Annual Report (Form 10-K), fiscal year 1994

ITEM 1: BUSINESS
General
Winn-Dixie Stores, Inc., organized in Florida on December 26, 1928, is a major food retailer with 1,159 stores in 13 southeastern and southwestern states and the Bahamas Islands. According to published reports of sales at June 29, 1994 the Company was the fifth largest in United States supermarket sales.
All of the Company's subsidiaries except Bahamas Supermarkets, Limited are wholly-owned. Except where the context indicates otherwise, the term "Company" includes the parent company and all of its subsidiaries collectively.
Financial information on industry segments and lines of business is omitted because, apart from the principal business of operating retail self-service food stores, the Company had no other lines of business or industry segments. Store Formats and Business Strategy
The business of the Company is the operation of a chain of retail self-service food stores which sell groceries, meats, seafood, fresh produce, deli/bakery, pharmaceuticals and general merchandise items. The Company's stores offer broad lines of merchandise, including nationally advertised and private label brands and unbranded merchandise (principally meats, seafood and produce), and generally operate on the basis of competitive pricing. Food items sold include dry groceries, dairy products, baked goods, meats, poultry and fish, fresh fruit, vegetables, frozen foods and other items commonly marketed by retail food stores. The Company's stores also sell many general merchandise items, such as cigarettes, soaps, paper products, health and cosmetic products, hardware, and numerous small household items. Some locations (255) have pharmacies that fill prescriptions. Some locations (842) have fresh seafood markets that sell fresh fish. At June 29, 1994, the Company operated in the United States 1,145 retail stores of which 439 were located in Florida, 129 in North Carolina, 126 in Georgia, 86 in South Carolina, 84 in Alabama, 78 in Louisiana, 72 in Texas, 53 in Kentucky, 30 in Virginia, 20 in Tennessee, 18 in Mississippi, 7 in Oklahoma and 3 in Indiana. Such stores were operated under the names of "Winn-Dixie" (858), "Marketplace" (286) and "Buddies" (1). In addition, the Company operated 14 stores in the Bahamas Islands under the names "The City Meat Markets" (11) and "Winn-Dixie Stores" (3).
Support and Other Services
The following table shows the locations of the Company's distribution centers and its manufacturing and processing plants, as well as the principal products produced in the plants:
ITEM 1: BUSINESS, continued
LOCATION FACILITIES
ALABAMA Montgomery Distribution center; Plants: milk bottling and frozen pizza
FLORIDA Jacksonville Two Distribution centers; Plants: detergents; paper bags; coffee, tea and spices
Madison Plant: meat processing
Miami Distribution center; Plant: milk bottling
Orlando Distribution center
Bartow Plant: egg processing Plant City Plants: ice cream and milk bottling Pompano Distribution center Sarasota Distribution center Tampa Distribution center
GEORGIA Atlanta Distribution center
Fitzgerald Plants: jams, jellies, mayonnaise, salad dressing, peanut butter and condiments; canned and bottled carbonated beverages
Gainesville Plants: oleomargarine; natural cheese cutting and wrapping, processed cheese and pimento cheese
Valdosta Plants: crackers, cookies and snacks
KENTUCKY Louisville Distribution center
LOUISIANA New Orleans Distribution center
Hammond Distribution center; Plant: milk bottling
NORTH CAROLINA Charlotte Distribution center Raleigh Distribution center High Point Plants: milk bottling and cultured products
SOUTH CAROLINA Greenville Distribution center; Plants: milk bottling and ice cream
TEXAS Fort Worth Distribution center; Plant: milk bottling
BAHAMAS Nassau Distribution center
ITEM 1: BUSINESS, continued
An insignificant portion of the production of the coffee, tea, detergent, cheese, oleomargarine, egg, condiments, carbonated beverage and cookie plants is sold to others.
Types of products produced by the Company for sale in its stores are described above. Services provided by the Company such as check cashing are incidental to the total business.
The Company has not publicly announced, or otherwise made public, information about any new product or industry segment which would require the investment of a material amount of the assets of the Company or which otherwise is material.
Sources of available raw materials are factors which do not affect the Company in any different manner than they affect other manufacturers and processors of the goods identified.
Patents and trademarks owned by the Company are not of material importance to its operations.
Seasonality does not materially affect the business of the Company. However, due to the influx of winter residents to the Sunbelt, Florida in particular, and increased purchases of food items for the Thanksgiving and Christmas holiday seasons, there is a seasonal sales increase during the period of November - April each fiscal year.
The Company and other food retailers have no unusual working capital requirements.
The business of the Company is not dependent upon a single or a few customers. The Company does not sell goods or services in an amount which equals 10 percent or more of the Company's consolidated sales to any single customer or group of customers under common control or to any affiliated group of customers.
Backlog ordering is not a factor in the business of the Company.
No portion of the business of the Company is subject to renegotiation of profits or termination of contracts or subcontracts at the election of any government.
Marketing and Competition
In all areas in which the Company operates, the business is highly competitive with local and national food chain stores as well as with independent stores and markets. Many factors enter into the competition, including price, quality of goods and services, product mix and convenience.
The retail food industry is extremely competitive. Each division faces somewhat different competitive conditions. The following table lists the major competitors for each division.
Division Major Competitors Jacksonville Publix, Albertson's, Piggly Wiggly (Bruno), Food Lion Tampa/Sarasota Publix, Kash N Karry, Albertson's, Food Lion Montgomery Bruno, Delchamps, Walmart Supercenter Miami/Pompano Publix, XTRA, Sedano's, Albertson's Orlando Publix, Albertson's, Goodings, Food Lion Greenville Food Lion, Bi-Lo, Super K Raleigh Food Lion, Harris-Teeter, Kroger Charlotte Food Lion, Harris-Teeter Atlanta Kroger, Ingles, A&P, Cub, Publix
Louisville Kroger New Orleans Delchamps, Schwegmans, National Tea, Albertson's Fort Worth Kroger, Albertson's, Minyards, Food Lion, Randall's, Walmart Supercenter Bahamas Supervalu
Additionally, local chains and wholesaler-supported independents are well represented in all regions.
