FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 2001
Commission File Number 1-5039
WEIS MARKETS, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 24-0755415
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 S. Second Street
P. O. Box 471
Sunbury, PA 17801-0471
(Address of principal executive offices) (Zip Code)
(570) 286-4571
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, No Par Value 41,688,157 shares
(Outstanding at end of period)
WEIS MARKETS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Consolidated Balance Sheets -
March 31, 2001 and December 30, 2000 2
Consolidated Statements of Income -
Three Months Ended March 31, 2001
and March 25, 2000 3
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2001
and March 25, 2000 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 7
Part II. Other Information
Item 4. Exhibits and Reports on Form 8-K 8
Signatures 8
1
PART I - FINANCIAL INFORMATION
WEIS MARKETS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands)
March 31, 2001 December 30, 2000
Assets
Current:
Cash $ 3,410 $ 3,389
Marketable securities 440,496 410,218
Accounts receivable, net 22,216 25,080
Inventories 153,714 168,541
Prepaid expenses 4,992 6,821
Income taxes recoverable --- 3,144
__________ __________
Total current assets 624,828 617,193
Property and equipment, net 443,221 441,819
Intangible and other assets, net 26,274 26,892
__________ __________
$ 1,094,323 $ 1,085,904
========== ==========
Liabilities
Current:
Accounts payable $ 77,455 $ 78,162
Accrued expenses 14,988 18,360
Accrued self-insurance 14,461 12,959
Payable to employee benefit plans 8,662 8,663
Income taxes payable 3,562 ---
Deferred income taxes 3,529 2,143
__________ __________
Total current liabilities 122,657 120,287
Deferred income taxes 17,394 17,731
Shareholders' Equity
Common stock, no par value,
100,800,000 shares authorized,
47,454,279 and 47,453,979 shares
issued, respective 7,603 7,594
Retained earnings 1,075,924 1,069,986
Accumulated other comprehensive income
(Net of deferred taxes of $5,477
in 2001 and $5,166 in 2000) 7,723 7,284
__________ __________
1,091,250 1,084,864
Treasury stock, at cost, 5,766,122 and
5,766,122 shares, respectively (136,978) (136,978)
__________ __________
Total shareholders' equity 954,272 947,886
__________ __________
$ 1,094,323 $ 1,085,904
========== ==========
See accompanying notes to consolidated financial statements.
2
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars in thousands except per share amounts)
Three months ended
March 31, 2001 March 25, 2000
Net sales $ 489,095 $ 519,750
Cost of sales, including warehousing
and distribution expenses 358,909 389,687
__________ __________
Gross profit on sales 130,186 130,063
Operating, general and
administrative expenses 112,293 109,279
__________ __________
Income from operations 17,893 20,784
Investment income 6,757 4,475
Other income 2,207 2,986
__________ __________
Income before provision
for income taxes 26,857 28,245
Provision for income taxes 9,663 10,367
__________ __________
Net income $ 17,194 $ 17,878
========== ==========
Weighted-average shares outstanding 41,692,178 41,703,856
========== ==========
Cash dividends per share $ 0.27 $ 0.26
========== ==========
Basic and diluted earnings per $ 0.41 $ 0.43
========== ==========
See accompanying notes to consolidated financial statements.
3
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
Three Months Ended
March 31, 2001 March 25, 2000
Cash flows from operating activities:
Net income $ 17,194 $ 17,878
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 10,552 10,547
Amortization 1,696 1,510
Loss on sale of fixed assets 714 57
Gain on sale of marketable securities (462) (546)
Changes in operating assets and liabilities:
Decrease in inventories 14,827 5,523
Decrease in accounts receivable
and prepaid expenses 4,693 424
Decrease in income taxes recoverable 3,144 399
Decrease in accounts payable
and other liabilities (2,578) (9,564)
Increase in income taxes payable 3,562 8,252
Increase (decrease) in deferred income taxes 738 (722)
__________ __________
Net cash provided by operating
activities 54,080 33,758
Cash flows from investing activities:
Purchase of property and equipment (13,761) (19,690)
Proceeds from the sale of property and equipment 15 54
Purchase of marketable securities (128,646) (2,474)
Proceeds from maturities of marketable securities 14,462 11,081
Proceeds from the sale of marketable securities 85,118 2,425
Increase in intangible assets and other assets --- (13,379)
__________ __________
Net cash used in investing activities (42,812) (21,983)
Cash flows from financing activities:
Proceeds from issuance of common stock 9 21
Dividends paid (11,256) (10,840)
Purchase of treasury stock --- (74)
__________ __________
Net cash used in financing activities (11,247) (10,893)
Net increase in cash 21 882
Cash at beginning of period 3,389 4,552
__________ __________
Cash at end of period $ 3,410 $ 5,434
========== ==========
Cash paid during the period for:
Interest expense $ --- $ ---
========== ==========
Income taxes $ 2,219 $ 2,438
========== ==========
See accompanying notes to consolidated financial statements.
