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 March 31, 2012

Commission File Number 0-00981

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

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes    X           No           

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer            Accelerated filer            Non-accelerated filer     X      Smaller reporting company          

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 April 20, 2012 was 787,581,000.

 

 

 

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PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements

PUBLIX SUPER MARKETS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts are in thousands, except par value)

 

		March 31, 2012				December 31, 2011
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	617,923				366,853
Short-term investments			531,556				447,972
Trade receivables			553,194				542,990
Merchandise inventories			1,375,471				1,361,709
Deferred tax assets			62,135				59,400
Prepaid expenses			34,931				24,316
Total current assets			3,175,210				2,803,240
Long-term investments			4,265,494				3,805,283
Other noncurrent assets			178,840				171,179
Property, plant and equipment			8,653,010				8,621,316
Accumulated depreciation			(4,150,183	)			(4,132,786	)
Net property, plant and equipment			4,502,827				4,488,530
		$	12,122,371				11,268,232
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	1,299,732				1,133,120
Accrued expenses:
Contribution to retirement plans			207,352				405,818
Self-insurance reserves			131,019				125,569
Salaries and wages			151,425				110,207
Dividends payable			464,560				—
Other			238,633				221,713
Current portion of long-term debt			15,338				15,124
Federal and state income taxes			232,383				39,225
Total current liabilities			2,740,442				2,050,776
Deferred tax liabilities			319,194				316,802
Self-insurance reserves			221,413				219,660
Accrued postretirement benefit cost			103,582				103,595
Long-term debt			125,028				119,460
Other noncurrent liabilities			119,396				116,482
Total liabilities			3,629,055				2,926,775
Common stock related to Employee Stock Ownership Plan (ESOP)			2,391,965				2,137,217
Stockholders’ equity:
Common stock of $1 par value. Authorized 1,000,000 shares; issued and outstanding 790,011 shares in 2012 and 779,675 shares in 2011			790,011				779,675
Additional paid-in capital			1,581,730				1,354,881
Retained earnings			6,076,039				6,131,193
Treasury stock at cost, 2,306 shares in 2012			(51,660	)			—
Accumulated other comprehensive earnings			51,359				30,261
Common stock related to ESOP			(2,391,965	)			(2,137,217	)
Total stockholders’ equity			6,055,514				6,158,793
Noncontrolling interests			45,837				45,447
Total equity			8,493,316				8,341,457
		$	12,122,371				11,268,232

See accompanying notes to condensed consolidated financial statements.

 

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PUBLIX SUPER MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts are in thousands, except per share amounts)

 

		Three Months Ended
		March 31, 2012				March 26, 2011
		(Unaudited)
Revenues:
Sales		$	7,070,446				6,788,030
Other operating income			55,650				48,372
Total revenues			7,126,096				6,836,402
Costs and expenses:
Cost of merchandise sold			5,109,277				4,877,323
Operating and administrative expenses			1,417,470				1,387,359
Total costs and expenses			6,526,747				6,264,682
Operating profit			599,349				571,720
Investment income, net			18,339				25,132
Other income, net			6,289				7,178
Earnings before income tax expense			623,977				604,030
Income tax expense			214,566				205,863
Net earnings		$	409,411				398,167
Weighted average shares outstanding			782,080				782,728
Basic and diluted earnings per share		$	0.52				0.51
Cash dividends declared per common share		$	0.59				0.53

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(Amounts are in thousands)

 

		Three Months Ended
		March 31, 2012				March 26, 2011
		(Unaudited)
Net earnings		$	409,411				398,167
Other comprehensive earnings:
Unrealized gain on available-for-sale (AFS) securities, net of tax effect of $13,077 and $6,285 in 2012 and 2011, respectively			20,766				9,980
Reclassification adjustment for net realized gain on AFS securities, net of tax effect of ($92) and ($3,104) in 2012 and 2011, respectively			(146	)			(4,929	)
Adjustment to postretirement benefit plan obligation, net of tax effect of $301 and $103 in 2012 and 2011, respectively			478				165
Comprehensive earnings		$	430,509				403,383

See accompanying notes to condensed consolidated financial statements.