Winn-Dixie is considered a major competitor in all geographic areas in which it competes.
ITEM 1: BUSINESS, continued
The Company did not spend a material amount on Company-sponsored research and development activities or on Company-sponsored research activities relating to the development of new products, services or techniques, or the improvement of existing products, services or techniques during any of the years in the three-year period ended June 29, 1994.
Government Regulation
The Company's compliance with Federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment has not had, and is not expected to have, a material affect on its capital expenditures, earnings or competitive position.
Associates
At the end of fiscal 1994, the Company had 40,000 full-time and 72,000 part-time associates.
Bahamas
All sales are to customers within the United States and the Bahamas Islands. The Company exports an insignificant amount of merchandise to its subsidiaries in the Bahamas which operate 14 retail food stores as outlined above. Retail sales in the Bahamas are not considered to be material.
ITEM 2:



ITEM 2: PROPERTIES
Stores
All of the retail stores operated by the Company are on premises occupied on a rental basis. See "Note 9 of the Notes to Consolidated Financial Statements", page included herein.
Support Properties
The warehousing and distribution centers are rented under leases due to expire as follows: Greenville - 2002; Louisville - 2002; Tampa - 2017; Miami - 2017; Raleigh - 2017; Montgomery - 2017; New Orleans - 2017; Sarasota - 2017; Jacksonville (Edgewood) - 2002; Fort Worth - 2016; Atlanta - 2002; Pompano - 2003; Charlotte - 2004; Orlando - 2005; Jacksonville (Commonwealth) - 2011 and Hammond - 2016. All of these contain renewal options, which vary from lease to lease.
The Hialeah warehouse facility, the milk plant in Miami and the Deep South plant in Orlando, Florida, are no longer in operation and have been replaced with new facilities. These properties are now owned in fee by the Company and are being held for sale.
The Company's Valdosta cracker and cookie bakery, Fort Worth dairy plant, Madison meat processing plant, Plant City ice cream and milk bottling plant, and Gainesville margarine and cheese processing and packaging plant are owned in fee.
The Company's Greenville milk bottling and ice cream; Jacksonville coffee, tea and spices processing, detergent and bag plants; Montgomery milk bottling plant; and Hammond milk bottling plant are situated at the leased warehousing and distribution center locations in those cities. The Bartow egg processing plant, High Point milk bottling and cultured products plant, Montgomery frozen pizza plant and the Fitzgerald jam, jellies, mayonnaise, salad dressing, peanut butter, condiments and canned and bottled carbonated beverage plant are rented under leases.
All of the above support properties are considered to be in excellent condition.
ITEM 3:

ITEM 3: LEGAL PROCEEDINGS
There are pending against the Company various claims and lawsuits arising in the normal course of business, including suits charging violations of certain civil rights laws.
The U.S. Environmental Protection Agency has notified the Company that it is one of the many potentially responsible parties (PRPs) for cleanup of two designated Superfund sites located in Tampa, Florida, three such sites in Jacksonville (2 related sites) and one site in Madison, Florida. The Company may be a PRP for cleanup of one non-Superfund site in Tarrant County, Texas. Although cleanup costs are believed to be substantial, accurate estimates will not be available until studies have been completed at the sites.
The Company has entered into orders by consent with numerous other PRPs to conduct studies and do cleanup for three of the Superfund sites and is negotiating an agreement with PRPs who are under an order at another Superfund site to determine the most cost-effective way to clean up such sites. Although under federal statutes the Company is jointly and severally liable for cleanup costs at each location, the Company's share of total costs is estimated not to exceed $350,000 for four of the Superfund sites and the Texas site.
The Company believes it is not a responsible party for cleanup of the Madison, Florida, and Tarrant County, Texas, sites and has no estimate of costs for those matters. Other than these two and the New Mexico site mentioned below, these involve wastes the Company paid to be properly disposed and were mishandled by disposal companies or public disposal sites.
At one of the Tampa sites, the Company is one of 14 parties named as respondents in a Unilateral Administrative Order for Remedial Design and Remedial Action under 47 U.S.C. Section 9606(a) relating to a disposal site formerly operated by Hillsborough County, Florida. The parties are ordered to operate, maintain and monitor a water cleaning system and perform Remedial Design for the site. The costs to the Company are estimated at $150,000 in fiscal year 1994 with substantial credits for this year, with additional annual costs for an indefinite period thereafter.
The Company is also involved in the cleanup of a fuel tank leak at a New Mexico site formerly owned by it. The cleanup costs are to be prorated with others on the basis of the total time of ownership of the participants. The Company's share is 15% of the total costs estimated to be less than $150,000, with minimal annual monitoring costs thereafter.
It is the Company's policy to accrue and charge against earnings the environmental cleanup costs when it is probable that a liability has been incurred and an amount can be reasonably estimated, including evaluation of the other PRPs' ability to pay. The Company believes its ultimate liability as to these environmental matters will not necessitate significant capital outlays, will not materially affect the annual earnings of the Company, nor cause material changes in the Company's business. It is not possible to quantify future environmental costs because many issues relate to actions by third parties or changes in environmental regulation.
Although the amount of liability with respect to all other claims and lawsuits cannot be ascertained, management is of the opinion that any resulting liability will not have a material affect on the Company's consolidated earnings or financial position.
ITEM 4:

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the quarter ended June 29, 1994.
