UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 25, 1993 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 (IRS Employee Identification No.)
incorporation or organization)
1000 South Second Street, Sunbury, PA 17801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 717-286-4571
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common stock, no par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
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
The aggregate market value of Common Stock held by non-affiliates of the
Registrant is approximately $410,326,000.
Shares of common stock outstanding as of February 18, 1994 - 43,746,711.
The index to Exhibits is located in Part IV, Item 14(c).
DOCUMENTS INCORPORATED BY REFERENCE
Selected portions of the 1993 Weis Markets, Inc. Annual Report to Shareholders
are incorporated by reference in Part II and Part IV of this Form 10-K.
Selected portions of the Weis Markets, Inc. definitive proxy statement dated
March 18, 1994 are incorporated by reference in Part III of this Form 10-K.
WEIS MARKETS, INC.
PART I
Item 1. Business:
(a) Weis Markets, Inc. is a Pennsylvania business corporation formed
in 1924. The Company is engaged principally in the retail sale of
food. There was no material change in the nature of the company's
business during fiscal 1993.
(b) The principal business activity which the company has been engaged
in for the last five fiscal years is the retail sale of food.
(c)(1)(i) The company operates 117 retail food markets in Pennsylvania,
15 in Maryland, 1 in New Jersey, 3 in New York, 4 in Virginia, and
1 in West Virginia. The stores trade under the name Weis Markets,
except for 18 Pennsylvania stores which trade as Mr. Z's Food Mart,
2 Pennsylvania stores which trade as Erb's, 4 Pennsylvania stores
which trade as Scot's Lo Cost, and 1 Pennsylvania store which trades
as Big Top Market. During the past fiscal year, 4 new stores were
opened and 3 were closed. The company also owns and operates
Weis Food Service, a restaurant and institutional supplier. The
company supplies its stores from distribution centers in Sunbury,
Northumberland, and Milton, Pennsylvania. The percentage of net sales
contributed by each class of similar products for each of the five
fiscal years ended December 25, 1993 was:
Grocery Meat Produce Other
1989 62.89 15.03 11.69 10.39
1990 62.73 14.99 11.21 11.07
1991 61.27 14.49 10.95 13.29
1992 60.81 14.15 10.78 14.26
1993 60.74 14.80 11.06 13.40
(c)(1)(vi)The Company has its own distribution center with warehouses located
within a 15 mile radius of its corporate offices in Sunbury,
Pennsylvania. The Company is required to use a significant amount
of working capital to provide for the required amount of inventory
to meet demand for its products with efficient use of buying power
and space in the warehouse facilities.
(c)(1)(x)The business of the company is highly competitive, and, in the areas
served by it, the company competes based on price and service with
national retail food chains, local chains and many independent food
stores. The following list includes, but is not limited to, the
competitors of the Company: Acme Markets, Inc., Giant Foods of
Carlisle, Giant Foods of Landover, Festival Foods, Shop Rite,
Super Rite, Giant Eagle, Riverside Markets, Super Valu, Aldi,
Insalaco, Walmart, K-Mart, Sam's and A&P. On the basis of sales
volume, the company believes it is the leading food retailer in the
majority of the areas in which it operates.
(c)(1)(xiii)The company has approximately 15,000 employees.
Item 2. Properties:
The company owns and operates 68 of its stores and leases and operates
73 stores under operating leases for varying periods of time up to
the year 2013. The company owns all of its trade fixtures and
equipment in its stores and several parcels of vacant land which are
available as locations for possible future stores or other expansion.
The company owns and operates two warehouses in Sunbury, Pennsylvania
totaling approximately 551,000 square feet: one in Milton,
Pennsylvania of approximately 1,016,000 square feet, and two in
Northumberland, Pennsylvania totaling approximately 121,000 square
feet. Weis Markets also operates an ice cream plant, meat processing
plant and milk processing plant at its Sunbury location.
Item 3. Legal Proceedings:
Neither the company nor any subsidiary is presently a party to,
nor is any of their property subject to, any material pending legal
proceedings, other than routine litigation incidental to the
business.
Item 4. Submission of Matters to a Vote of Security Holders:
There were no matters submitted to a vote of security holders during
the fourth quarter of 1993.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters:
"Stock Prices and Dividend Information by Quarter" on page 15 and
"Stock Traded" on the inside back cover of the 1993 Weis Markets,
Inc. Annual Report to Shareholders are incorporated herein by
reference.
The computation of the approximate number of stockholders on
December 25, 1993 is based upon the approximate number of shareholders
as determined by the Company's transfer agent.
Item 6. Selected Financial Data:
"Five-Year Review of Operations" on page 15 of the 1993 Weis Markets,
Inc. Annual Report to Shareholders is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" on page 6 of the 1993 Weis Markets, Inc.
Annual Report to Shareholders is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data:
The following information in the 1993 Weis Markets, Inc. Annual
Report to Shareholders is incorporated herein by reference:
The consolidated financial statements on pages 7 to 9, the notes
to consolidated financial statements on pages 10 to 14 and the
independent auditors' report on page 14.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure:
None.
PART III
Item 10. Directors and Executive Officers of the Registrant:
"Election of Directors" on pages 4 and 5 of the Weis Markets, Inc.
definitive proxy statement dated March 18, 1994 is incorporated
herein by reference.
Item 11. Executive Compensation:
"Board Compensation Committee Report on Executive Compensation,"
"Summary Compensation Table," "Option/SAR Grants in Last Fiscal
Year," "Aggregated Option/SAR Exercises in Last Fiscal Year and
FY-End Option/SAR Values," "Retirement Plans," "Pension Plan Table,"
"Shareholder Return Performance," "Comparative Five-Year Total
Returns," and "Comparative Ten-Year Income Percentages" on pages 5 to
9 of the Weis Markets, Inc. definitive proxy statement dated March 18,
1994 is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management:
"Outstanding Voting Securities and Voting Rights" on page 3 of the
Weis Markets, Inc. definitive proxy statement dated March 18, 1994 is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions:
"Compensation Committee Interlocks and Insider Participation",
"Board Compensation Committee Report on Executive Compensation,"
"Summary Compensation Table," "Option/SAR Grants in Last Fiscal Year,
"Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values," "Retirement Plans," "Pension Plan Table,"
"Shareholder Return Performance," "Comparative Five-Year Total
Returns," and "Comparative Ten-Year Income Percentages," on pages
5 to 9 of the Weis Markets, Inc. definitive proxy statement dated
March 18, 1994 is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
The following information is incorporated herein by reference from
the 1993 Weis Markets, Inc. Annual Report to Shareholders: the
consolidated financial statements on pages 7 to 9, the notes to
consolidated financial statements on pages 10 to 14 and the
independent auditors' report on page 14.
(a) The following documents are filed as a part of this report:
Page
1.Report of Independent Auditors on
Financial Statement Schedules F-1
2.Financial Statement Schedules:
I. Marketable Securities F-2
V. Property, Plant and Equipment F-3
VI. Accumulated Depreciation,
Depletion and Amortization of
Property, Plant and Equipment F-4
Schedules other than those listed above are omitted for the reason
that they are either not applicable or not required or because the
information required is contained in the financial statements or
notes thereto.
