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 June 25, 1994
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 17801-471
(Address of principal executive offices) (Zip Code)
(717) 286-4571
(Registrant's telephone number, including area code)
NONE
(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 43,704,411 shares
(Outstanding at end of period)
WEIS MARKETS, INC.
INDEX
Page No.
Part I - Financial Information
Consolidated Condensed Balance Sheets -
June 25, 1994 and December 25, 1993 2
Consolidated Condensed Statements of Income
Six Months Ended June 25, 1994
and June 26, 1993 3
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 25, 1994
and June 26, 1993 4
Notes to Consolidated Condensed Financial Statements 5
Management's Discussion and Analysis of the
Consolidated Condensed Statements of Income 6
Part II - Other Information 7
Other Information and Signatures 8
1
PART I - FINANCIAL INFORMATION
WEIS MARKETS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
June 25, 1994 December 25, 1993
(Unaudited) (Unaudited)
Assets
Current Assets:
Cash $ 3,479 $ 9,066
Marketable Securities 478,824 458,112
Accounts Receivable, Net 23,394 20,378
Inventories 109,401 111,847
Prepaid Expenses and Other Assets 4,793 6,380
Prepaid Income Taxes 2,352 0
_______ _______
Total Current Assets 622,243 605,783
Property and Equipment, Net 224,421 225,285
Intangible Assets, Net 13,131 13,422
_______ _______
Total Assets $ 859,795 $ 844,490
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable $ 57,093 $ 59,356
Accrued Expenses 8,459 6,900
Accrued Self-Insurance 8,421 7,886
Payable to Employee Benefit Plans 8,839 8,994
Income Taxes 0 1,938
Deferred Income Taxes 6,962 7,525
______ ______
Total Current Liabilities 89,774 92,599
Deferred Income Taxes 14,829 13,776
Minority Interest -15 0
Shareholders' Equity
Common Stock 7,259 7,255
Retained Earnings 810,533 791,072
Net Unrealized Gain on Marketable 16,790 16,740
Minimum Pension Liability -126 -125
834,456 814,942
Less Treasury Stock, At Cost -79,249 -76,827
_______ _______
Total Shareholders' Equity 755,207 738,115
Total Liabilities and _______ _______
Shareholders' Equity $ 859,795 $ 844,490
<FN>
See accompanying notes to consolidated condensed financial statements.
2
WEIS MARKETS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
Three Months Ended Six Months Ended
06/25/94 06/26/93 06/25/94 06/26/93
Net Sales $ 368,467 $ 357,868 $ 741,093 $ 714,447
Cost of Sales 277,388 267,632 557,228 534,927
_______ _______ _______ _______
Gross Profit 91,079 90,236 183,865 179,520
Operating, General and
Administrative 72,197 71,444 147,032 140,793
______ ______ _______ _______
18,882 18,792 36,833 38,727
Interest and Divid 5,422 5,389 10,824 10,713
Other Income 3,375 3,099 7,114 6,790
Minority Interest 12 0 15 0
Income before prov. ______ ______ ______ ______
for income taxes 27,691 27,280 54,786 56,230
Provision for inco 9,883 9,526 19,580 19,789
______ ______ ______ _____
Net Income $ 17,808 $ 17,754 $ 35,206 $ 36,441
Weighted average number of common
shares outstanding 43,732,978 43,837,106 43,750,743 43,837,146
Cash dividend $ 0.18 $ 0.17 $ 0.36 $ 0.34
Earnings per common share negligible
difference if $ 0.41 $ 0.41 $ 0.80 $ 0.83
<FN>
(a) Primary earnings per common share have been computed by dividing
net income by the weighted average number of shares outstanding during
this period. Earnings per common share assuming full dilution have been
determined on the assumption that stock options outstanding at end of
period and exercised during the period were exercised as of the beginning
of the period. The increase in the average shares outstanding during the
period resulting from the above assumptions was reduced by the number of
common shares which were assumed to have been purchased from the
assumed proceeds resulting from the exercise of options; these purchases
were assumed to have been made at average market prices for the
options outstanding at the end of period.
See accompanying notes to consolidated condensed financial statements.
