
|
|
Comprehensive earnings |
|
— |
|
|
— |
|
|
917,584 |
|
|
|
— |
|
|
|
2,592 |
|
|
|
— |
|
|
920,176 |
|
|
Dividends, $0.32 per share
|
|
— |
|
|
— |
|
|
(224,264) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(224,264) |
|
|
Acquisition of 5,859 shares from
stockholders
|
|
— |
|
|
— |
|
|
— |
|
|
|
(316,031) |
|
|
|
— |
|
|
|
— |
|
|
(316,031) |
|
|
Sale of 1,141 shares to stockholders
|
|
— |
|
|
— |
|
|
— |
|
|
|
61,070 |
|
|
|
— |
|
|
|
— |
|
|
61,070 |
|
|
Change for ESOP related shares |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
52,304 |
|
|
52,304 |
|
|
Balances at September 26, 2020 |
|
$ |
711,636 |
|
|
4,005,969 |
|
|
14,607,846 |
|
|
|
(787,483) |
|
|
|
204,084 |
|
|
|
(3,514,400) |
|
|
15,227,652 |
|
See accompanying notes to condensed consolidated financial statements.
7
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1)Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Publix Super Markets, Inc. and subsidiaries (Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, the accompanying statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these statements include all adjustments that are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations. Due to the seasonal nature of the Company’s business and the impact of the coronavirus pandemic, the results of operations for the three and nine months ended September 25, 2021 are not necessarily indicative of the results for the entire 2021 fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 26, 2020.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(2)Fair Value of Financial Instruments
The fair value of certain of the Company’s financial instruments, including cash and cash equivalents, trade receivables and accounts payable, approximates their respective carrying amounts due to their short-term maturity.
The fair value of investments is based on market prices using the following measurement categories:
Level 1 – Fair value is determined by using quoted prices in active markets for identical investments. Investments included in this category are equity securities (exchange traded funds).
Level 2 – Fair value is determined by using other than quoted prices. By using observable inputs (for example, benchmark yields, interest rates, reported trades and broker dealer quotes), the fair value is determined through processes such as benchmark curves, benchmarking of similar securities and matrix pricing of corporate, state and municipal bonds by using pricing of similar bonds based on coupons, ratings and maturities. Investments included in this category are primarily debt securities (tax exempt and taxable bonds), including restricted investments in taxable bonds held as collateral.
Level 3 – Fair value is determined by using other than observable inputs. Fair value is determined by using the best information available in the circumstances and requires significant management judgment or estimation. No investments are currently included in this category.
Following is a summary of fair value measurements for investments as of September 25, 2021 and December 26, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
(Amounts are in thousands) |
| September 25, 2021 |
|
$ |
13,356,955 |
|
|
2,029,514 |
|
|
11,327,441 |
|
|
— |
|
| December 26, 2020 |
|
11,288,199 |
|
|
1,465,987 |
|
|
9,822,212 |
|
|
— |
|
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(3)Investments
(a)Debt Securities
Following is a summary of debt securities as of September 25, 2021 and December 26, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
|
|
|
|
(Amounts are in thousands) |
|
September 25, 2021 |
|
|
|
|
|
|
|
|
|
|
Tax exempt bonds |
|
$ |
341,196 |
|
|
3,348 |
|
|
2 |
|
|
344,542 |
|
|
Taxable bonds |
|
9,275,734 |
|
|
172,580 |
|
|
44,511 |
|
|
9,403,803 |
|
|
Restricted investments |
|
170,708 |
|
|
10,154 |
|
|
106 |
|
|
180,756 |
|
|
|
|
$ |
9,787,638 |
|
|
186,082 |
|
|
44,619 |
|
|
9,929,101 |
|
|
December 26, 2020 |
|
|
|
|
|
|
|
|
|
|
Tax exempt bonds |
|
$ |
548,438 |
|
|
7,408 |
|
|
88 |
|
|
555,758 |
|
|
Taxable bonds |
|
8,182,003 |
|
|
286,745 |
|
|
8,324 |
|
|
8,460,424 |
|
|
Restricted investments |
|
167,727 |
|
|
14,383 |
|
|
— |
|
|
182,110 |
|
|
|
|
$ |
8,898,168 |
|
|
308,536 |
|
|
8,412 |
|
|
9,198,292 |
|
The Company maintains restricted investments primarily for the benefit of the Company’s insurance carrier related to self-insurance reserves. These investments are held as collateral and not used for claim payments.