(b) There were no reports on Form 8-K filed during the quarter ended
December 25, 1993.
(c) A listing of exhibits filed or incorporated by reference is as
follows:
Exhibit No.
3-A Articles of Incorporation
3-B By-Laws
10-A Deferred Compensation Plan
10-B Profit Sharing Plan
10-C Employee Stock Ownership Plan
10-D Stock Appreciation Rights Program
10-E Stock Option Plan
13 Annual Report to Shareholders for the Fiscal Year ended
December 25, 1993
22 Subsidiaries of the Registrant
24 Consent of Independent Auditors
The exhibits listed above, except for exhibits 13, 22 and 24, have
been filed as exhibits under Part IV, Item 14(c) in Form 10-K for the
fiscal year ended December 27, 1980 and are incorporated herein by
reference.
The foregoing exhibits are available upon request from the Secretary
of the Company at a fee of $10.00 per copy.
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.
WEIS MARKETS, INC.
(Registrant)
Date
Sigfried Weis
President
Pursuant to the requirements of the Securities Exchange 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.
Date
Sigfried Weis
(Principal Executive Officer)
President and Director
Date
Robert F. Weis
(Principal Financial Officer)
Vice President and Treasurer
and Director
Date
Norman S. Rich
Vice President and Secretary
and Director
Date
William R. Mills
Vice President Finance
Independent Auditors' Report
The Board of Directors and Shareholders of
Weis Markets, Inc.:
Under date of January 28, 1994, we reported on the consolidated balance sheets
of Weis Markets, Inc. and subsidiaries as of December 25, 1993 and December 26,
1992 and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the years in the three-year period ended December 25,
1993, as contained in the 1993 annual report to shareholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the annual report on Form 10-K for the year 1993. In connection
with our audits of the aforementioned consolidated financial statements, we also
audited the related financial statement schedules as listed at Item 14(a)2.
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, such 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
Harrisburg, Pennsylvania
January 28, 1994
F-1
SCHEDULE I. MARKETABLE SECURITIES
December 25, 1993
Market Value of
Number of Each Issue and
Shares or Units- Amortized Carrying Amount
Name of Issuer Principal Amounts of Cost of at Balance Sheet
and Title of Each Issue Bonds and Notes Each Issue Date
Pennsylvania municipal and political
subdivision bonds 363,955,000 $377,742,000 $390,710,000
U.S. Treasury securities 31,000,000 31,272,000 33,690,000
Equity securities 879,342 12,736,000 26,699,000
Other short-term investments 7,013,000 7,013,000 7,013,000
$428,763,000 $458,112,000
<FN>
F-2
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
Fiscal Years Ended December 25, 1993, December 26, 1992, and
December 28, 1991
Balance at Balance at
Beginning Additions End of
Description of Period at Cost Retirements Period
Year Ended December 25, 1993:
Land $ 26,965,000 1,266,000 79,000 28,152,000
Buildings and improvements 157,941,000 11,909,000 1,436,000 168,414,000
Equipment 235,609,000 31,269,000 1,384,000 265,494,000
Leasehold improvements 29,781,000 4,744,000 89,000 34,436,000
$450,296,000 49,188,000 2,988,000 496,496,000
Year Ended December 26, 1992:
Land $ 25,253,000 1,798,000 86,000 26,965,000
Buildings and improvements 150,022,000 8,811,000 892,000 157,941,000
Equipment 217,909,000 19,954,000 2,254,000 235,609,000
Leasehold improvements 28,901,000 1,422,000 542,000 29,781,000
$422,085,000 31,985,000 3,774,000 450,296,000
Year Ended December 28, 1991:
Land $ 24,543,000 1,010,000 300,000 25,253,000
Buildings and improvements 139,915,000 11,876,000 1,769,000 150,022,000
Equipment 198,063,000 21,963,000 2,117,000 217,909,000
Leasehold improvements 25,574,000 3,327,000 - 28,901,000
$388,095,000 38,176,000 4,186,000 422,085,000
<FN>
Column C, "Additions at Cost," relates principally to acquiring and equipping new
stores and enlargement and refurbishing of existing facilities.
Estimated useful lives of the assets are: buildings and improvements 10-60 years,
equipment 3-12 years, and leasehold improvements 5-20 years.
F-3
SCHEDULE VI. ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
Fiscal Years Ended December 25, 1993, December 26, 1992, and December 28, 1991
Additions
Balance at Charged to Balance at
Beginning Costs and End of
Description of Period Expenses Retirements Period
Year Ended December 25, 1993:
Buildings and improvements $ 55,832,000 5,845,000 871,000 60,806,000
Equipment 178,359,000 19,915,000 921,000 197,353,000
Leasehold improvements 11,566,000 1,552,000 66,000 13,052,000
$245,757,000 27,312,000 1,858,000 271,211,000
Year Ended December 26, 1992:
Buildings and improvements $ 51,097,000 5,224,000 489,000 55,832,000
Equipment 161,778,000 18,815,000 2,234,000 178,359,000
Leasehold improvements 10,085,000 1,771,000 290,000 11,566,000
$222,960,000 25,810,000 3,013,000 245,757,000
Year Ended December 28, 1991:
Buildings and improvements $ 46,477,000 4,983,000 363,000 51,097,000
Equipment 146,070,000 17,788,000 2,080,000 161,778,000
Leasehold improvements 8,474,000 1,611,000 - 10,085,000
$201,021,000 24,382,000 2,443,000 222,960,000
<FN>
F-4
EXHIBIT 13
WEIS MARKETS, INC.
Annual Report to Shareholders for the fiscal year ended December 25, 1993.
WEIS MARKETS, INC.
1993 ANNUAL REPORT
Weis Markets, Inc.
Weis Markets, Inc. is a successful supermarket chain with 141 stores located
in Pennsylvania, Maryland, New Jersey, New York, Virginia, and West Virginia.
Started in 1912 as a cash-and-carry grocery store, Weis became publicly owned
in 1965. Its stock is listed on the New York Stock Exchange under the symbol
WMK. Over 15,000 employees contribute to the Company's continuing success.
Many of the Company's 1,800 private label products are supplied by its own
manufacturing and processing plants. Distribution centers located in Milton
and Sunbury are served by a Company owned fleet of tractor-trailers. In
addition to supermarkets, the Company owns and operates Weis Food Service,
a distributor to restaurant and institutional customers.
Highlights
(dollars in thousands, except per share amounts
For the Fiscal Years Ended December 25, 1993,
December 26, 1992, and December 28, 1991 1993 1992 1991
Net sales $1,441,090 $1,289,195 $1,294,332
Income before provision for income taxes and
cumulative effect of change in accounting principle 113,654 110,249 124,186
Net income 72,953 72,716 80,577
Cash dividends 30,677 29,907 28,484
Shareholders equity 738,115 680,265 647,413
Depreciation and amortization 28,959 26,358 25,131
Shares outstanding 43,796,403 43,831,468 44,216,374
Net income per share $ 1.66 1.65 $ 1.81
Cash dividends per share .70 .68 .64
Number of stores 141 126 124
To Our Shareholders
We are pleased to report that sales for Weis Markets for the 52-week fiscal
year ended December 25, 1993, increased 11.8% to $1,441,090,000 compared with
$1,289,195,000 for the same period a year ago. Earnings were $72,953,000
compared to $72,716,000 last year, an increase of .3%.
