UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 2019
Commission File Number 000-00981
 publixlogorev2a05.jpg
PUBLIX SUPER MARKETS, INC.
(Exact name of Registrant as specified in its charter)
Florida
 
59-0324412
(State of incorporation)
 
(I.R.S. Employer Identification No.)
 
 
3300 Publix Corporate Parkway
Lakeland, Florida
 
33811
(Address of principal executive offices)
 
(Zip code)
Registrant’s telephone number, including area code: (863) 688-1188
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
Yes    X          No         
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.
Yes    X          No         
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer            Accelerated filer           Non-accelerated filer    X    
Smaller reporting company            Emerging growth company           
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes                 No    X  
The number of shares of the Registrant’s common stock outstanding as of July 15, 2019 was 713,825,000.

 





PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts are in thousands, except par value)
(Unaudited)
 
June 29, 2019
 
December 29, 2018
ASSETS
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
820,610

 
 
 
599,264

 
Short-term investments
 
443,636

 
 
 
560,992

 
Trade receivables
 
680,737

 
 
 
682,981

 
Inventories
 
1,780,464

 
 
 
1,848,735

 
Prepaid expenses
 
81,196

 
 
 
122,224

 
Total current assets
 
3,806,643

 
 
 
3,814,196

 
Long-term investments
 
7,214,453

 
 
 
6,016,438

 
Other noncurrent assets
 
459,494

 
 
 
515,265

 
Operating lease right-of-use assets
 
2,852,599

 
 
 

 
Property, plant and equipment
 
14,862,041

 
 
 
14,174,564

 
Accumulated depreciation
 
(5,811,601
)
 
 
 
(5,537,947
)
 
Net property, plant and equipment
 
9,050,440

 
 
 
8,636,617

 
 
 
$
23,383,629

 
 
 
18,982,516

 
LIABILITIES AND EQUITY
 
Current liabilities:
 
 
 
 
 
 
 
Accounts payable
 
$
1,873,569

 
 
 
1,864,604

 
Accrued expenses:
 
 
 
 
 
 
 
Contributions to retirement plans
 
372,762

 
 
 
540,760

 
Self-insurance reserves
 
151,162

 
 
 
145,241

 
Salaries and wages
 
247,055

 
 
 
132,916

 
Other
 
383,915

 
 
 
321,080

 
Current portion of long-term debt
 
5,071

 
 
 
4,954

 
Current portion of operating lease liabilities
 
327,735

 
 
 

 
Federal and state income taxes
 
15,217

 
 
 

 
Total current liabilities
 
3,376,486

 
 
 
3,009,555

 
Deferred income taxes
 
568,217

 
 
 
420,757

 
Self-insurance reserves
 
223,607

 
 
 
222,419

 
Accrued postretirement benefit cost
 
105,492

 
 
 
105,308

 
Long-term debt
 
166,926

 
 
 
162,711

 
Operating lease liabilities
 
2,520,256

 
 
 

 
Other noncurrent liabilities
 
136,791

 
 
 
67,102

 
Total liabilities
 
7,097,775

 
 
 
3,987,852

 
Common stock related to Employee Stock Ownership Plan (ESOP)
 
3,350,623

 
 
 
3,134,999

 
Stockholders’ equity:
 
 
 
 
 
 
 
Common stock of $1 par value. Authorized 1,000,000 shares;
issued 721,671 shares in 2019 and 715,445 shares in 2018
 
721,671

 
 
 
715,445

 
Additional paid-in capital
 
3,719,046

 
 
 
3,458,004

 
Retained earnings
 
12,081,295

 
 
 
10,840,654

 
Treasury stock at cost, 7,686 shares in 2019
 
(336,547
)
 
 
 

 
Accumulated other comprehensive earnings (losses)
 
62,219

 
 
 
(55,762
)
 
Common stock related to ESOP
 
(3,350,623
)
 
 
 
(3,134,999
)
 
Total stockholders’ equity
 
12,897,061

 
 
 
11,823,342

 
Noncontrolling interests
 
38,170

 
 
 
36,323

 
Total equity
 
16,285,854

 
 
 
14,994,664

 
 
 
$
23,383,629

 
 
 
18,982,516

 

See accompanying notes to condensed consolidated financial statements.     
1



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

 
 
Three Months Ended
 
 
June 29, 2019
 
June 30, 2018
Revenues:
 
 
 
 
 
 
 
Sales
 
$
9,348,444

 
 
 
8,752,333

 
Other operating income
 
98,472

 
 
 
73,670

 
Total revenues
 
9,446,916

 
 
 
8,826,003

 
Costs and expenses:
 
 
 
 
 
 
 
Cost of merchandise sold
 
6,812,590

 
 
 
6,366,046

 
Operating and administrative expenses
 
1,954,888

 
 
 
1,817,165

 
Total costs and expenses
 
8,767,478

 
 
 
8,183,211

 
Operating profit
 
679,438

 
 
 
642,792

 
Investment income
 
145,142

 
 
 
108,315

 
Other nonoperating income, net
 
17,282

 
 
 
23,630

 
Earnings before income tax expense
 
841,862

 
 
 
774,737

 
Income tax expense
 
180,805

 
 
 
158,565

 
Net earnings
 
$
661,057

 
 
 
616,172

 
Weighted average shares outstanding
 
716,529

 
 
 
730,873

 
Earnings per share
 
$
0.92

 
 
 
0.84

 


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

 
 
Three Months Ended
 
 
June 29, 2019
 
June 30, 2018
Net earnings
 
$
661,057

 
 
 
616,172

 
Other comprehensive earnings:
 
 
 
 
 
 
 
Unrealized gain (loss) on debt securities net of income taxes of $19,817 and $(887) in 2019 and 2018, respectively.
 
58,130

 
 
 
(2,600
)
 
Reclassification adjustment for net realized loss on debt securities net of income taxes of $13 and $145 in 2019 and 2018, respectively.
 
