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 July 1, 1995
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 43,155,373 shares
(Outstanding at end of period)
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WEIS MARKETS, INC.
INDEX
Page No.
Part I - Financial Information
Consolidated Condensed Balance Sheets -
July 1, 1995 and December 31, 1994 2
Consolidated Condensed Statements of Income
Six Months Ended July 1, 1995
and June 25, 1994 3
Consolidated Condensed Statements of Cash Flows -
Six Months Ended July 1, 1995
and June 25, 1994 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
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>
July 1, 1995 December 31, 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash $ 5,819 $ 4,011
Marketable Securities 441,201 453,017
Accounts Receivable, Net 37,565 24,132
Inventories 122,803 130,019
Prepaid Expenses 5,085 4,229
Deferred Income Taxes --- 2,344
Total Current Assets 612,473 617,752
Property and Equipment, Net 261,885 245,263
Intangible and other Assets, Net 28,122 29,078
Total Assets $ 902,480 $ 892,093
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<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current Liabilities:
Accounts Payable $ 70,243 $ 82,529
Accrued Expenses 10,094 8,266
Accrued Self-Insurance 13,165 10,462
Payable to Employee Benefit Plan 7,997 7,957
Income Taxes 1,266 3,089
Deferred Income Taxes 774 ---
Total Current Liabiliti 103,539 112,303
Deferred Income Taxes 17,869 17,495
Minority Interest (85) (85)
Shareholders' Equity
Common Stock 7,380 7,380
Retained Earnings 855,984 834,995
Net Unrealized Gain on Marketabl 10,934 4,933
874,298 847,308
Less Treasury Stock, At Cost (93,141) (84,928)
Total Shareholders' Equ 781,157 762,380
Total Liabilities and
Shareholders' Equi $ 902,480 $ 892,093
<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 Six Months Ended
07/01/95 06/25/94 07/01/95 06/25/94
<S> <C> <C> <C> <C>
Net Sales $ 407,578 $ 368,467 $ 805,077 $ 741,093
Cost of Sales 304,319 277,388 599,926 557,228
Gross Profit 103,259 91,079 205,151 183,865
Operating, General and
Administrative 83,572 72,197 164,272 147,032
19,687 18,882 40,879 36,833
Interest and Divid 5,598 5,422 10,942 10,824
Other Income 3,293 3,375 6,578 7,114
Minority Interest 0 12 0 15
Income before provision
for income taxes 28,578 27,691 58,399 54,786
Provision for inco 10,199 9,883 20,959 19,580
Net Income $ 18,379 $ 17,808 $ 37,440 $ 35,206
Weighted average number of common
shares outstandi 43,171,266 43,732,978 43,263,350 43,750,743
Cash dividend $ 0.19 $ 0.18 $ 0.38 $ 0.36
Earnings per common share negligible
difference if $ 0.43 $ 0.41 $ 0.87 $ 0.80
<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>
Six Months Ended
07/01/95 06/25/94
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 37,440 $ 35,206
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 15,475 15,257
(Gain) on disposition of fixed assets 0 (11)
Changes in operating assets and liabilities:
Increase in inventories 7,216 2,446
Increase in accounts receivable,
prepaid expenses and other assets (14,289) (1,428)
Increase in prepaid income taxes 0 (2,352)
Increase in accounts payable,
accrued expenses, other liabilities and
minority interest (7,715) (339)
Decrease in income taxes payable (1,823) (1,938)
Increase/(Decrease) in deferred taxes (572) 540
Net cash provided by operating
activities 35,732 47,381
Cash flows from investing activities:
Purchase of property and equipment (31,141) (13,695)
Increase in intangible assets 0 (416)
Proceeds from the sale of property and equipm 0 20
( Increase)/Decrease in marketable securities 21,881 (20,713)
Net cash used by investing activiti (9,260) (34,804)
Cash flows from financing activities:
Proceeds from issuance of common stock 0 4
Dividends paid (16,451) (15,747)
Purchase of treasury stock (8,213) (2,421)
Net cash used by financing activiti (24,664) (18,164)
Net increase (decrease) in cash 1,808 (5,587)
Cash at beginning of period 4,011 9,066
Cash at end of period $ 5,819 $ 3,479
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 July 1, 1995 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 31, 1994 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 July
1, 1995 and June 25, 1994 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 second quarter ended July 1, 1995, increased 10.6%
to $407,578,000 compared with $368,467,000 last year. For the first half
of this year, sales have increased 8.6% to $805,077,000 compared
with $741,093,000 in 1994. The same-store sales continued on its
positive trend, increasing 3.5% for the quarter and 2.2% year-to-date.
SuperPetz, the 80% held pet supply stores subsidiary, continues its
strong growth opening six new stores during the second quarter of
1995. Sales from that operation contributed an additional $5,271,000
this quarter versus the same quarter last year. Although some of the
players within the core Pennsylvania market are changing,
competition overall remains strong. The cost of grocery merchandise
has increased slightly over last year and this increase, which is
expected to continue, is reflected in LIFO expense. Produce prices
dropped significantly from the high prices experienced in the first
quarter, and meat prices continue to remain low. The Company will
continue to be aggressive in its current market area while actively
seeking new store sites and acquisitions.