Earnings per share were $1.66 compared with $1.65 per share last year.
Depreciation and amortization increased to $28,959,000 from $26,358,000 in 1992
and return on equity was 10.3%. Shareholders' equity rose to $738,115,000 from
$680,265,000 in 1992.
Sales increases came primarily from new and enlarged stores and Mr. Z's Food
Mart stores in Northeastern Pennsylvania, which were acquired at the beginning
of the year. Increased competition, weakness in the economy, lower retail
prices, low inflation, and increased promotional expense continued to
characterize the year 1993 in our trading area. This environment was conducive
to increasing the sales of private label merchandise, one of the company's
strongest assets.
In 1993, we added 562,839 square feet of retail space. Four new super
stores were opened in Pennsylvania and New Jersey, averaging about 45,000
square feet with pharmacies, floral departments, bakeries, delis, and salad
bars. One of these stores was opened under the Scot's Lo-Cost format, a
warehouse-type market. Full-service banks were installed in a number of stores.
Thirteen stores were enlarged or remodeled. Retail space now totals 5,142,000
square feet. More than half of all stores are new or have been remodeled in
the last five years. At the end of the year, construction was substantially
completed on the 184,000 square-foot addition to the Milton Distribution
Center. It will house Shamrock Wholesale Distributing Company, a
wholly owned organization developed to buy, sell, and distribute nonfoods,
health and beauty care, and other products. The addition will also provide new
space for distribution of private label bread, snacks, and other grocery items.
At the end of the year, Weis Markets had 141 stores in Pennsylvania,
Maryland, New Jersey, New York, Virginia, and West Virginia, and Weis Food
Service - a restaurant and institutional supplier. Three stores were closed
during the year.
After the end of the year, the company made an investment in several large
pet supply stores in Ohio called SuperPetz. It is anticipated that the number
of these stores will grow into a successful chain in many areas of the country.
The Company continues to develop improved programs to meet the needs of its
customers. We installed a targeted coupon dispensing system at more than two
thirds of all checkouts before the end of 1993. The point-of-sale computer-
based system dispenses coupons based on customers' purchases and will be
installed company wide before the end of this first quarter of 1994. The
Company's front-end systems will be enhanced in many stores to allow use of
three major credit cards.At our general office, improvements will continue
with the installation of a new central computer system. This system is based
on newly developed technology which will provide almost triple the processing
speed while requiring significantly less maintenance and energy consumption.
The upgraded equipment is to be installed in the first quarter of 1994, just in
advance of planned improvements in store communication and merchandising
information systems.
Capital expenditures including acquisitions for 1993 totaled about
$64,412,000, compared to the budgeted figures of $55,527,000. We expect to
spend about $76,000,000 over the next eighteen months, provided that our
program of new and remodeled stores can be completed. Long approval times
still make predicting project completion a tentative factor.
Two new stores are now under construction. Eight more are in the planning
or approval stage and should be completed in the next eighteen months. Over
this period of time, about twenty stores should be remodeled or enlarged.
Construction is underway on several of these projects. New stores are planned
for Pennsylvania, Maryland, and New Jersey. Financing for the new and remodeled
stores will come from company funds, and the company will continue to have no
debt.
Mr. Charles H. Watts II, director for eighteen years, will not be standing
for reelection this year. We wish to extend our appreciation for his guidance
and counsel as a member of the board during a period of greatcompany growth.
With our new and acquired stores, plus our capable and energetic Weis
Markets people, our company should have a successful year, growth and profits
in 1994.
Sigfried Weis
President
Robert F. Weis
Vice President and Treasurer
Service and Value
Old-Fashioned Quality and Innovative Programs Lead the Way
During these uncertain economic times, the last thing anyone should have
to worry about is a grocery bill. At Weis Markets, we understand that - after
all, we buy groceries, too. That's why we're ahead of the rest in finding new
ways to give our loyal customers the service and value they deserve at a price
they can afford.
Checkout Coupons: Personalized for the Way You Shop
No two shoppers are exactly alike. Their tastes, needs, and shopping habits
vary as much as their clothing style or the cars they drive. Yet every year,
in newspapers, magazines, and even the U.S. mail, they receive thousands of
coupons that they will never use.
At Weis Markets, we know the value of coupon shopping when the coupons
match the products our customers actually buy. That's the theory behind Checkout
Coupons, our individualized coupon program. Shoppers simply buy their groceries
as usual. As their items are rung up, our computerized registers print out
Checkout Coupons right along with their receipt. No hold-ups at the checkout
line, no coupons for products our shoppers don't need or want. Just super
coupon values designed to meet personal shopping needs. With Weis Markets
Checkout Coupons it's easy to stretch a weekly food budget.
More than two thirds of our supermarkets offered Checkout Coupons at the
close of 1993, and during the first quarter of 1994 this program will be
expanded to all stores with checkout scanners.
Weis Vision Value Club: Frequent Shopper Points Add Up
Many Weis shoppers visit our stores weekly. And with our new Vision Value Club,
currently being tested in a limited area, frequent shoppers can earn points
for free gifts at no extra charge. . .and no extra effort!
Membership in the Vision Value Club isn't exclusive - it's a breeze. After
signing up, frequent shoppers simply make their purchases as usual. As items
are totaled, points are accumulated and stored electronically on a special
computer chip membership card right at the checkout. Shoppers may redeem those
points for brand name merchandise through the Vision Value Club gift catalog.
And as a bonus, specials like coupons, recipes, sweepstakes, games and more
appear automatically on the Vision Screen during checkout, adding further value
to frequent shopping.
New Store Locations and Acquisitions: Convenience and Competition Wins
Hands Down
With today's shoppers' busy schedules, even the most innovative and profitable
savings programs can't match the value of convenient shopping locations. That's
why we at Weis Markets are always looking for ways to expand our service area.
In 1993, we acquired fourteen Mr. Z's Markets, bringing the total number of our
convenient shopping locations to 141. Mr. Z's Markets are concentrated in the
Northeastern Pennsylvania area. Of course, customers will see the same low
prices and excellent service they've come to expect at all Weis Markets
locations.
In addition to acquisitions, we've opened new Weis Markets in
Elizabethtown, Pennsylvania and in Newton, New Jersey, the first Weis Markets in
New Jersey. A Scot's Lo-Cost Supermarket was opened in Montoursville,
Pennsylvania and a new Mr. Z' s in Waverly, Pennsylvania. Our growing customer
base is proof that it's quality products and dollar value that count. . .week
after week.
Business As Usual: Those Little "Extras" Make Shopping a Pleasure
No matter which store they visit, our customers know that service and value are
just "company policy" at Weis Markets. More than 15,000 employees are hard
at work to make shopping a little more pleasant at every convenient location.
