Company Quick10K Filing
Quick10K
Weis Markets
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$39.41 27 $1,060
10-Q 2019-06-29 Quarter: 2019-06-29
10-Q 2019-03-30 Quarter: 2019-03-30
10-K 2018-12-29 Annual: 2018-12-29
10-Q 2018-09-29 Quarter: 2018-09-29
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-30 Annual: 2017-12-30
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-07-01 Quarter: 2017-07-01
10-Q 2017-04-01 Quarter: 2017-04-01
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-24 Quarter: 2016-09-24
10-Q 2016-06-25 Quarter: 2016-06-25
10-Q 2016-03-26 Quarter: 2016-03-26
10-K 2015-12-26 Annual: 2015-12-26
10-Q 2015-09-26 Quarter: 2015-09-26
10-Q 2015-06-27 Quarter: 2015-06-27
10-Q 2015-03-28 Quarter: 2015-03-28
10-K 2014-12-27 Annual: 2014-12-27
10-Q 2014-09-27 Quarter: 2014-09-27
10-Q 2014-06-28 Quarter: 2014-06-28
10-Q 2014-03-29 Quarter: 2014-03-29
10-K 2013-12-28 Annual: 2013-12-28
8-K 2019-08-02 Earnings, Exhibits
8-K 2019-05-03 Earnings, Exhibits
8-K 2019-04-25 Shareholder Vote
8-K 2019-03-11 Earnings, Exhibits
8-K 2018-11-02 Earnings, Exhibits
8-K 2018-08-03 Earnings, Exhibits
8-K 2018-05-07 Earnings, Exhibits
8-K 2018-04-26 Shareholder Vote
8-K 2018-03-13 Earnings, Exhibits
DB Deutsche Bank Aktiengesellschaft 16,050
WMGI Wright Medical Group 3,990
MOR MorphoSys AG 2,770
COLB Columbia Banking System 2,740
DBD Diebold Nixdorf 831
IRMD Iradimed 262
STRM Streamline Health Solutions 24
JRSS JRSIS Health Care 0
TWLV Twelve Seas Investment 0
SPL Sabine Pass Liquefaction 0
WMK 2019-06-29
Part I – Financial Information
Item 2. Management’S Discussion and Analysis
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II – Other Information
Item 6. Exhibits
EX-31.1 wmk-20190629xex31_1.htm
EX-31.2 wmk-20190629xex31_2.htm
EX-32 wmk-20190629xex32.htm

Weis Markets Earnings 2019-06-29

WMK 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 wmk-20190629x10q.htm WEIS MARKETS, INC. 10Q 02 2019 WEIS MARKETS, INC 10Q 2 2019

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549



FORM 10-Q

(Mark One)



 

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended June 29, 2019



or

[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from __________to_________



Commission File Number 1-5039



WEIS MARKETS, INC.
(Exact name of registrant as specified in its charter)





 

 

PENNSYLVANIA
(State or other jurisdiction of incorporation or organization)

 

24-0755415
(I.R.S. Employer Identification No.)

 

1000 S. Second Street
P. O. Box 471
Sunbury, Pennsylvania
(Address of principal executive offices)

 



17801-0471
(Zip Code)







 

Registrant's telephone number, including area code: (570) 286-4571

Registrant's web address:  www.weismarkets.com



Not Applicable
(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 by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes [X]  No [   ]



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,”  “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.





 

 

Large accelerated filer  [  ]   

 

Accelerated filer  [X]

Non-accelerated filer   [  ]

 

Smaller reporting company  [  ]



 

Emerging growth company  [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [   ]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [   ]  No [X]



Securities registered pursuant to section 12(b) of the act:





 

 

Title of each class

Trading symbol

Name of exchange on which registered

Common stock, no par value

WMK

New York Stock Exchange



As of August 6, 2019, there were issued and outstanding 26,898,443 shares of the registrant’s common stock.

 

 


 

WEIS MARKETS, INC.

TABLE OF CONTENTS





 

FORM 10-Q

Page

Part I. Financial Information

 

Item 1. Financial Statements

 

Consolidated Balance Sheets

1

Consolidated Statements of Income

2

Consolidated Statements of Comprehensive Income

3

Consolidated Statements of Shareholders’ Equity

4

Consolidated Statements of Cash Flows

5

Notes to Consolidated Financial Statements

6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

12

Item 3. Quantitative and Qualitative Disclosures about Market Risk

18

Item 4. Controls and Procedures

18

Part II. Other Information

 

Item 6. Exhibits

19

Signatures

19

Exhibit 31.1 Rule 13a-14(a) Certification - CEO

 

Exhibit 31.2 Rule 13a-14(a) Certification - CFO

 

Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350

 





 

 

 


 

Table of Contents

WEIS MARKETS, INC.



PART I – FINANCIAL INFORMATION

ITEM I – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(unaudited)





 

 

 

 

 

(dollars in thousands)

June 29, 2019

 

December 29, 2018

Assets

 

 

 

 

 

Current:

 

 

 

 

 

Cash and cash equivalents

$

51,646 

 

$

37,808 

Marketable securities

 

57,376 

 

 

54,298 

SERP investment

 

18,162 

 

 

14,686 

Accounts receivable, net

 

54,373 

 

 

57,285 

Inventories

 

266,343 

 

 

280,756 

Prepaid expenses and other current assets

 

16,439 

 

 

24,289 

Total current assets

 

464,339 

 

 

469,122 

Property and equipment, net

 

877,212 

 

 

887,608 

Operating lease right-to-use

 

189,953 

 

 

 -

Goodwill

 

52,330 

 

 

52,330 

Intangible and other assets, net

 

18,079 

 

 

22,951 

Total assets

$

1,601,913 

 

$

1,432,011 



 

 

 

 

 

Liabilities 

 

 

 

 

 

Current:

 

 

 

 

 

Accounts payable

$

168,070 

 

$

191,099 

Accrued expenses

 

24,880 

 

 

45,354 

Operating leases

 

37,624 

 

 

 -

Accrued self-insurance

 

15,005 

 

 

