Company Quick10K Filing
Weis Markets
Price38.31 EPS2
Shares27 P/E17
MCap1,030 P/FCF7
Net Debt-77 EBIT78
TEV954 TEV/EBIT12
TTM 2019-09-28, in MM, except price, ratios
10-Q 2020-03-28 Filed 2020-05-07
10-K 2019-12-28 Filed 2020-03-12
10-Q 2019-09-28 Filed 2019-11-04
10-Q 2019-06-29 Filed 2019-08-06
10-Q 2019-03-30 Filed 2019-05-09
10-K 2018-12-29 Filed 2019-03-14
10-Q 2018-09-29 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-30 Filed 2018-03-15
10-Q 2017-09-30 Filed 2017-11-07
10-Q 2017-07-01 Filed 2017-08-10
10-Q 2017-04-01 Filed 2017-05-11
10-K 2016-12-31 Filed 2017-03-16
10-Q 2016-09-24 Filed 2016-11-03
10-Q 2016-06-25 Filed 2016-07-28
10-Q 2016-03-26 Filed 2016-05-05
10-K 2015-12-26 Filed 2016-03-18
10-Q 2015-09-26 Filed 2016-02-16
10-Q 2015-06-27 Filed 2015-08-04
10-Q 2015-03-28 Filed 2015-05-01
10-K 2014-12-27 Filed 2015-03-13
10-Q 2014-09-27 Filed 2014-11-06
10-Q 2014-06-28 Filed 2014-08-07
10-Q 2014-03-29 Filed 2014-05-08
10-K 2013-12-28 Filed 2014-03-14
10-Q 2013-09-28 Filed 2013-11-07
10-Q 2013-06-29 Filed 2013-08-08
10-Q 2013-03-30 Filed 2013-05-09
10-K 2012-12-29 Filed 2013-03-14
10-Q 2012-09-29 Filed 2012-11-08
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-10
10-K 2011-12-31 Filed 2012-03-15
10-Q 2011-09-24 Filed 2011-11-03
10-Q 2011-06-25 Filed 2011-08-04
10-Q 2011-03-26 Filed 2011-05-05
10-K 2010-12-25 Filed 2011-03-10
10-Q 2010-09-25 Filed 2010-11-04
10-Q 2010-06-26 Filed 2010-08-05
10-Q 2010-03-27 Filed 2010-05-06
10-K 2009-12-26 Filed 2010-03-11
8-K 2020-05-04
8-K 2020-04-30
8-K 2020-03-09
8-K 2019-11-18
8-K 2019-11-04
8-K 2019-08-27
8-K 2019-08-02
8-K 2019-05-03
8-K 2019-04-25
8-K 2019-03-11
8-K 2018-11-02
8-K 2018-08-03
8-K 2018-05-07
8-K 2018-04-26
8-K 2018-03-13

WMK 10Q Quarterly Report

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 1A. Risk Factors
Item 6. Exhibits
EX-31.1 wmk-20200328xex31_1.htm
EX-31.2 wmk-20200328xex31_2.htm
EX-32 wmk-20200328xex32.htm

Weis Markets Earnings 2020-03-28

Balance SheetIncome StatementCash Flow
1.71.41.00.70.30.02012201420172020
Assets, Equity
1.00.80.60.40.20.02012201420172020
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12012201420172020
Ops, Inv, Fin

10-Q 1 wmk-20200328x10q.htm WEIS MARKETS, INC. 10Q 01 2020 WEIS MARKETS, INC 10Q 1 2020_Taxonomy2019

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 March 28, 2020



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 May 7, 2020, 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

11

Item 3. Quantitative and Qualitative Disclosures about Market Risk

18

Item 4. Controls and Procedures

18

Part II. Other Information

 

Item 1a. Risk Factors

19

Item 6. Exhibits

20

Signatures

21

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)

March 28, 2020

 

December 28, 2019

Assets

 

 

 

 

 

Current:

 

 

 

 

 

Cash and cash equivalents

$

158,279 

 

$

66,871 

Marketable securities

 

62,049 

 

 

63,538 

SERP investment

 

16,350 

 

 

18,935 

Accounts receivable, net

 

56,952 

 

 

55,764 

Inventories

 

233,421 

 

 

279,806 

Prepaid expenses and other current assets

 

24,683 

 

 

23,378 

Total current assets

 

551,734 

 

 