The cost and fair value of debt securities by expected maturity as of September 25, 2021 and December 26, 2020 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
September 25, 2021 |
|
|
|
|
December 26, 2020 |
|
|
| |
|
Cost |
|
Fair
Value
|
|
|
Cost |
|
Fair
Value
|
|
| |
|
(Amounts are in thousands) |
|
| Due in one year or less |
|
$ |
766,268 |
|
|
774,261 |
|
|
|
677,453 |
|
|
682,965 |
|
|
| Due after one year through five years |
|
5,976,382 |
|
|
6,114,708 |
|
|
|
5,330,696 |
|
|
5,533,074 |
|
|
| Due after five years through ten years |
|
3,041,935 |
|
|
3,036,899 |
|
|
|
2,886,333 |
|
|
2,978,301 |
|
|
| Due after ten years |
|
3,053 |
|
|
3,233 |
|
|
|
3,686 |
|
|
3,952 |
|
|
|
|
$ |
9,787,638 |
|
|
9,929,101 |
|
|
|
8,898,168 |
|
|
9,198,292 |
|
|
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company had no debt securities with credit losses as of September 25, 2021 and December 26, 2020.
Following is a summary of debt securities with other unrealized losses by the time period impaired as of September 25, 2021 and December 26, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than
12 Months
|
|
|
|
|
12 Months
or Longer
|
|
|
|
|
Total |
|
|
|
|
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
|
|
|
(Amounts are in thousands) |
|
September 25, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax exempt bonds |
$ |
12,390 |
|
|
|
2 |
|
|
|
— |
|
|
|
— |
|
|
|
12,390 |
|
|
|
2 |
|
|
|
Taxable bonds |
3,180,685 |
|
|
|
34,255 |
|
|
|
531,692 |
|
|
|
10,256 |
|
|
|
3,712,377 |
|
|
|
44,511 |
|
|
|
Restricted investments |
9,751 |
|
|
|
106 |
|
|
|
— |
|
|
|
— |
|
|
|
9,751 |
|
|
|
106 |
|
|
|
|
$ |
3,202,826 |
|
|
|
34,363 |
|
|
|
531,692 |
|
|
|
10,256 |
|
|
|
3,734,518 |
|
|
|
44,619 |
|
|
|
December 26, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax exempt bonds |
$ |
3,704 |
|
|
|
88 |
|
|
|
— |
|
|
|
— |
|
|
|
3,704 |
|
|
|
88 |
|
|
|
Taxable bonds |
1,157,387 |
|
|
|
7,946 |
|
|
|
39,622 |
|
|
|
378 |
|
|
|
1,197,009 |
|
|
|
8,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,161,091 |
|
|
|
8,034 |
|
|
|
39,622 |
|
|
|
378 |
|
|
|
1,200,713 |
|
|
|
8,412 |
|
|
There are 159 debt securities contributing to the total unrealized losses of $44,619,000 as of September 25, 2021. Unrealized losses related to debt securities are primarily due to increases in interest rates that occurred since the debt securities were purchased. The Company continues to receive scheduled principal and interest payments on these debt securities.
(b)Equity Securities
Equity securities are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in earnings (fair value adjustment). The fair value of equity securities was $3,427,854,000 and $2,089,907,000 as of September 25, 2021 and December 26, 2020, respectively.
(c)Investment Income
Net realized gain on investments represents the difference between the cost and the proceeds from the sale of debt and equity securities. The net realized gain on investments excludes the net gain or loss on the sale of equity securities previously recognized through the fair value adjustment, which is presented separately in the following table.