15,516 

Deferred revenue, net

 

5,783 

 

 

7,961 

Income taxes payable

 

9,430 

 

 

7,283 

Total current liabilities

 

260,792 

 

 

267,213 

Postretirement benefit obligations

 

20,973 

 

 

18,110 

Accrued self-insurance

 

17,787 

 

 

17,795 

Operating leases

 

161,387 

 

 

 -

Deferred income taxes

 

90,735 

 

 

90,793 

Other

 

8,163 

 

 

15,201 

Total liabilities

 

559,837 

 

 

409,112 

Shareholders’ Equity

 

 

 

 

 

Common stock, no par value, 100,800,000 shares authorized, 33,047,807 shares issued,

 

 

 

 

 

26,898,443 shares outstanding

 

9,949 

 

 

9,949 

Retained earnings

 

1,181,647 

 

 

1,163,545 

Accumulated other comprehensive income

 

 

 

 

 

(Net of deferred taxes of $533 in 2019 and $110 in 2018)

 

1,337 

 

 

262 



 

1,192,933 

 

 

1,173,756 

Treasury stock at cost, 6,149,364 shares

 

(150,857)

 

 

(150,857)

Total shareholders’ equity

 

1,042,076 

 

 

1,022,899 

Total liabilities and shareholders’ equity

$

1,601,913 

 

$

1,432,011 



See accompanying notes to Consolidated Financial Statements.

1

 


 

Table of Contents

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



13 Weeks Ended

26 Weeks Ended

(dollars in thousands, except shares and per share amounts)

June 29, 2019

June 30, 2018

June 29, 2019

June 30, 2018

Net sales

$

887,967 

 

$

871,100 

 

$

1,764,686 

 

$

1,747,206 

 

Cost of sales, including advertising, warehousing and distribution expenses

 

651,297 

 

 

630,805 

 

 

1,298,463 

 

 

1,272,004 

 

Gross profit on sales

 

236,670 

 

 

240,295 

 

 

466,223 

 

 

475,202 

 

Operating, general and administrative expenses

 

210,801 

 

 

214,258 

 

 

424,375 

 

 

426,326 

 

Income from operations

 

25,869 

 

 

26,037 

 

 

41,848 

 

 

48,876 

 

Investment income and interest expense

 

1,079 

 

 

105 

 

 

3,975 

 

 

(427)

 

Income before provision for income taxes

 

26,948 

 

 

26,142 

 

 

45,823 

 

 

48,449 

 

Provision for income taxes

 

6,473 

 

 

7,047 

 

 

11,043 

 

 

13,163 

 

Net income

$

20,475 

 

$

19,095 

 

$

34,780 

 

$

35,286 

 



 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding, basic and diluted

 

26,898,443 

 

 

26,898,443 

 

 

26,898,443 

 

 

26,898,443 

 

Cash dividends per share

$

0.31 

 

$

0.30 

 

$

0.62 

 

$

0.60 

 

Basic and diluted earnings per share

$

0.76 

 

$

0.71 

 

$

1.29 

 

$

1.31 

 

See accompanying notes to Consolidated Financial Statements.

2

 


 

Table of Contents

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



13 Weeks Ended

26 Weeks Ended

(dollars in thousands)

June 29, 2019

June 30, 2018

June 29, 2019

June 30, 2018

Net income

$

20,475 

 

$

19,095 

 

$

34,780 

 

$

35,286 

 

Other comprehensive income (loss) by component, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during period

 

 

 

 

 

 

 

 

 

 

 

 

(Net of deferred taxes of $(179) and $14, respectively for the thirteen Weeks Ended and $(423) and $172, respectively for the twenty-six Weeks Ended)

 

454 

 

 

(42)

 

 

1,075 

 

 

(445)

 

Reclassification adjustment for losses included in net income

 

 

 

 

 

 

 

 

 

 

 

 

(Net of deferred taxes of $0 and $15, respectively for the twenty-six Weeks Ended)

 

 -

 

 

 -

 

 

 -

 

 

39 

 

Other comprehensive income gain (loss), net of tax

 

454 

 

 

(42)

 

 

1,075 

 

 

(406)

 

Comprehensive income, net of tax

$

20,929 

 

$

19,053 

 

$

35,855 

 

$

34,880 

 

See accompanying notes to Consolidated Financial Statements.



3

 


 

Table of Contents

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited)







 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

Accumulated

 

 

 

 

 

 

(dollars in thousands, except shares)

 

 

 

 

 

Other

 

 

 

 

Total

For Thirteen Weeks Ended June 29, 2019

Common Stock

Retained

Comprehensive

Treasury Stock

Shareholders’

and June 30, 2018

Shares

Amount

Earnings

Income (Loss)

Shares

Amount

Equity

Balance at March 30, 2019

33,047,807 

$

9,949 

$

1,169,510 

$

883 

 

6,149,364 

$

(150,857)

$

1,029,485 

Net income

 

 

20,475 

 

 

 

 

20,475 

Other comprehensive loss, net of

 

 

 

 

 

 

 

 

 

 

 

 

 

reclassification adjustments and tax

 

 

 

454 

 

 

 

454 

Dividends paid

 

 

(8,339)

 

 

 

 

(8,339)

Balance at June 29, 2019

33,047,807 

$

9,949 

$

1,181,647 

$

1,337 

 

6,149,364 

$

(150,857)

$

1,042,076 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

Balance at March 31, 2018

33,047,807 

$

9,949 

$

1,141,474 

$

34 

 

6,149,364 

$

(150,857)

$

1,000,600 

Net Income

 

 

19,095 

 

 

 

 

19,095 

Other comprehensive income, net of

 

 

 

 

 

 

 

 

 

 

 

 

 

reclassification adjustments and tax

 

 

 

(42)

 

 

 

(42)

Dividends paid

 

 

(8,069)

 

 

 

 

(8,069)

Balance at June 30, 2018

33,047,807 

$

9,949 

$

1,152,499 

$

(8)

 

6,149,364 

$

(150,857)

$

1,011,583 







 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

Accumulated

 

 

 

 

