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 28, 1997
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 41,796,893 shares
(Outstanding at end of period)
<PAGE>
WEIS MARKETS, INC.
INDEX
Page No.
Part I - Financial Information
Consolidated Condensed Balance Sheets -
June 28, 1997 and December 28, 1996 2
Consolidated Condensed Statements of Income
Six Months Ended June 28, 1997
and June 29, 1996 3
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 28, 1997
and June 29, 1996 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
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
WEIS MARKETS, INC.
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<S> <C> <C>
June 28, 1997 December 28, 1996
(Unaudited) (Unaudited)
Assets
Current:
Cash $ 3,053 $ 2,878
Marketable Securities 377,516 387,794
Accounts Receivable, Net 31,378 32,439
Inventories 146,189 159,347
Prepaid Expenses 6,925 8,186
_______ _______
Total Current Assets 565,061 590,644
Property and Equipment, Net 351,462 343,900
Intangible and Other Assets, Net 32,236 31,768
_______ _______
Total Assets $ 948,759 $ 966,312
======= =======
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current:
Accounts Payable $ 58,521 $ 88,057
Accrued Expenses 13,244 12,221
Accrued Self-Insurance 15,176 13,320
Payable to Employee Benefit Plans 6,993 7,572
Income Taxes Payable 1,510 1,656
Deferred Income Taxes 4,421 4,563
_______ _______
Total Current Liabilities 99,865 127,389
Deferred Income Taxes 19,764 20,396
Shareholders' Equity
Common Stock, No Par Value,
100,800,000 Shares Authorized,
47,445,929 shares issued 7,380 7,380
Retained Earnings 939,702 921,572
Net Unrealized Gain on Marketable
Securities (Net of deferred taxes
of $10,617 in 1997 and $10,726
in 1996) 14,970 15,123
_______ _______
962,052 944,075
Less Treasury Stock, At Cost (132,922) (125,548)
_______ _______
Total Shareholders' Equity 829,130 818,527
Total Liabilities and _______ _______
Shareholders' Equity $ 948,759 $ 966,312
======= =======
<FN>
See accompanying notes to consolidated condensed financial statements.
2
</TABLE>
<PAGE>
<TABLE>
WEIS MARKETS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
<CAPTION>
Three Months Ended Six Months Ended
06/28/97 06/29/96 06/28/97 06/29/96
<S> <C> <C> <C> <C>
Net Sales $ 446,945 $ 432,584 $ 903,731 $ 865,783
Cost of Sales 330,437 320,780 671,684 644,172
_______ _______ _______ _______
Gross Profit 116,508 111,804 232,047 221,611
Operating, General and
Administrative 94,286 89,062 189,189 175,976
_______ _______ _______ _______
Income from
Operations 22,222 22,742 42,858 45,635
Interest and Dividend
Income 4,139 4,949 8,380 9,966
Other Income 3,877 2,605 7,139 5,516
_______ _______ _______ _______
Income before provision
for income 30,238 30,296 58,377 61,117
Provison for
income taxes 11,055 10,895 20,956 22,017
_______ _______ _______ _______
Net Income $ 19,183 $ 19,401 $ 37,421 $ 39,100
======= ======= ======= =======
Earnings per common
share negligible difference
if full dulition is assumed
(a) $ 0.46 $ 0.46 $ 0.89 $ 0.92
======= ======= ======= =======
Cash dividend $ 0.23 $ 0.21 $ 0.46 $ 0.42
======= ======= ======= =======
Weighted average number
of common shares
outstanding 41,849,126 42,480,401 41,901,894 42,496,390
========== ========== ========== ==========
<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
</TABLE>
<PAGE>
<TABLE>
WEIS MARKETS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<CAPTION>
Six Months Ended
06/28/97 06/29/96
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 37,421 $ 39,100
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 21,099 17,460
(Gain)/Loss on sale of fixed assets 68 (19)
Changes in operating assets and liabilities:
Decrease in inventories 13,159 3,125
Decrease in accounts receivable
and prepaid expenses 2,322 2,082
Increase in prepaid income taxes --- (570)
Decrease in accounts payable
and other liabilities (27,236) (12,224)
Decrease in income taxes payable (146) (4,077)
Increase/(Decrease) in deferred taxes (665) 1,972
Net cash provided by operating _______ ______
activities 46,022 46,849
Cash flows from investing activities:
Purchase of property and equipment (27,947) (25,273)
Proceeds from the sale of property and
equipment 2 19