For example, our informative deli people can help busy shoppers find the perfect
prepared food to take home to a hungry family, without sacrificing nutritional
value. And with new products being added all the time, they don't have to
forego variety either. In the pharmacy, our professional staff is waiting to
answer questions regarding medicines and health concerns. Third Party
Departments and Weis' own computerized patient profile system make getting
prescriptions that much easier. Of course, our butchers are always happy to
provide special meat cuts, while our bakery specialists add just the right
touches to festive party delicacies. And checking out isn't a hassle, either.
Courteous register clerks and baggers end the shopping trip on an upbeat note.
At Weis Markets, we know that special deals and exciting programs
- though valuable - aren't enough. Getting more for their money on
everyday buys is what brings our shoppers back week after week. From well-
stocked fresh produce aisles, to a wide variety of succulent meats, to
thousands of brand names, our customers find competitive prices on everything
they need. More than 1,800 of our own private label products - including
"Weis Quality," "Big Top" and "The Way It Was" - line our shelves, ensuring
that shoppers don't have to sacrifice top quality for extra value. And Weis
Markets' SUPER BUYS add yet another way to save; economical larger sizes,
bonus packs and special features mean greater savings on weekly shopping
budgets.
In the supermarket business, the competition can be keen. And at Weis Markets,
we know that creative solutions to meeting our shoppers' needs are crucial to
our continued success. But we haven't forgotten that good old-fashioned
excellent service and unbeatable quality are what guarantees customer
satisfaction. You might just say that's what puts Weis Markets Ahead of the
Rest.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Sales for the 52 - week period ended December 25, 1993 of $1,441,090,000
increased 11.8% over sales of $1,289,195,000 for the 1992 fiscal year. Sales
in 1992 had decreased .4% compared with fiscal 1991 sales of $1,294,332,000.
The majority of the sales increase in the current year was generated from the
14 IGA stores acquired. Same store sales decreased 1.2 % in 1993. During the
last three years, the Company has experienced increased competitive activity
in a weak economy with very little price inflation in each of the three years.
Management anticipates a slight increase in inflation in 1994 but no decline
in competitive activity.
Expressed as a percentage of sales, the gross profit at 25.5% in 1993,
compares with 25.4% in 1992 and 25.7% in 1991. The Company has maintained
its gross margin at a consistent rate over the past three years through its
use of category management and the fact that suppliers have shifted traditional
promotional funding towards the cost of product. The LIFO inventory adjustment
in 1993 resulted in a charge to earnings of $510,000 compared to $2,321,000 in
1992.
Operating, general and administrative expenses of 20.0% as a percentage of
fiscal 1993 sales compares with 19.5% in 1992 and 18.9% in 1991. The majority
of the total dollar increase in 1993 expenses was directly associated with the
operation of the new stores acquired at the beginning of the year. Labor and
associated fringe benefit costs, as a percentage of sales, increased .28% from
1992 to 1993. Advertising expenditures, net of promotional funding, increased
.34% from 1992 to 1993.
Interest and dividend income of $21,528,000, at 1.5% of sales in 1993
compared to $23,783,000, at 1.8% of sales in 1992, and $25,935,000, at 2.0%
of sales in 1991. Investment income has continued to decline as a result of
the decline in market rates over the past three years. The investment portfolio
consists of Pennsylvania tax free municipal bonds, U.S. Treasury securities,
equity securities and other short-term investments. The Company has made
an effort to offset the decline in short term yields by extending its investment
maturities. It is management's intent to maintain a liquid portfolio to take
advantage of acquisition or other investment opportunities; therefore all
securities are classified as available-for-sale.
Other income is primarily generated from rental income, coupon handling
fees, cardboard salvage and gains on sales of fixed assets. Other income
increased $1,421,000 in 1993 compared to 1992 as a result of the acquired
stores. Expressed as a percentage of sales, other income at .9% in 1993,
compared to .9% in 1992, and .8% in 1991.
The effective tax rate was 35.8% in 1993, 35.0% in 1992, and 35.1% in 1991.
Corporate federal tax rates increased from 34% to 35% during the current year,
having a negative impact of $928,000 to the current year profits. The Company
adopted Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," as of December 29, 1991, which resulted in a cumulative
effect adjustment of $1,046,000 in the first quarter of fiscal 1992.
During fiscal 1993, the Company opened four new stores, closed three existing
stores, remodeled 13 stores, and completed the acquisition of 14 IGA stores
located in Northeastern Pennsylvania. The distribution center was enlarged by
184,000 square feet to meet the current and future service demands associated
with the store growth. As of its fiscal year end Weis Markets, Inc. was
operating 141 retail food stores and Weis Food Service, a restaurant and
institutional supplier. The company currently operates stores in Pennsylvania,
Maryland, New Jersey, New York, Virginia and West Virginia.
Liquidity and Capital Resources
The Company has consistently funded its working capital requirements each
year through internally generated cash flows from operations. Net cash
provided by operating activities was $104,103,000 in 1993, compared to
$83,282,000 in 1992 and $98,796,000 in 1991. Working capital has increased by
6.1% in 1993, 5.9% in 1992 and 5.7% in 1991. The increase in working capital
in 1993 was impacted by the adoption of the provisions of the Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities" (Statement 115). Had Statement 115 not been
adopted, working capital would have increased by 2.7% in 1993.
The Company continues to use its cash for acquisitions, the construction of
new supermarkets, the expansion and remodeling of existing stores, the securing
of sites for future expansion, and the upgrading of the processing and
distribution facilities. Property, equipment and other acquisition expenditures
during fiscal 1993 amounted to $64,412,000 compared to $31,985,000 in 1992
and $40,526,000 in 1991. Treasury Stock purchases amounted to $1,149,000 in
1993, compared to $10,044,000 in 1992, and $14,914,000 in 1991. The Board of
Directors' 1991 resolution authorizing the purchase of treasury stock has a
remaining balance of 696,000 shares. Total cash dividend payments on common
stock amounted to $.70 per share in 1993, compared to $.68 in 1992 and $.64
in 1991.
The Company's current store development plans will require investment of
approximately $76,000,000 during the next eighteen months. This includes the
opening of ten new stores, completion of 20 store remodels, and significant
improvements in the area of store and general office technology. The Company
is actively seeking acquisitions and investment opportunities so as to enhance
future performance. In view of the Company's significant liquid assets, no
existing debt financing, and its ability to generate working capital internally,
it is not expected that any type of external financing will be needed.