37

 
 
 
425

 
Adjustment to postretirement benefit obligation net of income taxes of
$192 in 2018.
 

 
 
 
564

 
Comprehensive earnings
 
$
719,224

 
 
 
614,561

 




See accompanying notes to condensed consolidated financial statements.     
2



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

 
 
Six Months Ended
 
 
June 29, 2019
 
June 30, 2018
Revenues:
 
 
 
 
 
 
 
Sales
 
$
19,022,641

 
 
 
18,025,799

 
Other operating income
 
184,385

 
 
 
146,011

 
Total revenues
 
19,207,026

 
 
 
18,171,810

 
Costs and expenses:
 
 
 
 
 
 
 
Cost of merchandise sold
 
13,778,982

 
 
 
13,047,503

 
Operating and administrative expenses
 
3,892,031

 
 
 
3,647,558

 
Total costs and expenses
 
17,671,013

 
 
 
16,695,061

 
Operating profit
 
1,536,013

 
 
 
1,476,749

 
Investment income
 
512,329

 
 
 
112,453

 
Other nonoperating income, net
 
36,595

 
 
 
45,658

 
Earnings before income tax expense
 
2,084,937

 
 
 
1,634,860

 
Income tax expense
 
442,909

 
 
 
338,417

 
Net earnings
 
$
1,642,028

 
 
 
1,296,443

 
Weighted average shares outstanding
 
716,277

 
 
 
732,534

 
Earnings per share
 
$
2.29

 
 
 
1.77

 


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

 
 
Six Months Ended
 
 
June 29, 2019
 
June 30, 2018
Net earnings
 
$
1,642,028

 
 
 
1,296,443

 
Other comprehensive earnings:
 
 
 
 
 
 
 
Unrealized gain (loss) on debt securities net of income taxes of $40,109 and $(9,062) in 2019 and 2018, respectively.
 
117,651

 
 
 
(26,581
)
 
Reclassification adjustment for net realized loss on debt securities net of income taxes of $113 and $153 in 2019 and 2018, respectively.
 
330

 
 
 
447

 
Adjustment to postretirement benefit obligation net of income taxes of
$385 in 2018.
 

 
 
 
1,129

 
Comprehensive earnings
 
$
1,760,009

 
 
 
1,271,438

 


See accompanying notes to condensed consolidated financial statements.         
3


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

 
 
Six Months Ended
 
 
June 29, 2019
 
June 30, 2018
Cash flows from operating activities:
 
 
 
 
 
 
 
Cash received from customers
 
$
19,109,152

 
 
 
18,151,097

 
Cash paid to employees and suppliers
 
(16,671,028
)
 
 
 
(15,831,134
)
 
Income taxes paid
 
(265,296
)
 
 
 
(531,571
)
 
Self-insured claims paid
 
(184,324
)
 
 
 
(184,068
)
 
Dividends and interest received
 
101,159

 
 
 
93,307

 
Other operating cash receipts
 
182,159

 
 
 
143,692

 
Other operating cash payments
 
(9,858
)
 
 
 
(7,862
)
 
Net cash provided by operating activities
 
2,261,964

 
 
 
1,833,461

 
Cash flows from investing activities:
 
 
 
 
 
 
 
Payment for capital expenditures
 
(651,213
)
 
 
 
(731,373
)
 
Proceeds from sale of property, plant and equipment
 
3,360

 
 
 
7,990

 
Payment for investments
 
(1,662,396
)
 
 
 
(1,138,033
)
 
Proceeds from sale and maturity of investments
 
1,103,933

 
 
 
983,841

 
Net cash used in investing activities
 
(1,206,316
)
 
 
 
(877,575
)
 
Cash flows from financing activities:
 
 
 
 
 
 
 
Payment for acquisition of common stock
 
(590,708
)
 
 
 
(750,771
)
 
Proceeds from sale of common stock
 
153,478

 
 
 
154,275

 
Dividends paid
 
(401,387
)
 
 
 
(359,252
)
 
Repayment of long-term debt
 
(4,984
)
 
 
 
(22,930
)
 
Other, net
 
9,299

 
 
 
4,797

 
Net cash used in financing activities
 
(834,302
)
 
 
 
(973,881
)
 
Net increase (decrease) in cash and cash equivalents
 
221,346

 
 
 
(17,995
)
 
Cash and cash equivalents at beginning of period
 
599,264

 
 
 
579,925

 
Cash and cash equivalents at end of period
 
$
820,610

 
 
 
561,930

 


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


PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts are in thousands)
(Unaudited)
 
 
 
Six Months Ended
 
 
June 29, 2019
 
June 30, 2018
Reconciliation of net earnings to net cash
provided by operating activities:
 
 
 
 
 
 
 
Net earnings
 
$
1,642,028

 
 
 
1,296,443

 
Adjustments to reconcile net earnings to net cash
provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
 
350,976

 
 
 
328,381

 
Increase in last-in, first out (LIFO) reserve
 
20,468

 
 
 
15,224

 
Retirement contributions paid or payable
in common stock
 
200,329

 
 
 
179,757

 
Deferred income taxes
 
107,238

 
 
 
11,508

 
Loss on disposal and impairment of property,
plant and equipment
 
2,794

 
 
 
4,987

 
Gain on investments
 
(423,599
)
 
 
 
(52,300
)
 
Net amortization of investments
 
23,252

 
 
 
35,801

 
Changes in operating assets and liabilities
providing (requiring) cash:
 
 
 
 
 
 
 
Trade receivables
 
1,466

 
 
 
41,474

 
Inventories
 
47,803

 
 
 
62,240

 
Other assets
 
21,055

 
 
 
(29,552
)
 
Accounts payable and accrued expenses
 
210,727

 
 
 
158,441

 
Federal and state income taxes
 
59,815

 
 
 
(214,478
)
 
Other liabilities
 
(2,388
)
 
 
 
(4,465
)
 