Following is a summary of investment income for the three and nine months ended September 25, 2021 and September 26, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|
September 25, 2021 |
|
September 26, 2020 |
|
September 25, 2021 |
|
September 26, 2020 |
| |
|
(Amounts are in thousands) |
| Interest and dividend income |
|
$ |
48,992 |
|
|
|
|
47,061 |
|
|
|
|
143,618 |
|
|
|
|
148,239 |
|
|
| Net realized gain on investments |
|
8,391 |
|
|
|
|
109,132 |
|
|
|
|
32,376 |
|
|
|
|
217,596 |
|
|
|
|
57,383 |
|
|
|
|
156,193 |
|
|
|
|
175,994 |
|
|
|
|
365,835 |
|
|
| Fair value adjustment, due to net unrealized gain, on equity securities held at end of period |
|
72,945 |
|
|
|
|
130,637 |
|
|
|
|
986,756 |
|
|
|
|
340,618 |
|
|
| Net gain on sale of equity securities previously recognized through fair value adjustment |
|
— |
|
|
|
|
(21,535) |
|
|
|
|
(9,441) |
|
|
|
|
(97,540) |
|
|
|
|
|
$ |
130,328 |
|
|
|
|
265,295 |
|
|
|
|
1,153,309 |
|
|
|
|
608,913 |
|
|
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(4)Consolidation of Joint Ventures and Long-Term Debt
From time to time, the Company enters into a joint venture (JV), in the legal form of a limited liability company, with certain real estate developers to partner in the development of a shopping center with the Company as the anchor tenant. The Company consolidates certain of these JVs in which it has a controlling financial interest. As of September 25, 2021, the carrying amounts of the assets and liabilities of the consolidated JVs were $196,617,000 and $78,298,000, respectively. As of December 26, 2020, the carrying amounts of the assets and liabilities of the consolidated JVs were $199,230,000 and $77,565,000, respectively. The assets are owned by and the liabilities are obligations of the JVs, not the Company, except for a portion of the long-term debt of certain JVs guaranteed by the Company. The JVs are financed with capital contributions from the members, loans and/or the cash flows generated by the JV owned shopping centers once in operation. Total earnings attributable to noncontrolling interests for 2021 and 2020 were immaterial. The Company’s involvement with these JVs does not have a significant effect on the Company’s financial condition, results of operations or cash flows.
The Company’s long-term debt results primarily from the consolidation of loans of certain JVs and loans assumed in connection with the acquisition of certain shopping centers with the Company as the anchor tenant. No loans were assumed during the nine months ended September 25, 2021 or September 26, 2020. Maturities of JV loans range from January 2022 through April 2027 and have variable interest rates based on a LIBOR index plus 200 to 250 basis points. Maturities of assumed shopping center loans range from October 2021 through January 2027 and have fixed interest rates ranging from 3.7% to 7.5%.
(5)Retirement Plan
The Company has a trusteed, noncontributory Employee Stock Ownership Plan (ESOP) for the benefit of eligible employees. Since the Company’s common stock is not traded on an established securities market, the ESOP includes a put option for shares of the Company’s common stock distributed from the ESOP. Shares are distributed from the ESOP primarily to separated vested participants and certain eligible participants who elect to diversify their account balances. Under the Company’s administration of the ESOP’s put option, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value for a specified time period after distribution of the shares from the ESOP. The fair value of distributed shares subject to the put option totaled $563,348,000 and $444,801,000 as of September 25, 2021 and December 26, 2020, respectively. The cost of the shares held by the ESOP totaled $3,259,724,000 and $3,039,748,000 as of September 25, 2021 and December 26, 2020, respectively. Due to the Company’s obligation under the put option, the distributed shares subject to the put option and the shares held by the ESOP are classified as temporary equity in the mezzanine section of the condensed consolidated balance sheets and totaled $3,823,072,000 and $3,484,549,000 as of September 25, 2021 and December 26, 2020, respectively. The fair value of the shares held by the ESOP totaled $10,481,250,000 and $9,976,034,000 as of September 25, 2021 and December 26, 2020, respectively.
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(6)Accumulated Other Comprehensive Earnings (Losses)
A reconciliation of the changes in accumulated other comprehensive earnings (losses) net of income taxes for the three months ended September 25, 2021 and September 26, 2020 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
Postretirement Benefit
|
|
Accumulated Other Comprehensive Earnings (Losses)
|
|
|
|
|
(Amounts are in thousands)
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at June 26, 2021 |
|
$ |
124,417 |
|
|
|
|
(20,194) |
|
|
|
|
104,223 |
|
|
|
Unrealized loss on debt securities |
|
(12,611) |