Consolidated Balance Sheets
(dollars in thousands)
December 25, 1993
and December 26, 1992 1993 1992
Assets
Current:
Cash $ 9,066 $ 1,298
Marketable securities 458,112 419,315
Accounts receivable, net 20,378 22,274
Inventories 111,847 97,659
Prepaid expenses and other assets 6,380 7,786
Deferred income taxes - 3,629
Prepaid income taxes - 419
Total current assets 605,783 552,380
Property and equipment, net 225,285 204,539
Intangible assets, net 13,422 4,609
$844,490 $761,528
Liabilities
Current:
Accounts payable $ 59,356 $ 49,236
Accrued expenses 6,900 6,244
Accrued self-insurance 7,886 7,731
Payable to employee benefit plans 8,994 5,597
Income taxes payable 1,938 -
Deferred income taxes 7,525 -
Total current liabilities 92,599 68,808
Deferred income taxes 13,776 12,455
Stockholders' Equity
Common stock, no par value,
100,800,000 shares authorized, 47,438,249 and
47,431,524 shares issued, respectively 7,255 7,147
Retained earnings 791,072 748,796
Net unrealized gain on marketable securities 16,740 -
Minimum pension liability (125) -
814,942 755,943
Treasury stock at cost - 3,641,846 and
3,600,056 shares, respectively (76,827) (75,678)
Total stockholders' equity 738,115 680,265
$ 844,490 761,528
<FN>
See accompanying notes to consolidated financial statements.
Consolidated Statements of Income
(dollars in thousands, except per share amounts)
For the Fiscal Years Ended December 25, 1993,
December 26, 1992, and December 28, 1991 1993 1992 1991
Net sales $1,441,090 $1,289,195 $1,294,332
Cost of sales, including warehousing and
distribution expenses 1,073,140 961,847 962,354
Gross profit on sales 367,950 327,348 331,978
Operating, general and administrative expenses 288,280 251,917 244,441
Income from operations 79,670 75,431 87,537
Interest and dividend income 21,528 23,783 25,935
Other income 12,456 11,035 10,714
Income before provision for income
taxes and cumulative effect of
change in accounting principle 113,654 110,249 124,186
Provision for income taxes 40,701 38,579 43,609
Income before cumulative effect
of change in accounting principle $ 72,953 $ 71,670 $ 80,577
Cumulative effect at December 29,
1991, of change in accounting for
income taxes - 1,046 -
Net income $ 72,953 $ 72,716 $ 80,577
Per share of common stock:
Income before cumulative effect
of change in accounting principle $ 1.66 $ 1.63 $ 1.81
Cumulative effect at December 29, 1991, of
change in accounting for income taxes - .02 -
Net income $ 1.66 $ 1.65 $ 1.81
Cash dividends $ .70 $ .68 $ .64
<FN>
See accompanying notes to consolidated financial statements.
Consolidated Statements of Shareholders' Equity
Net Unrealized
(dollars in thousands)
For the Fiscal Years Ended December 25, 1993, Common Retained Marketable Pension Treasury Shareholders
December 26, 1992 and December 28, 1991 Stock Earnings Securities Liability Stock Equity
Balance at December 29, 1990 $6,893 653,894 - - (50,720) 610,067
Shares issued for option 167 - - - - 167
Treasury stock purchased (527,855 shares) - - - - (14,914) (14,914)
Dividends paid - (28,484) - - - (28,484)
Net income - 80,577 - - - 80,577
Balance at December 28, 1991 7,060 705,987 - - (65,634) 647,413
Shares issued for option 87 - - - - 87
Treasury stock purchased (392,207 shares) - - - - (10,044) (10,044)
Dividends paid - (29,907) - - - (29,907)
Net income - 72,716 - - - 72,716
Balance at December 26, 1992 7,147 748,796 - - (75,678) 680,265
Shares issued for option 108 - - - - 108
Treasury stock purchased (41,790 shares) - - - - (1,149) (1,149)
Dividends paid - (30,677) - - - (30,677)
Change in accounting for
marketable securities - - 16,740 - - 16,740
Minimum pension liability - - - (125) - (125)
Net Income - 72,953 - - - 72,953
Balance at December 25, 1993 $7,255 791,072 16,740 (125) (76,827) 738,115
<FN>
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows
(dollars in thousands)
For the Fiscal Years Ended December 25, 1993,
December 26, 1992, and December 28, 1991 1993 1992 1991
Cash flows from operating activities:
Net income $ 72,953 $ 72,716 $ 80,577
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 28,959 26,358 25,131
Loss (gain) on disposition of fixed assets (798) 208 (404)
Changes in operating assets and liabilities:
Increase in inventories (14,188) (5,316) (4,611)
(Increase) decrease in accounts receivable,
prepaid expenses and other assets 3,302 (4,534) (5,146)
(Increase) decrease in prepaid income taxes 419 (419) -
Increase (decrease) in accounts
payable and other liabilities 11,652 (471) 3,184
Increase (decrease) in income taxes payable 1,938 (4,502) (959)
Increase (decrease) in deferred income taxes (134) (758) 1,024
Net cash provided by operating activities 104,103 83,282 98,796
Cash flows from investing activities:
Purchase of property and equipment (49,188) (31,985) (38,176)
Proceeds from the sale of property and equipment 1,928 553 2,145
Increase in marketable securities (9,448) (11,212) (17,244)
Increase in intangible assets (7,909) - (2,350)
Net cash used by investing activities (64,617) (42,644) (55,625)
Cash flows from financing activities:
Proceeds from issuance of common stock 108 87 167
Dividends paid (30,677) (29,907) (28,484)
Purchase of treasury stock (1,149) (10,044) (14,914)
Net cash used by financing activities (31,718) (39,864) (43,231)
Net increase (decrease) in cash 7,768 774 (60)
Cash at beginning of year 1,298 524 584
Cash at end of year $ 9,066 $ 1,298 $ 524
<FN>
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
The following is a summary of the significant accounting policies followed in
preparing the Company's consolidated financial statements:
(a) Definition of Fiscal Year
The Company's fiscal year ends on the last Saturday in December. Fiscal 1993,
1992, and 1991 were each comprised of 52 weeks.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries.
(c) Business Segment
The principal business activity reflected in the accompanying consolidated
financial statements is the retail sale of food.
(d) Intangible Assets
Intangible assets are generally amortized over periods ranging from 3 to 40
years. A portion of the excess of cost of investments over net assets
acquired prior to November 1, 1970, ($2,322,000) is not being amortized
because, in the opinion of management, there has been no decrease in value.
(e) Inventories
Inventories are valued at the lower of cost or market, using both the last-in,
first-out (LIFO) and average cost methods.
(f) Marketable securities
Marketable securities at December 25, 1993, consist of Pennsylvania municipal
bonds, U.S. Treasury securities, equity securities, and other short-term
investments. The Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" (Statement 115) at December 25, 1993. Under Statement
115, the Company classifies all of its marketable securities as available-for-
sale.
Available-for-sale securities are recorded at fair value. Unrealized
holding gains and losses, net of the related tax effect, are excluded from
earnings and are reported as a separate component of shareholders' equity until
realized. A decline in the market value below cost that is deemed other than
temporary results in a charge to earnings and the establishment of a new cost
basis for the security. Dividend and interest income are recognized when
earned. Realized gains and losses are included in earnings and are derived
using the specific identification method for determining the cost of securities.
Prior to adopting Statement 115, the Company valued its'securities in
accordance with Statement of Financial Accounting Standards No. 12,
"Accounting for Certain Marketable Securities" (Statement 12) and related
interpretations. Marketable debt securities were carried at amortized cost
and marketable equity securities were carried at the lower of cost or market.
(g) Property and Equipment
Depreciation is provided on the cost of buildings and improvements and
equipment principally using accelerated methods. Leasehold improvements are
amortized over the terms of the lease or the useful lives of the assets,
whichever is shorter.
