UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 27, 2014
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)
1000 S. Second Street
P. O. Box 471
Sunbury, Pennsylvania
(Address of principal executive offices)
Registrant's telephone number, including area code: (570) 286-4571
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common stock, no par value
Securities registered pursuant to Section 12(g) of the Act: None
24-0755415
(I.R.S. Employer Identification No.)
17801-0471
(Zip Code)
Registrant's web address: www.weismarkets.com
Name of each exchange on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ]
No [X]
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 and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted 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 and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Accelerated filer [X]
Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
The aggregate market value of Common Stock held by non-affiliates of the Registrant is approximately $545,000,000 as of June 28, 2014 the last
business day of the most recently completed second quarter.
Shares of common stock outstanding as of March 12, 2015 - 26,898,443.
DOCUMENTS INCORPORATED BY REFERENCE: Selected portions of the Weis Markets, Inc. definitive proxy statement dated March 12, 2015
are incorporated by reference in Part III of this Form 10-K.
Table of Contents
Item 1. Business:
WEIS MARKETS, INC.
PART I
Weis Markets, Inc. is a Pennsylvania business founded by Harry and Sigmund Weis in 1912 and incorporated in 1924. The Company
is engaged principally in the retail sale of food in Pennsylvania and surrounding states. There was no material change in the nature of
the Company's business during fiscal 2014. The Company’s stock has been traded on the New York Stock Exchange since 1965
under the symbol “WMK.” The Weis family currently owns approximately 65% of the outstanding shares. Robert F. Weis serves as
Chairman of the Board of Directors, and Jonathan H. Weis, son of Robert F. Weis, serves as Vice Chairman, President and Chief
Executive Officer.
The Company's retail food stores sell 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 Company advertises its products and promotes its brand through weekly newspaper circulars; radio and
television ads; e-mail blasts; and on-line via its website, social media and mobile applications. Printed circulars are used extensively
on a weekly basis to advertise featured items. The Company utilizes a loyalty marketing program, “Weis Club Preferred Shopper,”
which enables customers to receive discounts, promotions and fuel rewards. The Company currently owns and operates 163 retail
food stores. The Company’s operations are reported as a single reportable segment.
The following table provides additional detail on the percentage of consolidated net sales contributed by product category for fiscal
years 2014, 2013 and 2012, respectively:
Center Store (1)
Fresh (2)
Pharmacy Services
Fuel
Other
Consolidated net sales
2014
2013
2012
57.9 %
29.0
9.0
3.9
0.2
100.0 %
59.0 %
28.7
8.6
3.5
0.2
100.0 %
59.5 %
28.1
8.7
3.5
0.2
100.0 %
__________
(1) Consists primarily of groceries, dairy products, frozen foods, beer and wine, and general merchandise items, such as health and beauty care and
household products.
(2) Consists primarily of meats, seafood, fresh produce, floral, deli products, prepared foods and bakery products.
At the end of 2014, Weis Markets, Inc. operated 25 stores in Maryland, 5 stores in New Jersey, 9 stores in New York, 122 stores in
Pennsylvania and 2 stores in West Virginia, for a total of 163 retail food stores operating under the Weis Markets trade name.
1
Table of Contents
Item 1. Business: (continued)
WEIS MARKETS, INC.
All retail food store locations operate as conventional supermarkets. The retail food stores range in size from 8,000 to 70,000 square
feet, with an average size of approximately 50,000 square feet. The following summarizes the number of stores by size categories as
of year-end:
Square feet
55,000 to 70,000
45,000 to 54,999
35,000 to 44,999
25,000 to 34,999
Under 25,000
Total
2014
Number of stores
56
70
22
9
6
163
2014
% of Total
34%
43%
13%
6%
4%
100%
2013
Number of stores
53
72
22
12
6
165
2013
% of Total
32%
44%
13%
7%
4%
100%
The following schedule shows the changes in the number of retail food stores, total square footage and store additions/remodels as of
year-end:
Beginning store count
New stores (1)
Opened relocated stores
Closed stores
Closed relocated stores
Ending store count
Total square feet (000’s), at year-end
Additions/major remodels
____________________
(1) On June 11, 2012, Weis Markets, Inc. acquired three former Genuardi’s stores located in Conshohocken, Doylestown and Norristown,
Pennsylvania from Safeway Inc.
2011
164
1
1
(4)
(1)
161
7,877
9
2013
163
4
---
(2)
---
165
8,211
12
2014
165
1
1
(3)
(1)
163
8,202
8
2012
161
4
1
(2)
(1)
163
8,054
13
2010
164
---
---
---
---
164
7,887
4
The Company supports its retail operations through a centrally located distribution facility, its own transportation fleet, three
manufacturing facilities and its store support center. The Company is required to use a significant amount of working capital to
provide for the necessary amount of inventory to meet demand for its products through efficient use of buying power and effective
utilization of space in its distribution facilities. The manufacturing facilities consist of a meat processing plant, an ice cream plant and
a milk processing plant.
The Company operates in a highly competitive market place. The number and the variety of competitors vary by market. The
Company’s principal competition consists of international, national, regional and local food chains, as well as independent food stores.
The Company also faces substantial competition from convenience stores, membership warehouse clubs, specialty retailers,
supercenters and large-scale drug and pharmaceutical chains. The Company continues to effectively compete by offering a strong
combination of value, quality and service.
The Company currently employs approximately 18,200 full-time and part-time associates.
2
Table of Contents
Item 1. Business: (continued)
WEIS MARKETS, INC.
Trade Names and Trademarks. The Company has invested significantly in the development and protection of “Weis Markets”
both as a trade name and a trademark and considers it to be an important asset. The Company is the exclusive licensee of more than
60 other trademarks registered and/or pending in the United States Patent and Trademark Office from WMK Holdings, Inc., including
trademarks for its product lines and promotions such as Weis, Weis 2 Go, Weis Wonder Chicken, Price Freeze, Weis Gas-n-Go and
Weis Nutri-Facts. Each trademark registration is for an initial period of 10 years and may be renewed so long as it is in continued use
in commerce.
The Company considers its trademarks to be of material importance to its business and actively defends and enforces its rights.
The Company maintains a corporate web site at www.weismarkets.com. The Company makes available, free of charge, on the
“Corporate Information” section of its web site, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as
reasonably practicable after the Company electronically files such material or furnishes it to the U.S. Securities and Exchange
Commission (SEC) by clicking on the “SEC Information” link.
The Company’s Corporate Governance materials can be found in the “Corporate Information” section of the Company’s web site.
These materials include the corporate governance guidelines; the charters of the Audit, Compensation and Disclosure Committees;
and both the Code of Business Conduct and Ethics and the Code of Ethics for the CEO and CFO. A copy of the foregoing corporate
governance materials is available upon written request to the Company’s principal executive offices.
Item 1a. Risk Factors:
In addition to risks and uncertainties in the ordinary course of business common to all businesses, important factors are listed below
specific to the Company and its industry, which could materially impact its future performance.
The Company’s industry is highly competitive. If the Company is unable to compete effectively, the Company’s financial
condition and results of operations could be materially affected.
The retail food industry is intensely price competitive, and the competition the Company encounters may have a negative impact on
product retail prices. The financial results may be adversely impacted by a competitive environment that could cause the Company to
reduce retail prices without a reduction in its product cost to maintain market share; thus reducing sales and gross profit margins.
The trade area of the Company is located within a region and is subject to the economic, social and climate variables of that
region.
The majority of the Company’s stores are concentrated in central and northeast Pennsylvania, central Maryland, suburban Baltimore
regions and New York’s Southern Tier. Changes in economic and social conditions in the Company’s operating regions, including
fluctuations in the inflation rate along with changes in population and employment and job growth rates, affect customer shopping
habits. These changes may negatively impact sales and earnings. Business disruptions due to weather and catastrophic events
historically have been few. The Company’s geographic regions could receive an extreme variance in the amount of annual snowfall
that may materially affect sales and expense results.
The Company may be unable to retain key management personnel.
The Company's success depends to a significant degree upon the continued contributions of senior management. The loss of any key
member of management may prevent the Company from implementing its business plans in a timely manner. In addition,
employment conditions specifically may affect the Company’s ability to hire and train qualified associates.
3
WEIS MARKETS, INC.
TABLE OF CONTENTS
FORM 10-K
Part I
Item 1. Business
Item 1a. Risk Factors
Item 1b. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Executive Officers of the Registrant
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9a. Controls and Procedures
Item 9b. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Part IV
Item 15. Exhibits, Financial Statement Schedules
Item 15(c)(3). Schedule II - Valuation and Qualifying Accounts
Signatures
Exhibit 21 Subsidiaries of the Registrant
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
Page
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3
6
6
6
7
8
9
10
21
22
43
43
44
44
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44
44
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Table of Contents
Item 1a. Risk Factors: (continued)
WEIS MARKETS, INC.
Food safety issues could result in the loss of consumer confidence in the Company.
Customers count on the Company to provide them with safe and wholesome food products. Concerns regarding the safety of food
products sold in its stores could cause shoppers to avoid purchasing certain products from the Company, or to seek alternative sources
of supply for all of their food needs, even if the basis for the concern is outside of the Company’s control. A loss in confidence on the
part of its customers would be difficult and costly to reestablish. As such, any issue regarding the safety of any food items sold by the
Company, regardless of the cause, could have a substantial and adverse effect on operations.
The failure to execute expansion plans could have a material adverse effect on the Company's business and results of its
operations.
Circumstances outside the Company’s control could negatively impact anticipated capital investments in store, distribution and
manufacturing projects, information technology and equipment. The Company cannot determine with certainty whether its new stores
will be successful. The failure to expand by successfully opening new stores as planned, or the failure of a significant number of these
stores to perform as planned, could have a material adverse effect on the Company’s business and results of its operations.
Disruptions or security breaches in the Company’s information technology systems could adversely affect results.
The Company’s business is highly dependent on complex information technology systems that are vital to its continuing operations. If
the Company was to experience difficulties maintaining existing systems or implementing new systems, significant losses could be
incurred due to disruptions in its operations. Additionally, these systems contain valuable proprietary data as well as receipt and
storage of personal information about its associates and customers, in particular electronic payment data and personal health
information that, if breached, would have an adverse effect on the Company. Such an occurrence could adversely affect the
Company’s reputation with its customers, associates, and vendors, as well as the Company’s operations, results of operations,
financial condition and liquidity, and could result in litigation against the Company or the imposition of penalties. Moreover, a
security breach could require the expenditure of significant additional resources to further upgrade the security measures that the
Company employs to guard such important personal information against cyberattacks and other attempts to access such information
and could result in a disruption of operations.
The Company is affected by certain operating costs which could increase or fluctuate considerably.
Associate expenses contribute to the majority of the Company’s operating costs. The Company's financial performance is potentially
affected by increasing wage and benefit costs, a competitive labor market, regulatory wage increases and the risk of unionized labor
disruptions of its non-union workforce. The Company's profit is particularly sensitive to the cost of oil. Oil prices directly affect the
Company's product transportation costs, as well as its utility and petroleum-based supply costs. It also affects the costs of its
suppliers, which impacts its cost of goods.
Various aspects of the Company’s business are subject to federal, state and local laws and regulations.
The Company is subject to various federal, state and local laws, regulations and administrative practices that affect the Company’s
business. The Company must comply with numerous provisions regulating health and sanitation standards, food labeling, equal
employment opportunity, minimum wages and licensing for the sale of food, drugs and alcoholic beverages. The Company’s
compliance with these regulations may require additional capital expenditures and could adversely affect the Company’s ability to
conduct the Company’s business as planned. Management cannot predict either the nature of future laws, regulations, interpretations
or applications, or the effect either additional government regulations or administrative orders, when and if promulgated, or disparate
federal, state, and local regulatory schemes would have on the Company’s future business. They could, however, require the
reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated,
additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling and/or
scientific substantiation. Any or all of such requirements could have an adverse effect on the Company’s results of operations and
financial condition.
4
Table of Contents
Item 1a. Risk Factors: (continued)
WEIS MARKETS, INC.
Unexpected factors affecting self-insurance claims and reserve estimates could adversely affect the Company.
The Company uses a combination of insurance and self-insurance to provide for potential liabilities for workers' compensation,
general liability, vehicle accident, property and associate medical benefit claims. Management estimates the liabilities associated with
the risks retained by the Company, in part, by considering historical claims experience, demographic and severity factors and other
actuarial assumptions which, by their nature, are subject to a high degree of variability. Any projection of losses concerning workers’
compensation and general liability is subject to a high degree of variability. Among the causes of this variability are unpredictable
external factors affecting future inflation rates, discount rates, litigation trends, legal interpretations, benefit level changes and claim
settlement patterns.
The Company was liable for associate health claims up to an annual maximum of $750,000 per member prior to March 1, 2012,
$1,250,000 per member prior to March 1, 2013, $2,000,000 per member prior to March 1, 2014 and an unlimited amount per member
as of March 1, 2014. As of March 1, 2014, the Company purchased stop loss insurance which carries a $500,000 specific deductible
with a $250,000 aggregating deductible. The Company is liable for workers' compensation claims up to $2,000,000 per claim.
Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $100,000
to $1,000,000. The Company, for the benefit of cost savings, has accepted the risk of an unusual amount of independent multiple
material claims arising, which could have a significant impact on earnings.
Changes in tax laws may result in higher income tax.
The Company's future effective tax rate may increase from current rates due to changes in laws and the status of pending items with
various taxing authorities. Currently, the Company benefits from a combination of its corporate structure and certain state tax laws.
The Company’s investment portfolio may suffer losses from changes in market interest rates and changes in market
conditions which could adversely affect results of operations or liquidity.
As of December 27, 2014, the Company had $23.0 million in cash and cash equivalents, $74.0 million in marketable securities and
$9.1 million in SERP (Supplemental Executive Retirement Plan) investment (level 1 mutual funds). The Company’s marketable
securities consist of municipal bonds and equity securities. These investments are subject to general credit, liquidity, market and
interest rate risks. Substantially all of these securities are subject to interest rate and credit risk and will decline in value if interest
rates increase or one of the issuers’ credit ratings is reduced. As a result, the Company may experience a reduction in value or loss of
liquidity from investments, which may have a negative impact on the Company’s results of operations, liquidity and financial
condition. The Federal Deposit Insurance Corporation (FDIC) insures amounts up to $250,000 per depositor, per insured bank, for
each account ownership category. The Company has balances in bank accounts that may exceed the insured amount leaving the
Company exposed for any amounts over the $250,000 limit.