4
WEIS MARKETS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) Significant Accounting Policies
Basis of Presentation: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions for Form
10-Q and Article 10 of Regulation S-X. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The operating results for the periods
presented are not necessarily indicative of the results to be expected for the
full year. For further information, refer to the consolidated financial
statements and footnotes thereto included in the company's latest annual report
on Form 10-K.
(2) Comprehensive Income
The components of comprehensive income, net of related tax, for the three-month
period ended March 31, 2001 and March 25, 2000 are as follows:
Three Months Ended
(dollars in thousands) 03/31/01 03/25/00
Net Income $ 17,194 $ 17,878
Unrealized gains (losses) on
marketable secrurities 709 (799)
Less: reclassification adjustment for
gains included in net income (271) (319)
_______ _______
Comprehensive income $ 17,632 $ 16,760
======= =======
(3) Property and Equipment
Property and equipment, as of March 31, 2001 and December 30, 2000, consisted
of :
Useful Life
(dollars in thousands) (in years) 2001 2000
Land $ 67,474 $ 63,341
Buildings and improvements 10-60 315,484 312,462
Equipment 3-12 462,877 462,079
Leasehold improvements 5-20 95,895 97,310
_______ _______
Total, at cost 941,730 935,192
Less accumulated depreciation
and amoritiztion 498,509 493,373
_______ _______
$ 443,221 $ 441,819
======= =======
(4) Subsequent Event
On May 7, 2001, the Registrant purchased an aggregate of 14,477,242 shares of
its common stock from the family of the late Sigfried Weis. The purchase
price was $30.00 per share, for an aggregate purchase price of approximately
$434.3 million in cash. The amount of such consideration was determined through
negotiations between the Registrant and the sellers of such shares, and was
subject to review by a special committee of the Registrant's board of directors
formed for the purpose of evaluating the transaction. In determining the amount
of such consideration and assessing the fairness thereof, the Company received
financial advice from Morgan Stanley Dean Witter, and the special committee
received financial advice from Dresdner Kleinwort Wasserstein, Inc., both of
which firms rendered fairness opinions to the special committee. The selling
shareholders are descendants, or family members of descendants, of one of the
founders of the Registrant. The selling shareholders include Joseph I.
Goldstein, a director of the Registrant who has resigned from the Board of
Directors, his wife and certain of his relatives. The sources of the funds used
for the Registrant's acquisition of its shares were the Registrant's own cash
resources and borrowings from Mellon Bank under a credit agreement entered into
in the ordinary course.
5
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
Sales for the first quarter ended March 31, 2001 of $489,095,000 compares
to $519,750,000 during the same period last year when sales for our food service
division, which was sold on April 7, 2000, were included in the company's
overall sales. Excluding the food service division's sales from last year's
results, the company's sales in the first quarter increased .8%, while identical
store sales increased 0.4%. The flat sales are indicative of a slowing economy
and the overall competitive environment.
Gross profit of $130,186,000 at 26.6% of sales, increased .1% versus the
same quarter last year. Excluding the food service division's gross profit from
last year's results for the quarter, gross profit increased $2,075,000 or 1.6%
over last year and increased .4% as a percent of sales.
The first quarter operating, general and administrative expenses of
$112,293,000, at 23.0% of sales, increased $3,014,000, or 2.8% compared to the
same quarter last year. As a percentage of sales, operating expenses for the
quarter were 2.0% higher than the 21.0% rate realized in the first quarter of
2000. Employee labor and benefit expense accounted for 41.4% of the total
dollar increase in expenses while rising energy costs accounted for an
additional 48.7%.
Investment income of $6,757,000 at 1.4% of sales, compares to $4,475,000
at .9% of sales in 2000. The company realized a $462,000 gain on the sale of
publicly traded securities from its investment portfolio during the quarter.