 

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PUBLIX SUPER MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts are in thousands)

 

		Three Months Ended
		March 31, 2012				March 26, 2011
		(Unaudited)
Cash flows from operating activities:
Cash received from customers		$	7,077,420				6,794,890
Cash paid to employees and suppliers			(6,069,152	)			(5,840,286	)
Income taxes paid			(35,161	)			(17,110	)
Self-insured claims paid			(60,360	)			(59,871	)
Dividends and interest received			37,519				39,989
Other operating cash receipts			53,751				46,337
Other operating cash payments			(2,433	)			(2,384	)
Net cash provided by operating activities			1,001,584				961,565
Cash flows from investing activities:
Payment for property, plant and equipment			(133,040	)			(114,321	)
Proceeds from sale of property, plant and equipment			1,437				1,317
Payment for investments			(681,110	)			(704,931	)
Proceeds from sale and maturity of investments			155,858				173,435
Net cash used in investing activities			(656,855	)			(644,500	)
Cash flows from financing activities:
Payment for acquisition of common stock			(141,860	)			(121,270	)
Proceeds from sale of common stock			48,479				49,283
Repayments of long-term debt			(668	)			(459	)
Other, net			390				(722	)
Net cash used in financing activities			(93,659	)			(73,168	)
Net increase in cash and cash equivalents			251,070				243,897
Cash and cash equivalents at beginning of period			366,853				605,901
Cash and cash equivalents at end of period		$	617,923				849,798

 

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

 

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PUBLIX SUPER MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts are in thousands)

 

		Three Months Ended
		March 31, 2012				March 26, 2011
		(Unaudited)
Reconciliation of net earnings to net cash provided by operating activities:
Net earnings		$	409,411				398,167
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			121,865				124,973
Retirement contributions paid or payable in common stock			80,439				81,410
Deferred income taxes			(13,629	)			5,225
Loss on disposal and impairment of property, plant and equipment			5,022				2,843
Gain on AFS securities			(238	)			(8,033	)
Net amortization of investments			25,312				16,481
Changes in operating assets and liabilities providing (requiring) cash:
Trade receivables			(9,982	)			4,084
Merchandise inventories			(13,762	)			96,063
Prepaid expenses and other noncurrent assets			(21,407	)			(6,738	)
Accounts payable and accrued expenses			214,512				61,202
Self-insurance reserves			7,203				5,076
Federal and state income taxes			193,158				183,627
Other noncurrent liabilities			3,680				(2,815	)
Total adjustments			592,173				563,398
Net cash provided by operating activities		$	1,001,584				961,565

See accompanying notes to condensed consolidated financial statements.

 

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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, results of operations and cash flows. Due to the seasonal nature of the Company’s business, the results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results for the entire 2012 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 31, 2011.

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 available-for-sale (AFS) securities 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. AFS securities that are included in this category are primarily a mutual fund and 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 and municipal bonds by using pricing of similar bonds based on coupons, ratings and maturities. In addition, the value of collateralized mortgage obligation securities is determined by using models to develop prepayment and interest rate scenarios for these securities which have prepayment features. AFS securities that are included in this category are primarily debt securities (tax exempt and taxable bonds).

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 AFS securities are currently included in this category.

Following is a summary of fair value measurements for AFS securities as of March 31, 2012 and December 31, 2011:

 

		$0,000,000		$0,000,000		$0,000,000		$0,000,000		$0,000,000		$0,000,000
		Fair Value		Level 1		Level 2		Level 3
		(Amounts are in thousands)
March 31, 2012		$4,797,050		537,673		4,259,377		—
December 31, 2011		4,253,255		473,099		3,780,156		—

 

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PUBLIX SUPER MARKETS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(3)    Investments

All of the Company’s debt and equity securities are classified as AFS and are carried at fair value. The Company evaluates whether AFS securities are other-than-temporarily impaired (OTTI) based on criteria that include the extent to which cost exceeds market value, the duration of the market value decline, the credit rating of the issuer or security, the failure of the issuer to make scheduled principal or interest payments and the financial health and prospects of the issuer or security.