The Company is a controlled Company due to the common stock holdings of the Weis family.
The Weis family’s share ownership represents approximately 65% of the combined voting power of the Company’s common stock as
of December 27, 2014. As a result, the Weis family has the power to elect a majority of the Company’s directors and approve any
action requiring the approval of the shareholders of the Company, including adopting certain amendments to the Company’s charter
and approving mergers or sales of substantially all of the Company’s assets. Currently, two of the Company’s six directors are
members of the Weis family.
Changes in vendor promotions or allowances, including the way vendors target their promotional spending, and the
Company's ability to effectively manage these programs could significantly impact margins and profitability.
The Company cooperatively engages in a variety of promotional programs with its vendors. As the parties assess the results of
specific promotions and plan for future promotions, the nature of these programs and the allocation of dollars among them changes
over time. The Company manages these programs to maintain or improve margins while at the same time increasing sales. A
reduction in overall promotional spending or a shift by vendors in promotional spending away from certain types of promotions that
the Company and its customers have historically utilized could have a significant impact on profitability.
5
WEIS MARKETS, INC.
Table of Contents
Item 1b. Unresolved Staff Comments:
There are no unresolved staff comments.
Item 2. Properties:
As of December 27, 2014, the Company owned and operated 82 of its retail food stores, and leased and operated 81 stores under
operating leases that expire at various dates through 2029. The Company owns all trade fixtures and equipment in its stores and
several parcels of vacant land, which are available as locations for possible future stores or other expansion.
The Company owns and operates one distribution center in Milton, Pennsylvania of approximately 1.1 million square feet, and one in
Northumberland, Pennsylvania totaling approximately 76,000 square feet. The Company also owns one warehouse complex in
Sunbury, Pennsylvania totaling approximately 551,000 square feet. The Company utilizes 259,000 square feet of its Sunbury location
to operate its ice cream plant, meat processing plant and milk processing plant.
Item 3. Legal Proceedings:
Neither the Company nor any subsidiary is presently a party to, nor is any of their property subject to, any pending legal proceedings,
other than routine litigation incidental to the business that would not have a material adverse effect on the financial results. The
Company estimates any exposure to these legal proceedings and establishes accruals for the estimated liabilities, where it is
reasonably possible to estimate and where an adverse outcome is probable.
6
Table of Contents
Executive Officers of the Registrant
WEIS MARKETS, INC.
The following sets forth the names and ages of the Company’s executive officers as of March 12, 2015, indicating all positions held
during the past five years:
Name
Age
Title
Robert F. Weis (a)
Jonathan H. Weis (b)
Kurt A. Schertle (c)
Scott F. Frost (d)
David W. Gose II (e)
Harold G. Graber (f)
James E. Marcil (g)
95
47
43
52
48
59
56
Chairman of the Board
Vice Chairman, President and Chief Executive Officer
Chief Operating Officer
Senior Vice President, Chief Financial Officer and Treasurer
Senior Vice President of Operations
Senior Vice President of Real Estate and Development and Secretary
Senior Vice President of Human Resources
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Robert F. Weis. The Company has employed Mr. Weis since 1946. Mr. Weis served as Chairman and Treasurer from
1995 until April 2002, at which time he was appointed Chairman of the Board.
Jonathan H. Weis. The Company has employed Mr. Weis since 1989. Mr. Weis served the Company as Vice President
of Property Management and Development from 1996 until April 2002, at which time he was appointed as Vice
President and Secretary. In January of 2004, the Board appointed Mr. Weis as Vice Chairman and Secretary. Mr. Weis
became the Company's interim President and Chief Executive Officer in September 2013 and was appointed as President
and Chief Executive Officer in February 2014.
Kurt A. Schertle. The Company hired Mr. Schertle on March 1, 2009 as its Vice President of Sales and Merchandising,
which included the responsibility of overseeing the Marketing Department. In February 2010, Mr. Schertle was
promoted to Senior Vice President of Sales and Merchandising. In July 2012, Mr. Schertle was promoted to Executive
Vice President of Sales and Merchandising at which time, he assumed the additional responsibility of overseeing the
Company’s Supply Chain. In September 2013, Mr. Schertle assumed the additional responsibility of overseeing Store
Operations and Mr. Schertle was promoted to Chief Operating Officer in March 2014.
Scott F. Frost. Mr. Frost joined the Company full-time in 1984 and he has held various positions since then, including
but not limited to, Controller, Assistant Treasurer and Acting Chief Financial Officer. The Company appointed Mr.
Frost as Vice President, Chief Financial Officer and Treasurer in October 2009. In January 2011, Mr. Frost was
promoted to Senior Vice President, Chief Financial Officer and Treasurer. Mr. Frost also served as Assistant Secretary
of the Company during the past five years.
David W. Gose II. Mr. Gose joined the Company in May 2014 as Senior Vice President of Operations. Prior to joining
the Company, Mr. Gose was Senior Director and Regional General Manager of Walmart Ohio, a retail store
SuperCenter, from February 2010 until May 2014. Walmart Ohio consisted of 92 stores that geographically included all
stores South of Toledo, Cleveland, Akron and Youngstown.
Harold G. Graber. Mr. Graber joined the Company in October 1989 as the Director of Real Estate. Mr. Graber, who
served the Company as Vice President for Real Estate since 1996, was promoted to Senior Vice President of Real Estate
and Development in February 2010. Mr. Graber was appointed as Secretary of the Company in February 2014.
James E. Marcil. Mr. Marcil joined the Company in September 2002 as Vice President of Human Resources. In
February 2010, Mr. Marcil was promoted to Senior Vice President of Human Resources.
7
Table of Contents
WEIS MARKETS, INC.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities:
The Company's stock is traded on the New York Stock Exchange (ticker symbol WMK). The approximate number of shareholders,
including individual participants in security position listings on December 27, 2014 as provided by the Company's transfer agent was
5,364. High and low stock prices and dividends paid per share for the last two fiscal years were:
2014
Stock Price
$
High
52.82
50.56
46.97
48.00
$
Low
46.12
42.54
39.09
38.23
Dividend
Per Share
$
0.30
0.30
0.30
0.30
2013
Stock Price
$
High
41.98
47.92
51.92
54.13
$
Low
37.90
39.34
45.12
46.15
Dividend
Per Share
$
0.30
0.30
0.30
0.30
Quarter
First
Second
Third
Fourth
The following line graph compares the yearly percentage change in the cumulative total shareholder return on the Company’s
common stock against the cumulative total return of the S&P Composite-500 Stock Index and the cumulative total return of a
published group index for the Retail Grocery Stores Industry (“Peer Group”), provided by Value Line, Inc., for the period of five
years. The graph depicts $100 invested at the close of trading on the last trading day preceding the first day of the fifth preceding year
in Weis Markets, Inc. common stock, S&P 500, and the Peer Group. The cumulative total return assumes reinvestment of dividends.
Comparative Five-Year Total Returns
Weis Markets, Inc.
S&P 500
Peer Group
2009
100.00
100.00
100.00
2010
114.55
115.06
117.87
2011
119.79
117.49
134.54
2012
120.79
136.29
155.75
2013
165.42
180.43
210.72
2014
154.54
205.13
280.61
8
Table of Contents
Item 6. Selected Financial Data:
WEIS MARKETS, INC.
The following selected historical financial information has been derived from the Company's audited consolidated financial
statements. This information should be read in connection with the Company's Consolidated Financial Statements and the Notes
thereto, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in Item 7.
Five Year Review of Operations
(dollars in thousands, except shares,
per share amounts and store information)
Net sales
Costs and expenses
Income from operations
Investment and other income
Income before provision for income taxes
Provision for income taxes
Net income
Retained earnings, beginning of year
Cash dividends
52 Weeks
Ended
Dec. 27, 2014
52 Weeks
Ended
Dec. 28, 2013
52 Weeks
Ended
Dec. 29, 2012
53 Weeks
Ended
Dec. 31, 2011
52 Weeks
Ended
Dec. 25, 2010
$
2,776,683
$
2,692,588
$
2,701,405
$
2,752,504
$
2,620,378
2,693,972
2,581,406
2,574,373
2,638,224
2,515,062
82,711
2,287
84,998
29,831
55,167
971,022
1,026,189
32,278
111,182
4,684
115,866
44,145
71,721
931,579
1,003,300
32,278
127,032
3,882
130,914
48,403
82,511
881,346
963,857
32,278
114,280
3,326
117,606
42,022
75,584
864,132
939,716
58,370
105,316
2,069
107,385
39,094
68,291
827,042
895,333
31,201
Retained earnings, end of year
$
993,911
$
971,022
$
931,579
$
881,346
$
864,132
Weighted-average shares outstanding, diluted
Cash dividends per share
Basic and diluted earnings per share
Working capital
Total assets
Shareholders’ equity
Number of grocery stores
26,898,443
1.20
$
26,898,443
1.20
$
26,898,443
1.20
$
26,898,443
2.17
$
26,898,443
1.16
$
$
$
$
$
2.05
223,776
1,191,119
857,832
163
$
$
$
$
2.67
211,528
1,148,242
834,053
165
$
$
$
$
3.07
229,748
1,090,440
795,690
163
$
$
$
$
2.81
223,742
1,029,004
745,886
161
$
$
$
$
2.54
234,889
992,081
728,127
164
9
Table of Contents
WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations:
Overview
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help
the reader understand Weis Markets, Inc., its operations and its present business environment. The MD&A is provided as a
supplement to and should be read in conjunction with the consolidated financial statements and the accompanying notes thereto
contained in “Item 8. Financial Statements and Supplementary Data” of this report. The following analysis should also be read in
conjunction with the Financial Statements included in the Quarterly Reports on Form 10-Q and the Annual Report on Form 10-K filed
with the U.S. Securities and Exchange Commission, as well as the cautionary statement captioned “Forward-Looking Statements”
immediately following this analysis. This overview summarizes the MD&A, which includes the following sections:
• Company Overview - a general description of the Company’s business and strategic imperatives.
• Results of Operations - an analysis of the Company’s consolidated results of operations for the three years presented in the
Company’s consolidated financial statements.
• Liquidity and Capital Resources - an analysis of cash flows, aggregate contractual obligations, and off-balance sheet
arrangements.
• Critical Accounting Policies and Estimates - a discussion of accounting policies that require critical judgments and estimates.
Company Overview
General
Weis Markets, Inc. was founded in 1912 by Harry and Sigmund Weis in Sunbury, Pennsylvania. Today, the Company ranks among
the top 50 food and drug retailers in the United States in revenues generated. As of December 27, 2014, the Company operated 163
retail food stores in Pennsylvania and four surrounding states: Maryland, New Jersey, New York and West Virginia.
Company revenues are generated in its retail food stores from the sale of a wide variety of consumer products including 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 Company supports
its retail operations through a centrally located distribution facility, its own transportation fleet, three manufacturing facilities and its
administrative offices. The Company's operations are reported as a single reportable segment.
10
Table of Contents
WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Company Overview, (continued)
Strategic Imperatives
The following strategic imperatives will be focused upon by the Company to attempt to ensure the success of the Company in the
coming years:
Establish a Sales Driven Culture – The Company continues to focus on sales and profits growth, improved operating
practices, increased productivity and positive cash flow. The Company believes disciplined growth will increase its market
share and operating profits, resulting in enhanced shareholder value. The Company’s method of driving sales includes
focused preparation and execution of sales programs, investing in new stores and remodels, and strategic acquisitions.
Communicating clear executable standards and aligning performance measures across the organization will help to instill a
sales-driven operating environment.
Continuously Upgrade Organizational Talent Pool – In support of the Company’s growth and sales building strategies, the
Company is committed to growing leaders at every level throughout the organization through enhanced leadership
development programs, succession planning, and establishing rewarding career paths. The Company believes that improved
associate talent directly impacts the ability to execute strategic plans and views this as a strategic imperative for future
growth.
Become More Relevant to Consumers – Understanding the consumer is crucial to the Company’s strategic plan. Research
can be done by studying the wants and needs of core consumers and casual consumers. Measuring customer satisfaction and
sharing insights across the organization will help communication between management and its consumers. The Company
strives to build customer loyalty by purchasing produce from local growers and supporting organizations within the
communities it serves. It will continue to invest in new stores, remodels and additions and strategic acquisitions, to help
retain and attract new consumers.
Create Meaningful Differentiation – The Company has identified product pricing, locally focused store assortments, shopping
experience, overall convenience and customer service as critical components of future success. The strategy includes
developing improved customer service training and setting customer service measurements and goals. As part of this
strategy, management is committed to offering its customers a strong combination of quality, service and value. It will
continue to offer competitive prices on name brand and private brand products to exceed customers’ expectations.
Significantly Improve Decision Support and Measurement – The Company will continue to make investments in its
information technology systems and distribution network. This will help improve associate productivity, store conditions and
the overall customer experience with user-friendly, support driven systems. These systems will also continue to play a key
role in the measurement of the Company’s strategic decisions and provide valuable insight into customer behavior, shopping
trends, and financial returns. Management will continue to streamline its supply chain by focusing on improving inventory
turns, cost per case, in-stock position and overall service levels, which will help to improve in-store conditions and result in
increased sales and profits.
Focus on Sustainability Strategies – The Company views being good stewards in the communities in which we operate as an
important component of overall success. The Company’s sustainability program operates under a structure of four key
pillars: green design, natural resource conservation, food and agricultural impact and social responsibility. The goal of the
sustainability strategy is to reduce the Company’s overall carbon footprint by reducing greenhouse gas emissions and
reducing the impact on climate change. The Company is seeking to reduce its carbon footprint by 20% by the year 2020. To
accomplish this, the Company intends to institute new sustainability programs and to improve existing sustainability
programs. Since 2008, the Company has been measuring the carbon footprint of the entire enterprise and has reduced the
carbon emissions by a total of 14.8%.