 

 

(dollars in thousands, except shares)

 

 

 

 

 

Other

 

 

 

 

Total

For Twenty-Six Weeks Ended June 29, 2019

Common Stock

Retained

Comprehensive

Treasury Stock

Shareholders’

and June 30, 2018

Shares

Amount

Earnings

Income (Loss)

Shares

Amount

Equity

Balance at December 29, 2018

33,047,807 

$

9,949 

$

1,163,545 

$

262 

 

6,149,364 

$

(150,857)

$

1,022,899 

Net income

 

 

34,780 

 

 

 

 

34,780 

Other comprehensive loss, net of

 

 

 

 

 

 

 

 

 

 

 

 

 

reclassification adjustments and tax

 

 

 

1,075 

 

 

 

1,075 

Dividends paid

 

 

(16,677)

 

 

 

 

(16,677)

Balance at June 29, 2019

33,047,807 

$

9,949 

$

1,181,647 

$

1,337 

 

6,149,364 

$

(150,857)

$

1,042,076 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

Balance at December 30, 2017

33,047,807 

$

9,949 

$

1,127,872 

$

5,880 

 

6,149,364 

$

(150,857)

$

992,844 

Net Income

 

 

35,286 

 

 

 

 

35,286 

Cumulative effect of accounting principle adoption of ASU 2016-01

 

 

5,481 

 

(5,481)

 

 

 

Other comprehensive income, net of

 

 

 

 

 

 

 

 

 

 

 

 

 

reclassification adjustments and tax

 

 

 

(406)

 

 

 

(406)

Dividends paid

 

 

(16,139)

 

 

 

 

(16,139)

Balance at June 30, 2018

33,047,807 

$

9,949 

$

1,152,499 

$

(8)

 

6,149,364 

$

(150,857)

$

1,011,583 



See accompanying notes to Consolidated Financial Statements.

4

 


 

Table of Contents

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)





 

 

 

 

 



26 Weeks Ended

(dollars in thousands)

June 29, 2019

June 30, 2018

Cash flows from operating activities:

 

 

 

 

 

Net income

$

34,780 

 

$

35,286 

Adjustments to reconcile net income to

 

 

 

 

 

net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

46,324 

 

 

46,137 

Loss on disposition of fixed assets

 

806 

 

 

157 

Loss on sale of marketable securities

 

 -

 

 

54 

Unrealized (gain) loss in value of equity securities

 

(848)

 

 

1,238 

Deferred income taxes

 

(482)

 

 

1,379 

Changes in operating assets and liabilities:

 

 

 

 

 

Inventories

 

14,413 

 

 

6,093 

Accounts receivable and prepaid expenses

 

10,762 

 

 

5,436 

Accounts payable and other liabilities

 

(29,423)

 

 

(20,538)

Income taxes

 

2,147 

 

 

8,429 

Other

 

487 

 

 

556 

Net cash provided by operating activities

 

78,966 

 

 

84,227 

Cash flows from investing activities:

 

 

 

 

 

Purchase of property and equipment

 

(44,335)

 

 

(46,367)

Proceeds from the sale of property and equipment

 

1,320 

 

 

321 

Purchase of marketable securities

 

(4,205)

 

 

(586)

Proceeds from maturities of marketable securities

 

2,785 

 

 

2,800 

Proceeds from the sale of marketable securities

 

 -

 

 

514 

Purchase of intangible assets

 

(540)

 

 

(1,662)

Change in SERP investment

 

(3,476)

 

 

(1,414)

Net cash used in investing activities

 

(48,451)

 

 

(46,394)

Cash flows from financing activities:

 

 

 

 

 

Payments on long-term debt

 

 -

 

 

(34,988)

Dividends paid

 

(16,677)

 

 

(16,139)

Net cash used in financing activities

 

(16,677)

 

 

(51,127)

Net increase (decrease) in cash and cash equivalents

 

13,838 

 

 

(13,294)

Cash and cash equivalents at beginning of year

 

37,808 

 

 

47,917 

Cash and cash equivalents at end of period

$

51,646 

 

$

34,623 

See accompanying notes to Consolidated Financial StatementsIn the first twenty-six weeks of 2019, there was $9.4 million cash paid for income taxes compared to $3.4 million in 2018 for the same period.  Cash paid for interest related to long-term debt was $49 thousand and $318 thousand in the first twenty-six weeks of 2019 and 2018, respectively. 





 

5

 


 

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 



 

(1) Significant Accounting Policies
Basis of Presentation:  The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X.  In the opinion of management, all adjustments (consisting of normal recurring deferrals and accruals) considered necessary for a fair presentation have been included.  The operating results for the periods presented are not necessarily indicative of the results to be expected for the full year.  The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited consolidated interim financial statements and there were no material subsequent events which require additional disclosure.  For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company's latest Annual Report on Form 10-K.   



(2) Current Relevant Accounting Standards

The Company adopted ASU 2016-02 Leases (Topic 842) effective December 30, 2018. The ASU requires lessees to recognize assets and liabilities for the rights and obligations created by their leases with lease terms more than 12 months. During 2018, the ASU was amended to permit the election of transitional provisions, including the elimination of the requirement to restate reporting periods prior to the date of adoption.  The Company has adopted the standard using transitional provisions and has elected practical expedients to not reassess the original conclusions reached regarding lease identification, lease classification and initial direct costs. The adoption had a significant impact on the Company’s Consolidated Balance Sheets, resulting in $202 million and $211 million of the operating lease right-to-use assets and lease liabilities, respectively.  There are no significant changes to the Consolidated Statements of Comprehensive Income or Consolidated Statements of Cash Flows.  See Note 7 for additional disclosures on the adoption.

 

(3)  Marketable Securities

The Company’s marketable securities are all classified as available-for-sale within “Current Assets” in the Company’s Consolidated Balance Sheets.  FASB has established three levels of inputs that may be used to measure fair value: 

Level 1  Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2  Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3  Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s marketable securities valued using Level 1 inputs include highly liquid equity securities, for which quoted market prices are available.  The Company’s municipal bond portfolio is valued using Level 2 inputs.  The Company’s municipal bonds are valued using a combination of pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models utilizing observable inputs, which are considered Level 2 inputs.