Declines in the value of AFS securities determined to be OTTI are recognized in earnings and reported as OTTI losses. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the debt security or if the Company will be required to sell the debt security prior to any anticipated recovery. If the Company determines that a debt security is OTTI under these circumstances, the impairment recognized in earnings is measured as the difference between the amortized cost and the current fair value. A debt security is also determined to be OTTI if the Company does not expect to recover the amortized cost of the debt security. However, in this circumstance, if the Company does not intend to sell the debt security and will not be required to sell the debt security, the impairment recognized in earnings equals the estimated credit loss as measured by the difference between the present value of expected cash flows and the amortized cost of the debt security. Expected cash flows are discounted using the debt security’s effective interest rate. An equity security is determined to be OTTI if the Company does not expect to recover the cost of the equity security. Declines in the value of AFS securities determined to be temporary are reported, net of tax, as other comprehensive losses and included as a component of stockholders’ equity.

Interest and dividend income, amortization of premiums, accretion of discounts and realized gains and losses on AFS securities are included in investment income. Interest income is accrued as earned. Dividend income is recognized as income on the ex-dividend date of the stock. The cost of AFS securities sold is based on the first-in, first-out method.

Following is a summary of AFS securities as of March 31, 2012 and December 31, 2011:

 

		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
		(Amounts are in thousands)
March 31, 2012
Tax exempt bonds		$	2,812,225				36,304				3,125				2,845,404
Taxable bonds			1,381,556				22,109				1,283				1,402,382
Restricted investments			170,000				—				949				169,051
Equity securities			326,785				60,835				7,407				380,213
		$	4,690,566				119,248				12,764				4,797,050
December 31, 2011
Tax exempt bonds		$	2,488,135				36,657				550				2,524,242
Taxable bonds			1,226,136				20,015				1,514				1,244,637
Restricted investments			170,000				—				3,019				166,981
Equity securities			296,105				35,564				14,274				317,395
		$	4,180,376				92,236				19,357				4,253,255

Realized gains on sales of AFS securities totaled $2,549,000 and $9,260,000 for the three months ended March 31, 2012 and March 26, 2011, respectively. Realized losses on sales of AFS securities totaled $2,311,000 and $1,227,000 for the three months ended March 31, 2012 and March 26, 2011, respectively. There were no OTTI losses on AFS securities for the three months ended March 31, 2012 and March 26, 2011.

 

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PUBLIX SUPER MARKETS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The amortized cost and fair value of AFS securities by expected maturity as of March 31, 2012 and December 31, 2011 are as follows:

 

		March 31, 2012								December 31, 2011
		Amortized Cost				Fair Value				Amortized Cost				Fair Value
		(Amounts are in thousands)
Due in one year or less		$	528,456				531,556				445,296				447,972
Due after one year through five years			2,821,738				2,856,820				2,492,484				2,524,020
Due after five years through ten years			451,734				456,595				348,427				356,808
Due after ten years			391,853				402,815				428,064				440,079
			4,193,781				4,247,786				3,714,271				3,768,879
Restricted investments			170,000				169,051				170,000				166,981
Equity securities			326,785				380,213				296,105				317,395
		$	4,690,566				4,797,050				4,180,376				4,253,255

Following is a summary of temporarily impaired AFS securities by the time period impaired as of March 31, 2012 and December 31, 2011:

 

		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)
March 31, 2012
Tax exempt bonds		$	367,505				3,125				—				—				367,505				3,125
Taxable bonds			215,199				1,283				—				—				215,199				1,283
Restricted investments			169,051				949				—				—				169,051				949
Equity securities			63,319				6,179				5,791				1,228				69,110				7,407
Total temporarily impaired AFS securities		$	815,074				11,536				5,791				1,228				820,865				12,764
December 31, 2011
Tax exempt bonds			$138,892				536				6,026				14				144,918				550
Taxable bonds			201,538				1,514				—				—				201,538				1,514
Restricted investments			166,981				3,019				—				—				166,981				3,019
Equity securities			86,236				13,899				1,889				375				88,125				14,274
Total temporarily impaired AFS securities		$	593,647				18,968				7,915				389				601,562				19,357

There are 295 AFS securities issues contributing to the total unrealized loss of $12,764,000 as of March 31, 2012. Unrealized losses related to debt securities are primarily driven by interest rate volatility impacting the market value of certain bonds. The Company continues to receive scheduled principal and interest payments on these debt securities. Unrealized losses related to equity securities are primarily driven by stock market volatility.