11
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WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Results of Operations
Analysis of Consolidated Statements of Income
(dollars in thousands except per share amounts)
For the Fiscal Years Ended December 27, 2014,
2014
2013
2012
December 28, 2013 and December 29, 2012
(52 weeks)
(52 weeks)
(52 weeks)
Percent Changes
2014 vs.
2013
2013 vs.
2012
Net sales
$ 2,776,683
$ 2,692,588
$ 2,701,405
3.1 %
(0.3) %
Cost of sales, including warehousing and
distribution expenses
Gross profit on sales
Gross profit margin
2,023,721
752,962
27.1 %
Operating, general and administratives expenses
670,251
O, G & A, percent of net sales
Income from operations
Operating margin
Investment income
Investment income, percent of net sales
Other income
Other income, percent of net sales
Income before provision for income taxes
Provision for income taxes
Effective tax rate
Net income
Net income, percent of net sales
Basic and diluted earnings per share
24.1 %
82,711
3.0 %
2,287
0.1 %
-
- %
84,998
29,831
35.1 %
55,167
2.0 %
2.05
$
$
1,947,120
745,468
27.7%
634,286
23.6%
111,182
4.1%
4,684
0.2%
-
-%
115,866
44,145
38.1%
71,721
2.7%
2.67
$
$
1,958,852
742,553
27.5 %
615,521
22.8 %
127,032
4.7 %
3,468
0.1 %
414
0.0 %
130,914
48,403
37.0 %
82,511
3.1 %
3.07
$
$
3.9
1.0
5.7
(0.6)
0.4
3.0
(25.6)
(12.5)
(51.2)
35.1
-
(100.0)
(26.6)
(32.4)
(11.5)
(8.8)
(23.1) %
(13.1) %
(23.2) %
(13.0) %
Income is earned by selling merchandise at price levels that produce revenues in excess of cost of merchandise sold and operating and
administrative expenses. Although the Company may experience short term fluctuations in its earnings due to unforeseen short-term
operating cost increases, it historically has been able to increase revenues and maintain stable earnings from year to year.
Net Sales
The Company's revenues are earned and cash is generated as merchandise is sold to customers at the point of sale. Discounts provided
to customers by the Company at the point of sale are recognized as a reduction in sales as products are sold or over the life of a
promotional program if redeemable in the future. Discounts provided by vendors, usually in the form of paper coupons, are not
recognized as a reduction in sales provided the coupons are redeemable at any retailer that accepts coupons.
Total store sales increased 3.1% in 2014 compared to 2013. Excluding fuel sales, total store sales increased 2.8%. Total store sales
decreased 0.3% in 2013 compared to 2012. Excluding fuel sales, total store sales decreased 0.4% in 2013 compared to 2012.
When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable when 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.
12
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WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Results of Operations (continued)
Comparable store sales increased 2.0% in 2014 compared to 2013. Excluding fuel sales, comparable store sales increased 1.7%. The
2014 sales increase is attributed to the Company’s current pricing initiatives and sales building programs. Comparable store sales
decreased 2.6% in 2013 compared to 2012. Excluding fuel sales, comparable store sales decreased 2.7% in 2013 compared to 2012.
The 2013 sales decline is attributed to increased competition, cycling the 2012 sales impact of Hurricane Sandy and a decline in food
stamp/SNAP (the United States Department of Agriculture’s Supplemental Nutrition Assistance Program) spending in its stores,
which accelerated in the fourth quarter of 2013 with the reduction in SNAP benefits that went into effect on November 1, 2013.
The Company continues to make progress in a market impacted by a slowly recovering economy. It attributes the 2014 sales increase
to its continued investments in lower pricing and disciplined sales building programs. In addition to targeted promotional activity in
key regional markets, the Company started an aggressive sales building program in 2014, notably its “Three Ways to Save” sales
initiative, which included the seasonal “Price Freeze” or “Get Grillin’” promotional program, Everyday Lower Prices (EDLP) and
Lowest Price Guarantee program. On December 29, 2013, the Company launched a twelfth round of its "Price Freeze" program. This
program froze prices on more than 2,000 products for a thirteen-week period. On March 30, 2014, the Company entered into another
"Get Grillin'" promotional program. The "Get Grillin'" promotional program was a fifteen-week reduced pricing program on top items
throughout the store that our customers found to be the most seasonally relevant. This program lowered prices on approximately 1,200
items. The EDLP program lowered prices on more than 1,000 regularly purchased items. The Lowest Price Guarantee program offers
discounts on four items every week that the Company guarantees to be the lowest compared to local competitors. Compared to 2013,
the Company generated a 1.5% increase in average sales per customer transaction in 2014, while identical customer store visits
increased by 0.6%. Compared to 2012, the Company generated a 0.7% increase in average sales per customer transaction in 2013,
while the number of identical customer store visits declined by 3.3%.
The Company’s results also benefited from increased operational efficiencies and improved in-stock conditions at store level. In
addition, the Company’s Gold Card program, an extension of its existing Preferred Club Shopper program, continues to target the
Company’s best shoppers with personalized offers and strong values to help them save money. The Company also continues to offer
its "Gas Rewards" program in most markets. The "Gas Rewards" program allows Weis Preferred Shoppers club card members to earn
gas discounts resulting from their in-store purchases. Customers can redeem these gas discounts at Sheetz convenience stores, located
in most of the Company's markets, at Manley's Mighty Mart Valero locations, in the Binghamton, NY market or at any of the twenty-
seven Weis Gas-n-Go locations.
Comparable center store sales decreased by 0.2% in 2014 compared to 2013. Comparable center store sales decreased 3.4% in 2013
compared to 2012. Center store was impacted by stagnant sales performance in key center store categories, increased competition an
a decline in food stamp/SNAP spending in its stores, which accelerated in the fourth quarter of 2013 with the reduction in SNAP
benefits that went into effect on November 1, 2013.
d
Comparable dairy sales increased 3.4% in 2014 compared to 2013. These increases are mainly attributed to commodity price inflation
throughout the dairy category, with milk, cheese and butter seeing the largest increases. Despite the significant commodity price
inflation, the Company was able to grow unit sales ahead of remaining market in 2014 as compared to 2013, through the continual
promotion of dairy products in the EDLP and Lowest Price Guarantee programs.
Comparable fresh sales increased 3.0% in 2014 compared to 2013. This increase was primarily driven by the meat, seafood, deli and
food service departments.
Comparable meat sales increased 3.8% in 2014 compared to 2013. In January 2014, the Company introduced the “Great Meals Start
Here” program, which focuses on superior customer service along with educating our customers about our quality and our ability to
cut fresh meat within the stores. This program coupled with price inflation; more strategic meat advertising; and a focus on improving
store conditions and resetting the stores to better serve our customers’ needs has contributed to the increase in meat sales. Comparable
meat sales decreased 2.5% in 2013 compared to 2012. With the cost of meat rising, the Company made the strategic decision to
reduce retail prices in order to encourage meat sales. The Company sold 256,084 more pounds of meat in 2013, compared to 2012.
Although total tonnage of meat sold increased, comparable meat sales decreased over the previous fiscal year due to the retail price
reduction strategy.
Comparable seafood sales increased 5.1% in 2014 compared to 2013. The increase is credited to the Company’s renewed attention to
promoting fresh seafood items, enhancing product variety and the Company’s ongoing commitment to the EDLP program.
13
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
WEIS MARKETS, INC.
Results of Operations (continued)
Comparable deli sales increased 2.8% in 2014 compared to 2013. The sales increase is attributed to the EDLP program, particularly in
slicing meats and cheeses, an increased focus on customer service and an expanded variety in the dips and spreads category.
Comparable deli sales decreased 4.6% in 2013 compared to 2012. Sales declined in 2013 as a result of emergency sales surges in
October 2012, which was caused by flooding due to Hurricane Sandy, which impacted regions of Pennsylvania and southern New
York, where the majority of the Company's stores are located. Customers were unable to prepare meals at home for extended periods
of time in 2012, resulting in increased deli sales. Additionally, 2013 sales were negatively affected by deli salad recalls occurring in
September and which continued to impact the fourth quarter of 2013, due to a disruption in supply.
Comparable food service sales increased 6.6% in 2014 compared to 2013. This increase is due to increased promotional activity on
key items within the department, partially through the EDLP program; an emphasis on delivering consistent product quality; the
successful launch of new items within the department; and the conversion to “fresh” fried chicken in 48 stores.
Comparable pharmacy sales increased 8.5% in 2014 compared to 2013. Pharmacy sales experienced significant price inflation in
2014 but were negatively affected in 2013 due to the conversion of brand to generic drugs. In addition to price inflation, the sales
increase is also attributable to an increased number of prescriptions being filled, partially due to the Company’s in-store pet
medication and medication synchronization programs. Also contributing to the increase, are some of the Company’s stores having
expanded pharmacy hours and more individuals are eligible for healthcare benefits under the Affordable Care Act. Comparable
pharmacy sales decreased 2.2% in 2013 compared to 2012. Pharmacy sales were impacted by a $15.3 million and a $10.4 million
decline in 2013 and 2012, respectively, due to the conversion of brand drugs to generic. Generics are sold at lower retail prices,
decreasing total pharmacy sales. While sales dropped significantly in dollars because of the increased utilization of generic
pharmaceuticals, the number of units sold in comparable stores also decreased 0.4% in 2013 compared to 2012. As part of
management's strategy to offset this decline, the Company emphasized a continued focus on immunization while implementing in-
store pet medications and a medication synchronization program.
Comparable fuel sales increased 0.4% in 2014 compared to 2013. Comparable fuel sales declined 8.3% in 2013 compared to 2012.
Sales were affected by fuel price deflation in 2013, which resulted in lower retail gas sales.
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), distribution center and transportation costs, as well as
manufacturing facility operations.
According to the latest U.S. Bureau of Labor Statistics’ report, the annual Seasonally Adjusted Food-at-Home Consumer Price Index
increased 2.4% in 2014, 0.9% in 2013 and 2.4% in 2012. 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. Despite the fluctuation of retail and
wholesale prices, the Company maintained a gross profit rate of 27.1% in 2014, 27.7% in 2013 and 27.5% in 2012. The gross profit
rate declined in 2014 as a result of the implementation of the Company’s Three Ways to Save sales initiative, which consisted of the
EDLP and Lowest Price Guarantee programs throughout the year, the “Price Freeze” program in the first quarter and the “Get
Grillin’” program in the second quarter.
The Company experienced a LIFO charge of $911,000 for 2014, compared to a charge of $692,000 for 2013 and a charge of $1.2
million for 2012. With the exception of pharmacy, the Company expects wholesale price inflation to increase slightly in 2015.
The Company's profitability is impacted by the cost of oil. Fluctuating fuel prices affect the delivered cost of product and the cost of
other petroleum-based supplies. As a percentage of sales, the cost of diesel fuel used by the Company to deliver goods from its
distribution center to its stores decreased by 0.02% in 2014 compared to 2013 and remained unchanged in 2013 compared to 2012.
According to the U.S. Department of Energy, the 52-week average diesel fuel price for the Central Atlantic States decreased $0.01 per
gallon to $4.00 per gallon as of December 22, 2014, compared to $4.01 per gallon as of December 23, 2013. Diesel fuel prices for the
Central Atlantic States peaked in February 2014 at $4.36 and steadily fell to $3.39 as of December 22, 2014. Based upon the U.S.
Energy Information Administration’s current projections, the Company is expecting diesel fuel prices to remain below $3.00 during
2015.
14
Table of Contents
WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Results of Operations (continued)
Although the Company experienced product cost inflation and deflation in various commodities in 2014, 2013 and 2012, 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.
Operating, General and Administrative Expenses
Business operating costs including expenses generated from administration and purchasing functions, are recorded in "Operating,
general and administrative expenses." Business operating costs include items such as wages, benefits, utilities, repairs and
maintenance, advertising costs and credits, rent, insurance, equipment depreciation, leasehold amortization and costs for outside
provided services.
The Company may not be able to recover rising expenses through increased prices charged to its customers. Any delay in the
Company's response to unforeseen cost increases or competitive pressures that prevent its ability to raise prices may cause earnings to
suffer. A majority of our associates are paid hourly rates related to federal and state minimum wage laws. Although we have and will
continue to attempt to pass along any increased labor costs through food price increases, there can be no assurance that all such
increased labor costs can be reflected in our prices or that increased prices will be absorbed by consumers without diminishing
consumer spending to some degree. However, to date, we have not experienced a significant reduction in profit margins as a result of
changes in such laws, and management does not anticipate any significant related future reductions in gross profit margins.
Employee-related costs such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 60% of
the total “Operating, general and administrative expenses.” Employee-related costs increased $7.7 million or 2.0% in 2014 compared
to 2013 and increased $4.6 million or 1.2% in 2013 compared to 2012. As a percent of sales, employee-related costs decreased 0.2%
in 2014 compared to 2013 but increased 0.2% in 2013 compared to 2012. As a percent of sales, direct store labor decreased 0.2% in
2014 compared to 2013 but increased 0.3% in 2013 compared to 2012.
The Company expensed $1.1 million, $2.0 million and $1.1 million in 2014, 2013 and 2012, respectively, due to adjustments made to
the non-qualified supplemental executive retirement plan resulting from a rise in the equity market. See Note 6 Retirement Plans, of
Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on the Company’s
retirement plans.
The Company’s self-insured health care benefit expenses decreased 0.5% in 2014 compared to 2013 and decreased 14.9% in 2013
compared to 2012. During 2013, the Company incurred less expensive health care claims, compared to 2012. The Company remains
concerned about the potential impact that The Patient Protection and Affordable Care Act will have on its future operating expenses.
On September 21, 2013, the Company entered into a separation agreement with the former President and Chief Executive Officer.
The Company's "Operating, general and administrative expenses" were negatively impacted by the charge of $6.1 million worth of
estimated expenses related to the separation agreement. See Exhibit 10, filed with the quarterly report on Form 10-Q filed on
November 7, 2013, for more information pertaining to the separation agreement.