Executive Officers of the Registrant
Set forth below is certain information concerning the executive officers of the Company:
YEAR YEAR FIRST AGE IN APPOINTED EMPLOYED YEARS AT TO CURRENT BY NAME 06-29-94 OFFICE HELD POSITION WINN-DIXIE A. Dano Davis 49 Chairman of the Board and 1988 1968 Principal Executive Officer James Kufeldt 56 President 1988 1961 C. H. McKellar 56 Executive Vice President 1988 1957 E. T. Walters 60 Senior Vice President 1989 1959 C. E. Winge 49 Senior Vice President 1988 1963 T. E. McDonald 57 Senior Vice President 1986 1955 H. E. Hess 54 Senior Vice President 1988 1958 W. E. Ripley, Jr. 48 Vice President, Secretary and General Counsel 1991 1978 R. P. McCook 41 Financial Vice President and Principal Financial Officer 1984 1984 L. H. May 49 Vice President 1989 1964 D. H. Bragin 50 Treasurer 1985 1961 R. J. Brocato 50 Vice President 1993 1963 W. C. Calkins 55 Vice President 1987 1958 J. W. Critchlow 47 Vice President 1988 1967 R. J. Ehster 53 Vice President 1983 1958 R. R. George 49 Vice President 1993 1966 D. G. Lafever 45 Vice President 1990 1966 H. E. Miller 62 Vice President 1984 1956 J. R. Pownall 57 Vice President 1986 1955 L. J. Sadlowski 53 Vice President 1983 1961 R. A. Sevin 51 Vice President 1987 1961 B. B. Tripp 57 Vice President 1987 1954 D. L. Whitford 46 Vice President 1991 1964
J. D. Bell, Vice President and Director of Services, passed away during fiscal year 1994. Jim Bell had been an associate for 42 years. A.C. Webb was elected Vice President and Director of Services.
M. A. Sellers, Director of Produce and Floral Operations, was elected Vice President and Director of Produce and Floral Operations.
All of the officers listed above have been employed for the past five years in either the same capacity as listed, or in a position with the Company which was consistent in occupation with the present assignment.
Officers are elected annually by the Board of Directors and serve for a one-year period or until their successors are elected. No officers have employment contracts with the Company.
PART II
ITEM 5:

ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The principal market on which the Company's common stock is traded is the New York Stock Exchange. The number of record holders of the Company's common stock as of August 15, 1994 was 39,226.
Information required by this Item concerning sales prices of the Company's common stock and the frequency and amount of dividends is hereby incorporated by reference to "Note 12 of the Notes to Consolidated Financial Statements", page included herein.
ITEM 6:

ITEM 6: SELECTED FINANCIAL DATA
The information required by this Item is on page included herein.
ITEM 7:

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is on page included herein.
ITEM 8:


ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data are as set forth in the "Index to Consolidated Financial Statements, Supporting Schedules and Supplemental Data" on page 13 included herein.
ITEM 9:

ITEM 9:CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements on accounting and financial disclosure between the Company and its auditors within the 24 months prior to June 29, 1994.
PART III
ITEM 10:



ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11:

ITEM 11: EXECUTIVE COMPENSATION
ITEM 12:

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13:

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by these Items are incorporated herein by reference to the Company's definitive proxy statement to be filed on or before September 2, 1994 in connection with its Annual Meeting of Shareholders.
PART IV
ITEM 14:

ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Financial Statements and Schedules:
(a) Exhibit and Financial Statements and Schedules
(1) Financial Statements:
See Index to Consolidated Financial Statements, Supporting Schedules and Supplemental Data on page 13 included herein.
(2) Financial Statement Schedules:
See Index to Consolidated Financial Statements, Supporting Schedules and Supplemental Data on page 13 included herein. Exhibits:
Certain of the following exhibits which have heretofore been filed with the Securities and Exchange Commission under the Securities Act of 1933 or the Securities Exchange Act of 1934 and which are designated in prior filings as noted below, are hereby incorporated by reference and made a part hereof:
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the quarter ended June 29, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WINN-DIXIE STORES, INC.
A. DANO DAVIS By ------------------------- A. Dano Davis, Chairman
September 16, 1994 Date -----------------------
Pursuant to the requirements of the Securities Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
A. DANO DAVIS Chairman (Principal September 16, 1994 - ----------------- executive officer) and (A. Dano Davis) Director
J. KUFELDT President and Director September 16, 1994 - ----------------- (J. Kufeldt)
RICHARD P. MCCOOK Financial Vice President September 16, 1994 - ----------------- (Principal financial officer) (Richard P. McCook)
D. H. BRAGIN Treasurer (Principal September 16, 1994 - ----------------- accounting officer) (D. H. Bragin)
A. D. DAVIS Director September 16, 1994 - -------------------- (A. D. Davis)
ROBERT D. DAVIS Director September 16, 1994 - -------------------- (Robert D. Davis)
T. WAYNE DAVIS Director September 16,1994 - -------------------- (T. Wayne Davis)
SIGNATURES, continued
C. H. MCKELLAR Director September 16, 1994 - -------------------- (C. H. McKellar)
RADFORD D. LOVETT Director September 16, 1994 - -------------------- (Radford D. Lovett)
CHARLES P. STEPHENS Director September 16, 1994 - -------------------- (Charles P. Stephens)
Director September , 1994 - -------------------- (Armando M. Codina)
DAVID F. MILLER Director September 16, 1994 - -------------------- (David F. Miller)
CARLETON T. RIDER Director September 16, 1994 - -------------------- (Carleton T. Rider)
WINN-DIXIE STORES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements and Supplemental Data:
Independent Auditors' Report
Report of Management
Consolidated Statements of Earnings, Years ended June 29, 1994, June 30, 1993 and June 24, 1992
Consolidated Balance Sheets, June 29, 1994 and June 30, 1993
Consolidated Statements of Cash Flows, Years ended June 29, 1994, June 30, 1993 and June 24, 1992
Consolidated Statements of Shareholders' Equity, Years ended June 29, 1994, June 30, 1993 and June 24, 1992
Notes to the Consolidated Financial Statements
Financial Statement Schedules:
Independent Auditors' Report on Financial Statement Schedules S-1
V Consolidated Property, Plant and Equipment, Years Ended June 29, 1994, June 30, 1993 and June 24, 1992 S-2
VI Consolidated Accumulated Depreciation and Amortization of Property, Plant and Equipment, Years ended June 29, 1994, June 30, 1993 and June 24, 1992 S-3
VII Consolidated Valuation and Qualifying Accounts, Years ended June 29, 1994, June 30, 1993 and June 24, 1992 S-4
IX Short-Term Borrowings, Years ended June 29, 1994, June 30, 1993 and June 24, 1994 S-5
X Consolidated Supplementary Income Statement Information, Years ended June 29, 1994, June 30, 1993 and June 24, 1992 S-6
All other schedules are omitted either because they are not applicable or because information required therein is shown in the Financial Statements or Notes thereto.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations.