 

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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 Joint Ventures (JV), in the legal form of limited liability companies, with certain real estate developers to partner in the development of shopping centers with the Company as the anchor tenant. The Company consolidates certain of these JVs in which it has a controlling financial interest. The Company is considered to have a controlling financial interest in a JV when it has (1) the power to direct the activities of the JV that most significantly impact the JV’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from the JV that could potentially be significant to such JV.

The Company evaluates a JV using specific criteria to determine whether the Company has a controlling financial interest and is the primary beneficiary of the JV. Factors considered in determining whether the Company is the primary beneficiary include risk and reward sharing, experience and financial condition of the other JV members, voting rights, involvement in routine capital and operating decisions and each member’s influence over the JV owned shopping center’s economic performance.

Generally, most major JV decision making is shared between all members. In particular, the use and sale of JV assets, business plans and budgets are generally required to be approved by all members. However, the Company, through its anchor tenant operating lease agreement, has the power to direct the activities that most significantly influence the economic performance of the JV owned shopping center. Additionally, through its member equity interest in the JV, the Company will receive a significant portion of the JV’s benefits or is obligated to absorb a significant portion of the JV’s losses.

As of March 31, 2012, the carrying amounts of the assets and liabilities of the consolidated JVs were $177,079,000 and $76,787,000, respectively. As of December 31, 2011, the carrying amounts of the assets and liabilities of the consolidated JVs were $177,226,000 and $76,249,000, 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 2012 and 2011 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. The Company assumed loans totaling $6,450,000 during the three months ended March 31, 2012. No loans were assumed during the three months ended March 26, 2011. Maturities of JV loans range from July 2012 through January 2015 and have either (1) fixed interest rates ranging from 4.5% to 5.3% or (2) variable interest rates based on a LIBOR index plus basis points ranging from 195 basis points to 250 basis points. Maturities of assumed shopping center loans range from September 2013 through January 2027 and have fixed interest rates ranging from 5.1% to 7.5%.

 

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PUBLIX SUPER MARKETS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(5)    Retirement Plan

The Company has a trusteed, noncontributory Employee Stock Ownership Plan (ESOP) for the benefit of eligible employees. The Company’s 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. Since the Company’s common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value for a 15-month period after distribution of the shares from the ESOP. The fair value of distributed shares subject to the put option totaled $158,303,000 and $116,824,000 as of March 31, 2012 and December 31, 2011, respectively. The cost of the shares held by the ESOP totaled $2,233,662,000 and $2,020,393,000 as of March 31, 2012 and December 31, 2011, 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 $2,391,965,000 and $2,137,217,000 as of March 31, 2012 and December 31, 2011, respectively. The fair value of the shares held by the ESOP totaled $5,602,392,000 and $4,917,283,000 as of March 31, 2012 and December 31, 2011, respectively.

 

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company is primarily engaged in the retail food industry, operating supermarkets in Florida, Georgia, Alabama, South Carolina and Tennessee. As of March 31, 2012, the Company operated 1,053 supermarkets.

Results of Operations

Sales

Sales for the three months ended March 31, 2012 were $7.1 billion as compared with $6.8 billion for the three months ended March 26, 2011, an increase of $282.4 million or a 4.2% increase. The Company estimates that its sales increased $58.4 million or 0.9% from new supermarkets and $224.0 million or 3.3% from 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. Comparable store sales for the three months ended March 31, 2012 increased primarily due to product cost inflation and increased customer counts resulting from a better economic climate.