508,292 

Property and equipment, net

 

886,856 

 

 

886,928 

Operating lease right-to-use

 

207,735 

 

 

210,196 

Goodwill

 

52,330 

 

 

52,330 

Intangible and other assets, net

 

17,709 

 

 

17,816 

Total assets

$

1,716,364 

 

$

1,675,562 



 

 

 

 

 

Liabilities 

 

 

 

 

 

Current:

 

 

 

 

 

Accounts payable

$

208,027 

 

$

180,718 

Accrued expenses

 

35,382 

 

 

39,528 

Operating leases

 

38,741 

 

 

39,114 

Accrued self-insurance

 

15,797 

 

 

15,719 

Deferred revenue, net

 

6,337 

 

 

8,662 

Income taxes payable

 

17,525 

 

 

8,197 

Total current liabilities

 

321,809 

 

 

291,938 

Postretirement benefit obligations

 

18,721 

 

 

22,143 

Accrued self-insurance

 

17,621 

 

 

17,625 

Operating leases

 

177,371 

 

 

179,654 

Deferred income taxes

 

97,056 

 

 

97,041 

Other

 

6,601 

 

 

8,416 

Total liabilities

 

639,179 

 

 

616,817 

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

 

1,216,524 

 

 

1,198,173 

Accumulated other comprehensive income

 

 

 

 

 

(Net of deferred taxes of $629 in 2020 and $593 in 2019)

 

1,569 

 

 

1,480 



 

1,228,042 

 

 

1,209,602 

Treasury stock at cost, 6,149,364 shares

 

(150,857)

 

 

(150,857)

Total shareholders’ equity

 

1,077,185 

 

 

1,058,745 

Total liabilities and shareholders’ equity

$

1,716,364 

 

$

1,675,562 



See accompanying notes to Consolidated Financial Statements.

1

 


 

Table of Contents

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)







 

 

 

 

 

 



 

 



13 Weeks Ended

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

March 28, 2020

March 30, 2019

Net sales

$

985,820 

 

$

876,718 

 

Cost of sales, including advertising, warehousing and distribution expenses

 

721,673 

 

 

647,166 

 

Gross profit on sales

 

264,147 

 

 

229,552 

 

Operating, general and administrative expenses

 

226,719 

 

 

211,732 

 

Income from operations

 

37,428 

 

 

17,820 

 

Investment income (loss) and interest expense

 

(4,019)

 

 

2,895 

 

Other income (expense)

 

2,676 

 

 

(1,841)

 

Income before provision for income taxes

 

36,085 

 

 

18,874 

 

Provision for income taxes

 

9,396 

 

 

4,570 

 

Net income

$

26,689 

 

$

14,304 

 



 

 

 

 

 

 

Weighted-average shares outstanding, basic and diluted

 

26,898,443 

 

 

26,898,443 

 

Cash dividends per share

$

0.31 

 

$

0.31 

 

Basic and diluted earnings per share

$

0.99 

 

$

0.53 

 

See accompanying notes to Consolidated Financial Statements.

2

 


 

Table of Contents

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)







 

 

 

 

 

 



 

 

 

 

 

 



13 Weeks Ended

(dollars in thousands)

March 28, 2020

March 30, 2019

Net income

$

26,689 

 

$

14,304 

 

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 $38 and $243, respectively for the thirteen Weeks Ended)

 

95 

 

 

621 

 

Reclassification adjustment for (gains) losses included in net income

 

 

 

 

 

 

(Net of deferred taxes of $2 and $0, respectively for the thirteen Weeks Ended)

 

(6)

 

 

 -

 

Other comprehensive income gain (loss), net of tax

 

89 

 

 

621 

 

Comprehensive income, net of tax

$

26,778 

 

$

14,925 

 

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

Common Stock

Retained

Comprehensive

Treasury Stock

Shareholders’

March 28, 2020 and March 30, 2019

Shares

Amount

Earnings

Income (Loss)

Shares

Amount

Equity

Balance at December 28, 2019

33,047,807 

$

9,949 

$

1,198,173 

$

1,480 

 

6,149,364 

$

(150,857)

$

1,058,745 

Net Income

 

 

26,689 

 

 

 

 

26,689 

Other comprehensive loss, net of

 

 

 

 

 

 

 

 

 

 

 

 

 

reclassification adjustments and tax

 

 

 

89 

 

 

 