Sales for 1994 amounted to $11.1 billion, an increase of 2.3% over 1993, a 53 week year. On a comparable 52 week year basis, the sales increase would have been 4.3%. The change in comparable store sales amounted to 2.0%, 2.8% and 1.8% for each of the last three fiscal years. Comparable store sales for 1994 reflect the softness in the retail food industry due to a weak economy throughout the year and increased competitive activity in our trade area. The Company operated 1,159, 1,151 and 1,189 retail stores with 40.7 million, 39.0 million and 38.6 million square feet at the end of fiscal year 1994, 1993 and 1992, respectively.
In fiscal year 1994, the Company opened and acquired 60 stores averaging 43,500 square feet, enlarged or remodeled 87 stores and closed 66 stores, averaging 26,300 square feet.
As a percent of sales, gross profit margins were 22.9%, 22.6% and 22.8% in fiscal 1994, 1993 and 1992, respectively. The increase in gross profit margins is a result of our computer-assisted merchandise acquisition systems and our forward-buy purchasing programs. Approximately 92% of the Company's inventories are valued under the LIFO (last-in, first-out) method. The LIFO calculations resulted in a $2.0 million pre-tax increase in gross profit in 1994, a pre-tax decrease in gross profit of $0.5 million in 1993 and a pre-tax increase in gross profit of $10.8 million in 1992.
Operating and administrative expenses, as a percent of sales, were 20.5%, 20.3% and 20.7% in fiscal 1994, 1993 and 1992, respectively. Our major increases in operating and administrative expenses are depreciation, payroll and occupancy costs.
Cash discounts and other income amounted to $98.1 million, $132.4 million and $119.4 million in 1994, 1993 and 1992, respectively. Gains (losses) on the sales of securities and other assets amounted to $(3.2) million in 1994, $4.5 million in 1993 and $3.8 million in 1992. Investment income amounted to $4.0 million, $8.4 million and $10.0 million in fiscal 1994, 1993 and 1992, respectively. The decrease in 1994 was due to a reduction in financial income, including the elimination of dividends from our Bahamas subsidiary.
Interest expense totaled $14.3 million, $18.1 million and $15.1 million in fiscal 1994, 1993 and 1992, respectively. Interest expense primarily reflects a computation of interest on capital lease obligations. The 1994 decrease in other interest expense is due to a decrease in short-term borrowings.
Earnings before income taxes and cumulative effect of change in accounting principle were $348.5 million, $363.7 million and $328.0 million in fiscal 1994, 1993 and 1992, respectively. The decrease in pre-tax earnings is primarily a result of the decrease in cash discounts and other income. The effective income tax rates were 38.0%, 35.0% and 34.0% for fiscal 1994, 1993 and 1992, respectively.
Earnings before cumulative effect of change in accounting principle were $216.1 million, or $2.90 per share in 1994, $236.4 million, or $3.11 per share in 1993 and $216.4 million, or $2.82 per share in 1992.
In June 1992, we adopted the Financial Accounting Standards Board (FASB) Statement Number 109, "Accounting for Income Taxes." This change in accounting policy resulted in a non-cash charge to the net earnings of the Company in the amount of $20.5 million, or $0.27 per share in 1992.
Results of Operations (cont.)
Net earnings amounted to $216.1 million, or $2.90 per share for 1994, $236.4 million, or $3.11 per share for 1993 and $195.9 million, or $2.55 per share for 1992. The LIFO calculations increased net earnings by $1.1 million, or $0.01 per share in 1994, decreased earnings by $0.3 million, or $0.00 per share for 1993 and increased net earnings by $7.1 million, or $0.09 per share for 1992.
Liquidity and Capital Resources.
The Company's financial condition remains very sound and very strong. Cash and cash equivalents and short-term investments amounted to $31.5 million at year-end. Cash provided by operating activities amounted to $436.3 million in 1994, $213.0 million in 1993 and $338.3 million in 1992.
Net capital expenditures totaled $277.7 million, compared to $194.8 million for the previous year. These expenditures were for new store locations, store enlargements and remodelings, the expansion of a warehouse facility and a new manufacturing facility. Total capital investment in Company retail and support facilities, including operating leases, is estimated to be $525 million in 1994 and projected to be $600 million in 1995. The Company has no material construction or purchase commitments outstanding as of June 29, 1994.
Working capital amounted to $488.0 million, $544.7 million and $550.8 million for 1994, 1993 and 1992, respectively. Inventories on a FIFO (first-in, first-out) basis increased $15.4 million, primarily due to the increase in the number of stores and our store enlargement program.
The Company has an authorized $200 million commercial paper program. In support of these programs, or as an independent source of funds, the Company also has $250 million of short-term lines of credit. These lines of credit are available at any time during the year and are renewable on an annual basis. There was $9.5 million borrowed against the bank lines of credit at the end of 1994. There was $80.0 million in commercial paper outstanding at the end of 1993.
Excluding capital lease obligations, the Company had no outstanding long-term debt as of June 29, 1994 or June 30, 1993.
The Company's cash flow from operations and available credit facilities are considered adequate to fund both the short-term and long-term capital needs of the Company.