Maintenance and repairs are charged to income and renewals and betterments
are capitalized. When assets are retired or otherwise disposed of, the assets
and accumulated depreciation are removed from the respective accounts and any
profit or loss on the disposition is credited or charged to income.
(h) Income Taxes
In February 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(Statement 109). Statement 109 requires a change from the deferred method of
accounting for income taxes of APB Opinion 11 to the asset and liability
method of accounting for income taxes. Under the asset and liability method
of Statement 109, deferred tax assets and liabilities are recognized for the
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
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment
date.
Effective December 29, 1991, the Company adopted Statement 109 and has
reported the cumulative effect of that change in the method of accounting
for income taxes in the 1992 consolidated statement of income.
Pursuant to the deferred method under APB Opinion 11, which was applied in
1991 and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting
purposes and income tax purposes using the tax rate applicable for the year of
the calculation. Under the deferred method, deferred taxes are not adjusted
for subsequent changes in tax rates.
(i) Earnings Per Share
The earnings per share computations are based upon the weighted average number
of common shares and common share equivilants outstanding during the year.
(j) Reclassification
Certain amounts in prior-year financial statements have been reclassified to
conform with current year classifications.
(2) Income Taxes
As discussed in note 1, the Company adopted Statement 109 as of December 29,
1991. The cumulative effect of this change in accounting for income taxes of
$1,046,000 is determined as of December 29, 1991, and is reported separately
in the consolidated statement of income for the year ended December 26, 1992.
Prior years' financial statements have not been restated to apply the
provisions of Statement 109.
The provision for income tax consists of:
(dollars in thousands) 1993 1992 1991
Currently payable:
Federal $29,929 $27,885 $31,287
State 10,812 10,453 11,646
Deferred (40) 241 676
$40,701 $38,579 $43,609
The following is a reconciliation between the applicable income tax expense
and the amount of income taxes which would have been provided at the Federal
statutory rate. The statutory rate was 35% in 1993, 34% in 1992, and 34% in
1991. The tax rate change in 1993 had a negative impact of $928,000 to the
current year profits.
(dollars in thousands) 1993 1992 1991
Tax at statutory rate $39,779 $37,485 $42,223
State income taxes, net of
federal income tax benefit 7,355 6,965 7,818
Other - principally tax-exempt
investment income (6,433) (5,871) (6,432)
Actual provision
(effective tax rate 35.8%, 35.0%,
and 35.1%, respectively) $40,701 $38,579 $43,609
Cash paid for income taxes was $40,530,000, $43,171,000 and $40,621,000
in 1993, 1992 and 1991, respectively.
For the year ended December 28, 1991, deferred income tax expense of
$676,000 results from timing differences in the recognition of income and
expense for income tax and financial reporting purposes. The sources and tax
effects of those timing differences are presented as follows:
(dollars in thousands) 1991
Excess of tax over financial statement depreciation $1,024
Allowance for doubtful accounts receivable 2
Additional costs inventoried for tax purposes
pursuant to the Tax Reform Act of 1986 (166)
Accrual for compensated absences (9)
Accrual for employee benefit plans (114)
Other (61)
$ 676
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
25, 1993, and December 26, 1992, are presented below:
(dollars in thousands) 1993 1992
Gross deferred tax assets:
Accounts receivable, due to allowance
for doubtful accounts $ 195 $ 224
Inventories, due to additional costs inventoried for tax
purposes pursuant to the Tax Reform Act of 1986 1,117 926
Compensated absences, principally due to
accrual for accounting purposes 369 168
Employee benefit plans, principally due to
accrual for accounting purposes 2,301 1,034
General liability insurance, principally due
to accrual for accounting purposes 1,074 1,052
Other 94 225
Total gross deferred tax assets 5,150 3,629
Less valuation allowance - -
Total deferred tax assets 5,150 3,629
Gross deferred tax liabilities:
Net unrealized gain on marketable securities (12,609) -
Plant and equipment, principally due to
differences in depreciation (13,776) (12,455)
Other (66) -
Total gross deferred tax liabilities (26,451) (12,455)
Net deferred tax liability $(21,301) $ (8,826)
Reflected on attached consolidated balance sheets as:
Current deferred asset (liability) - net $ (7,525) $ 3,629
Noncurrent deferred liability - net (13,776) (12,455)
Net deferred tax liability $(21,301) $ (8,826)
(3) Inventories
Merchandise inventories as of December 25, 1993, and December 26, 1992, were
valued as follows:
(dollars in thousands) 1993 1992
LIFO $ 90,786 $72,393
Average Cost 21,061 25,266
$111,847 $97,659
If all inventories were valued on the average cost method, which
approximates current cost, total inventories would have been $40,395,000 and
$39,885,000 higher than as reported on the above methods as of December 25,
1993, and December 26, 1992, respectively.
Although management believes the use of the LIFO method for valuing
certain inventories (as set forth above) represents the most appropriate
matching of costs and revenues in the Company's circumstances, the following
summary of net income and per share amounts based on the use of the average
cost method for valuing all inventories is presented for comparative purposes.
(dollars in thousands,except per share amounts) 1993 1992 1991
Net income $73,245 $74,060 $81,291
Net income per share $ 1.67 $ 1.68 $ 1.83
(4) Property and EquipmentProperty and equipment as of December 25, 1993,
and December 26, 1992, consisted of:
Useful Life
(dollars in thousands) (in years) 1993 1992
Land $ 28,152 $ 26,965
Buildings and improvements 10-60 168,414 157,941
Equipment 3-12 265,494 235,609
Leasehold improvements 5-20 34,436 29,781
Total, at cost 496,496 450,296
Less accumulated
depreciation and amortization 271,211 245,757
$225,285 $204,539
(5) Marketable SecuritiesAs discussed in note 1, the Company adopted Statement
115 as of December 25, 1993. The impact of this change in accounting principle
resulted in an increase in marketable securities of $29,349,000 and an increase
in shareholders' equity of $16,740,000, representing the after-tax impact.
Marketable Securities as of December 25, 1993, consisted of:
Gross Gross
Unrealized Unrealized
Amortized Holding Holding Fair
(dollars in thousands) Cost Gains Losses Value
Available-for-sale:
Pennsylvania municipal bonds $377,742 $12,997 $2,922 $390,710
U.S. Treasury securities 31,272 2,418 - 33,690
Equity securities 12,736 13,963 - 26,699
Other short-term investments 7,013 - - 7,013
$428,763 $29,378 $2,922 $458,112
Maturities of investment securities classified as available-for-
sale at December 25, 1993, were as follows:
Amortized Fair
(dollars in thousands) Cost Value
Available-for-sale:
Due within one year $ 68,453 $ 69,579
Due after one year through five years 336,963 350,756
Due after five years through ten years 10,611 11,078
Equity securities 12,736 26,699
$428,763 $458,112
For the year ended December 26, 1992, marketable debt securities and marketable
equity securities were valued in accordance with Statement 12. Marketable
debt securities consisted primarily of Pennsylvania municipal bonds and U. S.