Depreciation and amortization expense was $66.9 million, or 2.4% of net sales, for 2014 compared to $58.3 million, or 2.2% of net
sales, for 2013 and $50.7 million, or 1.9% of net sales, for 2012. The increase in depreciation and amortization expense in 2014
compared to 2013 and in 2013 compared to 2012 was the result of additional capital expenditures as the Company implements its
capital expansion program. In the first quarter of 2012, the Company changed its accounting policy for property and equipment and
switched the depreciation method for this group of assets from accelerated methods to straight-line. See Note 1 (j) to the Consolidated
Financial Statements included in this Annual Report on Form 10-K for more information on the Company’s change in accounting
estimate related to depreciation expense. See the Liquidity and Capital Resources section for further information regarding the
Company’s capital expansion program.
15
Table of Contents
WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Results of Operations (continued)
The Company recognized pre-tax gains of $2.6 million, $2.9 million and $1.7 million in 2014, 2013 and 2012, respectively, from the
sale of two properties in 2014 and 2013 and one property in 2012. In 2013, the Company determined that the asset value of four
properties was impaired. As a result, the Company recognized a pre-tax impairment loss of $2.1 million. See Note 1(l) to the
Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on the Company's impairment
charges. Earnings were further impacted in 2013 by a $680,000 adjustment to liabilities for future expenses on closed stores.
Retail store profitability is sensitive to volatility in utility costs due to the amount of electricity and gas required to operate the
Company's stores and facilities. The Company is responding to this volatility in operating costs by employing conservation
technologies, procurement strategies and associate energy awareness programs to manage and reduce consumption. The Company
continues to be a member of the EPA GreenChill program for advancing environmentally beneficial refrigerant management
systems. The Company was awarded the GreenChill Distinguished Partner Award for leadership in refrigerant management due to the
demonstrated extraordinary leadership and initiative in achieving GreenChill’s mission in 2013. This past year, the Company received
three additional Gold Level Certified Stores. In total, the Company has twelve stores registered under the EPA GreenChill program.
In 2012, the Company replaced its existing lighting system at its 1.1 million square-foot distribution center with low watt fluorescent
and LED lighting, reducing energy consumption by 80% and operating costs by 30%. Its new store prototypes contain skylights that
harvest natural daylight to reduce lighting costs, LED lighting and motion sensors in its frozen departments and energy management
systems. All Company stores have an assigned Green Leader to promote in-store energy conservation. Despite these initiatives, the
Company’s utility expense increased by $2.1 million or 5.3% in 2014 compared to 2013. The increase is primarily due to higher
capacity charges and below average temperatures in the Mid-Atlantic States, the Company’s operating region, in the first quarter of
2014. However, the Company’s utility expense decreased by $1.0 million or 2.6% in 2013 compared to 2012, through the
aforementioned initiatives, with the added benefit of clement weather and a declining market in electricity costs.
Investment Income
The Company’s investment portfolio consists of marketable securities, which currently includes municipal bonds and equity
securities, as well as the Company’s SERP investment, which is comprised of mutual funds that are maintained within the Company’s
non-qualified supplemental executive retirement plan and the non-qualified pharmacist deferred compensation plan. The Company
classifies all of its municipal bonds and equity securities as available-for-sale. Investment income declined $2.4 million in 2014
compared to 2013. This decrease is primarily attributed to fewer sales of equity securities and a decline in the Company’s SERP
investment. The Company experienced a $1.4 million decrease in gains recognized on the sale of equity securities in 2014 compared
to 2013 and the Company’s SERP investment decreased by $797,000 in 2014 compared to 2013. Investment income increased by
$1.2 million in 2013 compared to 2012, primarily resulting from the $868,000 increase in gains recognized on the sale of equity
securities in 2013 compared to 2012.
Other Income
Upon completion, the Company recognized a gain of $414,000 on the bargain purchase of three former Genuardi locations in the
Delaware Valley region of Pennsylvania, from Safeway Inc., in the second quarter of 2012.
Provision for Income Taxes
The effective income tax rate was 35.1%, 38.1% and 37.0% in 2014, 2013 and 2012, respectively. In 2014, pre-tax book income
decreased significantly. Tax exempt interest and dividends eligible for a dividends received deduction increased, causing an increase
to the net favorable permanent differences. The combination of the decrease to net income before taxes and increase to the net
favorable permanent differences resulted in a drop in the effective rate for 2014. The rate increased starting in 2012 due to the
decrease in the domestic production deduction also referred to as the Section 199 deduction. The qualifying manufacturing sales
decreased during 2012 resulting in a sizeable provision to return adjustment which results in a higher effective tax rate. The effective
income tax rate differs from the federal statutory rate of 35% primarily due to the effect of state taxes, net of permanent differences.
16
Table of Contents
WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Liquidity and Capital Resources
Net cash provided by operating activities was $123.1 million in 2014, compared to $142.6 million in 2013 and $124.0 million in 2012.
In 2013, management implemented new inventory control buying procedures that increased distribution center efficiencies. Under
these new buying procedures, the distribution center inventory level decreased an average of $9.8 million per period during 2014
compared to 2013 and $7.0 million during the last nine fiscal months of 2013 compared to the same period in 2012. The Company's
overall inventory level only decreased by $811,000 in 2014 compared to 2013 and $4.8 million in 2013 compared to 2012 as a result
of holding more inventory at year end for the holidays and the addition of larger stores during each year. Working capital increased
5.8% in 2014, decreased 7.9% in 2013 and increased 2.7% in 2012, in each case compared to the prior year. The 2014 working capital
increase is primarily attributed to the lower investment in the Company’s capital expansion program during 2014 compared to the
previous years. Whereas, the 2013 decrease in working capital is primarily due to the utilization of marketable securities to fund the
Company’s capital expansion program.
Net cash used in investing activities was $85.8 million in 2014 compared to $106.8 million in 2013 and $107.8 million in 2012. These
funds were used primarily to purchase marketable securities and property and equipment in the three fiscal years presented. While the
Company purchased marketable securities in all three years presented, the Company’s net marketable securities transactions resulted
in the purchase of $8.4 million in 2014, compared to the disposal of $18.7 million in 2013 and the sale of $6.2 million in 2012.
Property and equipment purchases totaled $79.2 million in 2014, compared to $128.1 million in 2013 and $115.9 million in 2012,
which included the acquisition of a business in 2012. The Company acquired three former Genuardi stores for $6.1 million in 2012.
As a percentage of sales, capital expenditures including the acquisition were 2.9%, 4.8% and 4.3% in 2014, 2013 and 2012,
respectively. Proceeds from the sale of property and equipment decreased $837,000 in 2014 compared to 2013 despite the sale of
properties in each of the first and third quarters of 2014 for a total of $2.8 million. Proceeds from the sale of property and equipment
increased $1.9 million in 2013 compared to 2012, primarily due to the sale of two properties for $3.2 million in the second quarter of
2013.
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 estimates that its current development plans will require an investment of
approximately $91.8 million in 2015.
Net cash used in financing activities was $32.3 million in 2014, 2013 and 2012, which solely consisted of dividend payments to
shareholders. At December 27, 2014, the Company had outstanding letters of credit of $19.9 million. The letters of credit are
maintained primarily to support performance, payment, deposit or surety obligations of the Company. The Company does not
anticipate drawing on any of them.
Total cash dividend payments on common stock, on a per share basis, amounted to $1.20 in 2014, 2013 and 2012. No treasury stock
was purchased in 2014, 2013 or 2012. 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 no other commitment of capital resources as of December 27, 2014, other than the lease commitments on its store
facilities under operating leases that expire at various dates through 2029. The Company anticipates funding its working capital
requirements and its $91.8 million capital expansion program through cash and investment reserves and future internally generated
cash flows from operations.
17
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WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Liquidity and Capital Resources (continued)
The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates as they relate to available-for-sale
securities and any future long-term debt borrowings. The Company’s marketable securities portfolio currently consists of municipal
bonds and equity securities. Other short-term investments are classified as cash equivalents on the Consolidated Balance Sheets.
Under its current policies, the Company invests in high-grade marketable debt securities and does not use interest rate derivative
instruments to manage exposure to interest rate fluctuations. Currently, the Company’s investment strategy of obtaining marketable
debt securities with maturity dates between one and ten years helps to minimize market risk and to maintain a balance between risk
and return. The equity securities owned by the Company consist primarily of stock held in large capitalized companies trading on
public security exchange markets. The Company’s management continually monitors the risk associated with its marketable
securities. A quantitative tabular presentation of risk exposure is located in “Item 7a. Quantitative and Qualitative Disclosures about
Market Risk” of this report.
By their nature, these financial instruments inherently expose the holders to market risk. The extent of the Company’s interest rate
and other market risk is not quantifiable or predictable with precision due to the variability of future interest rates and other changes in
market conditions. However, the Company believes that its exposure in this area is not material.
The Company experienced an unrealized holding gain net of deferred taxes of $927,000 in 2014 and unrealized holding losses net of
deferred taxes of $36,000 in 2013 and $9,000 in 2012 (see Consolidated Statements of Comprehensive Income). As of December 27,
2014, the Company had $8.3 million in gross unrealized holding gains and $96,000 in gross unrealized holding losses related to
marketable securities. See Note 2 Marketable Securities, of Notes to the Consolidated Financial Statements included in this Annual
Report on Form 10-K for more information on the Company’s marketable securities.
Contractual Obligations
The following table represents scheduled maturities of the Company’s long-term contractual obligations as of December 27, 2014.
(dollars in thousands)
Operating leases
Total
Payments due by period
Total
$ 199,974
$ 199,974
Less than
1 year
32,826
32,826
$
$
1-3 years
58,593
58,593
$
$
3-5 years
$ 43,258
$ 43,258
More than
5 years
65,297
65,297
$
$
Off-Balance Sheet Arrangements
The Company is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect
on the Company’s financial condition, results of operations or cash flows, except for the possibility that the Financial Accounting
Standards Board could require the Company's store leases to be recognized on the balance sheet.
Critical 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. In the first quarter of 2012, the Company changed its accounting
policy for the depreciation of property and equipment. See Note 1 (j) to the Consolidated Financial Statements included in this
Annual Report on Form 10-K for more information on the Company’s change in accounting estimate related to depreciation expense.
18
Table of Contents
WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Critical Accounting Policies and Estimates (continued)
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires that the Company makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and
expenses. These estimates and assumptions are based on historical and other factors believed to be reasonable under the
circumstances. The Company evaluates these estimates and assumptions on an ongoing basis and may retain outside consultants,
lawyers and actuaries to assist in its evaluation. The Company believes the following accounting policies are the most critical because
they involve the most significant judgments and estimates used in preparation of its consolidated financial statements.
Inventories
Inventories are valued at the lower of cost or market, using both the last-in, first-out (LIFO) and average cost methods. The
Company’s center store and pharmacy inventories are valued using LIFO and the Company’s fresh inventories are valued using
average cost. The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities.
Allowances for inventory shortages are recorded based on the results of these counts and to provide for estimated shortages from the
last physical count to the financial statement date.
Property and Equipment
In the first quarter of 2012, the Company changed its accounting policy for property and equipment. Property and equipment continue
to be recorded at cost. Prior to January 1, 2012, the Company provided for depreciation of buildings and improvements and
equipment using accelerated methods. Effective January 1, 2012, the Company changed its method of depreciation for this group of
assets from the accelerated methods to straight-line. Management deemed the change preferable because the straight-line method will
more accurately reflect the pattern of usage and the expected benefits of such assets. Management also considered that the change will
provide greater consistency with the depreciation methods used by other companies in the Company's industry. The change was
accounted for as a change in accounting estimate effected by a change in accounting principle. The net book value of assets acquired
prior to January 1, 2012 with useful lives remaining will be depreciated using the straight-line method prospectively. If the Company
had continued using accelerated methods, depreciation expense would have been $11.5 million greater in 2012. Had accelerated
methods continued to be used, after considering the impact of income taxes, the effect would decrease net income by $6.8 million or
$.25 per share in 2012.
Leasehold improvements are unaffected by the change noted above. Leasehold improvements continue to be amortized using the
straight line method over the terms of the leases or the useful lives of the assets, whichever is shorter.
Maintenance and repairs are expensed and renewals and betterments are capitalized. When assets are retired or otherwise disposed of,
the assets and accumulated depreciation are removed from the respective accounts and any profit or loss on the disposition is credited
or charged to “Operating, general and administrative expenses.”
Goodwill and Intangible Assets
Intangible assets with an indefinite useful life are not amortized until their useful life is determined to be no longer indefinite and are
tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Goodwill is not amortized but tested for impairment for each reporting unit on an annual basis and between annual tests in certain
circumstances.
To derive the fair value of the Company’s sole reporting unit, the Company uses an income approach along with an analysis of its
stock value. Under the income approach, fair value of a reporting unit is determined based on estimated future cash flows discounted
by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company. Estimated future
cash flows are based on the Company’s internal projection model. The stock value evaluation consists of measuring the average
market capitalization of the Company against its total asset value of its sole reporting unit. The Company completes an impairment
test annually. See Note 1(l) to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more
information on the Company’s impairment of long-lived assets.
19
Table of Contents
WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Critical Accounting Policies and Estimates (continued)
Revenue Recognition
Revenue from the sale of products to the Company’s customers is recognized at the point of sale. Discounts provided to customers at
the point of sale through the Weis Club Preferred Shopper loyalty program are recognized as a reduction in sales as products are sold.
Periodically, the Company will run a point based sales incentive program that rewards customers with future sales discounts. The
Company makes reasonable and reliable estimates of the amount of future discounts based upon historical experience and its customer
data tracking software. Sales are reduced by these estimates over the life of the program. Discounts to customers at the point of sale
provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the discounts are
redeemable at any retailer that accepts those discounts. The Company records “Deferred revenue” for the sale of gift cards and
revenue is recognized in “Net sales” at the time of customer redemption for products. Gift card breakage income is recognized in
“Operating, general and administrative expenses” based upon historical redemption patterns and represents the balance of gift cards
for which the Company believes the likelihood of redemption by the customer is remote. Sales tax is excluded from “Net sales.” The
Company charges sales tax on all taxable customer purchases and remits these taxes monthly to the appropriate taxing jurisdiction.
Merchandise return activity is immaterial to revenues due to products being returned quickly and the unit cost is relatively low.
