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 September 24, 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 17801-0471
(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 43,554,636 shares
(Outstanding at end of period)
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WEIS MARKETS, INC.
INDEX
Page No.
Part I - Financial Information
Consolidated Condensed Balance Sheets -
September 24, 1994 and December 25, 1993 2
Consolidated Condensed Statements of Income -
Three Months and Nine Months Ended September 24, 1994
and September 25, 1993 3
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 24, 1994
and September 25, 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 8
Other Information and Signatures 8
1
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PART I - FINANCIAL INFORMATION
WEIS MARKETS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
September 24, 1994 December 25, 1993
(Unaudited) (Unaudited)
Assets
Current Assets:
<S> <C> <C>
Cash $ 4,939 $ 9,066
Marketable Securities 470,636 458,112
Accounts Receivable, Net 26,536 20,378
Inventories 124,749 111,847
Prepaid Expenses and Other Assets 5,193 6,380
Prepaid Income Taxes 199 0
Total Current Assets 632,252 605,783
Property and Equipment, Net 235,818 225,285
Intangible Assets, Net 24,538 13,422
Total Assets $ 892,608 $ 844,490
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<CAPTION>
Liabilities and Shareholders' Equity
Current Liabilities:
<S> <C> <C>
Accounts Payable $ 81,721 $ 59,356
Accrued Expenses 7,717 6,900
Accrued Self-Insurance 9,307 7,886
Payable to Employee Benefit Plans 10,042 8,994
Income Taxes 0 1,938
Deferred Income Taxes 6,504 7,525
Total Current Liabilities 115,291 92,599
Deferred Income Taxes 15,426 13,776
Minority Interest 7 0
Shareholders' Equity:
Common Stock 7,273 7,255
Retained Earnings 820,962 791,072
Net Unrealized Gain on Marketable Se 16,790 16,740
Minimum Pension Liability (126) (125)
844,899 814,942
Less Treasury Stock, At Cost (83,015) (76,827)
Total Shareholders' Equity 761,884 738,115
Total Liabilities and
Shareholders' Equi $ 892,608 $ 844,490
<FN>
See accompanying notes to consolidated condensed financial statements.
2
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WEIS MARKETS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
<CAPTION>
Three Months Ended Nine Months Ended
09/24/94 09/25/93 09/24/94 09/25/93
<S> <C> <C> <C> <C>
Net Sales $ 377,197 $ 354,884 $ 1,118,290 $ 1,069,331
Cost of Sales 279,340 264,061 836,568 798,988
Gross Profit 97,857 90,823 281,722 270,343
Operating, General and
Administrative exp 78,291 72,135 225,323 212,928
19,566 18,688 56,399 57,415
Interest and Divid 5,348 5,381 16,172 16,094
Other Income 3,915 2,999 11,029 9,789
Minority Interest (22) 0 (7) 0
Income before provision
for income taxe 28,807 27,068 83,593 83,298
Provision for incom 10,074 10,024 29,654 29,813
Net Income $ 18,733 $ 17,044 $ 53,939 $ 53,485
Weighted average number of common
shares outstanding 43,637,700 43,833,297 43,712,959 43,835,656
Cash dividends $ 0.19 $ 0.18 $ 0.55 $ 0.52
Earnings per common share negligible
difference if fu $ 0.43 $ 0.39 $ 1.23 $ 1.22
<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
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WEIS MARKETS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<CAPTION>
Nine Months Ended
09/24/94 09/25/93
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 53,939 $ 53,485
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 23,255 22,682
Gain on disposition of fixed assets (28) (856)
Changes in operating assets and liabilities:
Increase in inventories (12,902) (9,001)
(Increase)/Decrease in accounts receivable,
prepaid expenses and other assets (4,971) 4,822
(Increase)/Decrease in prepaid income tax (199) 419
Increase in accounts payable,
accrued expenses, and payable to employee
benefit plans 25,659 10,702
Increase/(Decrease) in income taxes payab (1,938) 1,701
Increase in deferred taxes 678 532
Net cash provided by operating
activities 83,493 84,486
Cash flows from investing activities:
Purchase of property and equipment (33,493) (37,470)
Increase in marketable securities (12,524) (17,265)
Proceeds from the sale of property and equipme 37 1,159
Increase in intangible assets (11,420) (7,909)
Net cash used by investing activitie (57,400) (61,485)
Cash flows from financing activities:
Proceeds from issuance of common stock 18 37
Dividends paid (24,050) (22,792)
Purchase of treasury stock (6,188) (802)
Net cash used by financing activitie (30,220) (23,557)
Net increase (decrease) in cash (4,127) (556)
Cash at beginning of period 9,066 1,298
Cash at end of period $ 4,939 $ 742
<FN>
See accompanying notes to consolidated condensed financial statements.