Total adjustments
 
619,936

 
 
 
537,018

 
Net cash provided by operating activities
 
$
2,261,964

 
 
 
1,833,461

 



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
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at December 29, 2018
 
$
715,445

 
3,458,004

 
10,840,654

 
 

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

Comprehensive earnings
 

 

 
980,971

 
 

 
 
59,814

 
 

 
1,040,785

Dividends, $0.26 per share
 

 

 
(185,835
)
 
 

 
 

 
 

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

 
235,017

 

 
 
127,329

 
 

 
 

 
367,951

Acquisition of 7,802 shares from stockholders
 

 

 

 
 
(333,857
)
 
 

 
 

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

 
26,019

 

 
 
86,556

 
 

 
 

 
113,196

Change for ESOP related shares
 

 

 

 
 

 
 

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

 
3,719,040

 
11,635,790

 
 
(119,972
)
 
 
4,052

 
 
(3,510,183
)
 
12,450,398

Comprehensive earnings
 

 

 
661,057

 
 

 
 
58,167

 
 

 
719,224

Dividends, $0.30 per share
 

 

 
(215,552
)
 
 

 
 

 
 

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

 

 

 
 
(256,851
)
 
 

 
 

 
(256,851
)
Sale of 904 shares to stockholders
 

 
6

 

 
 
40,276

 
 

 
 

 
40,282

Change for ESOP related shares
 

 

 

 
 

 
 

 
 
159,560

 
159,560

Balances at June 29, 2019
 
$
721,671

 
3,719,046

 
12,081,295

 
 
(336,547
)
 
 
62,219

 
 
(3,350,623
)
 
12,897,061


See accompanying notes to condensed consolidated financial statements.         
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
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at December 30, 2017
 
$
733,440

 
3,139,647

 
10,044,564

 
 

 
 
152,636

 
 
(3,053,138
)
 
11,017,149

Comprehensive earnings
 

 

 
680,271

 
 

 
 
(23,394
)
 
 

 
656,877

Dividends, $0.23 per share
 

 

 
(168,597
)
 
 

 
 

 
 

 
(168,597
)
Contribution of 8,440 shares to retirement plans
 
6,221

 
261,423

 

 
 
81,780

 
 

 
 

 
349,424

Acquisition of 10,714 shares from stockholders
 

 

 

 
 
(432,894
)
 
 

 
 

 
(432,894
)
Sale of 2,590 shares to stockholders
 
531

 
21,632

 

 
 
84,651

 
 

 
 

 
106,814

Change for ESOP related shares
 

 

 

 
 

 
 

 
 
(402,207
)
 
(402,207
)
Cumulative effect of net unrealized gain on equity securities reclassified to retained earnings
 

 

 
198,310

 
 

 
 
(198,310
)
 
 

 

Balances at March 31, 2018
 
740,192

 
3,422,702

 
10,754,548

 
 
(266,463
)
 
 
(69,068
)
 
 
(3,455,345
)
 
11,126,566

Comprehensive earnings
 

 

 
616,172

 
 

 
 
(1,611
)
 
 

 
614,561

Dividends, $0.26 per share
 

 

 
(190,655
)
 
 

 
 

 
 

 
(190,655
)
Acquisition of 7,623 shares from stockholders
 

 

 

 
 
(317,877
)
 
 

 
 

 
(317,877
)
Sale of 1,139 shares to stockholders
 
1

 
6

 

 
 
47,454

 
 

 
 

 
47,461

Change for ESOP related shares
 

 

 

 
 

 
 

 
 
205,027

 
205,027

Balances at June 30, 2018
 
$
740,193

 
3,422,708

 
11,180,065

 
 
(536,886
)
 
 
(70,679
)
 
 
(3,250,318
)
 
11,485,083



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 (the 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, the results of operations for the three and six months ended June 29, 2019 are not necessarily indicative of the results for the entire 2019 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 29, 2018.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(2)
Fair Value of Financial Instruments
The fair value of certain of the Company’s financial instruments, including cash and cash equivalents, trade receivables and accounts payable, approximates their respective carrying amounts due to their short-term maturity.
The fair value of investments is based on market prices using the following measurement categories:
Level 1 – Fair value is determined by using quoted prices in active markets for identical investments. Investments included in this category are equity securities (exchange traded funds and individual equity securities).
Level 2 – Fair value is determined by using other than quoted prices. By using observable inputs (for example, benchmark yields, interest rates, reported trades and broker dealer quotes), the fair value is determined through processes such as benchmark curves, benchmarking of like securities and matrix pricing of corporate, state and municipal bonds by using pricing of similar bonds based on coupons, ratings and maturities. Investments included in this category are primarily debt securities (tax exempt and taxable bonds), including restricted investments in taxable bonds held as collateral.
Level 3 – Fair value is determined by using other than observable inputs. Fair value is determined by using the best information available in the circumstances and requires significant management judgment or estimation. No investments are currently included in this category.
Following is a summary of fair value measurements for investments as of June 29, 2019 and December 29, 2018:
 
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
 
 
(Amounts are in thousands)
June 29, 2019
 
$
7,658,089

 
2,240,264

 
5,417,825

 

December 29, 2018
 
6,577,430

 
2,372,931

 
4,204,499

 



8


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



(3)
Investments
(a)
Debt Securities
Following is a summary of debt securities as of June 29, 2019 and December 29, 2018:
 
 
Cost
 
Gross
Unrealized
Gains
Gross
Unrealized
Losses
 
Fair
Value
 
 
(Amounts are in thousands)
June 29, 2019
 
 
 
 
 
 
 
 
 
 
 
Tax exempt bonds
 
$
1,019,864

 
 
1,746

 
 
1,359

 
 
1,020,251

Taxable bonds
 
3,809,977

 
 
89,836

 
 
6,654

 
 
3,893,159

Restricted investments
 
169,681

 
 
8,885

 
 

 
 
178,566

 
 