|
|
|
|
— |
|
|
|
|
(12,611) |
|
|
|
Net realized gain on debt securities reclassified to investment income |
|
(6,258) |
|
|
|
|
— |
|
|
|
|
(6,258) |
|
|
|
Adjustment to postretirement benefit obligation
|
|
— |
|
|
|
|
1,378 |
|
|
|
|
1,378 |
|
|
|
Net other comprehensive (losses) earnings |
|
(18,869) |
|
|
|
|
1,378 |
|
|
|
|
(17,491) |
|
|
|
Balances at September 25, 2021 |
|
$ |
105,548 |
|
|
|
|
(18,816) |
|
|
|
|
86,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
|
|
|
Balances at June 27, 2020 |
|
$ |
217,080 |
|
|
|
|
(15,588) |
|
|
|
|
201,492 |
|
|
|
Unrealized gain on debt securities |
|
5,456 |
|
|
|
|
— |
|
|
|
|
5,456 |
|
|
|
Net realized gain on debt securities reclassified to investment income
|
|
(3,678) |
|
|
|
|
— |
|
|
|
|
(3,678) |
|
|
|
Adjustment to postretirement benefit obligation
|
|
— |
|
|
|
|
814 |
|
|
|
|
814 |
|
|
|
Net other comprehensive earnings |
|
1,778 |
|
|
|
|
814 |
|
|
|
|
2,592 |
|
|
|
Balances at September 26, 2020 |
|
$ |
218,858 |
|
|
|
|
(14,774) |
|
|
|
|
204,084 |
|
|
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the changes in accumulated other comprehensive earnings (losses) net of income taxes for the nine months ended September 25, 2021 and September 26, 2020 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
Postretirement Benefits
|
|
Accumulated Other Comprehensive Earnings (Losses)
|
|
|
|
(Amounts are in thousands)
|
|
| 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at December 26, 2020 |
|
|
$ |
223,904 |
|
|
|
|
(22,953) |
|
|
|
|
200,951 |
|
|
| Unrealized loss on debt securities |
|
|
(103,182) |
|
|
|
|
— |
|
|
|
|
(103,182) |
|
|
| Net realized gain on debt securities reclassified to investment income |
|
|
(15,174) |
|
|
|
|
— |
|
|
|
|
(15,174) |
|
|
|
Adjustment to postretirement benefit obligation
|
|
|
— |
|
|
|
|
4,137 |
|
|
|
|
4,137 |
|
|
| Net other comprehensive (losses) earnings |
|
|
(118,356) |
|
|
|
|
4,137 |
|
|
|
|
(114,219) |
|
|
| Balances at September 25, 2021 |
|
|
$ |
105,548 |
|
|
|
|
(18,816) |
|
|
|
|
86,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
|
|
|
|
| Balances at December 28, 2019 |
|
|
$ |
98,506 |
|
|
|
|
(17,217) |
|
|
|
|
81,289 |
|
|
| Unrealized gain on debt securities |
|
|
127,951 |
|
|
|
|
— |
|
|
|
|
127,951 |
|
|
| Net realized gain on debt securities reclassified to investment income |
|
|
(7,599) |
|
|
|
|
— |
|
|
|
|
(7,599) |
|
|
|
Adjustment to postretirement benefit obligation
|
|
|
— |
|
|
|
|
2,443 |
|
|
|
|
2,443 |
|
|
| Net other comprehensive earnings |
|
|
120,352 |
|
|
|
|
2,443 |
|
|
|
|
122,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at September 26, 2020 |
|
|
$ |
218,858 |
|
|
|
|
(14,774) |
|
|
|
|
204,084 |
|
|
(7)Subsequent Event
On October 1, 2021, the Company declared a quarterly dividend on its common stock of $0.37 per share or $254,100,000, payable November 1, 2021 to stockholders of record as of the close of business October 15, 2021.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The Company is engaged in the retail food industry and as of September 25, 2021 operated 1,284 supermarkets in Florida, Georgia, Alabama, South Carolina, Tennessee, North Carolina and Virginia. The Company plans to expand its retail operations into Kentucky in 2023. For the nine months ended September 25, 2021, 29 supermarkets were opened (including six replacement supermarkets) and 111 supermarkets were remodeled. Nine supermarkets were closed during the period. The replacement supermarkets that opened during the nine months ended September 25, 2021 replaced four supermarkets closed during the same period and two supermarkets closed during a previous period. Five supermarkets closed in 2021 will be replaced on site in a subsequent period. In the normal course of operations, the Company replaces supermarkets and closes supermarkets that are not meeting performance expectations. The impact of future supermarket closings is not expected to be material.
Coronavirus Pandemic
On March 13, 2020, the coronavirus pandemic was declared a national emergency. The coronavirus pandemic resulted in national, state and local authorities mandating or recommending isolation and other preventative measures for large portions of the population, including mandatory business restrictions and closures. These measures, which were necessary to slow the spread of the virus and protect lives, resulted in significant job losses and had serious adverse impacts on domestic and foreign economies. While economic stabilization efforts, including government payments to affected citizens and industries, have been implemented, the future impact of the coronavirus pandemic continues to be uncertain and difficult to predict. The Company was classified as an essential business and has remained open to serve the needs of its customers throughout the pandemic. It remains a top priority of the Company to continue to serve its customers in a way that protects the health and safety of its employees and customers.