Purchase of marketable securities (41,946) (73,718)
Proceeds from maturities of
marketable securities 51,961 85,781
Proceeds from sale of marketable securities --- ---
Increase in intangible assets and other assets (1,252) (1,253)
______ ______
Net cash used by investing
activities (19,182) (14,444)
Cash flows from financing activities:
Proceeds from issuance of common stock --- ---
Dividends paid (19,291) (17,851)
Purchase of treasury stock (7,374) (12,781)
______ ______
Net cash used by financing
activities (26,665) (30,632)
Net decrease in cash 175 1,773
Cash at beginning of period 2,878 3,285
______ ______
Cash at end of period $ 3,053 $ 5,058
====== ======
Cash Paid during the period for:
Interest Expense $ 0 $ 0
====== ======
Income Taxes $ 21,767 $ 24,692
====== ======
<FN>
See accompanying notes to consolidated condensed financial statements.
4
</TABLE>
<PAGE>
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 28, 1997 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 28, 1996 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 28,
1997 and June 29, 1996 are not necessarily indicative of the results to be
expected for the full year.
5
<PAGE>
WEIS MARKETS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
Sales for the second quarter ended June 28, 1997 increased 3.3% to
$446,945,000 compared to $432,584,000 last year. For the first half of this
year, sales have increased 4.4% to $903,731,000 compared to
$865,783,000 in 1996. Same-store sales continue to trend positively,
increasing .6% for the quarter and 1.6% year-to-date. The flat
identical-store sales growth reflects the deflationary environment in the
industry versus a year ago. Since the beginning of the year, grocery retail
prices have declined nearly 1%. Competition in the Companys marketing
area remains steady and management does not anticipate any significant
changes in the near term.
Gross profit of $116,508,000 at 26.1% of sales, increased $4,704,000 or
4.2% 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 .2% compared to the second quarter of last
year. Gross profit was negatively affected by inventory shrink loss of
$1,002,000 at SuperPetz, Inc. in the second quarter of this year and by
$3,512,000 year-to-date. The year-to-date gross profit at 25.7% of sales,
increased $10,437,000 or 4.7%, and increased as a percent of sales by
.1%.
Operating, general and administrative expenses for the second quarter
of $94,286,000 at 21.1% of sales, were $5,224,000 or 5.9% higher than the
same quarter last year. Year-to-date operating expenses of $189,189,000
at 20.9% of sales compares with $175,976,000 at 20.3% through the first half
of 1996. As a percent of sales, operating expenses increased by .5% for
the quarter and .6% year-to-date. The majority of the dollar increase in
expenses versus last year is in direct correlation with the higher sales
volume. The aggressive remodel and expansion plan the Company has
embarked upon is evidenced by the escalating depreciation and
amortization expense. Depreciation and amortization increased
$1,865,000 or 21.0% versus the same quarter last year and by $3,639,000
or 20.8% year-to-date. As a percentage of sales, depreciation and
amortization increased .4% for the quarter and .3% year-to-date. Operating
expenses at the SuperPetz subsidiary ran considerably higher as a
percentage of sales compared to the retail grocery stores. The higher
expense rate at SuperPetz caused the consolidated Weis Markets, Inc.,
operating expense as a percentage of sales to increase by .9% for the
quarter and .8% year-to-date.
Interest and dividend income of $4,139,000 at .9% of sales, decreased
$810,000, or 16.4%, versus the same quarter last year. As a percentage of
sales, the interest and dividend income decreased .2% compared to last
year. Year-to-date interest and dividend income of $8,380,000 decreased
$1,586,000 or 15.9% versus the first half of 1996. The Company has funded
part of its capital expenditure program from its portfolio of marketable
securities over the last three years. The amortized cost of marketable
securities held by the Company at the end of the first half were $42,974,000
less than at the end of the same period last year. Likewise, dividend and
interest income from those investments is also lower.