The Company has been notified as one of the many Potentially Responsible Parties by the Environmental Protection Agency with respect to the clean up of hazardous wastes at five Superfund sites and two additional sites. The Company is in the process of determining the potential liability and the most cost-effective way to clean up such sites. The Company believes its ultimate liability as to these environmental matters will not necessitate significant capital outlays, will not materially affect the annual earnings of the Company, nor cause material changes in the Company's business.
Impact of Inflation.
Inflation in food prices continues to be lower than the overall increase in the Consumer Price Index. Winn-Dixie's primary costs, inventory and labor, increase with inflation. Recovery of these costs has to come from improved operating efficiencies and, to the extent permitted by our competition, through improved gross profit margins.
INDEPENDENT AUDITORS' REPORT
The Shareholders and the Board of Directors Winn-Dixie Stores, Inc.:
We have audited the accompanying consolidated balance sheets of Winn-Dixie Stores, Inc. and subsidiaries as of June 29, 1994 and June 30, 1993, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the years in the three-year period ended June 29, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Winn-Dixie Stores, Inc. and subsidiaries at June 29, 1994 and June 30, 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended June 29, 1994, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP Certified Public Accountants Jacksonville, Florida August 1, 1994
REPORT OF MANAGEMENT
The Company is responsible for the preparation, integrity and objectivity of the consolidated financial statements and related information appearing in the Annual Report. The consolidated financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis and include amounts that are based on management's best estimates and judgments.
Management is also responsible for maintaining a system of internal controls that provides reasonable assurance that the accounting records properly reflect the transactions of the Company, that assets are safeguarded and that the consolidated financial statements present fairly the financial position and operating results. As part of the Company's controls, the internal audit staff conducts examinations in each of the retail and manufacturing divisions of the Company.
The Audit Committee of the Board of Directors, composed entirely of outside directors, meets periodically to review the results of audit reports and other accounting and financial reporting matters with the independent certified public accountants and the internal auditors.
A. Dano Davis R. P McCook Chairman of the Board Financial Vice President and Principal Executive Officer and Principal Financial Officer
F - 5
CONSOLIDATED BALANCE SHEETS June 29, 1994 and June 30, 1993
1994 1993 Assets Amounts in thousands
Current Assets: Cash and cash equivalents $ 31,451 22,302 Short - term investments - 85,482 31,451 107,784
Trade and other receivables, less allowance for doubtful items of $834,000 ($732,000 in 1993) 171,854 162,590 Associate stock loans 1,776 4,647 Merchandise inventories at lower of cost or market less LIFO reserve of $205,172,000 ($207,201,000 in 1993) 1,058,883 1,041,451 Prepaid expenses 97,220 96,728 Total current assets 1,361,184 1,413,200
Investments and other assets: Cash surrender value of life insurance, net 25,094 10,053 Other assets 12,493 4,990 Total investments and other assets 37,587 15,043
Deferred income taxes 41,024 47,684 Net property, plant and equipment 706,779 586,633 $ 2,146,574 2,062,560
Liabilities and Shareholders' Equity
Current Liabilities: Accounts payable $ 516,806 493,190 Short-term borrowings 9,500 80,000 Reserve for insurance claims and self-insurance 60,510 65,134 Accrued wages and salaries 68,238 66,821 Accrued rent 58,313 57,557 Accrued expenses 126,550 84,893 Current obligations under capital leases 3,462 2,989 Income taxes 29,787 17,962 Total current liabilities 873,166 868,546 Obligations under capital leases 85,374 87,153 Defined benefit plan 22,852 19,454 Reserve for insurance claims and self-insurance 105,417 100,169 Other liabilities 2,304 2,273
Shareholders' equity: Common stock of $1 par value Authorized 100,000,000 shares; issued 74,176,356 shares in 1994 and 74,955,846 shares in 1993 74,176 74,956 Retained earnings 983,285 910,009 Total shareholders' equity 1,057,461 984,965 Commitments and contingent liabilities (Note 10) $ 2,146,574 2,062,560
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.Summary of Significant Accounting Policies.
(a) Fiscal Year: The fiscal year ends on the last Wednesday in June. The fiscal year ended 1994 comprised 52 weeks, fiscal year 1993 comprised 53 weeks and fiscal year 1992 comprised 52 weeks.
(b) Basis of Consolidation: The consolidated financial statements include the accounts of Winn-Dixie Stores, Inc. and its subsidiaries which operate as a major food retailer in the southeastern and southwestern United States and the Bahamas Islands. Effective June 30, 1993, the Company consolidated its Bahamas statements of earnings in accordance with generally accepted accounting principles. This investment had previously been accounted for using the cost method. The retroactive consolidation of the Bahamas operating results did not have a significant impact on the statements of earnings for all years presented. Accordingly, the 1993 and prior statements of earnings have not been restated and the previously unrecorded earnings have been recorded directly to retained earnings.
(c) Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments with a maturity of three months or less when purchased. Cash and cash equivalents are stated at cost plus accrued interest, which approximates market.
(d) Short-Term Investments: Short-term investments consist of highly liquid investments with a maturity of more than three months when purchased. The Company uses these short-term investments in its cash management program. Short-term investments are stated at cost plus accrued interest, which approximates market.
(e) Inventories: Inventories are stated at the lower of cost or market. The "dollar value" last-in, first-out (LIFO) method is used to determine the cost of approximately 92% of inventories consisting primarily of merchandise in stores and distribution warehouses. Manufacturing and produce inventories are valued at the lower of first-in, first-out (FIFO) cost or market. Elements of cost included in manufacturing inventories consist of material, direct labor and plant overhead.
(f) Fair Value of Financial Instruments: The carrying amount of the following financial instruments approximates fair value because of their short-term maturity: cash and cash equivalents; short-term investments; trade and other receivables; short-term borrowings; accounts payable and other accruals. See note 6 (b) for information on interest rate swap agreements.