4
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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 September 24, 1994 and the results of operations for
the three months and nine months then ended and statements of cash flows
for the nine months then ended.
2. The comparative balance sheet for December 25, 1993 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 September
24, 1994 and September 25, 1993 are not necessarily indicative of the
results to be expected for the full year.
5
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WEIS MARKETS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
Sales for the third quarter ended September 24, 1994, increased 6.3%
to $377,197,000 compared with $354,884,000 in the same quarter last year,
while same-store sales increased 2.2%. Year-to-date sales for the
thirty-nine weeks ended increased 4.6% to $1,118,290,000, compared with
$1,069,331,000 in 1993. Same-store sales increased 2.6% over last
year-to-date figures.
Management is pleased with the continued positive trend in total and
same-store sales as competitive pressures have remained high. Current
competitive changes occurring within the Company's marketing areas
include: (1.) Wegmans, a new competitor to this market, opened one store
near Scranton, Pa. during the current quarter, and two additional sites were
announced, (2.) Two K-Mart Super Centers have been announced in the
York and Lancaster, Pa. area, (3.) Penn Traffic is attempting to acquire 40
stores located throughout Central Pa. from Acme, (4.) Path Mark
announced the closing of seven of its grocery stores throughout Central, Pa.
Although the competition continues to change, the company has the
financial strength to compete aggressively and still increase sales and
profits through its new store and acquisition plans.
Gross profit of $97,857,000 at 25.9% of sales, increased $7,034,000 or
7.7% versus the same quarter last year. Gross profit as a percentage of
sales increased .4% over the gross profit rate generated in the same
quarter a year ago. The year-to-date gross profit at 25.2% of sales,
increased $11,379,000 or 4.2%, but the gross profit rate has decreased .1%
compared to the identical nine months last year.
Operating expenses for the third quarter of $78,291,000 at 20.8% of
sales, increased $6,156,000, or 8.5% higher than the same quarter last year,
but increased only .5% as a percent of sales. Self-insured medical plan
expenses increased $758,000 for the quarter and $1,898,577 year-to-date.
The majority of the increase is due to more individuals being covered under
the plan and from one catastrophic occurrence which is now nearing the
Company's one million dollar cap. Compared to the same quarter last year,
pension plan expense increased $850,000. Due to the freezing of the
pension plan benefits, a one time expense write-off for prior year plan
changes was needed in order to comply with accounting standards.
Advertising expenses increased $1,116,000 for the quarter and $2,743,000
year-to-date. Snow removal costs during the first quarter were $513,000
higher than the prior year.
Interest and dividend income earned in the third quarter of $5,348,000 at
1.4% of sales, decreased $33,000, or .6%, versus the same quarter last
year. Year-to-date interest and dividend income of $16,172,000 has
increased $78,000 or .5% over the first nine months of 1993. Although
interest rates continue to climb gradually, there will not be an immediate
impact to the earnings of the company.
Other income for the quarter of $3,915,000 at 1.0% of sales increased
$916,000, or 30.5% compared to the same period last year. Income from
cardboard salvage operations increased $493,000 compared to the third
quarter in 1993, due to a significant increase in the price per ton. Negatively,
the higher rates on cardboard salvage are beginning to cause an increase
in paper bag and other paper supply costs reported in the operating
expenses. Year-to-date other income of $11,029,000 at 1.0% of sales
increased $1,240,000 or 12.7% over the same time period in 1993. Last
years other income included a gain on the sale of an abandoned store
facility of $830,000 in the first quarter.
