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 30, 1996
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 42,510,599 shares
(Outstanding at end of period)
WEIS MARKETS, INC.
INDEX
Page No.
Part I - Financial Information
Consolidated Condensed Balance Sheets -
March 30, 1996 and December 30, 1995 2
Consolidated Condensed Statements of Income
Three Months Ended March 30, 1996
and April 1, 1995 3
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 30, 1996
and April 1, 1995 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
Item 4 8
Item 6 and Signatures 9
1
PART I - FINANCIAL INFORMATION
WEIS MARKETS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
March 30, 1996 December 30, 1995
(Unaudited) (Unaudited)
Assets
Current:
Cash $ 7,312 $ 3,285
Marketable Securities 435,685 432,174
Accounts Receivable, Net 32,622 31,517
Inventories 135,314 131,727
Prepaid Expenses 7,117 7,764
------- -------
Total Current Assets 618,050 606,467
Property and Equipment, Net 288,260 285,993
Intangible and Other Assets, Net 30,936 30,698
------- -------
Total Assets $ 937,246 $ 923,158
Liabilities and Stockholders' Equity
Current:
Accounts Payable $ 69,086 $ 72,262
Accrued Expenses 14,089 12,997
Accrued Self-Insurance 14,327 13,285
Payable to Employee Benefit Plans 7,166 7,453
Income Taxes Payable 9,745 4,077
Deferred Income Taxes 4,584 5,258
------- -------
Total Current Liabilities 118,997 115,332
Deferred Income Taxes 18,300 16,527
Minority Interest (263) (263)
Shareholders' Equity
Common Stock, No Par Value,
100,800,000 Shares Authorized, 47,445,929 and
47,438,249 Shares issued, respect 7,380 7,380
Retained Earnings 890,688 879,916
Net Unrealized Gain on Marketable 13,800 14,748
Securities ------- -------
911,868 902,044
Less Treasury Stock, At Cost (111,656) (110,482)
------- -------
Total Shareholders' Equity 800,212 791,562
Total Liabilities and
Shareholders' Equity $ 937,246 $ 923,158
<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
03/30/96 04/01/95
Net Sales $ 433,199 $ 397,499
Cost of Sales 323,392 295,607
------- -------
Gross Profit 109,807 101,892
Operating, General and
Administrative Expenses 86,914 80,699
------- -------
Income from Operations 22,893 21,193
Interest and Dividend Income 5,017 5,344
Other Income 2,911 3,285
Minority Interest --- ---
------- -------
Income before provision
for income taxes 30,821 29,822
Provision for income taxes 11,122 10,760
------- -------
Net Income $ 19,699 $ 19,062
Earnings per common share negligible
difference if full dilution $ 0.46 $ 0.44
======= =======
Cash dividends per common s $ 0.21 $ 0.19
======= =======
Weighted average number of common
shares outstanding 42,512,398 43,355,392
========== ==========
<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)
Three Months Ended
03/30/96 04/01/95
Cash flows from operating activities:
Net Income $ 19,699 $ 19,062
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,559 8,107
Gain on sale of fixed assets --- ---
Changes in operating assets and liabilities:
Increase in inventories (3,587) (5,732)
Increase in accounts receivable
and prepaid expenses (458) (5,691)
Increase/(Decrease) in accounts payable,
accrued expenses, and minority inter (1,329) 7,901
Increase in income taxes payable 5,668 8,186
Increase/(Decrease) in deferred taxes 1,772 (802)
------- -------
Net cash provided by operating
activities 30,324 31,031
Cash flows from investing activities:
Purchase of property and equipment (10,542) (9,928)
Proceeds from the sale of prop. and equip. --- ---
Increase in marketable securities (5,132) (2,311)
Increase in intang. assets and other assets (522) ---
------- -------
Net cash used by investing activies (16,196) (12,239)
Cash flows from financing activities:
Proceeds from issuance of common stock --- ---
Dividends paid (8,927) (8,252)
Purchase of treasury stock (1,174) (7,748)
------- -------
Net cash used by financing activties (10,101) (16,000)
------- -------
Net decrease in cash 4,027 2,792
Cash at beginning of period 3,285 4,011
------- -------
Cash at end of period $ 7,312 $ 6,803
======= =======
Cash Paid during the period for:
Interest Expense $ 0 $ 0
Income Taxes $ 3,682 $ 2,574
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 March 30, 1996 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 30, 1995 was
derived from the audited financial reports for that year ended. This
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
March 30, 1996 and April 1, 1995 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 first quarter ended March 30, 1996, increased 9.0% to
$433,199,000 compared with $397,499,000 in the same quarter last
year, while identical store sales increased 5.2%. SuperPetz, the 80%
held pet supply stores subsidiary, which operated 14 stores at the end
of the first quarter in 1995, now operates 37 stores and accounted for
$10,415,000, or 2.6% of the total 9.0% sales increase. The Company
continues to aggressively expand its grocery store base with current
plans for construction up to as many as fifteen superstores and twelve
major renovations over the next fifteen months. SuperPetz continues
to actively look for new store sites and anticipates up to as many as
fifteen additional stores over the next twelve months.
Gross profit of $109,807,000 at 25.4% of sales, increased $7,915,000
or 7.8% versus the same quarter last year. The dollar increase in
gross profit was purely due to the increased sales volume, as the
gross profit rate as a percentage of sales decreased .2% versus a
year ago. Sales were positively impacted in the first quarter due to the
record amount of snow fall in the Companys primary sales region, but
consumers purchased more of the staple food products with lower
gross margins.
Operating expenses of $86,914,000 at 20.1% of sales, increased
$6,215,000, or 7.7% compared to the same quarter last year. As a
percentage of sales, total operating expenses decreased from .2%
compared to the 20.3% a year ago. The dollar increase in expenses
for the most part ran in direct correlation with the sales volume.