Vendor Allowances
Vendor allowances related to the Company's buying and merchandising activities are recorded as a reduction of cost of sales as they
are earned, in accordance with the underlying agreement. Off-invoice and bill-back allowances are used to reduce direct product costs
upon the receipt of goods. Promotional rebates and credits are accounted for as a reduction in the cost of inventory and recognized
when the related inventory is sold. Volume incentive discounts are realized as a reduction of cost of sales at the time it is deemed
probable and reasonably estimable that the incentive target will be reached. Long-term contract incentives, which require an exclusive
vendor relationship, are allocated over the life of the contract. Promotional allowance funds for specific vendor-sponsored programs
are recognized as a reduction of cost of sales as the program occurs and the funds are earned per the agreement. Cash discounts for
prompt payment of invoices are realized in cost of sales as invoices are paid. Warehouse and back-haul allowances provided by
suppliers for distributing their product through the Company’s distribution system are recorded in cost of sales as the required
performance is completed. Warehouse rack and slotting allowances are recorded in cost of sales when new items are initially set up in
the Company's distribution system, which is when the related expenses are incurred and performance under the agreement is complete.
Swell allowances for damaged goods are realized in cost of sales as provided by the supplier, helping to offset product shrink losses
also recorded in cost of sales.
Store Closing Costs
The Company provides for closed store liabilities relating to the estimated post-closing lease liabilities and related other exit costs
associated with the store closing commitments. The closed store liabilities are usually paid over the lease terms associated with the
closed stores having remaining terms ranging from one to four years. At December 27, 2014, closed store lease liabilities totaled
$955,000. The Company estimates the lease liabilities, net of estimated sublease income, using the undiscounted rent payments of
closed stores. Other exit costs include estimated real estate taxes, common area maintenance, insurance and utility costs to be incurred
after the store closes over the remaining lease term. Store closings are generally completed within one year after the decision to close.
Adjustments to closed store liabilities and other exit costs primarily relate to changes in subtenants and actual exit costs differing from
original estimates. Adjustments are made for changes in estimates in the period in which changes become known. Any excess store
closing liability remaining upon settlement of the obligation is reversed to income in the period that such settlement is determined.
Inventory write-downs, if any, in connection with store closings, are classified in cost of sales. Costs to transfer inventory and
equipment from closed stores are expensed as incurred. Store closing liabilities are reviewed quarterly to ensure that any accrued
amount that is no longer needed for its originally intended purpose is reversed to income in the proper period.
Self-Insurance
The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and associate medical
benefit claims. The self-insurance liability for most of the workers’ compensation claims is determined based on historical data and
an estimate of claims incurred but not reported. The other self-insurance liabilities are determined actuarially, based on claims filed
and an estimate of claims incurred but not yet reported. The Company was liable for associate health claims up to an annual
maximum of $750,000 per member prior to March 1, 2012, $1,250,000 per member prior to March 1, 2013, $2,000,000 per member
prior to March 1, 2014 and an unlimited amount per member as of March 1, 2014. As of March 1, 2014, the Company purchased stop
loss insurance which carries a $500,000 specific deductible with a $250,000 aggregating deductible. The Company is liable for
workers' compensation claims up to $2,000,000 per claim. Property and casualty insurance coverage is maintained with outside
carriers at deductible or retention levels ranging from $100,000 to $1,000,000. Significant assumptions used in the development of
the actuarial estimates include reliance on the Company’s historical claims data including average monthly claims and average lag
time between incurrence and reporting of the claim.
20
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WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Forward-Looking Statements
In addition to historical information, this Annual 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.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk:
(dollars in thousands)
December 27, 2014
Rate sensitive assets:
2015
2016
2017
2018
2019
Thereafter
Total
Dec. 27, 2014
Expected Maturity Dates
Fair Value
Fixed interest rate securities
Average interest rate
$ 5,200
3.17 %
$ 14,625
1.24 %
$ 12,535
1.64 %
$ 9,450
2.54 %
$ 4,275
1.84 %
$ 13,565
2.71 %
$ 59,650
2.15 %
$ 66,078
Other Relevant Market Risks
The Company’s equity securities at December 27, 2014 had a cost basis of $1,198,000 and a fair value of $7,881,000. The dividend
yield realized on these equity investments was 8.43% in 2014. Market risk, as it relates to equities owned by the Company, is
discussed within the “Liquidity and Capital Resources” section of “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” contained within this report.
21
Table of Contents
Item 8. Financial Statements and Supplementary Data:
WEIS MARKETS, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 27, 2014 and December 28, 2013
Assets
Current:
Cash and cash equivalents
Marketable securities
SERP investment
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Income taxes recoverable
Total current assets
Property and equipment, net
Goodwill
Intangible and other assets, net
Total assets
Liabilities
Current:
Accounts payable
Accrued expenses
Accrued self-insurance
Deferred revenue, net
Income taxes payable
Deferred income taxes
Total current liabilities
Postretirement benefit obligations
Deferred income taxes
Other
Total liabilities
Shareholders’ Equity
Common stock, no par value, 100,800,000 shares authorized, 33,047,807 shares issued,
26,898,443 shares outstanding
Retained earnings
Accumulated other comprehensive income, net
Treasury stock at cost, 6,149,364 shares
Total shareholders’ equity
Total liabilities and shareholders’ equity
See accompanying notes to consolidated financial statements.
22
2014
2013
$
$
$
$
22,986
73,959
9,121
70,642
239,641
17,432
612
434,393
716,860
35,162
4,704
1,191,119
144,812
34,590
18,695
6,720
-
5,800
210,617
18,672
100,756
3,242
333,287
9,949
993,911
4,829
1,008,689
(150,857)
857,832
1,191,119
$
$
$
$
17,965
63,093
8,752
57,193
240,452
17,293
-
404,748
704,985
35,162
3,347
1,148,242
133,568
27,416
19,333
7,056
1,628
4,219
193,220
17,101
97,934
5,934
314,189
9,949
971,022
3,939
984,910
(150,857)
834,053
1,148,242
Table of Contents
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except shares and per share amounts)
For the Fiscal Years Ended December 27, 2014,
December 28, 2013 and December 29, 2012
Net sales
2014
(52 weeks)
2013
(52 weeks)
2012
(52 weeks)
$
2,776,683
$
2,692,588
$
2,701,405
Cost of sales, including warehousing and distribution expenses
2,023,721
1,947,120
1,958,852
Gross profit on sales
Operating, general and administrative expenses
Income from operations
Investment income
Other income
Income before provision for income taxes
Provision for income taxes
Net income
Weighted-average shares outstanding, basic and diluted
Cash dividends per share
Basic and diluted earnings per share
See accompanying notes to consolidated financial statements.
752,962
670,251
82,711
2,287
-
84,998
29,831
55,167
26,898,443
1.20
2.05
$
$
$
745,468
634,286
111,182
4,684
-
115,866
44,145
71,721
26,898,443
1.20
2.67
$
$
$
742,553
615,521
127,032
3,468
414
130,914
48,403
82,511
26,898,443
1.20
3.07
$
$
$
23
Table of Contents
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands)
For the Fiscal Years Ended December 27, 2014,
December 28, 2013 and December 29, 2012
Net income
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 $644, $23 and $0, respectively)
Reclassification adjustment for gains included in net income
(Net of deferred taxes of $26, $730 and $293, respectively)
Other comprehensive income (loss), net of tax
Comprehensive income, net of tax
See accompanying notes to consolidated financial statements.
2014
(52 weeks)
2013
(52 weeks)
2012
(52 weeks)
$
55,167
$
71,721
$
82,511
927
(37)
890
(36)
(1,044)
(1,080)
(9)
(420)
(429)
$
56,057
$
70,641
$
82,082
24
Table of Contents
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(dollars in thousands, except shares)
Accumulated
Other
Total
For the Fiscal Years Ended December 27, 2014,
Common Stock
Retained
Comprehensive
Treasury Stock
Shareholders’
December 28, 2013 and December 29, 2012
Shares
Amount
Earnings
Income (Loss)
Shares
Amount
Equity
33,047,807
—
$
9,949
—
$
881,346
82,511
$
5,448
—
6,149,364
—
$
(150,857)
—
$
745,886
82,511
Balance at December 31, 2011
Net income
Other comprehensive loss, net of
reclassification adjustments and tax
Dividends paid
—
—
Balance at December 29, 2012
33,047,807
Net income
Other comprehensive loss, net of
reclassification adjustments and tax
Dividends paid
—
—
—
Balance at December 28, 2013
33,047,807
Net income
Other comprehensive income, net of
reclassification adjustments and tax
Dividends paid
—
—
—
Balance at December 27, 2014
33,047,807
$
See accompanying notes to consolidated financial statements.
—
—
9,949
—
—
—
9,949
—
—
(32,278)
931,579
71,721
—
(32,278)
971,022
55,167
(429)
—
5,019
—
—
—
6,149,364
—
(1,080)
—
3,939
—
—
—
6,149,364
—
—
—
9,949
—
(32,278)
993,911
$
$
890
—
4,829
—
—
6,149,364
—
—
(150,857)
—
—
—
(150,857)
—
—
—
(429)
(32,278)
795,690
71,721
(1,080)
(32,278)
834,053
55,167
890
(32,278)
$
(150,857)
$
857,832
25
Table of Contents
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
For the Fiscal Years Ended December 27, 2014,
December 28, 2013 and December 29, 2012
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation
Amortization
Gain on disposition of fixed assets
Impairment of fixed assets
Gain on sale of marketable securities
Gain on sale intangible assets
Gain on acquisition of business
Deferred income taxes
Changes in operating assets and liabilities:
Inventories
Accounts receivable, prepaid expenses and other current assets
Income taxes recoverable
Accounts payable and other liabilities
Income taxes payable
Other
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of property and equipment
Proceeds from the sale of property and equipment
Purchase of marketable securities
Proceeds from maturities of marketable securities
Proceeds from the sale of marketable securities
Acquisition of business
Purchase of intangible assets
Proceeds from the sale of intangible assets
Change in SERP investment
Net cash used in investing activities
Cash flows from financing activities:
Dividends paid
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
See accompanying notes to consolidated financial statements.
2014
(52 weeks)
2013
(52 weeks)
2012
(52 weeks)
$
55,167
$
71,721
$
82,511
59,004
7,865
(2,630)
-
(63)
-
-
3,785
811
(13,588)
(612)
15,894
(1,628)
(895)
123,110
(79,177)
3,614
(20,118)
4,050
7,668
-
(1,479)
-
(369)
(85,811)
(32,278)
(32,278)
5,021
17,965
22,986
51,068
7,207
(2,033)
2,088
(1,775)
(780)
-
10,377
4,791
(10,512)
-
9,546
269
665
142,632
(128,055)
4,451
(12,635)
1,150
30,170
-
(937)
780
(1,694)
(106,770)
(32,278)
(32,278)
3,584
14,381
17,965
$
$
44,153
6,498
(1,407)
-
(713)
-
(414)
15,611
(17,936)
(2,569)
1,226
(5,045)
1,359
687
123,961
(109,774)
2,542
(13,790)
-
19,941
(6,116)
(439)
-
(165)
(107,801)
(32,278)
(32,278)
(16,118)
30,499
14,381
$
26
Table of Contents
WEIS MARKETS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies
The following is a summary of the significant accounting policies utilized in preparing the Company’s consolidated financial
statements:
(a) Description of Business
Weis Markets, Inc. is a Pennsylvania business corporation formed in 1924. The Company is engaged principally in the retail sale of
food in Pennsylvania and surrounding states. The Company’s operations are reported as a single reportable segment. There was no
material change in the nature of the Company's business during fiscal 2014.
(b) Definition of Fiscal Year
The Company’s fiscal year ends on the last Saturday in December. Fiscal 2014 was comprised of 52 weeks, ending on December 27,
2014. Fiscal 2013 was comprised of 52 weeks, ending on December 28, 2013. Fiscal 2012 was comprised of 52 weeks, ending on
December 29, 2012. References to years in this annual report relate to fiscal years.
(c) Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
(d) Use of Estimates
Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America. Actual results could differ from those estimates.
(e) Correction for Immaterial Prior Period Misstatements
The Company corrected the $8.8 million balance related to “SERP investment” (consisting of level 1 mutual funds) by removing it
from “Cash and cash equivalents” in the 2013 Consolidated Balance Sheet. The opening cash impact on the 2012 Consolidated
Statement of Cash Flows was $6.9 million and the change to investing activities in 2012 was immaterial. The Company also corrected
the “Loss (gain) on disposition/impairment of fixed assets” originally reported as a net loss of $55,000 in the 2013 Consolidated
Statement of Cash Flows into the “Gain on disposition of fixed assets” of $2.0 million and the “Impairment of fixed assets” of $2.1
million. There is no cash impact on the 2013 Consolidated Statement of Cash Flows related to this change, since both line items still
net to the originally reported $55,000.
(f) Cash and Cash Equivalents
The Company maintains its cash balances in the form of core checking accounts and money market accounts. The Company
maintains cash deposits with banks that at times exceed applicable insurance limits. The Company reduces its exposure to credit risk
by maintaining such deposits with high quality financial institutions that management believes are creditworthy.
The Company considers investments with an original maturity of three months or less to be cash equivalents. Investment amounts
classified as cash equivalents as of December 27, 2014 and December 28, 2013 totaled $14.4 million and $7.2 million, respectively.
(g) Marketable Securities
Marketable securities consist of municipal bonds and equity securities. The Company invests primarily in high-grade marketable debt
securities. The Company classifies all of its marketable securities as available-for-sale.
Available-for-sale securities are recorded at fair value as determined by quoted market price based on national markets. Unrealized
holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of
shareholders’ equity until realized. A decline in the fair value below cost that is deemed other than temporary results in a charge to
earnings and the establishment of a new cost basis for the security. Dividend and interest income is recognized when earned.
Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of
securities.
(h) Accounts Receivable
Accounts receivable are stated net of an allowance for uncollectible accounts of $1,578,000 and $1,882,000 as of December 27, 2014
and December 28, 2013, respectively. The reserve balance relates to amounts due from pharmacy third party providers, retail
customer returned checks, manufacturing customers, vendors and tenants. The Company maintains an allowance for the amount of
receivables deemed to be uncollectible and calculates this amount based upon historical collection activity adjusted for current
conditions. Customer electronic payments accepted at the point of sale are classified as accounts receivable until collected.
27
Table of Contents
WEIS MARKETS, INC.