Gross profit of $103,259,000 at 25.3% of sales, increased
$12,180,000 or 13.4% versus the same quarter last year. The increase
in gross profit dollars were generated primarily from the higher sales
volume, as the gross profit rate increased only slightly by .6%
compared to the second quarter of last year. The year to date gross
profit at 25.5% of sales, increased $21,286,000 or 11.6%, and also
increased as a percent of sales by .7%. The LIFO charge for the
quarter was $600,000 higher than a year ago, reflecting the increased
cost seen in dry grocery and non-food products. Management feels
that the Company will continue to see low inflation in the cost of these
products through the remainder of the year.
Operating expenses for the second quarter of $83,572,000 at
20.5% of sales, increased $11,375,000 or 15.7% higher than the same
quarter last year, and also increased as a percent of sales by .8%.
Year to date operating expenses of $164,272,000 at 20.4% of sales
compares with $147,032,000 at 19.8% in the first half of 1994. Operating
expense increased in all expense categories because of the higher
sales volume from the new store additions at Weis, the six store
King's Supermarkets acquisition made in August of last year and the
addition of six SuperPetz since January of this year. As SuperPetz
continues to aggressively grow in store number, management
expects the higher gross profit and expense percentages generated
by these stores to have an increasing effect on both of these
percentages rates.
Interest and dividend income earned in the second quarter of
$5,598,000 at 1.4% of sales, increased $176,000, or 3.2%, versus the
same quarter last year, but declined as a percentage of sales by .1%.
Year to date interest and dividend income of $10,942,000 has
increased $118,000 or 1.1% over the first half of 1994. Although the
actual investment amount in marketable securities has declined since
the beginning of the year, the value of the portfolio has increased
significantly and is reflected in the balance sheet.
Other income for the quarter of $3,293,000 at .8% of sales
decreased $82,000, or 2.4% compared to the same quarter last year.
Year to date other income of $6,578,000 at .8% of sales has
decreased $536,000 versus a year ago.
Minority interest represents the 20% outside holdings of the
SuperPetz net income before tax for the quarter. Although profitable
from an operational point of reference, the write-off of the pre-opening
expenses, generated from the significant number of new pet supply
stores that will open this year, is expected to produce negative results
for the total year. Management did anticipate the negative impact
from the initial start-up phase of this concept. The Company has
conservatively wrote off pre-opening expenses associated with new
stores thus reducing the income to $0 for the quarter and year-to-date.
The effective tax rate for both the second quarter of 1995 and 1994
was 35.7%. Year-to- date, the effective tax rate for the year is 35.9%
versus 35.7% last year.
6
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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 of $18,379,000, or 43 cents per
share, compared with $17,808,000, or 41 cents per share, in 1994.
Year to date earnings of $37,440,000 or 87 cents per share, compared
with $35,206,000, or 80 cents per share in 1994.
During the quarter, the Company opened three new stores, two of
which were replacements, and had grand reopenings in three newly
remodeled and enlarged stores. Construction is currently in progress
on six new stores with two existing stores undergoing expansion and
major remodeling. Thirteen additional new stores and five major
remodels are in active planning stages. SuperPetz, Inc., the 80%
owned subsidiary of Weis Markets, opened six stores in the second
quarter and will have four new stores opening during the third quarter.
At the end of the quarter, Weis Markets, Inc., had 150 food stores in
operation in Pennsylvania, Maryland, New Jersey, New York, Virginia
and West Virginia, along with Weis Food Service, a restaurant and
institutional supplier. SuperPetz, Inc., now operates 20 stores located
in Pennsylvania, Ohio, Georgia, South Carolina, and Tennessee.
LIQUIDITY AND CAPITAL RESOURCES
The corporation's funding requirements during the six month
period ended July 1, 1995 and during the comparable period in 1994,
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 1995 amounted to $31,141,000, compared to $14,111,000 in
1994.
The purchase of Treasury Stock during the first half totaled
$8,213,000 compared with $2,421,000 purchased in the first half of
1994. The Board of Directors 1991 resolution authorizing the purchase
of Treasury Stock, has a remaining balance of 48,951 shares. The
1995 resolution authorizing the purchase of Treasury Stock has a
remaining balance of 1,000,000 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 10.5% increase in the quarterly dividend up from
19 cents a share to 21 cents a share. The dividend will be payable to
holders of record as of August 11, 1995, payable August 25, 1995.
The company's capital requirements through the first half of 1995
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. The
beginning of the year capital projections estimate of $105,000,000 for
eighteen months appears to be on schedule. 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 July 1, 1995.
7
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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 July 1, 1995
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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> JUL-01-1995
<CASH> 5,819,000
<SECURITIES> 441,201,000
<RECEIVABLES> 37,565
<ALLOWANCES> 0
<INVENTORY> 122,803,000
<CURRENT-ASSETS> 612,473,000
<PP&E> 261,885,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 902,480,000
<CURRENT-LIABILITIES> 103,539,000
<BONDS> 0
<COMMON> 7,380,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 902,480,000
<SALES> 805,077,000
<TOTAL-REVENUES> 805,077,000
<CGS> 599,926,000
<TOTAL-COSTS> 746,678,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 58,399,000
<INCOME-TAX> 20,959,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,440,000
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
</TABLE>