89 

Dividends paid

 

 

(8,339)

 

 

 

 

(8,339)

Balance at March 28, 2020

33,047,807 

$

9,949 

$

1,216,524 

$

1,569 

 

6,149,364 

$

(150,857)

$

1,077,185 



 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 29, 2018

33,047,807 

$

9,949 

$

1,163,545 

$

262 

 

6,149,364 

$

(150,857)

$

1,022,899 

Net income

 

 

14,304 

 

 

 

 

14,304 

Other comprehensive income, net of

 

 

 

 

 

 

 

 

 

 

 

 

 

reclassification adjustments and tax

 

 

 

621 

 

 

 

621 

Dividends paid

 

 

(8,339)

 

 

 

 

(8,339)

Balance at March 30, 2019

33,047,807 

$

9,949 

$

1,169,510 

$

883 

 

6,149,364 

$

(150,857)

$

1,029,485 



See accompanying notes to Consolidated Financial Statements.

4

 


 

Table of Contents

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)





 

 

 

 

 

 



13 Weeks Ended

(dollars in thousands)

 

March 28, 2020

March 30, 2019

Cash flows from operating activities:

 

 

 

 

 

 

Net income

$

26,689 

 

$

14,304 

 

Adjustments to reconcile net income to

 

 

 

 

 

 

net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

23,886 

 

 

23,125 

 

Loss on disposition of fixed assets

 

1,425 

 

 

608 

 

(Gain) on sale of marketable securities

 

(8)

 

 

 -

 

Unrealized (gain) loss in value of equity securities

 

1,922 

 

 

(625)

 

Deferred income taxes

 

(21)

 

 

(1,014)

 

Unrealized (gain) loss in SERP

 

2,676 

 

 

(1,008)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Inventories

 

46,385 

 

 

138 

 

Accounts receivable and prepaid expenses

 

(2,492)

 

 

9,894 

 

Accounts payable and other liabilities

 

14,919 

 

 

(18,912)

 

Income taxes

 

9,329 

 

 

5,553 

 

Other

 

53 

 

 

588 

 

Net cash provided by operating activities

 

124,763 

 

 

32,651 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

(24,848)

 

 

(24,444)

 

Proceeds from the sale of property and equipment

 

161 

 

 

84 

 

Purchase of marketable securities

 

(2,079)

 

 

(3,960)

 

Proceeds from maturities of marketable securities

 

1,800 

 

 

235 

 

Purchase of intangible assets

 

41 

 

 

(540)

 

Change in SERP investment

 

(91)

 

 

(1,708)

 

Net cash used in investing activities

 

(25,016)

 

 

(30,333)

 

Cash flows from financing activities:

 

 

 

 

 

 

Dividends paid

 

(8,339)

 

 

(8,339)

 

Net cash used in financing activities

 

(8,339)

 

 

(8,339)

 

Net increase (decrease) in cash and cash equivalents

 

91,408 

 

 

(6,021)

 

Cash and cash equivalents at beginning of year

 

66,871 

 

 

37,808 

 

Cash and cash equivalents at end of period

$

158,279 

 

$

31,787 

 

See accompanying notes to Consolidated Financial StatementsIn the first thirteen weeks of 2020, there was $89 thousand cash paid for income taxes compared to $51 thousand in 2019 for the same period.  Cash paid for interest related to long-term debt was $10 thousand and $36 thousand in the first thirteen weeks of 2020 and 2019, 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 regularly monitors recently issued accounting standards and assesses their applicability and impact.  The Company believes that there are no accounting standard updates that have or will have a material or significant impact on the Company's accounting policies.

 

(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  loss of $4.0 million in the first quarter of 2020, which included an unrealized loss in equity securities of $1.9 million. In the thirteen weeks ending March 30,  2019, the Company recognized investment income of $2.9 million, which included unrealized gains in equity securities of $625 thousand.  