Results of Operations
Sales
Sales for the three months ended September 25, 2021 were $11.9 billion as compared with $11.1 billion for the three months ended September 26, 2020, an increase of $867.4 million or 7.8%. The increase in sales for the three months ended September 25, 2021 as compared with the three months ended September 26, 2020 was primarily due to new supermarket sales and a 6.3% increase in comparable store sales (supermarkets open for the same weeks in both periods, including replacement supermarkets). Comparable store sales for the three months ended September 25, 2021 increased primarily due to increased product costs. Sales for supermarkets that are replaced on site are classified as new supermarket sales since the replacement period for the supermarket is generally 9 to 12 months.
Sales for the nine months ended September 25, 2021 were $35.4 billion as compared with $33.7 billion for the nine months ended September 26, 2020, an increase of $1,746.8 million or 5.2%. The increase in sales for the nine months ended September 25, 2021 as compared with the nine months ended September 26, 2020 was primarily due to new supermarket sales and a 3.6% increase in comparable store sales. Comparable store sales for the nine months ended September 25, 2021 increased primarily due to increased product costs.
Gross profit
Gross profit (sales less cost of merchandise sold) as a percentage of sales was 26.9% and 27.6% for the three months ended September 25, 2021 and September 26, 2020, respectively. The decrease in gross profit as a percentage of sales for the three months ended September 25, 2021 as compared with the three months ended September 26, 2020 was primarily due to the increase in the LIFO reserve and product cost increases which were not passed on to customers. Gross profit as a percentage of sales was 27.7% and 28.1% for the nine months ended September 25, 2021 and September 26, 2020, respectively. The decrease in gross profit as a percentage of sales for the nine months ended September 25, 2021 as compared with the nine months ended September 26, 2020 was primarily due to the increase in the LIFO reserve and a decrease in the impact of the coronavirus pandemic on shrink and volume driven efficiencies in 2021 as compared with 2020.
Operating and administrative expenses
Operating and administrative expenses as a percentage of sales were 20.0% and 20.4% for the three months ended September 25, 2021 and September 26, 2020, respectively. The decrease in operating and administrative expenses as a percentage of sales for the three months ended September 25, 2021 as compared with the three months ended September 26, 2020 was primarily due to a decrease in payroll costs as a percentage of sales, partially offset by an increase in facility costs as a percentage of sales. Operating and administrative expenses as a percentage of sales were 19.8% and 19.6% for the nine months ended September 25, 2021 and September 26, 2020, respectively. The increase in operating and administrative expenses as a percentage of sales for the nine months ended September 25, 2021 as compared with the nine months ended September 26, 2020 was primarily due to an increase in payroll costs as a percentage of sales.
Operating profit
Operating profit as a percentage of sales was 7.6% and 7.9% for the three months ended September 25, 2021 and September 26, 2020, respectively. The decrease in operating profit as a percentage of sales for the three months ended September 25, 2021 as compared with the three months ended September 26, 2020 was primarily due to the decrease in gross profit as a percentage of sales, partially offset by the decrease in operating and administrative expenses as a percentage of sales. Operating profit as a percentage of sales was 8.7% and 9.2% for the nine months ended September 25, 2021 and September 26, 2020, respectively. The decrease in operating profit as a percentage of sales for the nine months ended September 25, 2021 as compared with the nine months ended September 26, 2020 was primarily due to the decrease in gross profit as a percentage of sales and the increase in operating and administrative expenses as a percentage of sales.
Investment income
Investment income was $130.3 million and $265.3 million for the three months ended September 25, 2021 and September 26, 2020, respectively. Excluding the impact of net unrealized gains on equity securities in 2021 and 2020, investment income would have been $57.4 million and $156.2 million for the three months ended September 25, 2021 and September 26, 2020, respectively. Excluding the impact of net unrealized gains on equity securities, the decrease in investment income for the three months ended September 25, 2021 as compared with the three months ended September 26, 2020 was primarily due to the decrease in net realized gains on investments.
Investment income was $1,153.3 million and $608.9 million for the nine months ended September 25, 2021 and September 26, 2020, respectively. Excluding the impact of net unrealized gains on equity securities in 2021 and 2020, investment income would have been $176.0 million and $365.8 million for the nine months ended September 25, 2021 and September 26, 2020, respectively. Excluding the impact of net unrealized gains on equity securities, the decrease in investment income for the nine months ended September 25, 2021 as compared with the nine months ended September 26, 2020 was primarily due to the decrease in net realized gains on investments.