3
WEIS MARKETS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
Six Months Ended
06/25/94 06/26/93
Cash flows from operating activities:
Net Income $ 35,206 $ 36,441
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 15,257 14,933
(Gain) on disposition of fixed assets (11) (845)
Changes in operating assets and liabilities:
(Increase)/Decrease in inventories 2,446 (1,830)
(Increase)/Decrease in accounts receivable,
prepaid expenses and other assets (1,428) 4,059
Increase in prepaid income taxes (2,352) (2,526)
Increase/(Decrease) in accounts payable,
accrued expenses, and payable to employee
benefit plans (339) 2,600
Decrease in income taxes payable (1,938) 0
Increase/(Decrease) in deferred taxes 540 (109)
Net cash provided by operating ______ ______
activities 47,381 52,723
Cash flows from investing activities:
Purchase of property and equipment (13,695) (29,100)
Increase in intangible assets (416) (7,909)
Proceeds from the sale of property and equi 20 1,205
Increase in marketable securities (20,713) (2,692)
_______ ______
Net cash used by investing activi (34,804) (38,496)
Cash flows from financing activities:
Proceeds from issuance of common stock 4 27
Dividends paid (15,747) (14,903)
Purchase of treasury stock (2,421) (25)
______ ______
Net cash used by financing activi (18,164) (14,901)
Net increase (decrease) in cash (5,587) (674)
Cash at beginning of period 9,066 1,298
_____ _____
Cash at end of period $ 3,479 $ 624
<FN>
See accompanying notes to consolidated condensed financial statements.
4
WEIS MARKETS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position as of
June 25, 1994 and the results of operations for the three
months then ended, and statements of cash flows for the
three months then ended.
2. The comparative balance sheet for December 25, 1993 was
derived from the audited financial reports for that year
ended. The information has been designated as "unaudited"
in its entirety as the year-end column is not covered by an
auditors report, as contemplated by SAS 42, in this 10-Q
filing.
3. The results of operations for the three month ended periods
June 25, 1994 and June 26, 1993 are not
necessarily indicative of the results to be expected for
the full year.
5
WEIS MARKETS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
Sales for the second quarter ended June 25, 1994, increased 3.0% to
$368,467,000 compared with $357,868,000 in the same quarter last year,
while same-store sales increased 1.9%. For the first half of this year, sales
have increased 3.7% from $714,447,000 last year to $741,093,000 in 1994.
Competition remains strong, and food prices are still running slightly below
a year ago. Management does not expect the competitive situation to
drastically change or the economy to significantly improve in the near future,
but the cost of merchandise in selected food categories is expected to rise
as interest rates rise.
Gross profit of $91,079,000 at 24.7% of sales, increased $843,000 or .9%
versus the same quarter last year. The increased gross profit dollars were
generated from the increased sales volume, as the gross profit rate
declined .5% compared to last year. The Company has reduced retail
prices and increased advertising expenditures in certain key markets in
order to generate higher sales volumes. The year to date gross profit at
24.8% of sales, increased $4,345,000 or 2.4%, but decreased as a percent
of sales by .3%.
Operating expenses for the second quarter of $72,197,000 at 19.6% of
sales, increased $753,000, or 1.1% higher than the same quarter last year,
but decreased .4% as a percent of sales. Expenses associated with the
self-insured medical plans increased $621,000 while workers
compensation expense declined $130,000. A portion of the reduction in the
workers compensation expense can be attributed to a change in the
Pennsylvania minimum compensation requirements. Employee retirement
benefit costs increased $302,000 and advertising expenditures increased
$786,000 compared with the same period last year. In its efforts to conform
with the new labeling standards as set forth in the Nutritional Labeling and
Educational Act, the company expensed $101,000 of its own private brand
labels during the quarter. Year to date operating expenses of $147,032,000
at 19.8% of sales compares with $140,793,000 at 19.7% in the first half of
1993. Significant expenses in the first half of the year include snow removal
costs during the first quarter which were $513,000 higher than the prior year.
Year to date employee medical benefits increased $1,333,000 and
advertising expenditures are up $1,463,000.
Interest and dividend income earned in the second quarter of $5,422,000
at 1.5% of sales, increased $33,000, or .6%, versus the same quarter last
year and was even with last year as a percent of sales. Year to date
interest and dividend income of $10,824,000 has increased $111,000 or
1.0% over the first half of 1993. Interest rates are increasing gradually, but
there will not be an immediate impact to the earnings of the company.