Note 1 Summary of Significant Accounting Policies (continued)
(i) Inventories
Inventories are valued at the lower of cost or market, using both the last-in, first-out (LIFO) and average cost methods. The
Company’s center store and pharmacy inventories are valued using LIFO and the Company’s fresh inventories are valued using
average cost. The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities.
Allowances for inventory shortages are recorded based on the results of these counts and to provide for estimated shortages from the
last physical count to the financial statement date.
(j) Property and Equipment
In the first quarter of 2012, the Company changed its accounting policy for property and equipment. Property and equipment continue
to be recorded at cost. Prior to January 1, 2012, the Company provided for depreciation of buildings and improvements and
equipment using accelerated methods. Effective January 1, 2012, the Company changed its method of depreciation for this group of
assets from the accelerated methods to straight-line. Management deemed the change preferable because the straight-line method will
more accurately reflect the pattern of usage and the expected benefits of such assets. Management also considered that the change will
provide greater consistency with the depreciation methods used by other companies in the Company's industry. The change was
accounted for as a change in accounting estimate effected by a change in accounting principle. The net book value of assets acquired
prior to January 1, 2012 with useful lives remaining will be depreciated using the straight-line method prospectively. If the Company
had continued using accelerated methods, depreciation expense would have been $11.5 million greater in 2012. Had accelerated
methods continued to be used, after considering the impact of income taxes, the effect would decrease net income by $6.8 million or
$.25 per share in 2012.
Leasehold improvements are unaffected by the change noted above. Leasehold improvements continue to be amortized using the
straight-line method over the terms of the leases or the useful lives of the assets, whichever is shorter.
Maintenance and repairs are expensed and renewals and betterments are capitalized. When assets are retired or otherwise disposed of,
the assets and accumulated depreciation are removed from the respective accounts and any profit or loss on the disposition is credited
or charged to “Operating, general and administrative expenses.”
(k) Goodwill and Intangible Assets
Intangible assets with an indefinite useful life are not amortized until their useful life is determined to be no longer indefinite and are
tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Goodwill is not amortized but tested for impairment for each reporting unit on an annual basis and between annual tests in certain
circumstances.
To derive the fair value of the Company’s sole reporting unit, the Company uses an income approach along with an analysis of its
stock value. Under the income approach, fair value of a reporting unit is determined based on estimated future cash flows discounted
by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company. Estimated future
cash flows are based on the Company’s internal projection model. The stock value evaluation consists of measuring the average
market capitalization of the Company against its total asset value of its sole reporting unit. The Company completes an impairment
test annually. See Note 1(l) to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more
information on the Company’s impairment of long-lived assets.
28
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WEIS MARKETS, INC.
Note 1 Summary of Significant Accounting Policies (continued)
(k) Goodwill and Intangible Assets (continued)
The Company’s intangible assets and related accumulated amortization at December 27, 2014 and December 28, 2013 consisted of the
following:
(dollars in thousands)
Lease Acquisitions
Liquor Licenses
Customer Lists
Total
December 27, 2014
Accumulated
Amortization
$
$
2,418
-
10
2,428
Gross
3,654
3,358
120
7,132
$
$
$
Net
1,236
3,358
110
$
$
4,704
$
Gross
3,654
1,879
120
5,653
December 28, 2013
Accumulated
Amortization
$
$
2,235
65
6
2,306
$
Net
1,419
1,814
114
$
3,347
Intangible assets with a definite useful life are generally amortized on a straight-line basis over periods ranging from 15 to 30 years.
Estimated amortization expense for the next five fiscal years is approximately $189,000 in 2015, $189,000 in 2016, $189,000 in 2017,
$189,000 in 2018 and $189,000 in 2019. As of December 27, 2014, the Company’s intangible assets with indefinite lives consisted of
goodwill and Pennsylvania liquor licenses.
(l) Impairment of Long-Lived Assets
The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current
circumstances warrant revised estimates of useful lives. The Company completes an impairment test annually. The Company also
reviews its property and equipment for impairment whenever events or changes in circumstances indicate the carrying value of an
asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to the net undiscounted cash flows
expected to be generated by the asset. An impairment loss would be recorded for the excess of net book value over the fair value of
the asset impaired. The fair value is estimated based on expected discounted future cash flows.
With respect to owned property and equipment associated with closed stores, the value of the property and equipment is adjusted to
reflect recoverable values based on the Company’s prior history of disposing of similar assets and current economic conditions.
In accordance with Accounting Standards Codification No. 360, Property, Plant and Equipment, the Company recorded a pre-tax
charge of $2.1 million in the third quarter of 2013 for the impairment of long-lived assets, including equipment and leasehold
improvements. The charge was a result of management determining that the net book value of four properties was impaired. This
charge was included as a component of "Operating, general and administrative expenses."
The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results.
The Company believes that, based on current conditions, materially different reported results are not likely to result from long-lived
asset impairments. However, a change in assumptions or market conditions could result in a change in estimated future cash flows
and the likelihood of materially different reported results.
(m) Store Closing Costs
The Company provides for closed store liabilities relating to the estimated post-closing lease liabilities and related other exit costs
associated with the store closing commitments. Currently, closed stores have remaining lease terms ranging from one to four years,
and the liabilities associated with these closed store leases are paid over the terms of the lease. Closed store lease liabilities totaled
$955,000 and $1,193,000 as of December 27, 2014 and December 28, 2013, respectively. The Company estimates the lease liabilities,
net of estimated sublease income, using the undiscounted rent payments of closed stores. Adjustments to closed store liabilities
primarily relate to changes in sublease income and actual exit costs differing from original estimates. Adjustments are made for
changes in estimates in the period in which the change becomes known. Store closing liabilities are reviewed quarterly to ensure that
any accrued amount that is not a sufficient estimate of future costs, or that no longer is needed for its originally intended purpose, is
adjusted to income in the proper period.
29
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WEIS MARKETS, INC.
Note 1 Summary of Significant Accounting Policies (continued)
(m) Store Closing Costs (continued)
The following table summarizes accrual activity for future lease obligations of stores that were closed in the normal course of
business:
(dollars in thousands)
Balance at December 29, 2012
Additions
Payments
Adjustments
Balance at December 28, 2013
Additions
Payments
Adjustments
Balance at December 27, 2014
Future Lease
Obligations
635
680
(33)
(89)
1,193
119
(375)
18
955
$
$
(n) Self-Insurance
The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and associate medical
benefit claims. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims and an estimated liability
for claims incurred but not reported. The Company was liable for associate health claims up to an annual maximum of $750,000 per
member prior to March 1, 2012, $1,250,000 per member prior to March 1, 2013, $2,000,000 per member prior to March 1, 2014 and
an unlimited amount per member as of March 1, 2014. As of March 1, 2014, the Company purchased stop loss insurance which
carries a $500,000 specific deductible with a $250,000 aggregating deductible. The Company is liable for workers' compensation
claims up to $2,000,000 per claim. Property and casualty insurance coverage is maintained with outside carriers at deductible or
retention levels ranging from $100,000 to $1,000,000.
(o) Income Taxes
The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled.
(p) Earnings Per Share
Earnings per share are based on the weighted-average number of common shares outstanding.
(q) Revenue Recognition
Revenue from the sale of products to the Company’s customers is recognized at the point of sale. Discounts provided to customers at
the point of sale through the Weis Club Preferred Shopper loyalty program are recognized as a reduction in sales as products are sold.
Periodically, the Company will run a point based sales incentive program that rewards customers with future sales discounts. The
Company makes reasonable and reliable estimates of the amount of future discounts based upon historical experience and its customer
data tracking software. Sales are reduced by these estimates over the life of the program. Discounts to customers at the point of sale
provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the discounts are
redeemable at any retailer that accepts those discounts. The Company records “Deferred revenue” for the sale of gift cards and
revenue is recognized in “Net sales” at the time of customer redemption for products. Gift card breakage income is recognized in
“Operating, general and administrative expenses” based upon historical redemption patterns and represents the balance of gift cards
for which the Company believes the likelihood of redemption by the customer is remote. Sales tax is excluded from “Net sales.” The
Company charges sales tax on all taxable customer purchases and remits these taxes monthly to the appropriate taxing jurisdiction.
Merchandise return activity is immaterial to revenues due to products being returned quickly and the unit cost is relatively low.
30
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WEIS MARKETS, INC.
Note 1 Summary of Significant Accounting Policies (continued)
(r) Cost of Sales, Including Warehousing and Distribution Expenses
“Cost of sales, including warehousing and distribution expenses” consists of direct product (net of discounts and allowances),
distribution center and transportation costs, as well as manufacturing facility operations.
(s) Vendor Allowances
Vendor allowances that relate to the Company's buying and merchandising activities are recorded as a reduction of cost of sales as
they are earned, in accordance with the underlying agreement. Off-invoice and bill-back allowances are used to reduce direct product
costs upon the receipt of goods. Promotional rebates and credits are accounted for as a reduction in the cost of inventory and
recognized when the related inventory is sold. Volume incentive discounts are realized as a reduction of cost of sales at the time it is
deemed probable and reasonably estimable that the incentive target will be reached. Long-term contract incentives, which require an
exclusive vendor relationship, are allocated over the life of the contract. Promotional allowance funds for specific vendor-sponsored
programs are recognized as a reduction of cost of sales as the program occurs and the funds are earned per the agreement. Cash
discounts for prompt payment of invoices are realized in cost of sales as invoices are paid. Warehouse and back-haul allowances
provided by suppliers for distributing their product through the Company’s distribution system are recorded in cost of sales as the
required performance is completed. Warehouse rack and slotting allowances are recorded in cost of sales when new items are initially
set up in the Company's distribution system, which is when the related expenses are incurred and performance under the agreement is
complete. Swell allowances for damaged goods are realized in cost of sales as provided by the supplier, helping to offset product
shrink losses also recorded in cost of sales.
Vendor allowances recorded as credits in cost of sales totaled $89.5 million in 2014, $76.4 million in 2013 and $75.1 million in 2012.
Vendor paid cooperative advertising credits totaled $16.0 million in 2014, $16.0 million in 2013 and $16.4 million in 2012. These
credits were netted against advertising costs within “Operating, general and administrative expenses.” The Company had accounts
receivable due from vendors of $395,000 and $440,000 for earned advertising credits and $5.7 million and $5.8 million for earned
promotional discounts as of December 27, 2014 and December 28, 2013, respectively. The Company had $734,000 and $911,000 in
unearned income included in accrued liabilities for unearned vendor programs under long-term contracts for display and shelf space
allocation as of December 27, 2014 and December 28, 2013, respectively.
(t) Operating, General and Administrative Expenses
Business operating costs including expenses generated from administration and purchasing functions, are recorded in “Operating,
general and administrative expenses” in the Consolidated Statements of Income. Business operating costs include items such as
wages, benefits, utilities, repairs and maintenance, advertising costs and credits, rent, insurance, equipment depreciation, leasehold
amortization and costs for outside provided services.
(u) Advertising Costs
The Company expenses advertising costs as incurred. The Company recorded advertising expense, before vendor paid cooperative
advertising credits, of $24.6 million in 2014, $23.5 million in 2013 and $23.5 million in 2012 in “Operating, general and
administrative expenses.”
(v) Rental Income
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.” All leases are operating leases, as disclosed in Note 5.
31
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WEIS MARKETS, INC.
Note 1 Summary of Significant Accounting Policies (continued)
(w) Current Relevant Accounting Standards
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") 2014-09, Revenue
from Contracts with Customers (Topic 606), which amended the existing accounting standards for revenue recognition. ASU 2014-09
establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects
the expected consideration received in exchange for those goods or services. The standard is effective for annual reporting periods
beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The
amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as
of the date of initial application. The Company is currently in the process of evaluating the impact of adoption of the ASU on its
consolidated financial statements.
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment
(Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 amends
guidance on reporting discontinued operations only if the disposal of a component of an entity or group of components of an entity
represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. It also allows
companies to have significant continuing involvement and continuing cash flows with the discontinued operations. Additional
disclosures are also required for discontinued operations and individually material disposal transactions that do not meet the definition
of a discontinued operation. The standard should be applied prospectively for all disposals of components of an entity and for all
businesses that, on acquisition, are classified as held for sale that occurred within annual periods beginning on or after December 15,
2014, including interim periods within that reporting period. The Company is currently in the process of evaluating the impact of
adoption of the ASU on its consolidated financial statements.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40)(Topic
718): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 provides guidance related
to management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern
and to provide related footnote disclosures. The new requirements are effective for the annual periods ending after December 15,
2016, and for interim periods and annual periods thereafter. Early adoption is permitted. Adoption of the new ASU will not have an
impact on the Company’s consolidated financial statements.
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WEIS MARKETS, INC.
Note 2 Marketable Securities
The Company’s marketable securities are all classified as available-for-sale. 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 bond portfolio is valued using Level 2 inputs. The Company’s 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 brokerage firm(s), which include
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. In addition, the Company engaged an independent firm to value a sample of the Company’s municipal bond holdings in order
to validate the investment’s assigned fair value.
Marketable securities, as of December 27, 2014 and December 28, 2013, consisted of:
(dollars in thousands)
December 27, 2014
Available-for-sale:
Level 1
Equity securities
Level 2
Municipal bonds
(dollars in thousands)
December 28, 2013
Available-for-sale:
Level 1
Equity securities
Level 2
Municipal bonds
Amortized
Cost
Gross
Unrealized
Holding Gains
Gross
Unrealized
Holding Losses
Fair
Value
1,198
$
6,683
$
-
$
7,881
64,561
65,759
$
1,613
8,296
$
(96)
(96)
$
66,078
73,959
Amortized
Cost
Gross
Unrealized
Holding Gains
Gross
Unrealized
Holding Losses
Fair
Value
970
$
7,239
$
-
$
8,209
55,431
56,401
$
686
7,925
$
(1,233)
(1,233)
$
54,884
63,093
$
$
$
$
Maturities of marketable securities classified as available-for-sale at December 27, 2014, were as follows:
(dollars in thousands)
Available-for-sale:
Due within one year
Due after one year through five years
Due after five years through ten years
Equity securities
Amortized
Cost
Fair
Value
$
$
1,875
46,613
16,073
1,198
65,759
$
$
1,912
47,740
16,426
7,881
73,959
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WEIS MARKETS, INC.