Minority interest of $22,000 and $7,000, for the quarter and year-to-date
respectively, represents 20% of the Superpetz, Inc. net income before tax for
the third quarter. At the beginning of the current year, the company acquired
an 80% interest in the pet supply company operating as Superpetz in
Dayton, Ohio. Year-to-date, the Companys portion of the income before
taxes from Superpetz amounts to $28,000.
6
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WEIS MARKETS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
OPERATING RESULTS (continued)
The effective tax rate for the third quarter was 35.0% compared to 37.0%
for the same quarter in 1993.
Net earnings for the third quarter were $18,733,000, or 43 cents per
share, compared with $17,044,000, or 39 cents per share, in 1993.
Year-to-date earnings of $53,939,000 or $1.23 per share, compared with
$53,485,000, or $1.22 cents per share in 1993.
On August 3, 1994, the Company purchased Kings Supermarkets, Inc.
The six stores, located in eastern Pennsylvania, continue to be operated by
the existing Kings management team, and are now serviced by the Weis
distribution facilities located in Sunbury and Milton Pennsylvania. The
transition at Kings has been very smooth and both buying and operational
efficiencies are quickly being realized in that operation.
The Company opened one new store during the quarter and has
construction in progress on four new stores with major remodels of eight
existing stores in various stages of completion. Six of the eight remodels will
include store expansions. The Company's 80% owned subsidiary,
Superpetz, acquired five pet supply stores located in Georgia and South
Carolina from Pet Owners Warehouse, Inc. during the quarter. Stronger
buying power was quickly gained from the doubling in size of the Superpetz
operation and other economies of scale are now being considered.
At the end of September, Weis Markets, Inc., had 149 stores in
operation in Pennsylvania, New Jersey, New York, Maryland, Virginia and
West Virginia, along with Weis Food Service, a restaurant and institutional
supplier. Superpetz, Inc. now operates ten stores located in Ohio, Georgia
and South Carolina.
LIQUIDITY AND CAPITAL RESOURCES
The corporation's funding requirements during the nine month period
ended September 24, 1994 and during the comparable time period in 1993,
were for acquisitions, the enlargement and remodeling of existing
supermarkets and upgrading of the processing and distribution facilities.
Year-to-date property, equipment and acquisition expenditures amounted to
$44,913,000, compared to $45,379,000 in 1993.
The purchase of Treasury Stock year-to-date totaled $6,188,000
compared with $802,000 purchased in the same nine month period of 1993.
The Board of Directors 1991 resolution authorizing the purchase of Treasury
Stock, has a remaining balance of 453,000 shares. Cash dividends were
paid during the quarter to holders of common stock at a rate of 19 cents per
share. The Board of Directors recently declared a normal quarterly
dividend of 19 cents a share to holders of record on November 14, 1994,
payable November 28, 1994.
The company's capital requirements through the first nine months of
1994 were financed entirely from internally generated funds. The working
capital has increased .7% 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
September 24, 1994.
7
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) One Form 8-K was filed on August 30, 1994, announcing an, "Item 5.
Other Event".
Sigfried Weis and Robert F. Weis were appointed Co-Chairmen of
the Board of Directors. Sigfried Weis had formerly been the Company's
President and Robert F. Weis had been the Company's Vice President.
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
Co-Chairman - Treasurer
Date
WILLIAM R. MILLS
Vice President-Finance
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-24-1994
<CASH> 4,939,000
<SECURITIES> 470,636,000
<RECEIVABLES> 26,536,000
<ALLOWANCES> 0
<INVENTORY> 124,749,000
<CURRENT-ASSETS> 632,252,000
<PP&E> 235,818,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 892,608,000
<CURRENT-LIABILITIES> 115,291,000
<BONDS> 0
<COMMON> 7,273,000
0
0
<OTHER-SE> 837,626,000
<TOTAL-LIABILITY-AND-EQUITY> 892,608,000
<SALES> 1,118,290,000
<TOTAL-REVENUES> 1,118,290,000
<CGS> 836,568,000
<TOTAL-COSTS> 1,035,327,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 83,593,000
<INCOME-TAX> 29,654,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,939,000
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.22
</TABLE>