(g) Income Taxes: In the fourth quarter of 1992, the Company adopted Statement of Financial Accounting Standards Number 109, "Accounting for Income Taxes" (Statement No. 109), which requires a change from the deferred method to the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The cumulative effect of the change in method of accounting has been reported in the 1992 consolidated statement of earnings.
(h) Self-insurance: Self-insurance reserves are established for automobile and general liability, workers' compensation, and property loss costs based on claims filed and claims incurred but not reported, with a maximum per occurrence of $2,000,000 for automobile and general liability, $1,000,000 for workers' compensation, $500,000 for property loss, other than windstorm and flood, and $5,000,000 for damage due to windstorm and flood. The Company is insured for insurance costs in excess of these limits.
(i) Depreciation and Amortization: Depreciation of plant and equipment, which is stated at historical cost, is provided over the estimated useful lives by the straight-line method or by methods that produce results similar to the straight-line method. Amortization of improvements to leased premises is provided principally by the straight-line method over the periods of the leases or the estimated useful lives of the improvements, whichever is less.
(j) Store Opening Costs: The costs of opening new stores are charged to earnings in the year incurred.
(k) Earnings Per Share: The number of shares used in the calculation for 1994, 1993 and 1992 amounted to 74,644,036, 76,119,152 and 76,805,335, respectively, which is the weighted average number of shares of common stock outstanding during each year.
2.Accounts Receivable.
Accounts receivable at year-end were as follows:
1994 1993 Amounts in thousands Trade and other receivables $52,797 69,222 Construction advances 119,891 94,100 172,688 163,322 Less: Allowance for doubtful items 834 732 $ 171,854 162,590
3.Inventories.
At June 29, 1994, inventories valued by the LIFO method would have been $205,172,000 higher ($207,201,000 higher at June 30, 1993) if they were stated at the lower of FIFO cost or market. If the FIFO method inventory valuation had been used for the year ended June 29, 1994, reported net earnings would have been $1,088,000 or $0.01 per share lower ($326,000 or $0.00 per share higher in 1993 and $7,113,000 or $0.09 per share lower in 1992).
4.Property, Plant and Equipment.
Property, plant and equipment consists of the following:
1994 1993 Amounts in thousands Land $ 2,724 2,733 Buildings 23,949 25,825 Furniture, fixtures, machinery and equipment 1,537,928 1,431,596 Transportation equipment 104,914 100,045 Improvements to leased premises 267,333 230,494 Construction in progress 45,329 32,770 1,982,177 1,823,463 Less: Accumulated depreciation and amortization 1,342,474 1,305,756 639,703 517,707
Leased property under capital leaes, less accumulated amortization of $41,429,000 ($39,697,000 in 1993) 67,076 68,926
Net property, plant and equipment $ 706,779 586,633
The Company had non-cash additions to leased property of $10.3 million, $1.4 million and $2.9 million for 1994, 1993 and 1992, respectively.
5.Income Taxes.
As discussed in Note 1(g), the Company adopted Statement No. 109 as of June 27, 1991. The cumulative effect of this change in accounting for income taxes of $20,485,000 was determined as of June 27, 1991 and is reported separately in the consolidated statement of earnings for the year ended June 24, 1992. The cumulative effect of applying Statement No. 109 reduced earnings for 1992, which resulted from reducing the net deferred tax assets previously recorded for decreases in the historical tax rates. This accounting change had no impact on the cash flows of the Company. The accounting change did not have a significant impact on the 1992 provision for income taxes.
The provision for income taxes consisted of:
Current Deferred Total Amounts in thousands Federal $ 108,163 (217) 107,946 State 19,805 4,631 24,436 $ 127,968 4,414 132,382
Federal $ 104,006 7,808 111,814 State 12,872 2,598 15,470 $ 116,878 10,406 127,284
Federal $ 119,006 (16,602) 102,404 State 8,785 371 9,156 $ 127,791 (16,231) 111,560
The following reconciles the above provision to the Federal statutory income tax rate:
1994 1993 1992
Federal statutory income tax rate 35.0 % 34.0 34.0 State and local income taxes, net of federal income tax benefits 3.8 2.9 2.4 Other tax credits (1.1) (0.6) (1.8) Other, net 0.3 (1.3) (0.6) 38.0 % 35.0 34.0
The retroactive increase in the federal corporate income tax rate from 34% to 35%, enacted on August 10, 1993 and effective on January 1, 1993, resulted in additional income tax expense in fiscal 1994. This increase in income tax expense was offset by an increase in prepaid income taxes resulting from the federal corporate income tax rate increase as required by Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred liabilities at June 29, 1994, June 30, 1993 and June 24, 1992 are presented below:
1994 1993 1992 Amounts in thousands
Deferred tax assets: Reserve for insurance claims and self-insurance $ 61,766 62,264 64,060 Estimated loss on assets 372 - 5,097 Reserve for vacant store leases 11,248 8,971 10,996 Unearned promotional allowance 3,909 7,608 3,325 Reserve for accrued vacations 8,021 8,133 7,701 State net operating loss carryforwards 6,683 10,190 12,652 Excess of tax over book depreciation 9,283 9,406 9,475 Excess of book over tax rent expense 902 3,814 5,345 Excess of book over tax retirement expense 7,127 6,202 5,318 Uniform capitalization of inventory 4,418 4,080 4,160 Other, net 13,034 12,369 13,323 Total gross deferred tax assets 126,763 133,037 141,452 Less: Valuation allowance 6,325 6,406 6,403 Net deferred tax assets 120,438 126,631 135,049 Deferred tax liabilities: Excess of book over tax depreciation (8,811) (6,879) (6,694) Bahamas subsidiary foreign earnings (9,375) (8,967) - Other, net (4,753) (8,872) (7,069) Total gross deferred tax liabilities (22,939) (24,718) (13,763) Net deferred tax assets $ 97,499 101,913 121,286
As discussed in Note 1 (b), the Company consolidated its Bahamas operations effective June 30, 1993. The previously unrecorded earnings (net of deferred income tax liability of $8,967,000) were recorded directly to retained earnings.