Other income for the quarter of $3,375,000 at .9% of sales increased
$276,000, or 8.9% compared to the same period last year. Income from
cardboard salvage operations increased $124,000 in the second quarter of
1994 compared to the same quarter in 1993, due to a significant increase in
the price per ton. Year to date other income of $7,114,000 at 1.0% of sales
increased $324,000 or 4.8% over the first half of 1993. Last years other
income included a gain on the sale of an abandoned store facility of
$830,000 in the first quarter.
At the beginning of the current year, the company acquired an 80%
interest in Superpetz a new chain of large pet supply stores operating in
Ohio. Minority interest of $12,000 represents 20% of the Superpetz, Inc.
loss for the quarter. Year to date, the Company's portion of the loss from
Superpetz was $15,000.
The effective tax rate for the first quarter was 35.7% compared to 34.9%
for the same quarter in 1993. The corporate federal income tax rate
increased 1.0% in the third quarter of 1993 from 34.0% to 35.0% and the
company took the income hit retroactively in the third quarter of last year
rather than adjust prior periods. The state of Pennsylvania reduced the
corporate income tax rate retroactively to January 1, 1994 from 12.25% to
11.99%. The income effect was minimal at this time, but future scheduled
declines will help to increase company profits.
6
WEIS MARKETS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
OPERATING RESULTS (continued)
Net earnings for the second quarter were $17,808,000, or 41 cents per
share, compared with $17,754,000, or 41 cents per share, in 1993. Year to
date earnings of $35,206,000 or 80 cents per share, compared with
$36,441,000, or 83 cents per share in 1993.
On June 24, 1994, the Company announced that a letter of intent to
purchase King's Supermarkets, Inc. had been signed by Jay H. King, Chief
Executive Officer of King's Supermarkets, Inc., and Norman S. Rich,
Executive Vice President and Secretary of Weis Markets, Inc. The six high
volume King's stores, located in eastern Pennsylvania, fit well into the
current geographic market area of Weis without direct competition from its
other stores in the area. The stores will continue to be operated by the
existing King's management team, but will be serviced primarily from
existing Weis facilities located in Sunbury and Milton Pennsylvania. The
acquisition was completed on August 3, 1994.
The company completed one major remodel during the quarter and has
construction in progress on three new grocery stores with major remodels of
eight existing stores in various stages of completion. Six of the eight
remodels include store expansions. The company expects to open one
new grocery store and complete three of the remodels and enlargements
during the third quarter. One new Superpetz store was opened during the
quarter and one more store is scheduled to open during the third quarter.
At the end of June, Weis Markets, Inc., had 142 stores in operation in
Pennsylvania, New Jersey, New York, Maryland, Virginia and West
Virginia, four Superpetz pet supply stores in Ohio and Weis Food Service, a
restaurant and institutional food supplier.
LIQUIDITY AND CAPITAL RESOURCES
The corporation's funding requirements during the six month period
ended June 25, 1994 and during the comparable period in 1993, were for
acquisitions, the enlargement and remodeling of existing supermarkets and
upgrading of the processing and distribution facilities. Property, equipment
and acquisition expenditures in the first half of 1994 amounted to
$14,111,000, compared to $37,009,000 in 1993.
The purchase of Treasury Stock during the first half totaled $2,421,000
compared with $25,000 purchased in the first half of 1993. The Board of
Directors 1991 resolution authorizing the purchase of Treasury Stock, has a
remaining balance of 604,000 shares. Cash dividends were paid during the
quarter to holders of common stock at a rate of 18 cents per share. The
Board of Directors recently declared a 5.6% increased in the quarterly
dividend from 18 cents a share to 19 cents a share to holders of record on
August 12, 1994, payable August 26, 1994. This represents 30 consecutive
years of dividend increases.
The company's capital requirements through the first half of 1994 were
financed entirely from internally generated funds. The working capital has
increased 3.8% since the beginning of the year. Management believes that
the company's cash and short-term investments, plus cash flow from
operations, will be sufficient to finance current operations, cover dividend
requirements, self-insurance programs, possible acquisitions, the purchase
of Treasury Stock, and the continuing expansion program. Management
continues to review grocery store and food service acquisition possibilities
within its market area and other types of business relationships. Selected
acquisition firms are aware of the company's expansion plans and are
working with management in this regard.
The corporation has no other commitment of capital resources as of the
end of the first half, June 25, 1994.
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 26, 1994
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
SIGFRIED WEIS
President
Date
WILLIAM R. MILLS
Vice President-Finance
8