Gross profit

Gross profit (sales less cost of merchandise sold) as a percentage of sales was 27.7% and 28.1% for the three months ended March 31, 2012 and March 26, 2011, respectively. The decrease in gross profit as a percentage of sales for the three months ended March 31, 2012 as compared with the three months ended March 26, 2011 was primarily due to an increase in the last-in, first-out reserve, an increase in promotional activity and product cost increases, some of which were not passed on to customers.

Operating and administrative expenses

Operating and administrative expenses as a percentage of sales were 20.0% and 20.4% for the three months ended March 31, 2012 and March 26, 2011, respectively. The decrease in operating expenses as a percentage of sales for the three months ended March 31, 2012 as compared with the three months ended March 26, 2011 was primarily due to a 0.4% decrease in payroll as a percentage of sales primarily due to more effective scheduling.

Investment income, net

Investment income, net was $18.3 million and $25.1 million for the three months ended March 31, 2012 and March 26, 2011, respectively. The decrease in investment income, net for the three months ended March 31, 2012 as compared with the three months ended March 26, 2011 was primarily due to a decrease in realized gains on the sale of equity securities. There were no OTTI losses on AFS for the three months ended March 31, 2012 and March 26, 2011.

Income taxes

The effective income tax rate was 34.4% and 34.1% for the three months ended March 31, 2012 and March 26, 2011, respectively. The effective income tax rate for the three months ended March 31, 2012 as compared with the three months ended March 26, 2011 remained relatively unchanged.

Net earnings

Net earnings were $409.4 million or $0.52 per share and $398.2 million or $0.51 per share for the three months ended March 31, 2012 and March 26, 2011, respectively. Net earnings as a percentage of sales were 5.8% and 5.9% for the three months ended March 31, 2012 and March 26, 2011, respectively. The decrease in net earnings as a percentage of sales for the three months ended March 31, 2012 as compared with the three months ended March 26, 2011 was primarily due to a decrease in gross profit as a percentage of sales partially offset by a decrease in operating and administrative expenses as a percentage of sales, as noted above.

 

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Liquidity and Capital Resources

Cash and cash equivalents, short-term investments and long-term investments totaled $5,415.0 million as of March 31, 2012, as compared with $4,620.1 million as of December 31, 2011. This increase is primarily due to the difference in net cash provided by operating activities for the first quarter 2012 of $1,001.6 million compared to the fourth quarter 2011 of $447.5 million. The difference is primarily due to the timing of payments, particularly for merchandise and income taxes. This excess was invested in short-term and long-term investments.

Net cash provided by operating activities

Net cash provided by operating activities was $1,001.6 million for the three months ended March 31, 2012, as compared with $961.6 million for the three months ended March 26, 2011. The increase in cash provided by operating activities for the three months ended March 31, 2012 as compared with the three months ended March 26, 2011 remained relatively unchanged. Any net cash in excess of the amount needed for current operations is invested in short-term and long-term investments.

Net cash used in investing activities

Net cash used in investing activities was $656.9 million for the three months ended March 31, 2012, as compared with $644.5 million for the three months ended March 26, 2011. For the three months ended March 31, 2012, the primary use of net cash in investing activities was funding capital expenditures and net increases in investment securities. Capital expenditures totaled $133.0 million. These expenditures were incurred in connection with the opening of seven new supermarkets (including one replacement supermarket) and remodeling 13 supermarkets. No supermarkets were closed during the period. The replacement supermarket opened during the three months ended March 31, 2012 replaced one of the supermarkets closed in 2011. New supermarkets added 0.3 million square feet in the three months ended March 31, 2012, an increase of 0.7%. Expenditures were also incurred for the acquisition of shopping centers with the Company as the anchor tenant, new or enhanced information technology hardware and applications and the expansion of warehouses. For the same period, the payment for investments, net of the proceeds from the sale and maturity of such investments, was $525.3 million.

