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 29, 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 17801-0471
(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 42,111,981 shares
(Outstanding at end of period)
<PAGE>
WEIS MARKETS, INC.
INDEX
Page No.
Part I - Financial Information
Consolidated Condensed Balance Sheets -
June 29, 1996 and December 30, 1995 2
Consolidated Condensed Statements of Income
Six Months Ended June 29, 1996
and July 1, 1995 3
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 29, 1996
and July 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
Other Information and Signatures 9
1
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PART I - FINANCIAL INFORMATION
WEIS MARKETS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
June 29, 1996 December 30, 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Assets
Current:
Cash $ 5,058 $ 3,285
Marketable Securities 420,003 432,174
Accounts Receivable, Net 31,963 31,517
Inventories 128,602 131,727
Prepaid Expenses 5,236 7,764
Prepaid Income Tax 570 ---
_______ _______
Total Current Assets 591,432 606,467
Property and Equipment, Net 294,501 285,993
Intangible and Other Assets, Net 31,256 30,698
_______ _______
Total Assets $ 917,189 $ 923,158
======= =======
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<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current:
Accounts Payable $ 59,314 $ 72,262
Accrued Expenses 14,152 12,997
Accrued Self-Insurance 13,445 13,285
Payable to Employee Benefit Plans 6,970 7,453
Income Taxes Payable --- 4,077
Deferred Income Taxes 4,907 5,258
_______ _______
Total Current Liabilities 98,788 115,332
Deferred Income Taxes 18,805 16,527
Minority Interest (371) (263)
Shareholders' Equity
Common Stock, No Par Value,
100,800,000Shares Authorized,
47,445,929 and 47,438,249 Shares
issued, respectively 7,380 7,380
Retained Earnings 901,165 879,916
Net Unrealized Gain on Marketable
Securities 14,685 14,748
_______ _______
923,230 902,044
Less Treasury Stock, At Cost (123,263) (110,482)
_______ _______
Total Shareholders' Equity 799,967 791,562
Total Liabilities and _______ _______
Shareholders' Equity $ 917,189 $ 923,158
<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
06/29/96 07/01/95 06/29/96 07/01/95
<S> <C> <C> <C> <C>
Net Sales $ 432,584 $ 407,578 $ 865,783 $ 805,077
Cost of Sales 320,780 304,319 644,172 599,926
_______ _______ _______ _______
Gross Profit 111,804 103,259 221,611 205,151
Operating, General
and Administrative 89,062 83,572 175,976 164,272
_______ _______ _______ _______
Income from 22,742 19,687 45,635 40,879
Operations
Interest and Dividend 4,949 5,598 9,966 10,942
Income
Other Income 2,496 3,293 5,407 6,578
Minority Interest 109 0 109 0
Income before provision _______ _______ _______ _______
for income taxes 30,296 28,578 61,117 58,399
Provision for income _______ _______ _______ _______
taxes 10,895 10,199 22,017 20,959
_______ _______ _______ _______
Net Income $ 19,401 $ 18,379 $ 39,100 $ 37,440
======= ======= ======= =======
Earnings per common share
negligible difference
if full dilution is
assumed(a) $ 0.46 $ 0.43 $ 0.92 $ 0.87
======= ======= ======= =======
Cash dividend per
common share $ 0.21 $ 0.19 $ 0.42 $ 0.38
======= ======= ======= =======
Weighted average number
of common shares
outstanding 42,480,401 43,171,266 42,296,390 43,263,350
========== ========== ========== ==========
<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 the end of the period and options 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 the 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
06/29/96 07/01/95
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 39,100 $ 37,440
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 17,460 15,475
Gain on sale of fixed assets (19) ---
Changes in operating assets and liabilities:
Decrease in inventories 3,125 7,216
(Increase)/Decrease in accounts receivable
and prepaid expenses 2,082 (14,289)
Increase in prepaid income taxes (570)
Decrease in accounts payable, accrued
expenses, and minority interest (12,224) (7,715)
Decrease in income taxes payable (4,077) (1,823)
Increase/(Decrease) in deferred taxes 1,972 (572)
Net cash provided by operating _______ ______
activities 46,849 35,732
Cash flows from investing activities:
Purchase of property and equipment (25,273) (31,141)
Proceeds from the sale of property
and equipment 19 ---
Purchase of marketable securities (73,718) (20,005)
Proceeds from maturities of marketable
securities 64,180 49,398
(Increase)/Decrease in highly liquid, short
term investments 21,601 (7,512)
Increase in intangible assets and other ass (1,253) ---
______ ______
Net cash used by investing activites (14,444) (9,260)
Cash flows from financing activities:
Proceeds from issuance of common stock --- ---
Dividends paid (17,851) (16,451)
Purchase of treasury stock (12,781) (8,213)
______ ______
Net cash used by financing activites (30,632) (24,664)
Net decrease in cash 1,773 1,808
Cash at beginning of period 3,285 4,011
______ ______
Cash at end of period $ 5,058 $ 5,819
====== ======
Cash Paid during the period for:
Interest Expense $ 0 $ 0
====== ======
Income Taxes $ 24,692 $ 23,354
<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 June 29, 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 June
29, 1996 and July 1, 1995 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 June 27, 1996, increased 6.1%
to $432,584,000 compared to $407,578,000 last year. For the first half of
this year, sales have increased 7.5% to $865,783,000 compared to
$805,077,000 in 1995. Same-store sales continue to trend positively,
increasing 3.2% for the quarter and 4.2% year-to-date. Sales at
SuperPetz, the 80% held pet supply stores subsidiary, accounted for
$10,431,000 of the sales increase in the quarter, as it has grown from 20
stores operating at the end of the second quarter last year to 40 stores
today. Inflation in grocery products remains flat versus a year ago,
and there have been no abnormal retail price fluctuations. Competition
in the Companys marketing area remains intense and management
does not expect any significant changes in this level of competition in
the future.
Gross profit of $111,804,000 at 25.9% of sales, increased $8,545,000
or 8.3% 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 .6% compared to the second quarter of
last year. The year-to-date gross profit at 25.6% of sales, increased
$16,460,000 or 8.0%, and increased as a percent of sales by .1%. The
gross profit generated by the SuperPetz operation, did increase the
Weis Markets, Inc., consolidated gross margin rate by .3% in both the
quarter and year-to-date.
Operating expenses for the second quarter of $89,062,000 at 20.6%
of sales, were $5,490,000 or 6.6% higher than the same quarter last
year. As a percent of sales, operating expenses increased by .1% for
the quarter. Year-to-date operating expenses of $175,976,000 at 20.3%
of sales compares with $164,272,000 at 20.4% through the first half of
1995. The increased expenses versus last year are, for the most part,
in direct correlation with the higher sales volume. However, operating
expenses at SuperPetz did run considerably higher as a percentage
of sales, and did cause the consolidated Weis Markets, Inc., operating
expense as a percentage of sales to increase by .7% for the quarter
and .6% year-to-date. Depreciation and amortization expense
increased $1,533,000 or 20.8% in the second quarter and $1,985,000 or
12.8% year-to-date. This is a direct effect of the aggressive remodel
and expansion plans the Company has embarked upon.
Interest and dividend income of $4,949,000 at 1.1% of sales,
decreased $649,000, or 11.6%, versus the same quarter last year. As
a percentage of sales, the interest and dividend income decreased
.3% compared to last year. Year-to-date interest and dividend income
of $9,966,000 decreased $976,000 or 8.9% versus the first half of 1995.
The amortized cost of marketable securities held by the Company at
the end of the first half were $27,609,000 less than at the end of the
same period last year. Likewise, dividend and interest income from
those investments are also lower.
Other income for the quarter of $2,496,000 at .6% of sales
decreased $797,000, or 24.2% compared to the same quarter last
year. Year-to-date other income of $5,407,000 at .6% of sales has
decreased $1,171,000 or 17.8% versus a year ago. Income from the
sale of cardboard salvage decreased $853,000 this quarter versus the
second quarter last year and has decreased $1,249,000 year-to-date.