$
4,999,522

 
 
100,467

 
 
8,013

 
 
5,091,976

December 29, 2018
 
 
 
 
 
 
 
 
 
 
 
Tax exempt bonds
 
$
1,256,673

 
 
184

 
 
12,759

 
 
1,244,098

Taxable bonds
 
2,527,468

 
 
1,737

 
 
55,085

 
 
2,474,120

Restricted investment
 
160,318

 
 
520

 
 
346

 
 
160,492

 
 
$
3,944,459

 
 
2,441

 
 
68,190

 
 
3,878,710

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 June 29, 2019 and December 29, 2018 are as follows:
 
 
June 29, 2019
 
December 29, 2018
 
 
Cost
 
Fair
Value
 
Cost
 
Fair
Value
 
 
(Amounts are in thousands)
Due in one year or less
 
$
444,036

 
443,636

 
563,272

 
560,992

Due after one year through five years
 
3,334,452

 
3,372,629

 
2,831,916

 
2,768,971

Due after five years through ten years
 
1,214,955

 
1,269,396

 
542,488

 
541,852

Due after ten years
 
6,079

 
6,315

 
6,783

 
6,895

 
 
$
4,999,522

 
5,091,976

 
3,944,459

 
3,878,710



9


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



Following is a summary of temporarily impaired debt securities by the time period impaired as of June 29, 2019 and December 29, 2018:
 
 
Less Than
12 Months
 
 
12 Months
or Longer
 
 
Total
 
 
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
 
(Amounts are in thousands)
 
June 29, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax exempt bonds
 
$

 
 

 
 
702,766

 
 
1,359

 
 
702,766

 
 
1,359

 
Taxable bonds
 
31,196

 
 
136

 
 
997,595

 
 
6,518

 
 
1,028,791

 
 
6,654

 
 
 
$
31,196

 
 
136

 
 
1,700,361

 
 
7,877

 
 
1,731,557

 
 
8,013

 
December 29, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax exempt bonds
 
$
25,150

 
 
95

 
 
1,182,783

 
 
12,664

 
 
1,207,933

 
 
12,759

 
Taxable bonds
 
645,379

 
 
5,821

 
 
1,464,208

 
 
49,264

 
 
2,109,587

 
 
55,085

 
Restricted investment
 
28,687

 
 
346

 
 

 
 

 
 
28,687

 
 
346

 
 
 
$
699,216

 
 
6,262

 
 
2,646,991

 
 
61,928

 
 
3,346,207

 
 
68,190

 
There are 208 debt securities contributing to the total unrealized losses of $8,013,000 as of June 29, 2019. Unrealized losses related to debt securities are primarily due to increases in interest rates impacting the market value of certain bonds. The Company continues to receive scheduled principal and interest payments on these debt securities.
(b)
Equity Securities
In 2018, the Company adopted the Accounting Standards Update (ASU) requiring equity securities be measured at fair value with net unrealized gains and losses from changes in the fair value recognized in earnings (fair value adjustment). The fair value of equity securities was $2,566,113,000 and $2,698,720,000 as of June 29, 2019 and December 29, 2018, respectively.
Prior to adoption of the ASU, equity securities were classified as available-for-sale and measured at fair value. Changes in fair value determined to be temporary were reported in other comprehensive earnings net of income taxes. Upon adoption of the ASU, the Company reclassified the cumulative effect of the net unrealized gain on equity securities net of income taxes as of December 31, 2017 of $198,310,000 from accumulated other comprehensive earnings to retained earnings. The fair value adjustment includes the cumulative effect of the ASU reclassified to retained earnings as of December 31, 2017.


10


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



(c)
Investment Income
In the following table, net realized gain on the sale of investments represents the difference between the cost and the proceeds from the sale of debt and equity securities. The net realized gain on the sale of investments excludes the net gain on the sale of equity securities previously recognized through the fair value adjustment, which is presented separately.
Following is a summary of investment income for the three and six months ended June 29, 2019 and June 30, 2018:
 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
 
(Amounts are in thousands)
Interest and dividend income
 
$
46,714

 
 
31,061

 
 
88,730

 
 
60,153

 
Net realized gain on sale of investments
 
66,233

 
 
16,642

 
 
70,444

 
 
23,667

 
 
 
112,947

 
 
47,703

 
 
159,174

 
 
83,820

 
Fair value adjustment, due to net unrealized gain, on equity securities held at end of period
 
4,969

 
 
76,829

 
 
319,317

 
 
51,047

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

 
 
(16,217
)
 
 
33,838

 
 
(22,414
)
 
 
 
$
145,142

 
 
108,315

 
 
512,329

 
 
112,453

 
(4)
Leases
(a)
Lessee
In 2019, the Company adopted the ASU requiring the lease rights and obligations arising from existing and new lease agreements be recognized as assets and liabilities on the balance sheet. The Company adopted the ASU on a modified retrospective basis and elected the transitional provisions eliminating the requirement to restate reporting periods prior to the date of adoption. The Company also elected to not reassess the original conclusions reached regarding lease identification, lease classification and initial direct costs for leases entered into prior to the adoption of the ASU. As of December 30, 2018, the Company recognized its operating lease right-of-use assets and operating lease liabilities on the balance sheet. The adoption of the ASU did not have a material effect on the Company’s results of operations and had no effect on the Company’s cash flows.
The Company included finance lease right-of-use assets of $134,541,000 in net property, plant and equipment and finance lease liabilities of $4,831,000 and $111,982,000 in other accrued expenses and other noncurrent liabilities, respectively, on the condensed consolidated balance sheet as of June 29, 2019.
The Company conducts a major portion of its retail operations from leased locations. The Company determines whether a lease exists at inception. Initial lease terms are typically 20 years followed by five year renewal options and may include rent escalation clauses. A renewal option is included in the right-of-use asset and lease liability to the extent it is reasonably certain the option will be exercised. The present value of future payments for each lease is determined by using the Company’s incremental borrowing rate at the time of lease commencement. Additionally, the Company has operating leases for certain transportation and other equipment with initial lease terms ranging up to five years.
Operating lease expense primarily represents fixed lease payments for operating leases recognized on a straight-line basis over the applicable lease term. Variable lease expense represents the payment of real estate taxes, insurance, maintenance and, for certain locations, additional rentals based on a percentage of sales in excess of stipulated minimums (excess rent). The payment of variable real estate taxes, insurance and maintenance is generally based on the Company’s pro-rata share of total shopping center square footage. The Company estimates excess rent, where applicable, based on annual sales projections and uses the straight-line method to amortize the cost to variable lease expense.