6

 


 

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

(3)  Marketable Securities (continued)



Marketable securities, as of March 28, 2020 and December 28, 2019, consisted of:



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

 

Gross

Gross

 

 

(dollars in thousands)

Amortized

Unrealized

Unrealized

Fair

March 28, 2020

Cost

Holding Gains

Holding Losses

Value

Available-for-sale:

 

 

 

 

 

 

 

 

Level 1

 

 

 

 

 

 

 

 

Equity securities

 

 

 

 

 

 

$

7,278 

Level 2

 

 

 

 

 

 

 

 

Municipal bonds

$

52,572 

$

2,272 

$

(73)

 

54,771 



$

52,572 

$

2,272 

$

(73)

$

62,049 







 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

 

Gross

Gross

 

 

(dollars in thousands)

Amortized

Unrealized

Unrealized

Fair

December 28, 2019

Cost

Holding Gains

Holding Losses

Value

Available-for-sale:

 

 

 

 

 

 

 

 

Level 1

 

 

 

 

 

 

 

 

Equity securities

 

 

 

 

 

 

$

9,201 

Level 2

 

 

 

 

 

 

 

 

Municipal bonds

$

52,264 

$

2,091 

$

(18)

 

54,337 



$

52,264 

$

2,091 

$

(18)

$

63,538 



Maturities of marketable securities classified as available-for-sale at March 28, 2020, were as follows:



 

 

 

 



 

Amortized

 

Fair

(dollars in thousands)

 

Cost

 

Value

Available-for-sale:

 

 

 

 

Due within one year

$

5,437 

$

5,457 

Due after one year through five years

 

28,190 

 

28,996 

Due after five years through ten years

 

18,945 

 

20,318 



$

52,572 

$

54,771 



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 “Other income (expense).”

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 28, 2019

$

1,480 



 

 

Other comprehensive income before reclassifications

 

95 

Amounts reclassified from accumulated other comprehensive income

 

(6)

Net current period change in other comprehensive income

 

89 

Accumulated other comprehensive income balance as of March 28, 2020

$

1,569 



The following table sets forth the effects on net income of the amounts reclassified out of accumulated other comprehensive income for the periods ended March 28, 2020 and March 30, 2019.



 

 

 

 

 



 

 

 

 

 



 

Amounts Reclassified from



 

Accumulated Other Comprehensive Income to the



 

Consolidated Statements of Income



 

13 Weeks Ended

(dollars in thousands)

Location

March 28, 2020

March 30, 2019

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

 

 

 

 



Investment income (loss) and interest expense

$

(8)

$

 -



Provision for income taxes

 

 

 -

Total amount reclassified, net of tax

$

(6)

$

 -





(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”), which was amended on August 21, 2019 and matures on September 1, 2022.  The Credit Agreement provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $30.0 million with an additional discretionary amount available of $70.0 million.  As of March 28, 2020, the availability under the revolving credit agreement was $24.0 million, net of $6.0 million letters of credit.  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 $9 thousand and $18 thousand in the thirteen weeks ended March 28, 2020 and March 30, 2019, 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-week periods ending March 28, 2020 and March 30, 2019:







 

 

 

 

 

 

 

 

 

 

 

 



 

13 Weeks Ended

(dollars in thousands)

 

March 28, 2020

 

March 30, 2019

Grocery

 

$

863,747 

 

87.6 

%

 

$

766,901 

 

87.5 

%

Pharmacy

 

 

89,333 

 

9.1 

 

 

 

81,781 

 

9.3 

 

Fuel

 

 

29,967 

 

3.0 

 

 

 

26,465 

 

3.0 

 

Manufacturing

 

 

2,773 

 

0.3 

 

 

 

1,571 

 

0.2 

 



 

 

 

 

 

 

 

 

 

 

 

 

Total net sales

 

$

985,820 

 

100.0 

%

 

$

876,718 

 

100.0 

%





(7) Leases



As of March 28, 2020, the Company leased approximately 51% of its open store facilities under operating leases that expire at various dates through 2035, 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 weeks ended March 28, 2020 and March 30, 2019.









 

 

 

 

(dollars in thousands)

2020

2019

Operating lease cost

$

11,504 

$

11,641 

Variable lease cost

 

2,667 

 

2,643 

Lease or sublease income

 

(2,037)

 

(1,874)

Net lease cost

$

12,134 

$

12,410 



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WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

(8) Prior Year Reclassification



As of December 28, 2019, the Company reclassified non-service components of the Supplemental Executive Retirement Plan (SERP) benefit obligation separately from the service cost component. These non-service components totaling $1.8 million as of March 30, 2019 were reclassified to “Other income (expense)”.  The Company recognizes service cost components in “Operating, general and administrative costs”.



The tables below summarize the effects of the reclassifications of previously reported Consolidated Financial Statements for the fiscal quarter ended March 30, 2019.