Dividends and interest income increased $2,366,000 compared to results for the
same quarter last year. The company sold tax-free municipal bonds, reinvesting
those funds into taxable instruments increasing both investment income and
applicable income taxes.
Other income for the quarter of $2,207,000 at .5% of sales, decreased
$779,000, or 26.1%, compared to the first quarter in 2000. The majority of the
decline is due to the write-off of leasehold improvements on a closed store in
the current year.
The effective tax rate of 36% in the first quarter compared with 36.7% in
the same quarter in 2000.
Net earnings for the quarter of $17,194,000, or 41 cents per share,
compared with $17,878,000, or 43 cents per share, in 2000. Discounting the
impact of the food service division from the first quarter of 2000, earnings per
share decreased one cent per share on a comparable basis.
As of March 31, 2001, the company was operating 164 retail food stores,
with locations in Pennsylvania, Maryland, New Jersey, New York, Virginia and
West Virginia. The company owns SuperPetz II, Inc., a chain of 33 pet supply
stores with locations in Alabama, Georgia, Indiana, Kentucky, Maryland,
ichigan, North Carolina, Ohio, Pennsylvania, South Carolina and Tennessee.
LIQUIDITY AND CAPITAL RESOURCES
The company generated $54,080,000 in cash flows from operating activities
for the three-month period ended March 31, 2001 compared to $33,758,000 during
the same period of 2000. Working capital increased $5,265,000 or 1.1% since the
beginning of the year.
Net cash used in investing activities during the first quarter of 2001 was
$42,812,000 compared to $21,983,000 in 2000. Property, equipment and intangible
expenditures in the first quarter of 2001 amounted to $13,761,000 as compared to
$33,069,000 in 2000.
6
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
Net cash used in financing activities during the first quarter of 2001 was
$11,247,000, compared to $10,893,000 in 2000. The Board of Directors' 1996
resolution authorizing the purchase of treasury stock has a remaining balance of
573,385 shares. Cash dividend payments made during the quarter at $.27 per
common share amounted to $11,256,000. This compares to $10,840,000 in
dividends paid at the rate of $.26 per share in the first quarter of 2000. At a
regularly scheduled meeting held on April 20, 2001, the Board of Directors
declared a $.27 per share dividend payable to holders of record as of April 30,
2001, payable on May 14, 2001.
The company funded its working capital requirements for the quarter
through internally generated cash flows from operations, as it has done in
prior years. Company management estimates that its current development plans
will require an investment of approximately $95,200,000 over an eighteen-month
period through the middle of 2002. The company continues to pursue acquisitions
and investment opportunities to enhance future financial performance. The
financial and liquidity position of the company, combined with its historical
insurance loss experience rates, has allowed it to carry higher deductible and
retention levels on its employee and business insurance coverage. The company
plans to maintain these higher exposure levels, thus benefiting from reduced
premium expenses.
FORWARD-LOOKING STATEMENTS
In addition to historical information, this 10-Q Report may contain
forward-looking statements. Any forward-looking statements contained herein are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those projected. For example, risks and uncertainties
can arise with changes in: general economic conditions, including their impact
on capital expenditures; business conditions in the retail industry; the
regulatory environment; rapidly changing technology and competitive factors,
including increased competition with regional and national retailers; and price
pressures. Readers are cautioned not to place undue reliance on forward-looking
statements, which reflect management's analysis only as of the date hereof.
The Company undertakes no obligation to publicly revise or update these
forward-looking statements to reflect events or circumstances that arise after
the date hereof. Readers should carefully review the risk factors described in
other documents the Company files periodically with the Securities and Exchange
Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Quantitative Disclosure - There have been no material changes in the company's
market risk during the three months ended March 31, 2001. Quantitative
information is set forth in Item 7A on the company's Form 10-K under the caption
"Quantitative Disclosures About Market Risk", which was filed for the fiscal
year ended December 30, 2000 and is incorporated herein by reference.
Qualitative Disclosure - This information is set forth on Item 7 of the
company's 10-K under the caption "Liquidity and Capital Resources," within
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", which was filed for the fiscal year ended December 30, 2000 and
is incorporated herein by reference.
7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K -- There were no reports on Form 8-K filed for the
three months ended March 31, 2001.
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.
WEIS MARKETS, INC.
Date 05/15/2001 /S/ Robert F. Weis
ROBERT F. WEIS
Chairman of the Board & Treasurer
Date 05/15/2001 /S/ William R. Mills
WILLIAM R. MILLS
Vice President-Finance & Secretary
8