11


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



Lease expense for the three and six months ended June 29, 2019 was as follows:
 
Three Months Ended
Six Months Ended
 
June 29, 2019
June 29, 2019
 
(Amounts are in thousands)
Operating lease expense
 
$
106,808

 
 
217,473

 
Finance lease expense:
 
 
 
 
 
 
Amortization of right-of-use assets
 
2,396

 
 
4,336

 
Interest on lease liabilities
 
789

 
 
1,437

 
Variable lease expense
 
14,471

 
 
28,888

 
Sublease rental income
 
(650
)
 
 
(1,543
)
 
 
 
$
123,814

 
 
250,591

 
Supplemental cash flow information related to leases for the six months ended June 29, 2019 was as follows:
 
Six Months Ended
 
June 29, 2019
 
(Amounts are in thousands)
Operating cash flows from rent paid for operating lease liabilities
 
210,008

 
Right-of-use assets obtained in exchange for new lease liabilities:
 
 
 
Operating leases
 
202,392

 
Finance leases
 
46,339

 
The weighted-average remaining lease term and weighted-average discount rate as of June 29, 2019 are as follows:
 
June 29, 2019
Weighted-average remaining lease term:
 
 
 
Operating leases
 
 12 years

 
Finance leases
 
18 years

 
Weighted-average discount rate:
 
 
 
Operating leases
 
3.5
%
 
Finance leases
 
4.0
%
 


12


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



Maturities of lease liabilities as of June 29, 2019 are as follows:
 
 
 
 
 
Year
Operating
Leases
 
 
Finance
Leases
 
(Amounts are in thousands)
2019
$
210,606

 
 
3,902

2020
409,915

 
 
31,596

2021
376,811

 
 
6,629

2022
341,069

 
 
6,629

2023
298,538

 
 
21,344

Thereafter
1,902,650

 
 
76,548

 
3,539,589

 
 
146,648

Less: Imputed interest
(691,598
)
 
 
(29,835
)

$
2,847,991

 
 
116,813

As of June 29, 2019, the Company has lease agreements that have not yet commenced with fixed lease payments totaling $318,361,000. These leases will commence in future periods with terms ranging up to 20 years.
(b)
Lessor
The Company leases space in owned shopping centers to tenants under noncancelable operating leases. The Company determines whether a lease exists at inception. Initial lease terms are typically five years followed by five year renewal options and may include rent escalation clauses. Lease income primarily represents fixed lease payments received from tenants recognized on a straight-line basis over the applicable lease term. Variable lease income represents the receipt of real estate taxes, insurance, maintenance and, for certain locations, excess rent.
Total lease income for the three and six months ended June 29, 2019 was as follows:
 
Three Months Ended
Six Months Ended
 
June 29, 2019
June 29, 2019
 
(Amounts are in thousands)
Lease income
 
$
37,490

 
 
73,407

 
Variable lease income
 
11,325

 
 
21,200

 
 
 
$
48,815

 
 
94,607

 


13


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



Fixed lease payments to be received for all noncancelable operating leases as of June 29, 2019 are as follows:
Year
 
(Amounts are in thousands)
2019
$
75,831

2020
132,931

2021
106,398

2022
80,482

2023
58,145

Thereafter
193,531

 
$
647,318

(5)
Consolidation of Joint Ventures and Long-Term Debt
From time to time, the Company enters into a joint venture (JV), in the legal form of a limited liability company, with certain real estate developers to partner in the development of a shopping center with the Company as the anchor tenant. The Company consolidates certain of these JVs in which it has a controlling financial interest. As of June 29, 2019, the carrying amounts of the assets and liabilities of the consolidated JVs were $153,188,000 and $76,608,000, respectively. As of December 29, 2018, the carrying amounts of the assets and liabilities of the consolidated JVs were $144,197,000 and $71,342,000, 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 2019 and 2018 were immaterial. The Company’s involvement with these JVs does not have a significant effect on the Company’s financial condition, results of operations or cash flows.
The Company’s long-term debt results primarily from the consolidation of loans of certain JVs and loans assumed in connection with the acquisition of certain shopping centers with the Company as the anchor tenant. No loans were assumed during the six months ended June 29, 2019. The Company assumed loans totaling $9,936,000 during the six months ended June 30, 2018. Maturities of JV loans range from June 2020 through April 2027 and have variable interest rates based on a LIBOR index plus 175 to 250 basis points. Maturities of assumed shopping center loans range from December 2020 through January 2027 and have fixed interest rates ranging from 3.7% to 7.5%.
(6)
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 $307,535,000 and $288,580,000 as of June 29, 2019 and December 29, 2018, respectively. The cost of the shares held by the ESOP totaled $3,043,088,000 and $2,846,419,000 as of June 29, 2019 and December 29, 2018, 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 $3,350,623,000 and $3,134,999,000 as of June 29, 2019 and December 29, 2018, respectively. The fair value of the shares held by the ESOP totaled $8,350,697,000 and $8,061,399,000 as of June 29, 2019 and December 29, 2018, respectively.