For Level 2 investment valuation, the Company utilizes standard pricing procedures of its investment advisory firm which includes various third party pricing services.  These procedures also require specific price monitoring practices as well as pricing review reports, valuation oversight and pricing challenge procedures to maintain the most accurate representation of investment fair market value. 



The Company accrues interest on its bond portfolio throughout the life of each bond held.  Dividends from the equity securities are recognized as received.  Interest, dividends and unrealized gains and losses on equity securities are recognized in “Investment income and interest expense” on the Company’s Consolidated Statements of Income.  The Company recognized investment income of $1.1 million in the second quarter of 2019, which included an unrealized gain in equity securities of $223 thousand. In the twenty-six weeks ending June 29, 2019, the Company recognized investment income of $4 million, which included unrealized gains in equity securities of $848 thousand.  Investment income of $178 thousand and investment loss of $187 thousand were recognized in the second quarter of 2018 and twenty-six weeks ended June 30, 2018, respectively.





6

 


 

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

(3)  Marketable Securities (continued)





Marketable securities, as of June 29, 2019 and December 29, 2018, consisted of:



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

 

Gross

Gross

 

 

(dollars in thousands)

Amortized

Unrealized

Unrealized

Fair

June 29, 2019

Cost

Holding Gains

Holding Losses

Value

Available-for-sale:

 

 

 

 

 

 

 

 

Level 1

 

 

 

 

 

 

 

 

Equity securities

 

 

 

 

 

 

$

8,074 

Level 2

 

 

 

 

 

 

 

 

Municipal bonds

$

47,433 

$

1,874 

$

(3)

 

49,304 



$

47,433 

$

1,874 

$

(3)

$

57,376 







 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

 

Gross

Gross

 

 

(dollars in thousands)

Amortized

Unrealized

Unrealized

Fair

December 29, 2018

Cost

Holding Gains

Holding Losses

Value

Available-for-sale:

 

 

 

 

 

 

 

 

Level 1

 

 

 

 

 

 

 

 

Equity securities

 

 

 

 

 

 

$

7,226 

Level 2

 

 

 

 

 

 

 

 

Municipal bonds

$

46,699 

$

426 

$

(53)

 

47,072 



$

46,699 

$

426 

$

(53)

$

54,298 



Maturities of marketable securities classified as available-for-sale at June 29, 2019, were as follows:



 

 

 

 



 

Amortized

 

Fair

(dollars in thousands)

 

Cost

 

Value

Available-for-sale:

 

 

 

 

Due within one year

$

3,899 

$

3,907 

Due after one year through five years

 

23,677 

 

24,288 

Due after five years through ten years

 

18,857 

 

20,104 

Due after ten years

 

1,000 

 

1,005 



$

47,433 

$

49,304 



SERP Investments

The Company also maintains a non-qualified supplemental executive retirement plan for certain of its associates which allows them to defer income to future periods.  Participants in the plans earn a return on their deferrals based on mutual fund investments.  The Company chooses to invest in the underlying mutual fund investments to offset the liability associated with the non-qualified deferred compensation plans.  Such investments are reported on the Company’s Consolidated Balance Sheets as “SERP investment,” are classified as trading securities and are measured at fair value using Level 1 inputs with gains and losses included in “Investment income and interest expense” on the Company’s Consolidated Statements of Income.  The changes in the underlying liability to the associates are recorded in “Operating, general and administrative expenses.”



7

 


 

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 





(4)  Accumulated Other Comprehensive Income

All balances in accumulated other comprehensive income are related to available-for-sale marketable securities.  The following table sets forth the balance of the Company’s accumulated other comprehensive income, net of tax. 



 

 



 

 



 

Unrealized Gains



 

on Available-for-Sale

(dollars in thousands)

 

Marketable Securities

Accumulated other comprehensive income balance as of December 29, 2018

$

262 



 

 

Other comprehensive income before reclassifications

 

1,075 

Amounts reclassified from accumulated other comprehensive income

 

 -

Net current period change in other comprehensive income

 

1,075 

Accumulated other comprehensive income balance as of June 29, 2019

$

1,337 



The following table sets forth the effects on net income of the amounts reclassified out of accumulated other comprehensive income for the periods ended June 29, 2019 and June 30, 2018.



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Amounts Reclassified from



 

Accumulated Other Comprehensive Income to the



 

Consolidated Statements of Income



 

13 Weeks Ended

26 Weeks Ended

(dollars in thousands)

Location

June 29, 2019

June 30, 2018

June 29, 2019

June 30, 2018

Unrealized gains (losses) on available-for-sale marketable securities

 

 

 

 

 

 

 

 



Investment income and interest expense

$

 -

$

 -

$

 -

$

54 



Provision for income taxes

 

 -

 

 -

 

 -

 

(15)

Total amount reclassified, net of tax

$

 -

$

 -

$

 -

$

39 



































(5) Long-Term Debt

On September 1, 2016 Weis Markets entered into a revolving credit agreement with Wells Fargo Bank, National Association (the “Credit Agreement”).  The Credit Agreement provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $50.0 million with an additional discretionary amount available of $50.0 million.  As of June 29, 2019, the availability under the revolving credit agreement was $88.5 million, net of $11.5 million letters of credit.  The revolving credit agreement matures on September 1, 2019.  The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.



Interest expense related to long-term debt was $14 thousand and $73 thousand in the thirteen weeks ended June 29, 2019 and June 30, 2018, respectively.  In the first half of 2019 and 2018, interest expense related to long-term debt totaled $33 thousand and $240 thousand, respectively.

8

 


 

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

(6) Revenue Recognition

The Chief Operating Officer, the Company’s chief operating decision maker, analyzes store operational revenues by geographical area but each area offers customers similar product, has similar distribution methods, and is supported by centralized management processes.  The Company’s operations are reported as a single reportable segment.