Note 3 Inventories
Merchandise inventories, as of December 27, 2014 and December 28, 2013, were valued as follows:
(dollars in thousands)
LIFO
Average cost
2014
193,621
46,020
239,641
$
$
2013
187,178
53,274
240,452
$
$
Management believes the use of the LIFO method for valuing certain inventories represents the most appropriate matching of costs
and revenues in the Company’s circumstances. If all inventories were valued on the average cost method, which approximates current
cost, total inventories would have been $79,933,000 and $79,022,000 higher than as reported on the above methods as of December
27, 2014 and December 28, 2013, respectively. During 2013, the Company had certain decrements in its LIFO pools, which had an
insignificant impact on the cost of sales.
Note 4 Property and Equipment
Property and equipment, as of December 27, 2014 and December 28, 2013, consisted of:
(dollars in thousands)
Land
Buildings and improvements
Equipment
Leasehold improvements
Total, at cost
Less accumulated depreciation and amortization
Useful Life
(in years)
10-60
3-12
5-20
$
2014
103,240
544,309
911,169
193,842
1,752,560
1,035,700
716,860
$
2013
97,906
527,789
874,008
184,995
1,684,698
979,713
704,985
$
$
Note 5 Lease Commitments
At December 27, 2014, the Company leased approximately 50% of its open store facilities under operating leases that expire at
various dates through 2029. These leases generally provide for fixed annual rentals; however, several provide for minimum annual
rentals plus contingent rentals as a percentage of annual sales and a number of leases require the Company to pay for all or a portion
of insurance, real estate taxes, water and sewer rentals, and repairs, the cost of which is charged to the related expense category rather
than being accounted for as rent expense. Most of the leases contain multiple renewal options, under which the Company may extend
the lease terms from 5 to 20 years. Rents on operating leases, including agreements with step rents, are charged to expense on a
straight-line basis over the minimum lease term.
Rent expense and income on all leases consisted of:
(dollars in thousands)
Minimum annual rentals
Contingent rentals
Lease or sublease income
2014
35,183
409
(6,881)
28,711
$
$
2013
32,817
386
(6,452)
26,751
$
$
$
2012
30,141
134
(6,352)
$
23,923
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WEIS MARKETS, INC.
Note 5 Lease Commitments (continued)
The following is a schedule by years of future minimum rental payments required under operating leases and total minimum sublease
and lease rental income to be received that have initial or remaining non-cancelable lease terms in excess of one year as of December
27, 2014.
(dollars in thousands)
2015
2016
2017
2018
2019
Thereafter
Subleases
Leases
$
$
32,826
31,619
26,974
24,073
19,185
65,297
199,974
$
$
(2,962)
(2,796)
(2,261)
(1,621)
(855)
(2,478)
(12,973)
The Company has $455,000 accrued as of December 27, 2014 and had $521,000 accrued as of December 28, 2013, for future
minimum rental payments due on previously closed stores, reduced by the estimated sublease income to be received. The future
minimum rental payments required under operating leases and estimated sublease income for these locations are included in the above
schedule.
Note 6 Retirement Plans
The Company has a contributory retirement savings plan, the Weis Markets, Inc. Retirement Savings Plan, covering substantially all
full-time associates. The Company had a noncontributory profit-sharing plan, the Weis Markets, Inc. Profit Sharing Plan, covering
eligible associates which included certain salaried associates, store management and administrative support personnel. Effective
December 1, 2009, the Weis Markets, Inc. Profit Sharing Plan was merged into the Weis Markets, Inc. Retirement Savings Plan. The
Company also has three supplemental retirement plans covering highly compensated employees of the Company. The Company’s
policy is to fund all qualified retirement plan costs as accrued, but not supplemental retirement costs. Employer contributions to the
qualified retirement plans are made at the sole discretion of the Company.
Retirement plan costs:
(dollars in thousands)
Retirement savings plan
Profit-sharing plan
Deferred compensation plan
Supplemental retirement plan
Pharmacist deferred compensation plan
2014
2013
2012
$
$
1,752
1,258
1,328
1,061
(228)
5,171
$
$
1,715
1,750
126
2,025
178
5,794
$
$
1,560
1,650
291
1,105
198
4,804
The Company maintains a non-qualified deferred compensation plan for the payment of specific amounts of annual retirement benefits
to certain officers or their beneficiaries over an actuarially computed normal life expectancy. The benefits are determined through
actuarial calculations dependent on the age of the recipient, using an assumed discount rate. The Company deems the discount rate to
be consistent over time with the rate of return on equity for the Company due to funding the total liability with Company assets. The
plan is unfunded and accounted for on an accrual basis. The projected benefit obligations are equal to the liability for pension benefits
included in “Accrued expenses” and “Postretirement benefit obligations” in the Consolidated Balance Sheets.
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WEIS MARKETS, INC.
Note 6 Retirement Plans (continued)
Change in the benefit obligations:
(dollars in thousands)
Benefit obligations at beginning of year
Interest cost
Benefit payments
Actuarial loss (gain)
2014
2013
$
$
7,800
581
(51)
747
9,077
$
$
7,726
575
(51)
(450)
7,800
Weighted-average assumptions used to determine benefit obligations:
Discount rate
2014
7.50%
2013
7.50%
Components of net periodic benefit cost:
(dollars in thousands)
Interest cost
Amount of recognized (loss) gain
Estimated future benefit payments:
(dollars in thousands)
2015
2016
2017
2018
2019
2020 - 2024
$
2014
581
(696)
2013
2012
$
575
501
$
557
318
$
Benefits
51
1,929
1,929
1,929
1,929
9,643
The Company also maintains a non-qualified supplemental executive retirement plan and a non-qualified pharmacist deferred
compensation plan for certain of its associates. These plans are designed to provide retirement benefits and salary deferral
opportunities because of limitations imposed by the Internal Revenue Code and the Regulations implemented by the Internal Revenue
Service. These plans are unfunded and accounted for on an accrual basis. Participants in these plans are excluded from participation
in the profit sharing portion of the Weis Markets, Inc. Retirement Savings Plan once their yearly earnings exceed the IRS highly
compensated threshold. The Board of Directors annually determines the amount of the allocation to the plans at its sole discretion.
The allocation among the various plan participants is made in both flat dollar amounts and in relationship to their compensation. Plan
participants are 100% vested in their accounts after six years of service with the Company. Benefits are distributed among
participants upon reaching the applicable retirement age. Substantial risk of benefit forfeiture does exist for participants in these
plans. The present value of accumulated benefits amounted to $9,646,000 and $9,352,000 at December 27, 2014 and December 28,
2013, respectively, and is included in “Postretirement benefit obligations” in the Consolidated Balance Sheets.
The Company has no other postretirement benefit plans.
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WEIS MARKETS, INC.
Note 7 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.
(dollars in thousands)
Accumulated other comprehensive income balance as of December 29, 2012
Other comprehensive loss before reclassifications
Amounts reclassified from accumulated other comprehensive income
Net current period other comprehensive loss
Accumulated other comprehensive income balance as of December 28, 2013
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive income
Net current period other comprehensive income
Accumulated other comprehensive income balance as of December 27, 2014
Unrealized Gains
on Available-for-Sale
Marketable Securities
5,019
(36)
(1,044)
(1,080)
3,939
927
(37)
890
4,829
$
$
$
The following table sets forth the effects on net income of the amounts reclassified out of accumulated other comprehensive income
for the periods ended December 27, 2014, December 28, 2013 and December 29, 2012.
Gains (Losses) Reclassified from
Accumulated Other Comprehensive Income to the
Consolidated Statements of Income
(dollars in thousands)
Location
2014
2013
2012
Unrealized gains on available-for-sale
marketable securities
Total amount reclassified, net of tax
Investment income
Provision for income taxes
$
$
63
(26)
37
$
$
1,774
(730)
1,044
$
$
713
(293)
420
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Note 8 Income Taxes
The provision (benefit) for income taxes consists of:
(dollars in thousands)
WEIS MARKETS, INC.
Current:
Federal
State
Deferred:
Federal
State
2014
2013
2012
$
24,809
1,237
$
2,686
1,099
29,831
$
$
26,994
6,774
8,184
2,193
44,145
$
$
30,258
2,534
12,107
3,504
48,403
The reconciliation of income taxes computed at the federal statutory rate (35% in 2014, 2013 and 2012) to the provision for income
taxes is:
(dollars in thousands)
Income taxes at federal statutory rate
State income taxes, net of federal income tax benefit
Other
Provision for income taxes (effective tax rate 35.1%, 38.1% and 37.0%, respectively)
$
2014
29,749
1,519
(1,437)
$
$
29,831
$
2013
40,553
5,828
(2,236)
44,145
$
2012
45,820
3,925
(1,342)
$
48,403
Cash paid for federal income taxes was $25,000,000, $26,350,000 and $27,500,000 in 2014, 2013 and 2012 respectively.
The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 27, 2014 and
December 28, 2013, are:
(dollars in thousands)
Deferred tax assets:
Accounts receivable
Compensated absences
Long term employment incentives
Employee benefit plans
General liability insurance
Postretirement benefit obligations
Net operating loss carryforwards
Other
Total deferred tax assets
Deferred tax liabilities:
Inventories
Unrealized gains on marketable securities
Nondeductible accruals and other
Depreciation
Total deferred tax liabilities
Net deferred tax liability
Current deferred liability - net
Noncurrent deferred liability - net
Net deferred tax liability
2014
2013
$
$
$
$
615
362
1,161
3,771
1,344
7,676
6,218
1,358
22,505
(7,459)
(3,371)
(6,522)
(111,709)
(129,061)
(106,556)
(5,800)
(100,756)
(106,556)
$
$
$
$
585
403
2,785
4,221
1,223
7,037
5,736
-
21,990
(6,809)
(2,753)
(4,745)
(109,836)
(124,143)
(102,153)
(4,219)
(97,934)
(102,153)
38
Table of Contents
WEIS MARKETS, INC.
Note 8 Income Taxes (continued)
The following table summarizes the activity related to the Company’s unrecognized tax benefits:
(dollars in thousands)
Unrecognized tax benefits at beginning of year
Increases based on tax positions related to the current year
Additions for tax positions of prior year
Reductions for tax positions of prior years
Settlements
Expiration of the statute of limitations for assessment of taxes
Unrecognized tax benefits at end of year
2014
2013
-
-
-
-
-
-
-
$
$
225
-
-
-
(225)
-
-
$
$
During 2013, the Company completed a final settlement with a state taxing authority resulting in a $225,000 state tax benefit net of
Federal income taxes.
The Company’s U.S. Federal income tax filings have been examined by the Internal Revenue Service through 2008. The Company or
one of its subsidiaries files tax returns in various states. The tax years subject to examination in Pennsylvania, where the majority of
the Company's revenues are generated, are 2011 to 2014.
The Company has net operating loss carryforwards of $95.5 million available for state income tax purposes. The net operating losses
will begin to expire starting in 2027. The Company expects to fully utilize these net operating loss carryforwards.
Note 9 Acquisition of Business
Fiscal 2014 Acquisitions
There were no acquisitions for fiscal 2014.
Fiscal 2013 Acquisitions
There were no acquisitions for fiscal 2013.
Fiscal 2012 Acquisitions
On June 11, 2012, Weis Markets, Inc. acquired three former Genuardi’s stores located in Conshohocken, Doylestown and Norristown,
Pennsylvania from Safeway Inc. Weis Markets, Inc. acquired the store locations and operations of these three former Genuardi’s
stores in an effort to establish its retail presence in the Delaware Valley. The results of operations of the three former Genuardi’s
stores are included in the accompanying consolidated financial statements from the date of acquisition. The three former Genuardi’s
stores contributed $22.1 million to sales in 2012.
The cash purchase price paid to Safeway Inc. was $6.1 million. The Company recognized a gain of $414,000 on the bargain purchase.
The purchased assets include inventories, equipment and intangible assets. Weis Markets, Inc. assumed all three lease obligations of
the former Genuardi’s stores.
The following table summarizes the fair values of the assets acquired at the date of acquisition.
(dollars in thousands)
Inventories
Equipment
Intangible assets
Total assets acquired
June 11, 2012
1,116
5,294
120
6,530
$
$
39
Table of Contents
Note 10 Summary of Quarterly Results (Unaudited)
Quarterly financial data for 2014 and 2013 are as follows:
WEIS MARKETS, INC.
(dollars in thousands, except per share amounts)
Thirteen Weeks Ended
Net sales
Gross profit on sales
Net income
Basic and diluted earnings per share
March 29, 2014
$
687,127
186,768
14,766
.55
June 28, 2014
$
$
September 27, 2014 December 27, 2014
713,788
192,793
13,896
.51
683,893
185,677
13,707
.51
$
691,875
187,724
12,798
.48
(dollars in thousands, except per share amounts)
Thirteen Weeks Ended
Net sales
Gross profit on sales
Net income
Basic and diluted earnings per share
March 30, 2013
$
682,712
191,127
20,129
.75
June 29, 2013
$
662,072
190,322
24,179
.90
$
September 28, 2013 December 28, 2013
686,392
181,256
15,721
.59
661,412
182,763
11,692
.43
$
Note 11 Fair Value Information
The carrying amounts for cash, accounts receivable and accounts payable approximate fair value because of the short maturities of
these instruments. The fair values of the Company’s marketable securities, as disclosed in Note 2, are based on quoted market prices
and institutional pricing guidelines for those securities not classified as Level 1 securities.
Note 12 Contingencies
The Company is involved in various legal actions arising out of the normal course of business. The Company also accrues for tax
contingencies when it is probable that a liability to a taxing authority has been incurred and the amount of the contingency can be
reasonably estimated, based on past experience. In the opinion of management, the ultimate disposition of these matters will not have
a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.
40
Table of Contents
WEIS MARKETS, INC.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Weis Markets, Inc.
We have audited the accompanying consolidated balance sheet of Weis Markets, Inc. as of December 27, 2014 and the related
consolidated statements of income, comprehensive income, shareholders' equity and cash flows for the period then ended. Our audit
also included the financial statement schedule listed in the index at Item 15(c)(3). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule
based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of
Weis Markets, Inc. at December 27, 2014, and the consolidated results of its operations and its cash flows for the period then ended, in
conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the
information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Weis
Markets, Inc.’s internal control over financial reporting as of December 27, 2014, based on criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our
report dated March 12, 2015 expressed an unqualified opinion thereon.