14


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



(7)
Accumulated Other Comprehensive Earnings (Losses)
A reconciliation of the changes in accumulated other comprehensive earnings (losses) net of income taxes for the three months ended June 29, 2019 and June 30, 2018 is as follows:
 
 
Investments
 
Postretirement Benefit
 
Accumulated Other Comprehensive Earnings (Losses)
 
 
 
(Amounts are in thousands)
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
Balances at March 30, 2019
 
 
$
10,781

 
 
 
(6,729
)
 
 
 
4,052

 
Unrealized gain on debt securities
 
 
58,130

 
 
 

 
 
 
58,130

 
Net realized loss on debt securities reclassified to investment income
 
 
37

 
 
 

 
 
 
37

 
Net other comprehensive earnings
 
 
58,167

 
 
 

 
 
 
58,167

 
Balances at June 29, 2019
 
 
$
68,948

 
 
 
(6,729
)
 
 
 
62,219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
 
 
 
Balances at March 31, 2018
 
 
$
(54,212
)
 
 
 
(14,856
)
 
 
 
(69,068
)
 
Unrealized loss on debt securities
 
 
(2,600
)
 
 
 

 
 
 
(2,600
)
 
Net realized loss on debt securities reclassified to investment income
 
 
425

 
 
 

 
 
 
425

 
Adjustment to postretirement benefit obligation
 
 

 
 
 
564

 
 
 
564

 
Net other comprehensive (losses) earnings
 
 
(2,175
)
 
 
 
564

 
 
 
(1,611
)
 
Balances at June 30, 2018
 
 
$
(56,387
)
 
 
 
(14,292
)
 
 
 
(70,679
)
 


15


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



A reconciliation of the changes in accumulated other comprehensive earnings (losses) net of income taxes for the six months ended June 29, 2019 and June 30, 2018 is as follows:
 
 
Investments
 
Postretirement Benefits
 
Accumulated Other Comprehensive Earnings (Losses)
 
 
 
(Amounts are in thousands)
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
Balances at December 29, 2018
 
 
$
(49,033
)
 
 
 
(6,729
)
 
 
 
(55,762
)
 
Unrealized gain on debt securities
 
 
117,651

 
 
 

 
 
 
117,651

 
Net realized loss on debt securities reclassified to investment income
 
 
330

 
 
 

 
 
 
330

 
Net other comprehensive earnings
 
 
117,981

 
 
 

 
 
 
117,981

 
Balances at June 29, 2019
 
 
$
68,948

 
 
 
(6,729
)
 
 
 
62,219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
 
 
 
Balances at December 30, 2017
 
 
$
168,057

 
 
 
(15,421
)
 
 
 
152,636

 
Unrealized loss on debt securities
 
 
(26,581
)
 
 
 

 
 
 
(26,581
)
 
Net realized loss on debt securities reclassified to investment income
 
 
447

 
 
 

 
 
 
447

 
Adjustment to postretirement benefit obligation
 
 

 
 
 
1,129

 
 
 
1,129

 
Net other comprehensive (losses) earnings
 
 
(26,134
)
 
 
 
1,129

 
 
 
(25,005
)
 
Cumulative effect of net unrealized gain on equity securities reclassified to retained earnings
 
 
(198,310
)
 
 
 

 
 
 
(198,310
)
 
Balances at June 30, 2018
 
 
$
(56,387
)
 
 
 
(14,292
)
 
 
 
(70,679
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(8)
Subsequent Event
On July 1, 2019, the Company declared a quarterly dividend on its common stock of $0.30 per share or $214,100,000, payable August 1, 2019 to stockholders of record as of the close of business July 15, 2019.


16



Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The Company is engaged in the retail food industry and as of June 29, 2019 operated 1,221 supermarkets in Florida, Georgia, Alabama, South Carolina, Tennessee, North Carolina and Virginia. For the six months ended June 29, 2019, 13 supermarkets were opened (including four replacement supermarkets) and 78 supermarkets were remodeled. Three supermarkets were closed during the period. The replacement supermarkets that opened during the six months ended June 29, 2019 replaced one supermarket closed during the same period and three supermarkets closed during a previous period. Two of the supermarkets closed in 2019 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.
Results of Operations
Sales
Sales for the three months ended June 29, 2019 were $9.3 billion as compared with $8.8 billion for the three months ended June 30, 2018, an increase of $596.1 million or 6.8%. The increase in sales for the three months ended June 29, 2019 as compared with the three months ended June 30, 2018 was primarily due to new supermarket sales and a 4.8% increase in comparable store sales (supermarkets open for the same weeks in both periods, including replacement supermarkets). 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. The Company estimates the increase in sales for the three months ended June 29, 2019 as compared with the three months ended June 30, 2018 was $105 million or 1.2% higher due to the effect of the Easter holiday being in the second quarter in 2019 and in the first quarter in 2018. Comparable store sales for the three months ended June 29, 2019 increased primarily due to increased product costs and the effect of the Easter holiday being in the second quarter in 2019 and in the first quarter in 2018.
Sales for the six months ended June 29, 2019 were $19.0 billion as compared with $18.0 billion for the six months ended June 30, 2018, an increase of $996.8 million or 5.5%. The increase in sales for the six months ended June 29, 2019 as compared with the six months ended June 30, 2018 was primarily due to new supermarket sales and a 3.3% increase in comparable store sales. Comparable store sales for the six months ended June 29, 2019 increased primarily due to increased product costs.
Gross profit
Gross profit (sales less cost of merchandise sold) as a percentage of sales was 27.1% and 27.3% for the three months ended June 29, 2019 and June 30, 2018, respectively. Gross profit as a percentage of sales for the three months ended June 29, 2019 as compared with the three months ended June 30, 2018 remained relatively unchanged. Gross profit as a percentage of sales was 27.6% for the six months ended June 29, 2019 and June 30, 2018.
Operating and administrative expenses
Operating and administrative expenses as a percentage of sales were 20.9% and 20.8% for the three months ended June 29, 2019 and June 30, 2018, respectively. Operating and administrative expenses as a percentage of sales were 20.5% and 20.2% for the six months ended June 29, 2019 and June 30, 2018, respectively. The increase in operating and administrative expenses as a percentage of sales for the three and six months ended June 29, 2019 as compared with the three and six months ended June 30, 2018 was primarily due to an increase in payroll costs as a percentage of sales.
Operating profit
Operating profit as a percentage of sales was 7.3% for the three months ended June 29, 2019 and June 30, 2018. Operating profit as a percentage of sales was 8.1% and 8.2% for the six months ended June 29, 2019 and June 30, 2018, respectively. Operating profit as a percentage of sales for the six months ended June 29, 2019 as compared with the six months ended June 30, 2018 remained relatively unchanged.