The following table represents net sales by type of product for the thirteen and twenty-six week periods ending June 29, 2019 and June 30, 2018:







 

 

 

 

 

 

 

 

 

 

 

 



 

13 Weeks Ended

(dollars in thousands)

 

June 29, 2019

 

June 30, 2018

Grocery

 

$

767,886 

 

86.6 

%

 

$

757,894 

 

87.0 

%

Pharmacy

 

 

84,682 

 

9.5 

 

 

 

78,271 

 

9.0 

 

Fuel

 

 

33,271 

 

3.7 

 

 

 

33,439 

 

3.8 

 

Manufacturing

 

 

2,128 

 

0.2 

 

 

 

1,496 

 

0.2 

 



 

 

 

 

 

 

 

 

 

 

 

 

Total net sales

 

$

887,967 

 

100.0 

%

 

$

871,100 

 

100.0 

%

















 

 

 

 

 

 

 

 

 

 

 

 



 

26 Weeks Ended

(dollars in thousands)

 

June 29, 2019

 

June 30, 2018

Grocery

 

$

1,534,787 

 

87.0 

%

 

$

1,525,912 

 

87.3 

%

Pharmacy

 

 

166,463 

 

9.4 

 

 

 

156,211 

 

8.9 

 

Fuel

 

 

59,736 

 

3.4 

 

 

 

62,084 

 

3.6 

 

Manufacturing

 

 

3,700 

 

0.2 

 

 

 

2,999 

 

0.2 

 



 

 

 

 

 

 

 

 

 

 

 

 

Total net sales

 

$

1,764,686 

 

100.0 

%

 

$

1,747,206 

 

100.0 

%













 

9

 


 

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

(7) Leases



The adoption of ASU 2016-02 Leases (Topic 842) had a significant impact on the Company’s Consolidated Balance Sheets, resulting in operating lease right-to-use assets of $202 million and lease liabilities of $211 million.  The difference between the operating lease right-to-use assets and lease liabilities represents prepaid and accrued rents, unfavorable lease obligations, favorable lease assets and deferred tenant allowances associated with operating leases as of December 30, 2018 and reclassified against the operating lease right-to-use asset upon adoption.



As of December 30, 2018, the Company leased approximately 53% of its open store facilities under operating leases that expire at various dates through 2033, with the remaining store facilities being owned.  These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus variable lease costs related to real estate taxes and insurance as well as contingent rentals based on a percentage of annual sales or increases periodically based on inflation.  These variable lease costs are not included in the measurement of the operating lease right-to-use assets or lease liabilities and are charged to the related expense category included in “Operating, general and administrative expenses.”  Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 5 to 20 years.  Additionally, the Company has operating leases for certain transportation and other equipment.



The Company leases or subleases space to tenants in owned, vacated and open store facilities.  Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”



The following is a schedule of the lease costs included in “Operating, general and administrative expenses” for the thirteen and twenty-six weeks ended June 29, 2019.





 

 

 

 

(dollars in thousands)

13 Weeks Ended

26 Weeks Ended

Operating lease cost

$

11,415 

$

23,056 

Variable lease cost

 

2,911 

 

5,554 

Lease or sublease income

 

(1,976)

 

(3,850)

Net lease cost

$

12,350 

$

24,760 



10

 


 

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 



(7) Leases (continued)



The following is a schedule by years of the future minimum rental payments required under operating leases and total minimum sublease and lease rental income to be received as of  June 29, 2019, inclusive of 12 months from June 30th.







 

 

 

(dollars in thousands)

 

Leases

Subleases

2019

$

45,526  (3,818)

2020

 

40,582  (3,558)

2021

 

33,586  (2,998)

2022

 

27,358  (2,541)

2023

 

23,718  (2,035)

Thereafter

 

64,026  (8,164)

Total Lease Payments

$

234,795  (23,114)

Less: Interest

 

35,784 

 -

Present value of lease liabilities

 

199,011  (23,114)









The following is a schedule of weighted-average remaining lease terms and weighted-average discount rates as of June 29, 2019 and December 30, 2018.







 

 

 

 

Lease Term and Discount Rate

 

June 29, 2019

 

December 30, 2018

Weighted-average remaining lease term

 

4.27 

 

4.69 

Weighted-average discount rate

 

3.57% 

 

3.84% 































 

11

 


 

Table of Contents

WEIS MARKETS, INC.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following discussion and analysis of Weis Markets, Inc.’s (the “Company”) financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q, the Company’s audited Consolidated Financial Statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2018, filed with the U.S. Securities and Exchange Commission, as well as the cautionary statement captioned "Forward-Looking Statements" immediately following this analysis.



Company Summary



Weis Markets is a conventional supermarket chain that operates 200 retail stores with nearly 23,000 associates located in Pennsylvania and six surrounding states: Delaware, Maryland, New Jersey, New York, Virginia and West Virginia.  Its products include groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services, deli products, prepared foods, bakery products, beer and wine, fuel and general merchandise items, such as health and beauty care and household products.  The store product selection includes national, local and private brands and the Company promotes by using Everyday Lower Price, Low Price Guarantee, and Loyalty programs.  The Loyalty program includes fuel rewards that may be redeemed at the Company’s fuel stations or one of its third-party fuel station partners.  On January 17, 2019 the Company announced a new pricing strategy for its private brand products named Low, Low Price. The move takes the Company’s private brand products from a high, low pricing strategy to everyday low cost.



The Company advertises its products and promotes its brand through weekly newspaper circulars; radio ads; e-mail blasts; and on-line via its web site, social media and mobile applications.  Printed circulars are used extensively on a weekly basis to advertise featured items.  The Company promotes by using Everyday Lower Price, Low Price Guarantee, Low, Low Price and utilizes a loyalty marketing program, “Weis Club Preferred Shopper,” which enables customers to receive discounts, promotions and in-store and fuel rewards.  

   

Utilizing its own centrally located distribution center and transportation fleet, Weis Markets self distributes approximately 65% of product with the remaining being supplied by direct store vendors.  In addition, the Company has three manufacturing facilities which process milk, ice cream and fresh meat products primarily for the Company’s stores but serve other companies as well.  The corporate offices are located in Sunbury, PA where the Company was founded in 1912. 