Other income for the quarter of $3,877,000 at .9% of sales increased
$1,272,000, or 48.8% compared to the same quarter last year. Year-to-date
other income of $7,139,000 at .8% of sales has increased $1,623,000 or
29.4% versus a year ago. The majority of the increase in other income for
the quarter came from a $415, 000 increase from the sale of cardboard
salvage and a $378,000 increase from store sub-lease income.
The effective tax rate for the second quarter of 1997 was 36.6%
compared with 36.0% in 1996. Year-to-date, the effective tax rate is 35.9%
compared to 36.0% last year. The increased taxes in the quarter are due
to the decline in tax-free investment income.
6
<PAGE>
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 $19,183,000, or 46 cents per
share, compared with $19,401,000, or 46 cents per share, in 1996.
Year-to-date earnings of $37,421,000 or 89 cents per share, compares with
$39,100,000, or 92 cents per share in 1996. The decline in the Companys
net income in the quarter and year-to-date versus the same period last
year, can be attributed to the SuperPetz subsidiary. Weis management
took over the operations of SuperPetz during the second quarter of this
year and is in the process of reorganizing that company. Management
does expect to continue to reduce losses at SuperPetz in the third quarter
and to be profitable in the fourth quarter of this year.
During the second quarter, the Company opened a superstore in Gap,
PA and completed extensive remodels of stores in Newburgh NY,
Hanover PA, Emmaus PA and Frederick MD. One store was closed for
operational reasons. Construction is currently in progress on nine new
stores and the major renovation and expansion of ten existing stores.
Seven of the new store facilities are replacements for older facilities.
At the end of June, Weis Markets, Inc., was operating 153 retail food
stores, 43 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 Alabama,
Georgia, Indiana, Kentucky, Maryland, Michigan, North Carolina, Ohio,
Pennsylvania, South Carolina and Tennessee.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations were $46,022,000 for the first half of 1997
compared to $46,849,000 in the comparable period of 1996. Working
capital has increased .4% 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 1997 amounted
to $27,947,000 compared to $25,273,000 in 1996. The capital project
expenditure estimate made at the beginning of this year of $120,000,000
over an eighteen month period appears to be on schedule with a
significant number of projects being completed in the second half of this
year.
The purchase of Treasury Stock during the first half totaled $7,374,000
compared with $12,781,000 purchased in the first half of 1996. The Board of
Directors 1996 resolution authorizing the purchase of Treasury Stock has a
remaining balance of 690,471.
Cash dividends of $9,629,000 were paid during the quarter to holders of
common stock at a rate of 23 cents per share. Total year-to-date
dividends paid to holders of common stock amounts to $19,291,000. The
Board of Directors recently declared a 4.4% increase in the quarterly
dividend up from 23 cents a share to 24 cents a share. The dividend will
be payable to holders of record as of August 8, 1997, payable August 22,
1997.
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 28, 1997.
7
<PAGE>
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 June 28, 1997
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> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> JUN-28-1997
<CASH> 3,053,000
<SECURITIES> 377,516,000
<RECEIVABLES> 31,378
<ALLOWANCES> 0
<INVENTORY> 146,189,000
<CURRENT-ASSETS> 565,061,000
<PP&E> 351,462,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 948,759,000
<CURRENT-LIABILITIES> 99,865,000
<BONDS> 0
<COMMON> 7,380,000
0
0
<OTHER-SE> 821,750,000
<TOTAL-LIABILITY-AND-EQUITY> 948,759,000
<SALES> 446,945,000
<TOTAL-REVENUES> 330,437,000
<CGS> 330,437,000
<TOTAL-COSTS> 416,707,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 30,238,000
<INCOME-TAX> 11,055,000
<INCOME-CONTINUING> 19,183,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,183,000
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
</TABLE>