Income tax expense
The effective income tax rate was 19.3% and 20.9% for the three months ended September 25, 2021 and September 26, 2020, respectively. The decrease in the effective income tax rate for the three months ended September 25, 2021 as compared with the three months ended September 26, 2020 was primarily due to the increased impact of permanent deductions and credits relative to earnings before income tax expense and a reduction in state income tax rates. The effective income tax rate was 21.4% and 21.2% for the nine months ended September 25, 2021 and September 26, 2020, respectively. The increase in the effective income tax rate for the nine months ended September 25, 2021 as compared with the nine months ended September 26, 2020 was primarily due to the decreased impact of permanent deductions and credits relative to earnings before income tax expense, partially offset by a reduction in state income tax rates.
Net earnings
Net earnings were $856.9 million or $1.24 per share and $917.6 million or $1.31 per share for the three months ended September 25, 2021 and September 26, 2020, respectively. Net earnings as a percentage of sales were 7.2% and 8.3% for the three months ended September 25, 2021 and September 26, 2020, respectively. Excluding the impact of net unrealized gains on equity securities in 2021 and 2020, net earnings would have been $802.5 million or $1.16 per share and 6.7% as a percentage of sales for the three months ended September 25, 2021 and $836.2 million or $1.20 per share and 7.6% as a percentage of sales for the three months ended September 26, 2020. Excluding the impact of net unrealized gains on equity securities in 2021 and 2020, the decrease in net earnings as a percentage of sales for the three months ended September 25, 2021 as compared with the three months ended September 26, 2020 was primarily due to the decrease in operating profit as a percentage of sales and net realized gains on investments.
Net earnings were $3,361.4 million or $4.87 per share and $2,952.0 million or $4.20 per share for the nine months ended September 25, 2021 and September 26, 2020, respectively. Net earnings as a percentage of sales were 9.5% and 8.8% for the nine months ended September 25, 2021 and September 26, 2020, respectively. Excluding the impact of net unrealized gains on equity securities in 2021 and 2020, net earnings would have been $2,632.6 million or $3.81 per share and 7.4% as a percentage of sales for the nine months ended September 25, 2021 and $2,770.7 million or $3.94 per share and 8.2% as a percentage of sales for the nine months ended September 26, 2020. Excluding the impact of net unrealized gains on equity securities in 2021 and 2020, the decrease in net earnings as a percentage of sales for the nine months ended September 25, 2021 as compared with the nine months ended September 26, 2020 was primarily due to the decrease in operating profit as a percentage of sales and net realized gains on investments.
Non-GAAP Financial Measures
In addition to reporting financial results for the three and nine months ended September 25, 2021 and September 26, 2020 in accordance with GAAP, the Company presents net earnings and earnings per share excluding the impact of equity securities being measured at fair value with net unrealized gains and losses from changes in the fair value recognized in earnings (fair value adjustment). These measures are not in accordance with, or an alternative to, GAAP. The Company excludes the impact of the fair value adjustment since it is primarily due to temporary equity market fluctuations that do not reflect the Company’s operations. The Company believes this information is useful in providing period-to-period comparisons of the results of operations. Following is a reconciliation of net earnings to net earnings excluding the impact of the fair value adjustment for the three and nine months ended September 25, 2021 and September 26, 2020:
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Three Months Ended |
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Nine Months Ended |
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September 25, 2021 |
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September 26, 2020 |
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September 25, 2021 |
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September 26, 2020 |
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(Amounts are in millions, except per share amounts) |
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| Net earnings |
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$ |
856.9 |
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|
917.6 |
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|
|
|
3,361.4 |
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2,952.0 |
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|
| Fair value adjustment, due to net unrealized gain, on equity securities held at end of period |
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(72.9) |
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(130.6) |
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(986.7) |
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(340.6) |
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| Net gain on sale of equity securities previously recognized through fair value adjustment |
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— |
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21.5 |
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9.4 |
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97.5 |
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Income tax expense (1)
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18.5 |
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27.7 |
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248.5 |
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61.8 |
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Net earnings excluding impact of fair value adjustment
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$ |
802.5 |
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836.2 |
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2,632.6 |
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2,770.7 |
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Weighted average shares outstanding
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688.9 |
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698.8 |
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690.7 |
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702.9 |
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Earnings per share excluding impact of fair value adjustment
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$ |
1.16 |
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1.20 |
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3.81 |
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3.94 |
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|
(1)Income tax expense is based on the Company’s combined federal and state statutory income tax rates.