17



Investment income
Investment income was $145.1 million and $108.3 million for the three months ended June 29, 2019 and June 30, 2018, respectively. The increase in investment income for the three months ended June 29, 2019 as compared with the three months ended June 30, 2018 was primarily due to increases in realized gains on the sale of equity securities and interest and dividend income partially offset by a decrease in net unrealized gains on equity securities. Excluding the impact of net unrealized gains on equity securities in 2019 and 2018, investment income would have been $112.9 million and $47.7 million for the three months ended June 29, 2019 and June 30, 2018, respectively.
Investment income was $512.3 million and $112.5 million for the six months ended June 29, 2019 and June 30, 2018, respectively. The increase in investment income for the six months ended June 29, 2019 as compared with the six months ended June 30, 2018 was primarily due to increases in net unrealized gains on equity securities, realized gains on the sale of equity securities and interest and dividend income. Excluding the impact of net unrealized gains on equity securities in 2019 and 2018, investment income would have been $159.2 million and $83.8 million for the six months ended June 29, 2019 and June 30, 2018, respectively.
Income tax expense
The effective income tax rate was 21.5% and 20.5% for the three months ended June 29, 2019 and June 30, 2018, respectively. The effective income tax rate was 21.2% and 20.7% for the six months ended June 29, 2019 and June 30, 2018, respectively. The increase in the effective income tax rate for the three and six months ended June 29, 2019 as compared with the three and six months ended June 30, 2018 was primarily due to the decreased impact of permanent deductions and credits due to the increase in earnings before income tax expense.
Net earnings
Net earnings were $661.1 million or $0.92 per share and $616.2 million or $0.84 per share for the three months ended June 29, 2019 and June 30, 2018, respectively. Net earnings as a percentage of sales were 7.1% and 7.0% for the three months ended June 29, 2019 and June 30, 2018, respectively. Net earnings as a percentage of sales for the three months ended June 29, 2019 as compared with the three months ended June 30, 2018 remained relatively unchanged. Net earnings and earnings per share for the three months ended June 29, 2019 and June 30, 2018 were impacted by net unrealized gains on equity securities. Excluding the impact of net unrealized gains on equity securities in 2019 and 2018, net earnings would have been $637.0 million or $0.89 per share and 6.8% as a percentage of sales for the three months ended June 29, 2019 and $571.0 million or $0.78 per share and 6.5% as a percentage of sales for the three months ended June 30, 2018. Excluding the impact of net unrealized gains on equity securities in 2019 and 2018, the increase in net earnings as a percentage of sales for the three months ended June 29, 2019 as compared with the three months ended June 30, 2018 was primarily due to increases in realized gains on the sale of equity securities and interest and dividend income.
Net earnings were $1,642.0 million or $2.29 per share and $1,296.4 million or $1.77 per share for the six months ended June 29, 2019 and June 30, 2018, respectively. Net earnings as a percentage of sales were 8.6% and 7.2% for the six months ended June 29, 2019 and June 30, 2018, respectively. The increase in net earnings as a percentage of sales for the six months ended June 29, 2019 as compared with the six months ended June 30, 2018 was primarily due to an increase in investment income. Net earnings and earnings per share for the six months ended June 29, 2019 and June 30, 2018 were impacted by net unrealized gains on equity securities. Excluding the impact of net unrealized gains on equity securities in 2019 and 2018, net earnings would have been $1,378.7 million or $1.92 per share and 7.2% as a percentage of sales for the six months ended June 29, 2019 and $1,275.1 million or $1.74 per share and 7.1% as a percentage of sales for the six months ended June 30, 2018.


18



Non-GAAP Financial Measures
In addition to reporting financial results for the three and six months ended June 29, 2019 and June 30, 2018 in accordance with GAAP, the Company presents net earnings and earnings per share excluding the impact of equity securities being measured at fair value with net unrealized gains and losses from changes in the fair value recognized in earnings (fair value adjustment). These measures are not in accordance with, or an alternative to, GAAP. The Company excludes the impact of the fair value adjustment since it is primarily due to temporary equity market fluctuations that do not reflect the Company’s operations. The Company believes this information is useful in providing period-to-period comparisons of the results of operations. Following is a reconciliation of net earnings to net earnings excluding the impact of the fair value adjustment for the three and six months ended June 29, 2019 and June 30, 2018:
 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
 
(amounts are in millions, except per share amounts)
Net earnings
 
$
661.1

 
 
616.2

 
 
1,642.0

 
 
1,296.4

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

 
(5.0
)
 
 
(76.8
)
 
 
(319.3
)
 
 
(51.0
)
 
Net (loss) gain on sale of equity securities previously recognized through fair value adjustment
 
(27.2
)
 
 
16.2

 
 
(33.8
)
 
 
22.4

 
Income tax expense (1)
 
8.1

 
 
15.4

 
 
89.8

 
 
7.3

 
Net earnings excluding impact of fair value adjustment
 
$
637.0

 
 
571.0

 
 
1,378.7

 
 
1,275.1

 
Weighted average shares outstanding
 
716.5

 
 
730.9

 
 
716.3

 
 
732.5

 
Earnings per share excluding impact of fair value adjustment
 
$
0.89

 
 
0.78

 
 
1.92

 
 