The valuation allowance for deferred tax assets as of June 27, 1991 was $6,932,000.
Current deferred income taxes of $56,475,000 and $54,229,000 for 1994 and 1993, respectively, are included in the prepaid expenses in the accompanying consolidated balance sheets.
The Company believes the results of future operations will generate sufficient taxable income to realize the deferred tax assets.
6.Financing.
(a) Credit Arrangements: The Company has available a $200 million Commercial Paper Program. As of June 29, 1994, there were no amounts outstanding as compared to $80.0 million outstanding on June 30, 1993. The Company also has short-term lines of credit totaling $250 million. The lines of credit are available when needed during the year and are renewable on an annual basis. The Company is not required to maintain compensating bank balances in connection with these lines of credit. As of June 29, 1994 there was $9.5 million outstanding under these bank lines of credit. On June 30, 1993, there was no amount outstanding under these bank lines of credit.
(b) Interest Rate Swap: The Company has entered into interest rate swap agreements to reduce the impact of changes in rental payments which are indexed to interest rate changes. At June 29, 1994, the Company had outstanding two interest rate swap agreements, having a notional principal amount of $50 million each, with an investment bank. These agreements effectively change the Company's exposure on its leased real estate with floating rental payments to fixed rental payments based on an 8.0% interest rate. The interest rate swap agreements mature in June, 1996 and June, 1998. The Company is exposed to credit loss in the event of nonperformance by the other party to these interest rate swap agreements. However, the Company does not anticipate nonperformance by the counterpart.
Since current short-term interest rates are significantly below the 8% rate of these contracts at June 29, 1994, the estimated negative value of these swaps was approximately $6.6 million.
7.Common Stock.
The Company has a stock purchase plan in effect for associates. Under the terms of the Plan, the Company may grant options to associates to purchase shares of the Company's common stock at a price at least 85% of the fair market value at the date of grant. During fiscal year 1992, 556,224 shares of common stock were sold to associates at an aggregate price of $19,189,728. There are 868,110 shares of the Company's common stock available for the grant of options under the Plan.
8.Stock Options.
Under the Company's Key Employee Stock Option Plan adopted by the Board of Directors on January 4, 1990 and approved by the shareholders on October 3, 1990, options to acquire up to 300,000 shares of common stock may be granted to key employees at market. On January 24, 1990, options for 206,000 shares were granted at an exercise price of $28.50 per share. Of the options granted, 103,000 became exercisable on June 26, 1991 and 103,000 became exercisable on June 24, 1992. Options under this plan expire on December 31, 1996.
On October 7, 1992, the shareholders approved an amendment to the Company's Key Employee Stock Option Plan to increase the number of shares of common stock available for issuance to 500,000 shares. Under this plan adopted by the Board of Directors on June 22, 1992, options to acquire 113,000 shares of common stock were granted to key employees at an exercise price of $42.125 per share. Of the options granted, 56,500 became exercisable on June 30, 1993. The remaining 56,500 became exercisable on June 29, 1994. Options under this plan expire on December 31, 1998.
On June 22, 1994, the Board of Directors, subject to shareholders approval, adopted an amendment to the Company's Key Employee Stock Option Plan to increase the number of shares of common stock available for issuance to 1,000,000 shares. Under this plan, options to acquire 233,000 shares at an exercise price of $44.875 per share were granted to key employees. Of the options granted, 116,500 shares are not exercisable before June 28, 1995 and the remaining 116,500 shares are not exercisable before June 27, 1996, if earned. These options expire on January 15, 2001.
Changes in options under these plans during the years ended June 29, 1994, June 30, 1993 and June 24, 1992 were as follows:
Number of Option Price Shares Per Share Outstanding - June 26, 1991 206,000 $28.500 Granted - Exercised - Canceled - Outstanding - June 24, 1992 206,000 $28.500 Granted 113,000 $42.125 Exercised (74,000) $28.500 Canceled - Outstanding - June 30, 1993 245,000 $28.500-42.125 Granted 233,000 $44.875 Exercised - Canceled - Outstanding - June 29, 1994 478,000 $28.500-44.875 Exercisble - June 29, 1994 245,000 $28.500-44.875 Shares available for additional grant 448,000
9. Leases.
(a) Leasing Arrangements: There were 1,353 leases in effect on store locations and other properties at June 29, 1994. Of these 1,353 leases, 70 store leases and 3 warehouse and manufacturing facility leases are classified as capital leases. Substantially all store leases will expire during the next twenty years and the warehouse and manufacturing facility leases will expire during the next thirty years. However, in the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties.
The rental payments on substantially all store leases are based on a minimum rental plus a contingent rental which is based on a per- centage of the store's sales in excess of stipulated amounts. Most of the Company's leases contain renewal options for five-year periods at fixed rentals.
(b) Leases: The following is an analysis of the leased property under capital leases by major classes:
Asset balances at June 29, 1994 June 30, 1993 Amounts in thousands Store facilities $ 82,844 80,265 Warehouses and manufacturing facilities 25,661 28,358 108,505 108,623 Less: Accumulated amortization 41,429 39,697 $ 67,076 68,926
The following is a schedule by year of future minimum lease payments under capital and operating leases, together with the present value of the net minimum lease payments as of June 29, 1994: Capital Operating Amounts in thousands Fiscal Year: 1995 $ 15,230 200,868 1996 15,088 195,906 1997 14,719 191,798 1998 14,162 186,976 1999 13,711 181,838 Later years 129,514 1,540,703 Total minimum lease payments 202,424 2,498,089
Less: Amount representing estimated taxes, maintenance and insurance costs included in total minimum lease payments 5,714 Net minimum lease payments 196,710 Less: Amount representing interest 107,874 Present value of net minimum lease payments $ 88,836
Rental payments under operating leases including, where applicable, real estate taxes and other expenses are as follows:
1994 1993 1992 Amounts in thousands Minimum rentals $ 190,830 187,055 179,655 Contingent rentals 3,352 4,282 4,257 $ 194,182 191,337 183,912
10. Commitments and Contingent Liabilities.
(a) Associate Benefit Programs: The Company has noncontributory, trusteed profit-sharing retirement programs which are in effect for eligible associates and may be amended or terminated at any time. Charges to earnings for contributions to the programs amounted to $54,212,000, $54,985,000 and $49,989,000 in 1994, 1993 and 1992, respectively.