In 2016, Weis Markets acquired five Mars Super Market locations in Baltimore County, MD, 38 Food Lion stores throughout Maryland, Virginia and Delaware, and a Nell's Family Market in East Berlin, PA.  The completion of these individual acquisitions expanded the Company's footprint into Virginia and Delaware, and increased its store count by 25 percent.  To date the acquired store group is providing a positive cash flow for the Company at a greater return on the fair value investment than if stores had been organically established.  As the acquired stores assimilate, management anticipates the adverse impact of these stores on Company margins to lessen.  In the first quarter of 2019, the Company closed two stores from the acquired store group.  The Company continues to actively investigate acquisition opportunities as well as grow its existing store base organically.



The Company continues to innovate and remain relevant to industry trends and offering customer convenience by presenting

programs like “Weis 2 Go Online” and home delivery.  In the first twenty-six weeks of 2019, the Company offered Weis 2 Go Online in 150 of its locations, adding 61 stores since the end of 2018.  Weis 2 Go Online allows the customer to order on-line and then pick up their order at a drive-thru location at the store.  During the third quarter of 2018 the Company began offering home delivery, and currently offers this convenience to customers in 177 different locations.

12

 


 

Table of Contents

WEIS MARKETS, INC.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(continued)

Results of Operations





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Analysis of Consolidated Statements of Income

 



 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage Changes

 



13 Weeks Ended

26 Weeks Ended

2019 vs. 2018

 

2019 vs. 2018

 

(dollars in thousands except per share amounts)

June 29, 2019

June 30, 2018

June 29, 2019

June 30, 2018

13 Weeks Ended

 

26 Weeks Ended

 

Net sales

$

887,967 

 

$

871,100 

 

$

1,764,686 

 

$

1,747,206 

 

 

 

1.9

%

 

 

1.0

%

 

Cost of sales, including advertising, warehousing and distribution expenses

 

651,297 

 

 

630,805 

 

 

1,298,463 

 

 

1,272,004 

 

 

 

3.2

 

 

 

2.1

 

 

Gross profit on sales

 

236,670 

 

 

240,295 

 

 

466,223 

 

 

475,202 

 

 

 

(1.5)

 

 

 

(1.9)

 

 

Gross profit margin

 

26.7 

%

 

27.6 

%

 

26.4 

%

 

27.2 

%

 

 

 

 

 

 

 

 

 

Operating, general and administrative expenses

 

210,801 

 

 

214,258 

 

 

424,375 

 

 

426,326 

 

 

 

(1.6)

 

 

 

(0.5)

 

 

  O, G & A, percent of net sales

 

23.7 

%

 

24.6 

%

 

24.0 

%

 

24.4 

%

 

 

 

 

 

 

 

 

 

  Income from operations

 

25,869 

 

 

26,037 

 

 

41,848 

 

 

48,876 

 

 

 

(0.6)

 

 

 

(14.4)

 

 

  Operating margin

 

2.9 

%

 

3.0 

%

 

2.4 

%

 

2.8 

%

 

 

 

 

 

 

 

 

 

Investment income and interest expense

 

1,079 

 

 

105 

 

 

3,975 

 

 

(427)

 

 

 

927.6

 

 

 

1,030.9

 

 

Investment income and interest expense, percent of net sales

 

0.1 

%

 

0.0 

%

 

0.2 

%

 

(0.0)

%

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

26,948 

 

 

26,142 

 

 

45,823 

 

 

48,449 

 

 

 

3.1

 

 

 

(5.4)

 

 

Income before provision for income taxes, percent of net sales

 

3.0 

%

 

3.0 

%

 

2.6 

%

 

2.8 

%

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

6,473 

 

 

7,047 

 

 

11,043 

 

 

13,163 

 

 

 

(8.1)

 

 

 

(16.1)

 

 

Effective income tax rate

 

24.0 

%

 

27.0 

%

 

24.1 

%

 

27.2 

%

 

 

 

 

 

 

 

 

 

Net income

$

20,475 

 

$

19,095 

 

$

34,780 

 

$

35,286 

 

 

 

7.2

%

 

 

(1.4)

%

 

Net income, percent of net sales

 

2.3 

%

 

2.2 

%

 

2.0 

%

 

2.0 

%

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share

$

0.76 

 

$

0.71 

 

$

1.29 

 

$

1.31 

 

 

 

7.0

%

 

 

(1.5)

%

 



Net Sales

Analysis of Sales





 

 

 

 

 

 



Percentage Changes



2019 vs. 2018

June 29, 2019

13 Weeks Ended

26 Weeks Ended

Net sales

 

1.9 

%

 

1.0 

%

Net sales, excluding fuel sales

 

2.0 

 

 

1.1 

 

Comparable store sales, adjusted for holiday impact

 

1.4 

 

 

1.4 

 

Comparable store sales, adjusted for holiday impact, excluding fuel sales

 

1.5 

%

 

1.6 

%



When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable after it has been in operation for five full quarters.  Relocated stores and stores with expanded square footage are included in comparable store sales since these units are located in existing markets and are open during construction.  Planned store dispositions are excluded from the calculation.  The Company only includes retail food stores in the calculation.



The Company’s 2019 second quarter sales benefited from the Easter holiday shift, since the Easter selling period occurred in the last week of the first quarter in 2018 while the slow selling post-Easter week fell in the second quarter a year ago.  In 2019, both weeks fell in the second quarter. Management estimates the incremental holiday sales impact in 2019 for comparative purposes was approximately $9.7 million which has been excluded from the Company’s 2019 comparable store sales total.

13

 


 

Table of Contents

WEIS MARKETS, INC.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(continued)

Results of Operations (continued)



Net Sales (continued)

Analysis of Sales (continued)



According to the latest U.S. Bureau of Labor Statistics’ report, the annual Seasonally Adjusted Food-at-Home Consumer Price Index increased 0.9% compared to an increase of 0.5% for the same period last year.  Even though the U.S. Bureau of Labor Statistics’ index rates may be reflective of a trend, it will not necessarily be indicative of the Company’s actual results.  According to the U.S. Department of Energy, the thirteen-week average price of gasoline in the Central Atlantic States increased 2.6% or $0.08 per gallon in the second quarter of 2019 compared to the same quarter in 2018. The year to date average remains the same in 2019 when compared to 2018.