/S/Ernst & Young LLP
Philadelphia, Pennsylvania
March 12, 2015
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders of
Weis Markets, Inc.
We have audited Weis Markets Inc.’s internal control over financial reporting as of December 27, 2014, based on criteria established
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992
framework) (the COSO criteria). Weis Markets, Inc.’s management is responsible for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the
accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
41
Table of Contents
WEIS MARKETS, INC.
Report of Independent Registered Public Accounting Firm (continued)
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Weis Markets, Inc. maintained, in all material respects, effective internal control over financial reporting as of
December 27, 2014, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheet of Weis Markets, Inc. as of December 27, 2014, and the related consolidated statements of income,
comprehensive income, shareholders' equity and cash flows for the period then ended of Weis Markets, Inc. and our report dated
March 12, 2015 expressed an unqualified opinion thereon.
/S/Ernst & Young LLP
Philadelphia, Pennsylvania
March 12, 2015
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Weis Markets, Inc.
We have audited the accompanying consolidated balance sheet of Weis Markets, Inc. (a Pennsylvania corporation) and subsidiaries
(the “Company”) as of December 28, 2013 and the related consolidated statements of income, comprehensive income, shareholders’
equity, and cash flows for each of the two years in the periods ended December 28, 2013, and December 29, 2012, (52 weeks, and 52
weeks, respectively). Our audits of the basic consolidated financial statements included the financial statement schedule listed in the
index appearing under Item 15(c)(3). These financial statements and financial statement schedule are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Weis Markets, Inc. and subsidiaries as of December 28, 2013, and the results of their operations and their cash flows for each of the
two years in the periods ended December 28, 2013, and December 29, 2012 (52 weeks, and 52 weeks, respectively) in conformity
with accounting principles generally accepted in the United States of America. In addition, in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/S/Grant Thornton LLP
Philadelphia, Pennsylvania
March 12, 2015
42
Table of Contents
WEIS MARKETS, INC.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:
None.
Item 9a. Controls and Procedures:
Management’s Report on Disclosure Controls and Procedures
The Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive officer and principal financial
officer, respectively) have concluded, based on their evaluation as of the close of the period covered by this Report, that the
Company's disclosure controls and procedures are effective 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, is 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 is 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.
Management's Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of
directors regarding the preparation and fair presentation of published financial statements. In making its assessment of internal control
over financial reporting, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control—Integrated Framework (1992 framework). All internal control systems, no matter how well
designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation.
With the participation of the Chief Executive Officer and the Chief Financial Officer, management concluded that the Company’s
internal control over financial reporting was effective as of December 27, 2014.
The independent registered public accounting firm of Ernst & Young LLP that has audited the Consolidated Financial Statements
included in this Annual Report on Form 10-K, has issued an attestation report on the Company’s internal control over financial
reporting as of December 27, 2014. The report can be found in Item 8 of this Form 10-K.
43
WEIS MARKETS, INC.
Table of Contents
Item 9a. Controls and Procedures: (continued)
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended December 27, 2014,
that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9b. Other Information:
There was no information required on Form 8-K during this quarter that was not reported.
Item 10. Directors, Executive Officers and Corporate Governance:
PART III
In addition to the information reported in Part I of this Form 10-K under the caption “Executive Officers of the Registrant,” “Election
of Directors,” “Board Committees and Meeting Attendance, Audit Committee,” “Corporate Governance Matters,” “Compensation
Tables” and “Stock Ownership, Section 16(a) Beneficial Ownership Reporting Compliance” of the Weis Markets, Inc. definitive
proxy statement dated March 12, 2015 are incorporated herein by reference.
Item 11. Executive Compensation:
“Board Committees and Meeting Attendance, Compensation Committee,” “Executive Compensation, Compensation Discussion and
Analysis,” “Compensation Committee Report,” “Compensation Tables” and “Other Information Concerning the Board of Directors,
Compensation Committee Interlocks and Insider Participation” of the Weis Markets, Inc. definitive proxy statement dated March 12,
2015 are incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters:
“Stock Ownership” of the Weis Markets, Inc. definitive proxy statement dated March 12, 2015 is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence:
“Other Information Concerning the Board of Directors, Review and Approval of Related Party Transactions” and “Independence of
Directors” of the Weis Markets, Inc. definitive proxy statement dated March 12, 2015 are incorporated herein by reference.
Item 14. Principal Accounting Fees and Services:
“Ratification Of Appointment Of Independent Registered Public Accounting Firm” of the Weis Markets, Inc. definitive proxy
statement dated March 12, 2015 is incorporated herein by reference.
44
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WEIS MARKETS, INC.
PART IV
Item 15. Exhibits, Financial Statement Schedules:
(a)(1) The Company’s 2014 Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm
are included in Item 8 of Part II.
Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Page
22
23
24
25
26
27
41
(a)(2) Financial statement schedules required to be filed by Item 8 of this form, and by Item 15(c)(3) below:
Schedule II - Valuation and Qualifying Accounts, page 47 of this annual report on Form 10-K
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission
are not required under the related instructions or are inapplicable and therefore have been omitted.
45
Table of Contents
Item 15. Exhibits, Financial Statement Schedules: (continued)
(a)(3) A listing of exhibits filed or incorporated by reference is as follows:
WEIS MARKETS, INC.
Exhibit No. Exhibits
3-A
Articles of Incorporation, filed as exhibit 4.1 in Form S-8 on September 13, 2002 and incorporated herein by reference.
3-B
10-A
10-B
10-C
10-D
10-E
10-F
10-G
10-H
10-I
10-J
10-K
10-L
10-M
21
31.1
31.2
32
By-Laws, filed as exhibit under Part IV, Item 14(c) in the annual report on Form 10-K for the fiscal year ended December 29, 2001
and incorporated herein by reference.
Retirement Savings Plan, amended September 22, 2014 and filed with this annual report on Form 10-K.
Supplemental Executive Retirement Plan, filed as exhibit under Part IV, Item 15(a)(3) in the annual report on Form 10-K for the fisca
year ended December 31, 2011 and incorporated herein by reference. *
l
Deferred Compensation Plan for Pharmacists, filed as exhibit under Part IV, Item 15(a)(3) in the annual report on Form 10-K for the
fiscal year ended December 26, 2009 and incorporated herein by reference.
Executive Benefits Agreement between the Company and Robert F. Weis, Chairman of the Board, signed on March 24, 2006,
commencing immediately and continuing thereafter through December 31, 2023, filed on Form 8-K March 24, 2006 and incorporated
herein by reference. *
Deferred Compensation Agreement between the Company and Mr. Robert F. Weis, filed as exhibit under Part IV, Item 15(a)(3) in the
annual report on Form 10-K for the fiscal year ended December 26, 2009 and incorporated herein by reference. *
Executive Employment Agreement between the Company and Jonathan H. Weis, Vice Chairman, President and Chief Executive
Officer, signed on July 14, 2014, with retroactive effect to January 1, 2014 and continuing thereafter through December 31, 2016, filed
as Exhibit 10.1 to Form 8-K July 18, 2014 and incorporated herein by reference. *
Executive Employment Agreement between the Company and Jonathan H. Weis, Vice Chairman, President and Chief Executive
Officer, signed on November 3, 2011, with retroactive effect to July 1, 2011 and continuing thereafter through December 31, 2016,
filed as Exhibit 10.1 to Form 8-K November 8, 2011 and incorporated herein by reference. *
Chief Executive Office Incentive Award Plan between the Company and Jonathan H. Weis, Chairman, President and Chief Executive
Officer, effective July 1, 2011, amended and restated effective as of January 1, 2014 and continuing thereafter through December 31,
2016, filed as Exhibit 10.2 to Form 8-K July 18, 2014 and incorporated herein by reference. *
Vice Chairman Incentive Award Plan between the Company and Jonathan H. Weis, Vice Chairman, President and Chief Executive
Officer, signed on November 3, 2011, with retroactive effect to July 1, 2011 and continuing thereafter through December 31, 2016,
filed as Exhibit 10.2 to Form 8-K November 8, 2011 and incorporated herein by reference. *
Confidential Separation Agreement and General Release between the Company and David J. Hepfinger, Former President and Chief
Executive Officer, signed on September 21, 2013, filed as Exhibit 10.1 to Form 10-Q November 7, 2013 and incorporated herein by
reference. *
Executive Employment Agreement between the Company and David J. Hepfinger, Former President and Chief Executive Officer,
signed on March 8, 2013, with retroactive effect to March 1, 2013 and continuing thereafter through February 28, 2018, filed as
Exhibit 10.1 to Form 8-K March 13, 2013 and incorporated herein by reference. *
Executive Employment Agreement between the Company and David J. Hepfinger, Former President and Chief Executive Officer,
signed on October 26, 2010, with retroactive effect to March 1, 2010 and continuing thereafter through February 28, 2013, filed as
Exhibit 10.1 to Form 8-K November 1, 2010 and incorporated herein by reference. *
CEO Incentive Award Plan between the Company and David J. Hepfinger, Former President and Chief Executive Officer, signed on
October 26, 2010, with retroactive effect to January 1, 2010 and continuing thereafter through December 31, 2014, filed as Exhibit
10.2 to Form 8-K November 1, 2010 and incorporated herein by reference. *
Subsidiaries of the Registrant, filed with this annual report on Form 10-K
Rule 13a-14(a) Certification - CEO, filed with this annual report on Form 10-K
Rule 13a-14(a) Certification - CFO, filed with this annual report on Form 10-K
Certification Pursuant to 18 U.S.C. Section 1350, filed with this annual report on Form 10-K
* Management contract or compensatory plan arrangement.
The Company will provide a copy of any exhibit upon receipt of a written request for the particular exhibit or exhibits desired. All
requests should be addressed to the Company’s principal executive offices.
(b) The Company files as exhibits to this annual report on Form 10-K, those exhibits listed in Item 15(a)(3) above.
46
WEIS MARKETS, INC.
Table of Contents
Item 15(c)(3). Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts:
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
WEIS MARKETS, INC.
(dollars in thousands)
Col. A
Description
Fiscal Year ended December 27, 2014:
Deducted from asset accounts:
Col. B
Balance at
Beginning
of Period
Col. C
Additions
Col. D
Col. E
Charged to
Costs and
Expenses
Charged to
Accounts
Describe
Deductions
Describe (1)
Balance at
End of
Period
Allowance for uncollectible accounts
$
1,882
$
577
$
---
$
881
$
1,578
Fiscal Year ended December 28, 2013:
Deducted from asset accounts:
Allowance for uncollectible accounts
$
1,526
$
1,320
$
---
$
964
$
1,882
Fiscal Year ended December 29, 2012:
Deducted from asset accounts:
Allowance for uncollectible accounts
$
1,415
$
2,456
$
---
$
2,345
$
1,526
(1) Deductions are uncollectible accounts written off, net of recoveries.
47
Table of Contents
WEIS MARKETS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date 03/12/2015
WEIS MARKETS, INC.
(Registrant)
/S/Jonathan H. Weis
Jonathan H. Weis
Vice Chairman,
President and Chief Executive Officer
and Director
(principal executive officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
Date 03/12/2015
Date 03/12/2015
Date 03/12/2015
Date 03/12/2015
Date 03/12/2015
Date 03/12/2015
Date 03/12/2015
Date 03/12/2015
/S/Robert F. Weis
Robert F. Weis
Chairman of the Board of Directors
S/Jonathan H. Weis
Jonathan H. Weis
Vice Chairman,
President and Chief Executive Officer
and Director
(principal executive officer)
/S/Scott F. Frost
Scott F. Frost
Senior Vice President, Chief Financial Officer
and Treasurer
(principal financial officer)
/S/Harold G. Graber
Harold G. Graber
Senior Vice President of Real Estate and Development
and Secretary
and Director
/S/Edward J. Lauth III
Edward J. Lauth III
Director
/S/Gerrald B. Silverman
Gerrald B. Silverman
Director
/S/Glenn D. Steele Jr.
Glenn D. Steele Jr.
Director
/S/Jeanette R. Rogers
Jeanette R. Rogers
Corporate Controller
(principal accounting officer)
48
Table of Contents
SUBSIDIARIES OF THE REGISTRANT
WEIS MARKETS, INC.
Exhibit 21
Albany Public Markets, Inc.
Dutch Valley Food Company, Inc.
Weis Transportation, Inc.
WMK Financing, Inc.
State of
Incorporation
New York
Pennsylvania
Pennsylvania
Delaware
Percent Owned
By Registrant
100%
100%
100%
100%
The consolidated financial statements include the accounts of the Company and its subsidiaries.
Table of Contents
I, Jonathan H. Weis, certify that:
WEIS MARKETS, INC.
CERTIFICATION- CEO
Exhibit 31.1
1. I have reviewed this annual report on Form 10-K of Weis Markets, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the periods covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 12, 2015
/S/ Jonathan H. Weis
Jonathan H. Weis
Vice Chairman,
President and Chief Executive Officer
Table of Contents
I, Scott F. Frost, certify that:
WEIS MARKETS, INC.
CERTIFICATION- CFO
Exhibit 31.2
1. I have reviewed this annual report on Form 10-K of Weis Markets, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the periods covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 12, 2015
/S/ Scott F. Frost
Scott F. Frost
Senior Vice President, Chief Financial Officer
and Treasurer
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WEIS MARKETS, INC.
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Weis Markets, Inc. (the "Company") on Form 10-K for the fiscal year ending December 27,
2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Jonathan H. Weis, Vice Chairman
President and Chief Executive Officer, and Scott F. Frost, Senior Vice President, Chief Financial Officer and Treasurer, of the
Company, certify, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
,
(1) to my knowledge the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company.
/S/ Jonathan H. Weis
Jonathan H. Weis
Vice Chairman, President and Chief Executive Officer
03/12/2015
/S/ Scott F. Frost
Scott F. Frost
Senior Vice President, Chief Financial Officer and Treasurer
03/12/2015
A signed original of this written statement required by Section 906 has been provided to Weis Markets, Inc. and will be retained by
Weis Markets, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.