In addition to providing profit sharing benefits, the Company makes group insurance available to early retirees from the time they retire until age 65 when they qualify for Medicare/Medicaid. Currently, the early retiree group constitutes 251 associates. This group of retirees bear the entire costs of this plan, which is maintained totally separate from the Company's regular group insurance plan. The Company reserves the right to modify these benefits.
(b) Defined Benefit Plan: The Company has a Management Security Plan (MSP), which is a non-qualified defined benefit plan providing disability, death and retirement benefits to 588 qualified associates of the Company. Total MSP cost charged to operations was $4,557,000, $3,992,000 and $3,868,000 in 1994, 1993 and 1992, respectively. The projected benefit obligation at June 29, 1994 was approximately $30,076,000. The effective discount rate used in determining the net periodic MSP cost was 8.0% for 1994, 1993 and 1992.
Life insurance policies, which are not considered as MSP assets for liability accrual computations, were purchased to fund the MSP pay- ments. These insurance policies are shown on the balance sheet at their cash surrender values, net of policy loans aggregating $137,640,000 and $130,296,000 at June 29, 1994 and June 30, 1993, respectively.
The Company holds life insurance on a broad-based group of qualified associates. These insurance policies are shown on the balance sheet at their cash surrender value, net of policy loans aggregating $216,591,000 at June 29, 1994.
(c) Litigation: There are pending against the Company various claims and lawsuits arising in the normal course of business, including suits charging violations of certain civil rights laws.
The U.S. Environmental Protection Agency has notified the Company that it is one of the many potentially responsible parties (PRPs) for cleanup of two designated Superfund sites located in Tampa, Florida, three such sites in Jacksonville (2 related sites) and one site in Madison, Florida. The Company may be a PRP for cleanup of one non-Superfund site in Tarrant County, Texas. Although cleanup costs are believed to be substantial, accurate estimates will not be available until studies have been completed at the sites.
The Company has entered into orders by consent with numerous other PRPs to conduct studies and do cleanup for three of the Superfund sites and is negotiating an agreement with PRPs who are under an order at another Superfund site to determine the most cost-effective way to clean up such sites. Although under federal statutes the Company is jointly and severally liable for cleanup costs at each location, the Company's share of total costs is estimated not to exceed $350,000 for four of the Superfund sites and the Texas site. The Company believes it is not a responsible party for cleanup of the Madison, Florida, and Tarrant County, Texas, sites and has no estimate of costs for those matters. Other than these two and the New Mexico site mentioned below, these involve wastes the Company paid to be properly disposed, and were mishandled by disposal companies or public disposal sites.
At one of the Tampa sites, the Company is one of 14 parties named as respondents in a Unilateral Administrative Order for Remedial Design and Remedial Action under 47 U.S.C. Section 9606(a) relating to a disposal site formerly operated by Hillsborough County, Florida. The parties are ordered to operate, maintain and monitor a water cleaning system and perform Remedial Design for the site. The costs to the Company are estimated at $150,000 in fiscal year 1994 with substantial credits for this year, with additional annual costs for an indefinite period thereafter.
The Company is also involved in the cleanup of a fuel tank leak at a New Mexico site formerly owned by it. The cleanup costs are to be prorated with others on the basis of the total time of ownership of the participants. The Company's share is 15% of the total costs estimated to be less than $150,000, with minimal annual monitoring costs thereafter.
It is the Company's policy to accrue and charge against earnings, the environmental cleanup costs when it is probable that a liability has been incurred and an amount can be reasonably estimated, including evaluation of the other PRPs' ability to pay. The Company believes its ultimate liability as to these environmental matters will not necessitate significant capital outlays, will not materially affect the annual earnings of the Company, nor cause material changes in the Company's business. It is not possible to quantify future environmental costs because many issues relate to actions by third parties or changes in environmental regulation.
Although the amount of liability with respect to all other claims and lawsuits cannot be ascertained, management is of the opinion that any resulting liability will not have a material affect on the Company's consolidated earnings or financial position.
11. Related Party Transactions.
The Company is essentially self-insured for purposes of employee group life, medical, accident and sickness insurance, with The American Heritage Life Insurance Company, a related party, providing administrative services and expenses for medical and accident claims. The American Heritage Life Insurance Company also financed the development and expansion of certain retail stores. Total payments aggregating $15,109,000, $34,108,000 and $23,329,000 were made in 1994, 1993 and 1992, respectively.
12. Quarterly Results of Operations (Unaudited).
As discussed in Note 1 (g), the Company adopted Statement No. 109. The first quarter results have been restated to reflect the cumulative effect of this change in accounting principle.
During 1994, 1993 and 1992, the fourth quarter results reflect a change from the estimate of inflation used in the calculation of LIFO inventory to the actual rate experienced by the Company of 1.0% to 0.1%, 1.0% to 0.1% and 2.3% to (0.6)%, respectively.
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
The Shareholders and Board of Directors Winn-Dixie Stores, Inc.:
Under date of August 1, 1994, we reported on the consolidated balance sheets of Winn-Dixie Stores, Inc. and subsidiaries as of June 29, 1994 and June 30, 1993, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the years in the three-year period ended June 29, 1994, as contained in the annual report on Form 10-K for the year 1994. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedules as listed in the accompanying index on page 13 of the annual report on Form 10-K for the year 1994. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP Certified Public Accountants
Jacksonville, Florida August 1, 1994
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