Comparable store sales for the second quarter of 2019 remained positive compared to the same period a year ago, adjusted for the holiday week, with increases of 1.4% and 1.5%, with and without fuel, respectively.  Year to date, comparable store sales for 2019 also remained positive when compared to the same period in 2018, with increases of 1.4% and 1.6% with and without fuel, respectively.  Customer acceptance of the new Low, Low Price private brand program,  as well as additional product offerings and customer conveniences such as “Weis 2 Go Online,”  currently offered in 150 store locations for both pickup and delivery and additional 27 for delivery only.



Although the Company experienced retail inflation and deflation in various commodities for the years presented, management cannot accurately measure the full impact of inflation or deflation on retail pricing due to changes in the types of merchandise sold between periods, shifts in customer buying patterns and the fluctuation of competitive factors.  Management remains confident in its ability to generate sales growth in a highly competitive environment, but also understands some competitors have greater financial resources and could use these resources to take measures which could adversely affect the Company's competitive position.



Cost of Sales and Gross Profit

Cost of sales consists of direct product costs (net of discounts and allowances), net advertising costs, distribution center and transportation costs, as well as manufacturing facility operations.  Increased sales volume resulted in an increase in cost of sales.  Both direct product cost and distribution cost increase when sales volume increases.



Gross profit margin decreased 0.9% in the second quarter of 2019 and year to date gross profit margin decreased 0.8% compared to the same periods in 2018Year-to-date declining retails and costs in fuel, fruits, vegetables and eggs had a negative impact on gross profit rates, while pharmacy gross profits are being pressured by recent changes in industry practices.  While the various commodities’ retails and costs are cyclical in nature, the Company cannot predict whether the pharmacy industry practices will change favorably.  Additionally, rainy weather in the Company’s operating area depressed high gross profit margin seasonal general merchandise sales in the second quarter of 2019 while fuel, fruits and vegetables returned to more normal retails and costs.



Non-cash LIFO inventory valuation adjustments was an expense of $400 thousand in the first twenty-six weeks of 2019, compared to an expense of $1.4 million in 2018.  The Company anticipates product costs to remain stagnant.



Although the Company experienced product cost inflation and deflation in various commodities for the quarters presented, management cannot accurately measure the full impact of inflation or deflation on costs due to changes in the types of merchandise sold between periods, shifts in customer buying patterns and the fluctuation of competitive factors.



14

 


 

Table of Contents

WEIS MARKETS, INC.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(continued)

Results of Operations (continued)



Operating, General and Administrative Expenses 
The majority of the operating, general and administrative expenses are driven by sales volume.



Employee-related costs such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 61% of the total “Operating, general and administrative expenses.”  As a percent of sales, direct store labor decreased 0.2% in the second quarter of 2019 when compared to the same period in 2018, but remained the same when comparing the first half of 2019 with the same period in 2018.  The Company continues to monitor store labor efficiencies and develop labor standards to reduce cost while maintaining the Company’s customer service expectations.  Currently, the Company is undergoing an initiative installing or upgrading self-checkouts in its stores in response to customer preference and labor rates and supply.



Depreciation and amortization expense charged to “Operating, general and administrative expenses was $21.4 million, or 2.4% of net sales during the second quarter of 2019 compared to $21.2 million, or 2.4% of net sales during second quarter of 2018.  During the first half of 2019 and 2018, depreciation and amortization expense charged to “Operating, general and administrative expenses” was $42.3 million, or 2.4% of net sales and $41.7 million, or 2.4% of net sales, respectively.  See the Liquidity and Capital Resources section for further information regarding the Company’s capital expansion program.







 

 

 

 

A breakdown of the material increases (decreases) as a percent of sales in "Operating, general and administrative expenses" is as follows:



 

 

 

 



13 Weeks Ended

 

(dollars in thousands)

Increase

Increase (Decrease)

 

June 29, 2019

(Decrease)

as a % of sales

 

Direct store labor

$

(124) (0.2)

%

Associate benefits, payroll taxes and incentives

 

(1,331) (0.2)

 

Store operational expenses & supplies

 

(1,280) (0.2)

 

Utilities expense

 

(920) (0.1)

 

Lease expense

 

(776) (0.1)

 



 

 

 

 







 

 

 

 



26 Weeks Ended

 

(dollars in thousands)

Increase

Increase (Decrease)

 

June 29, 2019

(Decrease)

as a % of sales

 

Associate benefits, payroll taxes and incentives

$

(2,227) (0.2)

%

Supplemental executive retirement plan expense

 

2,269  0.1 

 

Store operational expenses & supplies

 

(1,280) (0.2)

 

Utilities expense

 

(2,742) (0.2)

 

Lease expense

 

(1,116) (0.1)

 



 

 

 

 





All expenses as a percent of sales presented for the second quarter of 2019 have benefited in comparison with the 2018 percent of sales due to the Easter holiday shift and the closure of unprofitable stores.  In the first quarter of 2019 the Company recorded gains in investment income after income from operations due to the SERP retirement plan market gains in the first quarter of 2019 that have a corresponding expense recorded in “Operating, general and administrative expenses.”  The Company is also benefiting from cost saving initiatives in various area of its operations and is saving in utilities with a combination of purchasing, associate sustainability and capital investments such as it LED lighting program.



The Company’s 2018 sustainability report may be found at: https://www.weismarkets.com/sites/default/files/documents/weis_2018_9_ada.pdf?27



15

 


 

Table of Contents

WEIS MARKETS, INC.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





Provision for Income Taxes 

The effective income tax rate was 24.0% and 27.0% for the second quarter of 2019 and 2018, respectively.  The effective income tax rate was 24.1% and 27.2% for the first half of 2019 and 2018, respectively.  Historically, the effective income tax rate differed from the federal statutory rate, primarily due to the effect of state taxes, net of permanent differences.