Treasury securities and had a cost of $408,978,000 at December 26, 1992, and a
market value of $419,701,000. Gross unrealized gains amounted to $10,723,000.
Also included in marketable securities were marketable equity securities
having a cost of $10,337,000 at December 26, 1992, and a market value of
$21,780,000. Gross unrealized gains amounted to $11,443,000.
Unrealized gross losses and realized gains and losses of the marketable
securities portfolios were not significant.
(6) Retirement Plans
The Company has a noncontributory defined benefit pension plan covering
substantially all full-time employees, a noncontributory profit-sharing plan
covering eligible employees and a supplemental retirement plan covering certain
officers of the company. An eligible employee as defined in the Profit Sharing
Plan includes salaried employees, store management and administrative support
personnel. The Company's policy is to fund pension and profit-sharing cost
accrued, but not supplemental retirement costs. Contri-butions to the defined
benefit pension plan are based on guidelines of the Employee Retirement Income
Security Act of 1974, whereas contributions to the profit-sharing plan are made
at the sole discretion of the Company. The Company's supplemental retirement
plan provides for the payment of specific amounts of annual retirement benefits
to the officers or to their beneficiaries over an actuarially computed normal
life expectancy. The actuarial present value of accumulated benefits amounted
to $5,408,000 and $4,782,000 at December 25, 1993, and December 26, 1992,
respectively. Plan costs are based upon the deferral of retirement rather than
upon future service and all benefits are fully vested. Retirement plan costs
amounted to:
(dollars in thousands) 1993 1992 1991
Pension plan $ 973 $ 361 $ 140
Profit sharing plan 815 815 815
Supplemental retirement plan 781 1,092 559
$2,569 $2,268 $1,514
The net periodic defined benefit pension expense iscomputed as
follows:
(dollars in thousands) 1993 1992 1991
Service cost $ 973 $ 785 $ 720
Interest cost on projected benefit obligation 1,766 1,482 1,270
Actual return on plan assets (1,202) (2,278) (3,761)
Net amortization and deferral (564) 372 1,911
Net pension expense $ 973 $ 361 $ 140
The funded status of the Company's pension plan at September 30, 1993,
and September 30, 1992, (the measurement dates) is as follows:
(dollars in thousands) 1993 1992
Actuarial present value of benefit obligations:
Vested benefit obligation $(23,405) $(21,602)
Accumulated benefit obligation $(25,064) $(23,265)
Projected benefit obligation $(25,654) $(23,286)
Plan assets at fair value 22,972 23,495
Plan assets in excess of (less than) projected
benefit obligation (2,682) 209
Unrecognized prior service cost 2,551 1,494
Unrecognized net loss 3,879 3,349
Additional minimum liability adjustment (2,770) -
Unrecognized transition asset (3,070) (3,401)
(Accrued) Prepaid pension cost $ (2,092) $ 1,651
Plan assets consist primarily of common stocks, bonds, and U.S. government
obligations. The assumed long-term rate of return on plan assets was 9%.
Pension benefit obligations were determined using an assumed discount rate of
6.75% and 7%, respectively, and an assumed long-term rate of compensation
increase of 5%.
In accordance with the provisions of Statement of Financial Accounting
Standards No. 87, OAccounting for Pensions," the Company has recorded an
additional minimum liability of $2,770,000 at December 25, 1993, representing
the excess of the accumulated benefit obligation over the fair value of plan
assets and accrued pension cost. The additional liability has been offset
by an intangible asset to the extent of previously unrecognized prior service
cost. The amount in excess of previously unrecognized prior service cost is
recorded as a reduction of shareholders' equity in the amount of $125,000,
representing the after-tax impact.
The Company has no other post-retirement benefit plans.
(7) Incentive Plans
(a) Stock Option Plan
The Company has an incentive stock option plan for officers and other key
employees under which 465,519 shares of common stock are reserved for
issuance at December 25, 1993. Under the terms of the plan, option prices
are 100% of the Ofair market value" of the shares on the date granted.
Options granted are immediately exercisable and expire ten years after date of
grant.
Changes during the three years ended December 25, 1993, in options
outstanding under the plan were as follows:
Option Prices Shares
Per Share Under Option
Balance, December 29, 1990 $ 7.46 to $16.28 36,380
Exercised $ 7.46 to $16.28 (13,854)
Balance, December 28, 1991 $11.52 to $16.28 22,526
Options issued $25.13 to $26.88 3,250
Exercised $11.52 to $16.28 (7,301)
Balance, December 26, 1992 $16.06 to $26.88 18,475
Options issued $24.25 to $25.63 1,500
Exercised $16.06 to $16.28 (6,725)
Balance, December 25, 1993 $16.06 to $26.88 13,250
<FN>
At December 25, 1993, all options were exercisable.
(b) Company Appreciation Plan
Under a Company Appreciation Plan, officers and other employees are awarded
rights equivalent to shares of Company common stock. At the maturity date,
usually one year after the date of award, the value of any appreciation
from the original date of issue is paid in cash to the participants.
During 1993, 1992 and 1991, 17,500, 16,900 and 17,800 rights were awarded
under the program. In 1993, 1992 and 1991, $37,000, $11,000 and $35,000,
respectively, were charged to earnings.
(8) Lease Commitments
At December 25, 1993, the Company leased approximately 55% of its facilities
under operating leases which expire at various dates up to 2013. These leases
generally provide for fixed annual rentals; however, several provide for
minimum annual rentals plus contingent rentals as a percentage of annual
sales and a number of leases require the Company to pay for all or a portion
Of insurance, real estate taxes, water and sewer rentals and repairs, the
cost of which is charged to the related expense category rather than being
accounted for as rent expense. Most of the leases contain multiple renewal
options, under which the Company may extend the lease terms from 5 to 20
years.
Rent expense on all leases consists of:
(dollars in thousands) 1993 1992 1991
Minimum annual rentals $12,025 $9,760 $7,996
Contingent rentals 151 162 225
$12,176 $9,922 $8,221
The following is a schedule by year of future minimum rental
payments required under operating leases that have initial or
remaining noncancelable lease terms in excess of one year as of
December 25, 1993.
(dollars in thousands)
1994 $ 12,234
1995 10,770
1996 9,539
1997 9,083
1998 8,166
Thereafter 55,720
$105,512
<FN>
As of December 25, 1993, the future minimum rentals to be received under
noncancelable subleases were $18,010,000.
(9) Fair Value Information
The carrying amounts for cash, trade receivables and trade payables approximate
fair value because of the short maturities of these instruments. The fair
values of the Company's marketable securities are based on quoted market prices.
(10) Acquisitions
On December 31, 1992, the Company acquired 14 retail grocery stores from IGA
Food Mart, Inc., of Stroudsburg, Pennsylvania. The cash only transaction was
made from internally generated funds and was accounted for by the purchase
method. Goodwill arising from this transaction, which was not material, is
being amortized over a 15 year period on a straight line basis.
