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 30, 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 43,041,917 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 30, 1995 and December 31, 1994 2
Consolidated Condensed Statements of Income
Nine Months Ended September 30, 1995
and September 24, 1994 3
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 30, 1995
and September 24, 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>
September 30, 1995 December 31, 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash $ 3,003 $ 4,011
Marketable Securities 455,817 453,017
Accounts Receivable, Net 30,781 24,132
Inventories 119,874 130,019
Prepaid Expenses 3,123 4,229
Deferred Income Taxes --- 2,344
Total Current Assets 612,598 617,752
Property and Equipment, Net 272,298 245,263
Intangible and other Assets, Net 32,058 29,078
Total Assets $ 916,954 $ 892,093
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<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current Liabilities:
Accounts Payable $ 66,962 $ 82,529
Accrued Expenses 13,466 8,266
Accrued Self-Insurance 14,332 10,462
Payable to Employee Benefit Plans 7,984 7,957
Income Taxes 3,014 3,089
Deferred Income Taxes 2,411 ---
Total Current Liabilities 108,169 112,303
Deferred Income Taxes 18,302 17,495
Minority Interest (85) (85)
Shareholders' Equity
Common Stock, No Par Value,
100,800,000 Shares Authorized, 47,445,929 and
47,438,249 Shares issued, respectively 7,380 7,380
Retained Earnings 866,118 834,995
Net Unrealized Gain on Marketable 13,392 4,933
886,890 847,308
Less Treasury Stock, At Cost (96,322) (84,928)
Total Shareholders' Equity 790,568 762,380
Total Liabilities and
Shareholders' Equity $ 916,954 $ 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 Nine Months Ended
09/30/95 09/24/94 09/30/95 09/24/94
<S> <C> <C> <C> <C>
Net Sales $ 404,578 $ 377,197 $ 1,209,655 $ 1,118,290
Cost of Sales 298,768 279,340 898,694 836,568
Gross Profit 105,810 97,857 310,961 281,722
Operating, General and
Administrative 84,028 78,291 248,300 225,323
21,782 19,566 62,661 56,399
Interest and Dividend 5,376 5,348 16,318 16,172
Other Income 3,127 3,915 9,705 11,029
Minority Interest 0 (22) 0 (7)
Income before provision
for income taxes 30,285 28,807 88,684 83,593
Provision for income 11,096 10,074 32,055 29,654
Net Income $ 19,189 $ 18,733 $ 56,629 $ 53,939
Weighted average number of common
shares outstanding 43,101,115 43,637,700 43,201,645 43,712,959
Cash dividend $ 0.21 $ 0.19 $ 0.59 $ 0.55
Earnings per common share negligible
difference if $ 0.45 $ 0.43 $ 1.31 $ 1.23
<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
09/30/95 09/24/94
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 56,629 $ 53,939
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 23,634 23,255
Gain on disposition of fixed assets 0 (28)
Changes in operating assets and liabilities:
(Increase)/Decrease in inventories 10,145 (12,902)
Increase in accounts receivable,
prepaid expenses and other assets (5,543) (4,971)
Increase/(Decrease) in prepaid income ta 0 (199)
Increase/(Decrease) in accounts payable,
accrued expenses, other liabilities and
minority interest (6,470) 25,659
Decrease in income taxes payable (75) (1,938)
Increase/(Decrease) in deferred taxes (245) 678
Net cash provided by operating
activities 78,075 83,493
Cash flows from investing activities:
Purchase of property and equipment (50,484) (33,493)
Proceeds from the sale of property and equipm 0 37
( Increase)/Decrease in marketable securities 11,466 (11,420)
Increase in intangible assets and other asset (3,165) (12,524)
Net cash used by investing activiti (42,183) (57,400)
Cash flows from financing activities:
Proceeds from issuance of common stock 0 18
Dividends paid (25,506) (24,050)
Purchase of treasury stock (11,394) (6,188)
Net cash used by financing activiti (36,900) (30,220)
Net decrease in cash (1,008) (4,127)
Cash at beginning of period 4,011 9,066
Cash at end of period $ 3,003 $ 4,939
Cash Paid during the period for:
Interest Expense $ 0 $ 0
Income Taxes $ 32,130 $ 31,791
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 30, 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
September 30, 1995 and September 24, 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 third quarter ended September 30, 1995, increased
7.3% to $404,578,000 compared with $377,197,000 in the third quarter
last year, while same-store sales increased 2.3%. Year-to-date sales
for the thirty-nine weeks ended increased 8.2% to $1,209,655,000,
compared with $1,118,290,000 during the same period of time in 1994.
Same-store sales have increased 1.7% over last year-to-date
same-store sales figures. The six store King's Supermarkets
acquisition made in August of 1994 has now cycled.
Gross profit of $105,810,000 at 26.2% of sales, increased
$7,953,000 or 8.1% versus the same quarter last year. Gross profit as a
percentage of sales increased .3% over the gross profit rate
generated in the same quarter a year ago. The year-to-date gross
profit at 25.7% of sales, increased $29,239,000 or 10.4%. The dollar
increase in gross profit is primarily due to the increased number of
stores. Inflation in food prices remains minimal, while pharmaceutical
products have increased 10% over a year ago.