 

 

 

 

 

 

 

 

 



 

March 30, 2019

Consolidated Statements of Income

 

As Previously

 

 

 

 

 

 

(dollars in thousands)

 

Reported

 

Reclassifications

 

As Adjusted

Operating, general and administrative expenses

 

$

213,573 

 

$

(1,841)

 

$

211,732 

Income from operations

 

 

15,979 

 

 

1,841 

 

 

17,820 

Other income (expense)

 

 

 -

 

 

(1,841)

 

 

(1,841)







 

 

 

 

 

 

 

 

 



 

March 30, 2019

Consolidated Statements of Cash Flows

 

As Previously

 

 

 

 

 

 

(dollars in thousands)

 

Reported

 

Reclassifications

 

As Adjusted

Unrealized (gain) loss in SERP

 

$

 -

 

$

(1,008)

 

$

(1,008)

Net cash provided by operating activities

 

 

33,659 

 

 

(1,008)

 

 

32,651 

Change in SERP investment

 

 

(2,716)

 

 

1,008 

 

 

(1,708)

Net cash used in investing activities

 

 

(31,341)

 

 

1,008 

 

 

(30,333)





(9) COVID-19



On March 11, 2020, the World Health Organization declared that the novel coronavirus (COVID-19) had become a pandemic, and on March 13, the U.S. President declared a National Emergency concerning the disease. Additionally, in March 2020, state governments in the Company’s geographic operating area began instituting preventative shut down measures in order to combat the novel coronavirus pandemic.  The coronavirus and actions taken to mitigate the spread of it have had and are expected to continue to have an adverse impact on the economies and financial markets of the geographical area in which the Company operates.  On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted to amongst other provisions, provide emergency assistance for individuals, families and businesses affected by the novel coronavirus pandemic.



The Company’s business being deemed essential resulted in incremental financial performance that may not be indicative of future financial results and there remains uncertainty and increased risks concerning its employees, customers, supply chain and government regulation (see Forward-Looking Statements).

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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 28, 2019, 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 197 retail stores with over 23,500 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; Low, Low Price; 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 March 11, 2020, the World Health Organization declared that the novel coronavirus (COVID-19) had become a pandemic, and on March 13, the U.S. President declared a National Emergency concerning the disease. Additionally, in March 2020, state governments in the Company’s geographic operating area began instituting preventative shut down measures in order to combat the novel coronavirus pandemic.  The Company’s business was deemed essential and thus its stores have remained open during this time period, and sales, costs and profits have increased.  Although the Company sees similar sales and profit results extending into the beginning of the next quarter, the Company is not able to speculate how the ensuing economy or unknown future related expenses will affect it after the governmental novel coronavirus pandemic measures have ended.  The closure of other food sources and government stimulus payments to affected individuals have been accretive to our sales; however, the Company also faces new and increased risks  concerning its employees, government regulation and supply chain (see Forward-Looking Statements, below).



The Company advertises its products and promotes its brand through radio ads; e-mail blasts; and on-line via its web site, social media and mobile applications.  Printed circulars have been 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.  During the current novel coronavirus pandemic, the Company has eliminated its use of weekly newspaper circulars which resulted in a cost savings. At this point the Company has not determined if its use of printed circulars will be continued after the end of the pandemic.

   

Utilizing its own centrally located distribution center and transportation fleet, Weis Markets self distributes approximately 67% 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.  The Company has implemented current CDC guidelines to attempt to ensure the continuity of its distribution center and fleet.



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

programs like “Weis 2 Go Online” ordering with curbside pickup and home delivery.  In the first quarter of 2020, the Company offered Weis 2 Go Online curbside pickup in 153 of its locations.  During the third quarter of 2018 the Company began offering home delivery with Shipt, and currently offers this convenience to customers in 173 different locations.  Due to the surge in volume created by the novel coronavirus pandemic, the Company temporarily disabled Weis 2 Go Online on March 14, 2020 but maintained home delivery service through Shipt.  All stores have resumed curbside pickup as of April 5, 2020.  During the pandemic weekly sales through Weis 2 Go Online have increased between 200 and 400 percent.



In response to the novel coronavirus pandemic, the Company has implemented a COVID-19 prevention program to focus on providing a safe work and shopping environment.  These measures include but are not limited to: adjusting store hours, special store hours for the vulnerable and first responders, installing sneeze guards at customer interfacing locations, robust cleaning and sanitizing efforts, social distancing markers, body temperature check stations for employees, and educating employees and customers on the importance of following the Center for Disease Control’s guidelines for illness prevention.