However, snow removal costs did run $719,000 higher than a year ago.
Workers compensation expense conversely decreased $607,000 for
the quarter.
Interest and dividend income of $5,017,000 at 1.2% of sales,
decreased $327,000, or 6.1% versus the same quarter last year.
Yields on the primarily Pennsylvania tax free bond portfolio continues
to slip backwards due to market conditions thus causing the lower
interest income. With the amount of capital required to fund the store
expansion and renovation projects, management expects this number
to continue to decline as the portfolio decreases.
Other income for the quarter of $2,911,000 at .7% of sales
decreased $374,000, or 11.4% compared to the first quarter last year.
The price per ton paid for cardboard salvage has declined
significantly and the income generated from the sale of cardboard by
the Company during the first quarter declined $396,000 versus the first
quarter of 1995.
Minority interest represents the 20% outside holdings of the
SuperPetz net income before tax for the quarter. The Company
conservatively wrote off all pre-opening expenses associated with
new stores to be opened in the second quarter of this year, thus
reducing the income to $0.
The effective tax rate at 36.1% in the first quarter was unchanged
versus the same quarter in 1995.
Net earnings for the quarter of $19,699,000, or 46 cents per share,
compared with $19,061,000, or 44 cents per share, in 1995.
At the end of March, Weis Markets, Inc., was operating 151 retail
food stores, 37 SuperPetz pet supply stores and Weis Food Service, a
restaurant and institutional supplier. The Company currently operates
its retail food stores in Pennsylvania, Maryland, New Jersey, New
York, Virginia and West Virginia. SuperPetz operates stores in
Georgia, Indiana, Kentucky, Maryland, Michigan, Ohio, Pennsylvania,
South Carolina and Tennessee.
6
WEIS MARKETS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's funding requirements during the period ended
March 30, 1996 and during the comparable time period in 1995, were
for acquisitions, the enlargement and remodeling of existing retail
stores and continued upgrading of the processing and distribution
facilities. Year-to-date property, equipment and acquisition
expenditures amounted to $10,542,000, compared to $9,928,000 in
1995. The beginning of the year capital projections estimate of
$107,000,000 for eighteen months appears to be on schedule.
The purchase of Treasury Stock during the quarter amounted to
$1,174,000 compared with $7,748,000 purchased in the same quarter of
1995. On January 22, 1996, the Board of Directors unanimously
approved the authorization to repurchase an additional 1,000,000
treasury shares on the open market. At the end of the first quarter, the
remaining balance of shares authorized for repurchase was 1,385,745.
Cash dividends totaling $8,927,000 were paid during the quarter to
holders of common stock at a rate of 21 cents per share. On April 2,
1996, the Board of Directors declared a normal quarterly dividend of
21 cents a share to holders of record on May 10, 1996, payable on
May 24, 1996.
The Company's capital requirements in the first quarter were
financed entirely from internally generated funds. The working capital
has increased 1.6% 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
acquisitions of grocery stores, pet supply stores, food service
operations and other types of business relationships which could be
beneficial to the overall value of the company. 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 March 30, 1996.
7
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of Weis Markets, Inc., was
held on Tuesday, April 2, 1996, at 10:00 a.m., Eastern Standard Time,
at the principal office of the Corporation.
(b) Proxies for the meeting were solicited pursuant to Regulation 14
under the Act, there was no solicitation in opposition to the
management's nominees as listed in the proxy statement, and all such
nominees were elected.
(c) The meeting was held for the following purposes:
1. To elect six directors to serve, subject to provisions of the by-laws,
until the next Annual Meeting of shareholders or until their
respective successors have qualified.
2. To approve the appointment of auditors for the current fiscal year.
3. To act upon such other business as may properly come before
such meeting, or any adjournments or postponements thereof.
The official ballot from the meeting submitted to the Secretary by the
Judge of Elections disclosed the following tabulation of votes.
Proposal #1 For Withhold %
Robert F. Weis 30,245,544 12,805 71.2
Norman S. Rich 30,246,581 11,769 71.2
Micheal C. Rheam 41,316,183 17,258 97.2
Joseph I. Goldstein 45,039,425 12,312 106.0
Peter M. Sacerdote 26,525,922 14,131 62.4
Richard E. Shulman 26,528,277 11,776 62.4
Proposal #2 For Against Abstain %
Proposal to approve the
appointment of Ernst &
Young, LLP, as the
independent public accountants
of the corporation. 33,249,184 9,247 71,900 78.2
8
PART II - OTHER INFORMATION
(continued)
Item 6. Exhibits and Reports on Form 8-K
(b) Two Form 8-K's were filed in the first quarter of 1996, both
announcing, "Item 4. Changes in Registrant's Certifying Accountant."
The 8-K filed on February 2, 1996, informed the Securities and
Exchange Commision of the Registrant's decision made on January
22, 1996 to appoint Ernst & Young, LLP as the principal accountant to
audit the Registrant's financial statements and the decision to change
from KPMG Peat Marwick, LLP was not a result of disagreements with
them on any matter described in Item 304 (a) (1) (iv) and (v) of
Regulation S-K during the two most recent fiscal years.
The 8-K filed on March 27, 1996 informed the Securities and
Exchange Commision that the 10-K for the year ended December 30,
1995 had been filed and there were no disagreements or reportable
events with KPMG Peat Marwick, LLP on any matter described in Item
304 (a) (1) (iv) and (v) of Regulation S-K during the two most recent
fiscal years. As of the filing of the Form 10-K, the audit relationship
between KPMG and the Registrant was concluded.
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
ROBERT F. WEIS
Chairman of the Board & Treasurer
Date
WILLIAM R. MILLS
Vice President-Finance & Secretary
9