For the three months ended March 26, 2011, the primary use of net cash in investing activities was funding capital expenditures and net increases in investment securities. Capital expenditures totaled $114.3 million. These expenditures were incurred in connection with the opening of three new supermarkets and remodeling 19 supermarkets. Four supermarkets were closed during the period. All of the supermarkets closed during the three months ended March 26, 2011 were replaced on site in subsequent periods. Expenditures were also incurred for new or enhanced information technology hardware and applications. For the same period, the payment for investments, net of the proceeds from the sale and maturity of such investments, was $531.5 million.

Capital expenditure projection

Capital expenditures for the remainder of 2012 are expected to be approximately $597 million, primarily consisting of new supermarkets, remodeling certain existing supermarkets, expansion of warehouses, new or enhanced information technology hardware and applications and the acquisition of certain 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. In the normal course of operations, the Company replaces supermarkets and closes supermarkets that are not meeting performance expectations. The impact of future supermarket closings is not expected to be material.

Net cash used in financing activities

Net cash used in financing activities was $93.7 million for the three months ended March 31, 2012, as compared with $73.2 million for the three months ended March 26, 2011. The primary use of net cash in financing activities was funding net common stock repurchases. Net common stock repurchases totaled $93.4 million for the three months ended March 31, 2012, as compared with $72.0 million for the three months ended March 26, 2011. The Company currently repurchases common stock at the stockholders’ request in accordance with the terms of the Company’s Employee Stock Purchase Plan (ESPP), 401(k) Plan, ESOP and Non-

 

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Employee Directors Stock Purchase Plan (Directors Plan). 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 for amounts similar to those in prior years. 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

On March 6, 2012, the Company declared an annual cash dividend on its common stock of $0.59 per share or approximately $464.6 million, payable on June 1, 2012 to stockholders of record as of the close of business April 30, 2012. On June 1, 2011, the Company paid an annual cash dividend on its common stock of $0.53 per share or $418.7 million.

Cash requirements

In 2012, the cash requirements for current operations, capital expenditures, common stock repurchases and payment of the annual cash dividend 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.

Due to the increasing costs for less insurance coverage, the Company no longer has insurance for property, plant and equipment losses and is self insured for these losses.

 

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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. Forward-looking information includes statements about the future performance of the Company, which is based on management’s assumptions and beliefs in light of the information currently available to them. When used, the words “plan,” “estimate,” “project,” “intend,” “believe” and other similar expressions, as they relate to the Company, are intended to identify such forward-looking statements. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from those statements including, but not limited to, 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 state and federal legislation or regulation, 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 utility costs, 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. 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 31, 2011.

 

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 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 March 31, 2012 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

 

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PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

As reported in the Company’s Form 10-K for the year ended December 31, 2011, the Company is a party in various legal claims and actions considered 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 claims, 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 31, 2011.

 

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 March 31, 2012 were as follows (amounts are in thousands, except per share amounts):

 

		$000,000,000,000,000		$000,000,000,000,000		$000,000,000,000,000		$000,000,000,000,000
		Total Number of Shares		Average Price Paid per		Total Number of Shares Purchased as Part of Publicly Announced Plans or		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or
Period		Purchased		Share		Programs (1)		Programs (1)
January 1, 2012 through February 4, 2012		1,371		$20.20		N/A		N/A
February 5, 2012 through March 3, 2012		2,735		21.38		N/A		N/A
March 4, 2012 through March 31, 2012		2,486		22.40		N/A		N/A
Total		6,592		$21.52		N/A		N/A

 

 

(1)

Common stock is made available for sale only to the Company’s current employees through the Company’s ESPP and to participants of the Company’s 401(k) Plan. In addition, common stock is made available under the ESOP. Common stock is also made available for sale to members of the Company’s Board of Directors through the Directors Plan. The Company currently repurchases common stock subject to certain terms and conditions. The ESPP, 401(k) Plan, ESOP and Directors Plan 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 March 31, 2012 required to be disclosed in the last two columns of the table.

 

 

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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 the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, 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, and (v) Notes to Condensed Consolidated Financial Statements.

 

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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: May 10, 2012				/s/ John A. Attaway, Jr.
				John A. Attaway, Jr., Secretary
Date: May 10, 2012				/s/ David P. Phillips
				David P. Phillips, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

 

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