The Company maintains a COVID-19 prevention website at https://www.weismarkets.com/statement-weis-markets-chairman-and-chief-executive-officer.

11

 


 

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

2020 vs. 2019

 

(dollars in thousands except per share amounts)

March 28, 2020

March 30, 2019

13 Weeks Ended

 

Net sales

$

985,820 

 

$

876,718 

 

 

 

12.4

%

 

Cost of sales, including advertising, warehousing and distribution expenses

 

721,673 

 

 

647,166 

 

 

 

11.5

 

 

Gross profit on sales

 

264,147 

 

 

229,552 

 

 

 

15.1

 

 

Gross profit margin

 

26.8 

%

 

26.2 

%

 

 

 

 

 

Operating, general and administrative expenses

 

226,719 

 

 

211,732 

 

 

 

7.1

 

 

  O, G & A, percent of net sales

 

23.0 

%

 

24.2 

%

 

 

 

 

 

  Income from operations

 

37,428 

 

 

17,820 

 

 

 

110.0

 

 

  Operating margin

 

3.8 

%

 

2.0 

%

 

 

 

 

 

Investment income and interest expense

 

(4,019)

 

 

2,895 

 

 

 

(238.8)

 

 

Investment income and interest expense, percent of net sales

 

(0.4)

%

 

0.3 

%

 

 

 

 

 

Other income (expense)

 

2,676 

 

 

(1,841)

 

 

 

245.4

 

 

Other income (expense), percent of net sales

 

0.3 

%

 

(0.2)

%

 

 

 

 

 

Income before provision for income taxes

 

36,085 

 

 

18,874 

 

 

 

91.2

 

 

Income before provision for income taxes, percent of net sales

 

3.7 

%

 

2.2 

%

 

 

 

 

 

Provision for income taxes

 

9,396 

 

 

4,570 

 

 

 

105.6

 

 

Effective income tax rate

 

26.0 

%

 

24.2 

%

 

 

 

 

 

Net income

$

26,689 

 

$

14,304 

 

 

 

86.6

%

 

Net income, percent of net sales

 

2.7 

%

 

1.6 

%

 

 

 

 

 

Basic and diluted earnings per share

$

0.99 

 

$

0.53 

 

 

 

86.8

%

 



Net Sales

Analysis of Sales





 

 

 



Percentage Changes



2020 vs. 2019

March 28, 2020

13 Weeks Ended

Net sales

 

12.4 

%

Net sales, excluding fuel sales

 

12.4 

 

Comparable store sales

 

12.8 

 

Comparable store sales, excluding fuel sales

 

12.9 

 

Comparable store sales, adjusted for the novel coronavirus pandemic

 

1.5 

 

Comparable store sales, adjusted for the novel coronavirus pandemic, excluding fuel sales

 

1.2 

%



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 first quarter sales benefited from government regulations resulting from the novel coronavirus pandemic.  Management estimates that the incremental sales impact for comparative purposes was approximately $97.9 million and has excluded it from the 2020 comparable store sales total.

12

 


 

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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 1.1% compared to an increase of 0.9% 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 1.8% or $0.05 per gallon in the first quarter of 2020 compared to the same quarter in 2019.



Comparable store sales for the first quarter of 2020 is positive compared to the same period a year ago, adjusted for the impact of the novel coronavirus pandemic, with increases of 1.5% with fuel and 1.2% without fuel.  The Company’s first quarter sales were favorably impacted as a result of increased sales demand related to the novel coronavirus pandemic as well as increasing market share.  For the first two months of the first quarter of 2020, the lack of winter storms decremented sales compared to the same months in 2019. 



Although the Company experienced retail inflation and deflation in various commodities for the periods presented, the recent novel coronavirus pandemic has caused uncertainty about future economic conditions and may change future product mix.  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 on sales for the first quarter 2020 is positive when compared to the same period in 2019, with an increase of 0.6%. The increase in gross profit rate is attributable to a change in sales mix along with increased fresh department sell through, which reduced the amount of product loss.                