Liquidity and Capital Resources



The primary sources of cash are cash flows generated from operations and borrowings under the revolving credit agreement the Company entered into on September 1, 2016 with Wells Fargo Bank, NA (the “Credit Agreement”).  The Credit Agreement provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $50.0 million with an additional discretionary amount available of $50.0 million.  As of June 29, 2019, the availability under the revolving credit agreement was $88.5 million with $11.5 million of letters of credit outstanding.  The Company anticipates amending and extending the Credit Agreement, which matures on September 1, 2019.  The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.



The Company’s investment portfolio consists of high grade municipal bonds with maturity dates generally between one and 10 years and large capitalized public company equity securities.  The portfolio totaled $56.7 million as of June 29, 2019.  Management anticipates maintaining the investment portfolio, but has the ability to liquidate if needed.



The Company’s capital expansion program includes the construction of new superstores, the expansion and remodeling of existing units, the acquisition of sites for future expansion, new technology purchases and the continued upgrade of the Company’s distribution facilities and transportation fleet.  Management currently plans to invest approximately $86 million in its capital expansion program in 2019. 



The Company expects that cash generated from operations and cash available under the Credit Agreement (and future amendment) will fund its working capital requirements, debt requirements, capital expansion program, acquisitions and dividends.  The Company has no other commitment of capital resources as of June 29, 2019, other than the lease commitments on its store facilities and transportation equipment under operating leases that expire at various dates through 2033.



The Board of Directors’ 2004 resolution authorizing the repurchase of up to one million shares of the Company’s common stock has a remaining balance of 752,468 shares.    The Company has recently entered into a brokerage agreement with Wells Fargo Securities, LLC to facilitate possible share repurchases.



Quarterly Cash Dividends 

At its regular meeting held in July, the Board of Directors unanimously approved a quarterly dividend of $0.31 per share, payable on August 12, 2019 to shareholders of record on July 29, 2019.  The Company expects to continue paying regular cash dividends on a quarterly basis. However, the Board of Directors reconsiders the declaration of dividends quarterly. The Company pays these dividends at the discretion of the Board of Directors and the continuation of these payments and the amount of the dividends depends upon the results of operations, the financial condition of the Company and other factors which the Board of Directors deems relevant.



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WEIS MARKETS, INC.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(continued)

Liquidity and Capital Resources (continued)



Cash Flow Information







 

 

 

 

 

 

 

 

 



26 Weeks Ended

 

 

 

(dollars in thousands)

June 29, 2019

June 30, 2018

2019 vs. 2018

Net cash provided by (used in):

 

 

 

 

 

 

 

 

 

Operating activities

$

78,966 

 

$

84,227 

 

$

(5,261)

 

Investing activities

 

(48,451)

 

 

(46,394)

 

 

(2,057)

 

Financing activities

 

(16,677)

 

 

(51,127)

 

 

34,450 

 



Operating

Cash flows from operating activities decreased $5.2 million in the first twenty-six weeks of 2019 compared to the first twenty-six weeks of 2018.  The decrease in cash from Operating activities is attributable to a $9.1 million first quarter payment increase in associate incentives, as well as other changes in accounts payable.



Investing

Property and equipment purchases during the first twenty-six weeks of 2019 totaled $44.3 million compared to $46.4 million in the first twenty-six weeks of 2018.  As a percentage of sales, capital expenditures were 2.5% in the first twenty-six weeks of 2019 compared to 2.6% in the first twenty-six weeks of 2018.  In 2019, the Company plans to maintain or increase its marketable securities portfolio.



Financing

The Company paid dividends of $8.3 million and $16.7 million in the second quarter and first twenty-six weeks of 2019, respectively; and $8.1 million and $16.1 million in the second quarter and first twenty-six weeks of 2018, respectively.  The Company has not had an obligation on the Credit Agreement since the second quarter of 2018. As such, the Company had no payments on long-term debt in the first twenty-six weeks of 2019 compared to $35 million paid in the first twenty-six weeks of 2018.



Accounting Policies and Estimates



The Company has chosen accounting policies that it believes are appropriate to accurately and fairly report its operating results and financial position, and the Company applies those accounting policies in a consistent manner. The Significant Accounting Policies are summarized in Note 1 to the Consolidated Financial Statements included in the 2018 Annual Report on Form 10-K.  There have been no changes to the Significant Accounting Policies since the Company filed its Annual Report on Form 10-K for the fiscal year ended December 29, 2018, except for the adoption of ASU 2016-02, Leases (Topic 842) as discussed in Notes 2 and 7 of the Notes to the Consolidated Financial Statements.





Forward-Looking Statements



In addition to historical information, this 10-Q Report may contain forward-looking statements, which are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  Any forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.  For example, risks and uncertainties can arise with changes in: general economic conditions, including their impact on capital expenditures; business conditions in the retail industry; the regulatory environment; rapidly changing technology and competitive factors, including increased competition with regional and national retailers; and price pressures.  Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as of the date hereof.  The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.  Readers should carefully review the risk factors described in other documents the Company files periodically with the Securities and Exchange Commission.



 

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WEIS MARKETS, INC.



ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Quantitative Disclosure - There have been no material changes in the Company's market risk during the fiscal quarter ended June 29, 2019.  Quantitative information is set forth in Item 7a on the Company’s Annual Report on Form 10-K under the caption “Quantitative and Qualitative Disclosures About Market Risk,” which was filed for the fiscal year ended December 29, 2018 and is incorporated herein by reference.



Qualitative Disclosure - This information is set forth in the Company's Annual Report on Form 10-K under the caption “Liquidity and Capital Resources,” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed for the fiscal year ended December 29, 2018 and is incorporated herein by reference.



ITEM 4.  CONTROLS AND PROCEDURES



The Chief Executive Officer and the Chief Financial Officer, together with the Company’s Disclosure Committee, evaluated the Company’s disclosure controls and procedures as of the fiscal quarter ended June 29, 2019.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports was accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disc