(11) Summary of Quarterly Results (Unaudited)
Quarterly financial data for 1993 and 1992 is as follows:
(dollars in thousands,
except per share amounts) Thirteen Weeks Ended
Mar. 27, '93 Jun. 26, '93 Sep. 25,'93 Dec. 25, '93
Net sales $356,579 $357,868 $354,884 $371,759
Gross profit on sales 89,284 90,236 90,823 97,607
Net income 18,687 17,754 17,044 19,468
Net income per share .43 .41 .39 .44
Thirteen Weeks Ended
Mar. 28, '92 Jun. 27, '92 Sep. 26,'92 Dec. 26, '92
Net sales $320,719 $320,202 $320,060 $328,214
Gross profit on sales 81,435 80,951 81,912 83,050
Income before cumulative
effect of change in accounting
principle 18,436 18,236 17,911 17,087
Cumulative effect at
December 29, 1991, of
change in accounting for
income taxes 1,046 - - -
Net income 19,482 18,236 17,911 17,087
Income per share before
cumulative effect of change
in accounting principle .42 .41 .41 .39
Cumulative effect per share at
December 29, 1991, of
change in accounting for
income taxes .02 - - -
Net income per share .44 .41 .41 .39
Independent Auditors' Report
KPMG Peat MarwickCertified Public Accountants
225 Market Street
Harrisburg, PA 17108-1190
To the Shareholders of Weis Markets, Inc.:
We have audited the accompanying consolidated balance sheets of Weis Markets,
Inc. and subsidiaries as of December 25, 1993 and December 26, 1992 and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the years in the three-year period ended December 25, 1993. 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 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 Weis
Markets, Inc. and subsidiaries at December 25, 1993 and December 26, 1992 and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 25, 1993 in conformity with generally
accepted accounting principles.
As discussed in notes 1 and 5 to the consolidated financial statements,
the Company changed its method of accounting for investments at December 25,
1993 to adopt the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." As discussed in notes 1 and 2 to
the consolidated financial statements, the Company changed its method of
accounting for income taxes in 1992 to adopt the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes."
KPMG Peat Marwick
January 28, 1994
Five Year Review of Operations
52 Weeks 52 Weeks 52 Weeks 52 Weeks 52 Weeks
(dollars in thousands, Ended Ended Ended Ended Ended
except per share amounts) Dec. 25, 1993 Dec. 26, 1992 Dec. 28, 1991 Dec. 29, 1990 Dec. 30, 1989
Net sales $1,441,090 $1,289,195 $1,294,332 $1,271,806 $1,239,272
Costs and expenses 1,361,420 1,213,764 1,206,795 1,175,144 1,139,209
Income from operations 79,670 75,431 87,537 96,662 100,063
Other income, net 33,984 34,818 36,649 35,630 33,947
Income before provision for
income taxes and cumulative
effect of change in
accounting principle 113,654 110,249 124,186 132,292 134,010
Provision for income taxes 40,701 38,579 43,609 45,519 47,581
Income before cumulative effect
of change in accounting
principle 72,953 71,670 80,577 86,773 86,429
Cummulative effect of change
in accounting for income
taxes - 1,046 - - -
Net income 72,953 72,716 80,577 86,773 86,429
Retained earnings, beginning
of year 748,796 705,987 653,894 594,160 533,122
821,749 778,703 734,471 680,933 619,551
Cash dividends 30,677 29,907 28,484 27,039 25,391
Retained earnings, end of year $ 791,072 $ 748,796 $ 705,987 $ 653,894 $ 594,160
Weighted average shares outstanding 43,827,168 43,979,088 44,503,124 45,049,461 45,338,024
Cash dividends per share $ .70 $ .68 $ .64 $ .60 $ .56
Net income per share $ 1 .66 $ 1.65 $ 1.81 $ 1.93 $ 1.91
Working capital $ 513,184 $ 483,572 $ 456,454 $ 431,738 $ 387,576
Total assets 844,490 761,528 734,517 693,922 655,636
Shareholders' equity 738,115 680,265 647,413 610,067 567,266
Number of stores 141 126 124 118 120
Stock Prices and Dividend Information by Quarter
The approximate number of shareholders on December 25, 1993, was 5,800.
1993 1992
4th 3rd 2nd 1st 4th 3rd 2nd 1st
Stock Prices
High 28 5/8 29 7/8 26 5/8 27 27 3/8 26 1/2 27 1/2 27 7/8
Low 26 1/4 26 5/8 24 24 7/8 23 5/8 23 1/8 24 25
Dividends Per Share .18 .18 .17 .17 .17 .17 .17 .17
Directors
Sigfried Weis Robert F. Weis Norman S. Rich
President Vice President and Treasurer Vice President and Secretary
Micheal C. Rheam Charles H. Watts, II Peter M. Sacerdote
Special Projects Educational and Financial Limited Partner,
Coordinator Consultant Goldman Sachs & Co.
Officers
Sigfried Weis
President Alan L. Barrick Walter B. Bruce Robert E. Lutz
Vice President Vice President Vice President
Engineering and Private Label Grocery Merchandising
Robert F. Weis Manufacturing
Vice President
and Treasurer Stephen J. Bowers Richard L. Kunkle William R. Mills
Vice President Vice President Vice President
Norman S. Rich Weis Food Service Pharmacy Finance
Finance
Vice President
and Secretary
Annual Meeting
The annual meeting of the shareholders of the Company will be held at 10 a.m.
on Monday, April 4, 1994, at the Corporate offices, 1000 South Second Street,
Sunbury, PA 17801.
Registrar and Transfer Agent
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, NY 10005
Auditors
KPMG Peat MarwickCertified Public Accountants
225 Market StreetSuite 300
P.O. Box 1190
Harrisburg, PA 17108-1190
Stock Traded
New York Stock Exchange
EXHIBIT 22
WEIS MARKETS, INC.
SUBSIDIARIES OF THE REGISTRANT
Percent
State of Owned by
Incorporation Registrant
Albany Public Markets, Inc. New York 100%
Dutch Valley Food Company, Inc. Pennsylvania 100%
Martin's Farm Market, Inc. Pennsylvania 100%
Shamrock Wholesale Distributors, Inc. Pennsylvania 100%
The consolidated financial statements include the accounts of the company
and its subsidiaries.
EXHIBIT 24
Consent of Independent Auditors
The Board of Directors
Weis Markets, Inc.:
We consent to incorporation by reference in the registration statement on
Form S-8 of Weis Markets, Inc. of our report dated January 28, 1994, relating
to the consolidated balance sheets of Weis Markets, Inc. and subsidiaries
as of December 25, 1993 and December 26, 1992 and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the
years in the three-year period ended December 25, 1993, which report appears
in the December 25, 1993 Annual Report to Shareholders on Form 10-K of Weis
Markets, Inc. and is incorporated herein by reference.
We also consent to incorporation by reference in the registration statement
on Form S-8 of Weis Markets, Inc. of our report dated January 28, 1994,
relating to the financial statement schedules as listed at Item 14(a) 2 of
the Company's December 25, 1993 Annual Report on Form 10-K, which report
appears in the Company's December 25, 1993 Annual Report on Form 10-K.
KPMG PEAT MARWICK
Harrisburg, Pennsylvania
March 18, 1994