Liquidity and Capital Resources
Cash and cash equivalents, short-term investments and long-term investments totaled $14,528.5 million as of September 25, 2021, as compared with $11,961.7 million as of December 26, 2020 and $11,419.0 million as of September 26, 2020. The increase from the third quarter of 2020 to the third quarter of 2021 was primarily due to the increase in the fair value of investments and increased sales as a result of the coronavirus pandemic.
Net cash provided by operating activities
Net cash provided by operating activities was $4,126.7 million and $4,279.9 million for the nine months ended September 25, 2021 and September 26, 2020, respectively. The decrease in net cash provided by operating activities for the nine months ended September 25, 2021 as compared with the nine months ended September 26, 2020 was primarily due to the impact of the lag in payments for merchandise related to increased sales from the coronavirus pandemic in 2020, partially offset by the decrease in trade receivables and inventories.
Net cash used in investing activities
Net cash used in investing activities was $2,238.6 million and $2,891.9 million for the nine months ended September 25, 2021 and September 26, 2020, respectively. The primary use of net cash in investing activities for the nine months ended September 25, 2021 was funding capital expenditures and net increases in investments. Capital expenditures for the nine months ended September 25, 2021 totaled $983.3 million. These expenditures were incurred in connection with the opening of 29 supermarkets (including six replacement supermarkets) and the remodeling of 111 supermarkets. Expenditures were also incurred for new supermarkets and remodels in progress, construction or expansion of warehouses and new or enhanced information technology hardware and software. For the nine months ended September 25, 2021, the payment for investments, net of the proceeds from the sale and maturity of investments, was $1,265.6 million.
Net cash used in financing activities
Net cash used in financing activities was $1,390.1 million and $1,548.6 million for the nine months ended September 25, 2021 and September 26, 2020, respectively. The primary use of net cash in financing activities was funding net common stock repurchases and dividend payments. Net common stock repurchases totaled $634.7 million and $896.3 million for the nine months ended September 25, 2021 and September 26, 2020, respectively. The Company currently repurchases common stock at the stockholders’ request in accordance with the terms of the Company’s Employee Stock Purchase Plan (ESPP), Non-Employee Directors Stock Purchase Plan (Directors Plan), 401(k) Plan and ESOP. The amount of common stock offered to the Company for repurchase is not within the control of the Company, but is at the discretion of the stockholders. The Company expects to continue to repurchase its common stock, as offered by its stockholders from time to time, at its then current value. However, with the exception of certain shares distributed from the ESOP, such purchases are not required and the Company retains the right to discontinue them at any time.
Dividends
The Company paid quarterly dividends on its common stock totaling $732.9 million or $1.06 per share and $661.6 million or $0.94 per share during the nine months ended September 25, 2021 and September 26, 2020, respectively.
Capital expenditures projection
Capital expenditures for the remainder of 2021 are expected to be approximately $400 million, primarily related to new supermarkets, remodeling existing supermarkets, construction or expansion of warehouses, new or enhanced information technology hardware and software and the acquisition or development of shopping centers in which the Company operates. The shopping center acquisitions are financed with internally generated funds and assumed debt, if prepayment penalties for the debt are determined to be significant. This capital program is subject to continuing change and review.
Cash requirements
In 2021, cash requirements for operations, capital expenditures, common stock repurchases and dividend payments are expected to be financed by internally generated funds or liquid assets. Based on the Company’s financial position, it is expected that short-term and long-term borrowings would be available to support the Company’s liquidity requirements, if needed.
Forward-Looking Statements
Certain information provided by the Company in this Quarterly Report on Form 10-Q (Quarterly Report) may be forward-looking information as defined in Section 21E of the Securities Exchange Act of 1934 (Exchange Act). Forward-looking information includes statements about the future performance of the Company and is based on management’s assumptions and beliefs in light of the information currently available to them, including as it relates to the coronavirus pandemic. When used, the words “plan,” “estimate,” “project,” “intend,” “expect,” “believe,” “will” and other similar expressions, as they relate to the Company, are intended to identify such forward-looking statements. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from those statements including, but not limited to, the following: competitive practices and pricing in the food and drug industries generally and particularly in the Company’s principal markets; results of programs to increase sales, including private label sales; results of programs to control or reduce costs; changes in buying, pricing and promotional practices; changes in shrink management; changes in the general economy, including the economic downturn associated with the coronavirus pandemic; changes in consumer spending; changes in population, employment and job growth in the Company’s principal markets; impacts of a public health crisis or other significant catastrophic event, such as the coronavirus pandemic; impacts of an intrusion into, compromise of or disruption in the Company’s information technology systems; and other factors affecting the Company’s business within or beyond the Company’s control. These factors include changes in the rate of inflation, changes in federal, state and local laws and regulations, adverse determinations with respect to litigation or other claims, ability to recruit and retain employees, increases in operating costs including, but not limited to, labor costs, credit card fees and utility costs, particularly electric rates, ability to construct new supermarkets or complete remodels as rapidly as planned and stability of product costs. Other factors and assumptions not identified above could also cause the actual results to differ materially from those set forth in the forward-looking statements. Except as may be required by applicable law, the Company assumes no obligation to publicly update these forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company does not utilize financial instruments for trading or other speculative purposes, nor does it utilize leveraged financial instruments. There have been no material changes in the market risk factors from those disclosed in the Company’s Form 10-K for the year ended December 26, 2020.