1.74

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


19



Liquidity and Capital Resources
Cash and cash equivalents, short-term investments and long-term investments totaled $8,478.7 million as of June 29, 2019, as compared with $7,176.7 million as of December 29, 2018 and $7,190.8 million as of June 30, 2018. The increase from the second quarter of 2018 to the second quarter of 2019 was primarily due to net unrealized gains on equity securities and decreases in income taxes paid, capital expenditures and common stock repurchases.
Net cash provided by operating activities
Net cash provided by operating activities was $2,262.0 million and $1,833.5 million for the six months ended June 29, 2019 and June 30, 2018, respectively. The increase in net cash provided by operating activities for the six months ended June 29, 2019 as compared with the six months ended June 30, 2018 was primarily due to 2017 federal income tax payments extended to 2018 due to Hurricane Irma in 2017.
Net cash used in investing activities
Net cash used in investing activities was $1,206.3 million and $877.6 million for the six months ended June 29, 2019 and June 30, 2018, respectively. The primary use of net cash in investing activities for the six months ended June 29, 2019 was funding capital expenditures and net increases in investment securities. Capital expenditures for the six months ended June 29, 2019 totaled $651.2 million. These expenditures were incurred in connection with the opening of 13 supermarkets (including four replacement supermarkets) and remodeling 78 supermarkets. Expenditures were also incurred for supermarkets and remodels in progress, new or enhanced information technology hardware and applications and the acquisition of shopping centers with the Company as the anchor tenant. For the six months ended June 29, 2019, the payment for investments, net of the proceeds from the sale and maturity of investments, was $558.5 million.
Net cash used in financing activities
Net cash used in financing activities was $834.3 million and $973.9 million for the six months ended June 29, 2019 and June 30, 2018, respectively. The primary use of net cash in financing activities was funding net common stock repurchases and dividend payments. Net common stock repurchases totaled $437.2 million and $596.5 million for the six months ended June 29, 2019 and June 30, 2018, respectively. The Company currently repurchases common stock at the stockholders’ request in accordance with the terms of the 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 $401.4 million or $0.56 per share and $359.3 million or $0.49 per share during the six months ended June 29, 2019 and June 30, 2018, respectively.
Capital expenditures projection
Capital expenditures for the remainder of 2019 are expected to be approximately $800 million, primarily consisting of new supermarkets, remodeling existing supermarkets, new or enhanced information technology hardware and applications and the acquisition of shopping centers with the Company as the anchor tenant. The shopping center acquisitions are financed with internally generated funds and assumed debt, if prepayment penalties for the debt are determined to be significant. This capital program is subject to continuing change and review.
Cash requirements
In 2019, 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 short-term and long-term borrowings would be available to support the Company’s liquidity requirements, if needed.


20



Forward-Looking Statements
From time to time, certain information provided by the Company, including written or oral statements made by its representatives, may contain forward-looking information as defined in Section 21E of the Securities Exchange Act of 1934 (the Exchange Act). 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,” “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; changes in consumer spending; changes in population, employment and job growth in the Company’s principal markets; 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 29, 2018.
Item 4.    Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer each concluded that the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information has been accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure. There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation that occurred during the quarter ended June 29, 2019 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.



21



PART II. OTHER INFORMATION
Item 1.    Legal Proceedings
As reported in the Company’s Form 10-K for the year ended December 29, 2018, the Company is subject from time to time to various lawsuits, claims and charges arising in the normal course of business. The Company believes its recorded reserves are adequate in light of the probable and estimable liabilities. The estimated amount of reasonably possible losses for lawsuits, claims and charges, individually and in the aggregate, is considered to be immaterial. In the opinion of management, the ultimate resolution of these legal proceedings will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
Item 1A.    Risk Factors
There have been no material changes in the risk factors from those disclosed in the Company’s Form 10-K for the year ended December 29, 2018.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Shares of common stock repurchased by the Company during the three months ended June 29, 2019 were as follows (amounts are in thousands, except per share amounts):
 
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
 
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
March 31, 2019
through
May 4, 2019
 
 
2,153

 
 
 
$
43.70

 
 
N/A
 
N/A
May 5, 2019
through
June 1, 2019
 
 
2,309

 
 
 
44.75

 
 
N/A
 
N/A
June 2, 2019
through
June 29, 2019
 
 
1,328

 
 
 
44.75

 
 
N/A
 
N/A
 
 
Total
 
 
5,790

 
 
 
$
44.36

 
 
N/A
 
N/A
(1) 
Common stock is made available for sale by the Company only to its current employees and members of its Board of Directors through the ESPP and Directors Plan and to participants of the 401(k) Plan. In addition, common stock is provided to employees through the ESOP. The Company currently repurchases common stock subject to certain terms and conditions. The ESPP, Directors Plan, 401(k) Plan and ESOP each contain provisions prohibiting any transfer for value without the owner first offering the common stock to the Company.
The Company’s common stock is not traded on an established securities market. The amount of common stock offered to the Company for repurchase is not within the control of the Company, but is at the discretion of the stockholders. The Company does not believe that these repurchases of its common stock are within the scope of a publicly announced plan or program (although the terms of the plans discussed above have been communicated to the participants). Thus, the Company does not believe that it has made any repurchases during the three months ended June 29, 2019 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


22




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 the Quarterly Report on Form 10-Q for the quarter ended June 29, 2019 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.



23



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

 
 
 
 
 
 
 
PUBLIX SUPER MARKETS, INC.
 
 
 
 
 
 
 
 
 
 
 
Date:
August 1, 2019
 
/s/  Merriann M. Metz
 
 
 
Merriann M. Metz, Secretary
 
 
 
 
 
 
 
 
 
 
 
Date:
August 1, 2019
 
/s/  David P. Phillips
 
 
 
David P. Phillips, Executive Vice President and Chief Financial Officer (Principal Financial and
Accounting Officer)



24
 

Exhibit 31.1


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 evaluati