In 1995, the price paid per ton for cardboard salvage hit record highs
as foreign countries paid a premium for the export of corrugated box.
Minority interest of $109,000 represents the 20% shareholder
portion of the net loss before tax of SuperPetz, Inc., for the quarter.
Income from the SuperPetz store operations continues to be profitable.
However, the write-off of new store opening costs and operational
weakness due to the extremely fast growth of this concept has inhibited
the bottom line. Management did anticipate the negative impact from
the initial startup of this concept and expects the company to be at a
break-even point by the end of this year. Heavy emphasis is being
placed on the establishment of better operational controls to reduce
expenses.
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 second quarter of 1996 was 36.0%
compared with 35.7% in 1995. Year-to-date, the effective tax rate is
36.0% compared to 35.9% last year. The increased taxes are due to
the combined effect of an increase in operational profit and the decline
in tax-free investment income.
Net earnings for the second quarter of $19,401,000, or 46 cents per
share, compared with $18,379,000, or 43 cents per share, in 1995.
Year-to-date earnings of $39,100,000 or 92 cents per share, compare
with $37,440,000, or 87 cents per share in 1995.
During the quarter, the Company completed six store remodels and
the remodel and enlargement of one other store. Construction is
currently in progress on ten new stores, five of which are replacements
of old facilities, and the major renovation and expansion of three
existing stores. Seven additional new stores and twelve major
remodels are in active planning stages. SuperPetz, Inc., opened three
stores in the second quarter and anticipates four additional stores to
be opened before year end.
The adoption of the Financial Accounting Standard Boards
Statement of Financial Accounting Standards Number 121,
(Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of), and Number 123, (Accounting
for Stock Compensation), had no effect on the Companys financial
position.
At the end of the quarter, Weis Markets, Inc., had 151 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 40 stores located
in Alabama, Georgia, Indiana, Kentucky, Maryland, Michigan, North
Carolina, Ohio, Pennsylvania, South Carolina, and Tennessee.
7
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WEIS MARKETS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations were $46,849,000 for the six-month
period ended June 29, 1996, as compared to $35,732,000 in the
comparable period of 1995. Working capital has increased .3% since
the beginning of the year. The company's funding requirements in
both years were financed entirely from internally generated funds.
Property and equipment expenditures in the first half of 1996
amounted to $25,273,000, compared to $31,141,000 in 1995. The
beginning of the year capital project expenditure estimate of
$107,000,000 for eighteen months appears to be on schedule with a
significant amount of the projects being completed in the second half
of this year.
The purchase of Treasury Stock during the first half totaled
$12,781,000 compared with $8,213,000 purchased in the first half of
1995. The Board of Directors 1995 resolution authorizing the purchase
of Treasury Stock, has a remaining balance of 5,559 shares and the
1996 resolution 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 21 cents per share. The Board of Directors recently
declared a 9.5% increase in the quarterly dividend up from 21 cents a
share to 23 cents a share. The dividend will be payable to holders of
record as of August 9, 1996, payable August 23, 1996
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 June 29, 1996.
8
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) One Form 8-K was filed on April 2, 1996, announcing an, "Item 5.
Other Event". The size of the board of directors was increased from six
to eight by unanimous approval. Unanimously approved to those
positions were Jonathan H. Weis and Michael M. Apfelbaum.
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> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-29-1995
<CASH> 5,058,000
<SECURITIES> 420,003,000
<RECEIVABLES> 31,963
<ALLOWANCES> 0
<INVENTORY> 128,602,000
<CURRENT-ASSETS> 591,432,000
<PP&E> 294,501,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 917,189,000
<CURRENT-LIABILITIES> 98,788,000
<BONDS> 0
<COMMON> 7,380,000
0
0
<OTHER-SE> 792,587,000
<TOTAL-LIABILITY-AND-EQUITY> 917,189,000
<SALES> 432,584,000
<TOTAL-REVENUES> 432,584,000
<CGS> 320,780,000
<TOTAL-COSTS> 409,842,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 30,296,000
<INCOME-TAX> 10,895,000
<INCOME-CONTINUING> 19,401,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,401,000
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
</TABLE>