Item 4. Controls and Procedures
As of the end of the period covered by this Quarterly 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-15. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer each concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information has been accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure. There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation that occurred during the quarter ended September 25, 2021 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As reported in the Company’s Form 10-K for the year ended December 26, 2020, the Company is subject from time to time to various lawsuits, claims and charges arising in the normal course of business. The Company believes its recorded reserves are adequate in light of the probable and estimable liabilities. The estimated amount of reasonably possible losses for lawsuits, claims and charges, individually and in the aggregate, is considered to be immaterial. In the opinion of management, the ultimate resolution of these legal proceedings will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Shares of common stock repurchased by the Company during the three months ended September 25, 2021 were as follows (amounts are in thousands, except per share amounts):
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Period |
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
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Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
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June 27, 2021
through
July 31, 2021
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771 |
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|
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$ |
61.30 |
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N/A |
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N/A |
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August 1, 2021
through
August 28, 2021
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|
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2,207 |
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|
|
|
63.10 |
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N/A |
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N/A |
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August 29, 2021
through
September 25, 2021
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|
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915 |
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|
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63.10 |
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N/A |
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N/A |
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Total
|
|
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3,893 |
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|
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$ |
62.74 |
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|
N/A |
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N/A |
|
(1)Common stock is made available for sale by the Company only to its current employees and members of its Board of Directors through the ESPP and Directors Plan and to participants of the 401(k) Plan. In addition, common stock is provided to employees through the ESOP. The Company currently repurchases common stock subject to certain terms and conditions. The ESPP, Directors Plan, 401(k) Plan and ESOP each contain provisions prohibiting any transfer for value without the owner first offering the common stock to the Company.
The Company’s common stock is not traded on an established securities market. The amount of common stock offered to the Company for repurchase is not within the control of the Company, but is at the discretion of the stockholders. The Company does not believe that these repurchases of its common stock are within the scope of a publicly announced plan or program (although the terms of the plans discussed above have been communicated to the participants). Thus, the Company does not believe that it has made any repurchases during the three months ended September 25, 2021 required to be disclosed in the last two columns of the table.
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Mine Safety Disclosures
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 The following financial information from this Quarterly Report is formatted in Extensible Business Reporting Language: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Earnings, (iii) Condensed Consolidated Statements of Comprehensive Earnings, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Stockholders’ Equity and (vi) Notes to Condensed Consolidated Financial Statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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PUBLIX SUPER MARKETS, INC. |
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| Date: |
November 1, 2021 |
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/s/ Merriann M. Metz |
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Merriann M. Metz, Secretary |
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| Date: |
November 1, 2021 |
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/s/ David P. Phillips |
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David P. Phillips, Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
Certification
I, Randall T. Jones, Sr., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Publix Super Markets, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 1, 2021
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| /s/ Randall T. Jones, Sr. |
| Randall T. Jones, Sr. |
| Chief Executive Officer |
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
Certification
I, David P. Phillips, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Publix Super Markets, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 1, 2021
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| /s/ David P. Phillips |
| David P. Phillips |
| Executive Vice President, Chief Financial Officer and Treasurer |
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with the Quarterly Report of Publix Super Markets, Inc. (the Company) on Form 10-Q for the period ended September 25, 2021 (the Report) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the Exchange Act) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
I, Randall T. Jones, Sr., 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 Exchange Act; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 1, 2021
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| /s/ Randall T. Jones, Sr. |
| Randall T. Jones, Sr. |
| Chief Executive Officer |
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with the Quarterly Report of Publix Super Markets, Inc. (the Company) on Form 10-Q for the period ended September 25, 2021 (the Report) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the Exchange Act) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
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 Exchange Act; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 1, 2021
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| /s/ David P. Phillips |
| David P. Phillips |
| Executive Vice President, Chief Financial Officer and Treasurer |