Non-cash LIFO inventory valuation adjustments represent expense of $1.5 million in the first thirteen weeks of 2020, compared to expense of $200 thousand in 2019.  Although the Company experienced cost inflation and deflation in various commodities for the periods presented, the recent novel coronavirus pandemic has caused uncertainty about future economic conditions.  Due to this uncertainty, management has estimated a greater annual increase in LIFO expense than it has in previous years due to expected product cost inflation by year end.



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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 62% of the total “Operating, general and administrative expenses.”  As a percent of sales, direct store labor decreased 0.8% in the first quarter of 2020 when compared to the same period in 2019.  Due to the novel coronavirus pandemic, the Company’s hiring rate has increased approximately 300% in response to the increase in demand in stores, as well as distribution needs.   The Company also issued a temporary pay increase for essential employees in stores and distribution; hourly store associates are receiving $2 per hour additional wages. 



Depreciation and amortization expense charged to “Operating, general and administrative expenses” was $21.7 million, or 2.2% of net sales during the first quarter of 2020 compared to $21.0 million, or 2.4% of net sales during the first quarter of 2019.  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)

 

March 28, 2020

(Decrease)

as a % of sales

 

Direct store labor

 

3,458  (0.8)

%

Fixed expense

 

1,130  (0.4)

 





Fixed expenses include occupancy costs, depreciation and amortization and insurance expenses.  Althrough fixed expenses have remained stable from a cost perspective, the increase in sales has caused a decrease in the percent of sales rate.



The majority of the operating, general and administrative expenses as a percent of sales presented for the first quarter of 2020 have benefited in comparison with the 2019 percent of sales due to the increase in sales casued by the novel coronavirus pandemic and, to a lesser degree, the closure of unprofitable stores early in the quarter.  Due to the nature of fixed expenses, management expects less variability when analyzed as a percent of sales, relative to the majority of operating, general and administrative expenses.

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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 26.0%  and 24.2% for the first quarter of 2020 and 2019, respectivelyHistorically, 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 source of cash is cash flows generated from operations. In addition, the Company has access to a revolving credit agreement entered into on September 1, 2016, and amended on August 21, 2019, with Wells Fargo Bank, NA (the “Credit Agreement”).  The Credit Agreement matures on September 1, 2022 and provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $30.0 million with an additional discretionary amount available of $70.0 million.  As of March 28, 2020, the availability under the revolving credit agreement was $24.0 million with $6.0 million of letters of credit outstanding.  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 bonds with maturity dates between one and 10 years and three long-held high yield, large capitalized public company equity securities.  The portfolio totaled $62.0 million as of March 28, 2020.  Management anticipates maintaining the investment portfolio but has the ability to liquidate if needed.  The novel coronavirus pandemic has created volatility in capital markets, which has negatively impacted the Company’s investment portfolio. 



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 2020.  However, management’s ability to complete its current plans will depend upon the governmental jurisdictions in which the Company operates and preventative shut down mandates by such jurisdictions regarding the novel coronavirus pandemic.



The Company expects that cash generated from operations and cash available under the Credit Agreement 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 March 28, 2020, other than the lease commitments on its store facilities and transportation equipment under operating leases that expire at various dates through 2035.



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 April, the Board of Directors unanimously approved a quarterly dividend of $0.31 per share, payable on May 26, 2020 to shareholders of record on May 11, 2020.  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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Table of Contents

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







 

 

 

 

 

 

 

 

 



13 Weeks Ended

 

 

 

(dollars in thousands)

March 28, 2020

March 30, 2019

2020 vs. 2019

Net cash provided by (used in):

 

 

 

 

 

 

 

 

 

Operating activities

$

124,763 

 

$

32,651 

 

$

92,112 

 

Investing activities

 

(25,016)

 

 

(30,333)

 

 

5,317 

 

Financing activities

 

(8,339)

 

 

(8,339)

 

 

 -

 



Operating

Cash flows from operating activities increased $92.1 million in the first thirteen weeks of 2020 compared to the first thirteen weeks of 2019.  Management attributes this increase to increased sales volume resulting from the novel coronavirus pandemic. Sales and profit increased substantially over the same period last year, while inventory volume has sold down in the distribution center, as well as in stores.



Investing

Property and equipment purchases during the first thirteen weeks of 2020 totaled $24.8 million compared to $24.4 million in the first thirteen weeks of 2019.  As a percentage of sales, capital expenditures were 2.5% in the first thirteen weeks of 2020 and 2.8% in the first thirteen weeks of 2019.  In 2020, the Company plans to maintain or increase its marketable securities portfolio.