Operating expenses for the third quarter of $84,028,000 at 20.8% of
sales, increased $5,737,000, or 7.3% compared to the same quarter
last year, but remained the same as a percent of sales. As in the case
of sales and gross profit, operating expenses increased in all
categories because of the higher sales volume. As the number of
SuperPetz stores continue to increase, management is anticipating
that the higher gross profit and expense ratios generated by these
stores will have a slight increasing effect on the total company rates.
Interest and dividend income earned in the third quarter of
$5,376,000 at 1.3% of sales, increased $28,000, or .5%, versus the
same quarter last year. Year-to-date interest and dividend income of
$16,318,000 has increased $146,000 or .9% over the first nine months of
1994.
Other income for the quarter of $3,127,000 at .8% of sales
decreased $788,000, or 20.1% compared to the same quarter last
year. In 1994 income from cardboard salvage operations had
increased $493,000 compared to the third quarter in 1993, due to a
significant increase in the price per ton. The reverse of that situation is
now occurring as the price for cardboard per ton is declining.
Year-to-date other income of $9,705,000 at .8% of sales has
decreased $1,324,000 or 12.0% over the same time period in 1994.
Minority interest represents the 20% outside holdings of the
SuperPetz net income before tax for the quarter. Although operationally
profitable, 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 anticipated
the negative impact of these start-up costs and conservatively
recorded $0 income for the quarter and year-to-date.
The effective tax rate for the third quarter was 36.6% compared to
35.0% for the same quarter in 1994. Year-to-date, the effective tax rate
was 36.2% compared to 35.5%. The slightly higher than a year ago
effective rate is due to the impact of the higher income from operations
this year with only a slight rise in the income from the tax free
investments.
Net earnings for the third quarter were $19,189,000, or 45 cents per
share, compared with $18,733,000, or 43 cents per share, in 1994.
Year-to-date earnings of $56,629,000 or $1.31 per share, compared
with $53,939,000, or $1.23 cents per share in 1994.
At the end of September, Weis Markets, Inc., had 150 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., the 80% held subsidiary of Weis
Markets, Inc., now operates 23 pet supply stores in Georgia, Indiana,
Kentucky, Maryland, Ohio, South Carolina and Tennessee.
6
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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 nine month
period ended September 30, 1995 and during the comparable time
period in 1994, were for acquisitions, the building and stocking of new
stores, the enlargement and remodeling of existing supermarkets, the
continued upgrading of the processing and distribution facilities and
the normal operating expenses of the business.
Year-to-date property, equipment and acquisition expenditures
amounted to $53,649,000, compared to $44,913,000 in 1994. At the
onset of 1995, the Company embarked on an 18 month new store and
equipment expansion program, allocating $105 million to capital
expenditures. This is by far the most aggressive expansion plan in the
history of Weis Markets. During the third quarter, the Company opened
two new stores, one of which one was a replacement, and had a grand
reopening in a newly remodeled and enlarged store. Construction is
currently in progress on four new stores with two existing stores
undergoing expansion and major remodeling. The Company has
fifteen new grocery stores and six major remodels in the active
planning and design stages.
SuperPetz, Inc., the 80% owned pet supply stores subsidiary of
Weis Markets, opened three new stores in the third quarter and
continues to aggressively pursue new sites as it has since its inception
in January of 1994, when this concept was started with just two stores.
SuperPetz anticipates opening four more stores during the fourth
quarter of this year. The growth of this new retail format has been at a
much faster pace than our original projections.
Since the beginning of the year, the actual cost of investments in
marketable securities has decreased $11,466,000 as detailed in the
"Consolidated Condensed Statements of Cash Flows." However, the
market value of the remaining securities has increased by over
$14,266,000. The fluctuation in the market value of the securities
impacts only the balance sheet as so defined by the provisions of
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." The cash received
from the decrease in marketable securities was utilized for the higher
capital expenditures, the on-going operational needs of the business,
and the purchase of Treasury Stock.
The purchase of Treasury Stock year-to-date totaled $11,394,000
compared with $6,188,000 purchased in the same nine month period of
1994. Life to date, the Company has repurchased 4,404,012 shares at
a total cost of $96,322,000. The January 26, 1995, board resolution
authorizing the repurchase of up to 1,000,000 additional shares has
935,495 shares remaining.
Cash dividends were paid during the quarter to holders of common
stock at a rate of 21 cents per share compared to 19 cents per share
paid in the third quarter of 1994. The Board of Directors recently
declared a normal quarterly dividend of 21 cents a share to holders of
record on November 10, 1995, payable November 24, 1995.
The company's capital requirements through the first nine months of
1995 were financed entirely from internally generated funds. The
working capital has decreased .2% since the beginning of the fiscal
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 corporation has no other commitment of capital resources as of
September 30, 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 September 30, 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
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,003,000
<SECURITIES> 455,817,000
<RECEIVABLES> 30,781
<ALLOWANCES> 0
<INVENTORY> 119,874,000
<CURRENT-ASSETS> 612,598,000
<PP&E> 272,298,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 916,954,000
<CURRENT-LIABILITIES> 108,169,000
<BONDS> 0
<COMMON> 7,380,000
0
0
<OTHER-SE> 783,188,000
<TOTAL-LIABILITY-AND-EQUITY> 916,954,000
<SALES> 1,209,655,000
<TOTAL-REVENUES> 1,209,655,000
<CGS> 898,694,000
<TOTAL-COSTS> 1,120,971,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 88,684,000
<INCOME-TAX> 32,055,000
<INCOME-CONTINUING> 56,629,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,629,000
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 1.31
</TABLE>