Financing

The Company paid dividends of $8.3 million in the first thirteen weeks of 2020 and $8.3 million in the first thirteen weeks of 2019.  The Company has not had an obligation on the Credit Agreement since the second quarter 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 2019 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 28, 2019.

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Table of Contents

WEIS MARKETS, INC.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Forward-Looking Statements



In addition to historical information, this Form 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.



On March 11, 2020, the World Health Organization declared that the novel coronavirus (COVID-19) had become a pandemic, and on March 13, the U.S. President declared a National Emergency concerning the disease.  Additionally, in March 2020, state governments in the Company’s geographic operating area began instituting preventative shut down measures in order to combat the novel coronavirus pandemic.  Management, at this time, cannot assess the ultimate economic impact to the Company, which will be determined by, among other things, the length of time that such circumstances continue, nor can the Company predict the effects of governmental and public responses to changing conditions.  Below are is a list of risks that management is monitoring:



·

Employees - Reduced workforces due to the temporary inability to work caused by illness, quarantine, or government mandates.

·

Supply Chain – Interruption in the Company’s supply chain due to having to suspend operations at its centrally located distribution center or vendors not being able to supply the Company because of their own suspended operations.

·

Lawsuits – Future litigation arising from issues concerning the novel coronavirus.  

·

Future government regulation - Future laws, regulations, interpretations, administrative orders, or applications that may have an adverse impact on the Company’s operations and costs.

·

Customer trends – Changes in the methods in which customers procure the Company’s products.

·

Cyber security – Increased Cyber-attacks due to “work at home” requirements.

.



 

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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 March 28, 2020Quantitative 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 28, 2019 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 28, 2019 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 March 28, 2020.  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 disclosure.



In connection with the evaluation described above, there was no change in the Company’s internal control over financial reporting during the fiscal quarter ended March 28, 2020, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. 

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PART II – OTHER INFORMATION



ITEM 1a. RISK FACTORS



In addition to risks and uncertainties in the ordinary course of business common to all businesses, an important update to the risk factors previously disclosed in Item 1a of Part I of our Annual Report on Form 10-K for the year ended December 28, 2019 is listed below, which could materially impact the Company’s future performance.    The risk factor below and the risk factors included in our Annual Report on Form 10-K may be important to understanding statements in this Form 10-Q and should be read in conjunction with the unaudited consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.



Our business and operations, and the operations of our suppliers, have been, and may in the future be adversely affected by epidemics or pandemics such as the novel coronavirus (COVID-19) pandemic outbreak.



We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases. The global spread of COVID-19 has created significant volatility, uncertainty and economic disruption.  The Company’s business was deemed essential during the novel coronavirus pandemic and the Company is committed to maintaining a safe work and shopping environment.  Management, at this time, cannot assess the ultimate economic impact to the Company, which will be determined by, among other things, the length of time that such circumstances continue, nor can the Company predict the effects of governmental and public responses to changing conditions.  The risks and uncertainties surrounding the coronavirus pandemic are broad however below is a list of risks management is monitoring which could have a material impact on the Company’s business:



·

Employees - Reduced workforces due to the temporary inability to work caused by illness, quarantine, or government mandates.

·

Supply Chain – Interruption in the Company’s supply chain due to having to suspend operations at its centrally located distribution center or vendors not being able to supply the Company because of their own suspended operations.

·

Lawsuits – Future litigation arising from issues concerning the novel coronavirus.  

·

Future government regulation - Future laws, regulations, interpretations, administrative orders, or applications that may have an adverse impact on the Company’s operations and costs.

·

Customer trends – Changes in the methods in which customers procure the Company’s products.

·

Cyber security – Increased Cyber-attacks due to “work at home” requirements.

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ITEM 6. EXHIBITS



Exhibits





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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.



 

 

(Registrant)



 

 

 

Date:

5/7/2020

 

/S/Jonathan H. Weis



 

 

Jonathan H. Weis



 

 

Chairman,



 

 

President and Chief Executive Officer



 

 

(Principal Executive Officer)



 

 

 

Date:

5/7/2020

 

/S/Scott F. Frost



 

 

Scott F. Frost



 

 

Senior Vice President, Chief Financial Officer



 

 

and Treasurer



 

 

(Principal Financial Officer)



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