Weis Markets, Inc.
1000 S. Second Street * P.O. Box 471 * Sunbury, PA 17801-0471
William R. Mills
Senior Vice President and Treasurer/CFO
May 2, 2006
Filed via EDGAR
Mr. George F. Ohsiek, Jr.
Branch Chief
United States Securities and Exchange Commission
Division of Corporation Finance; Mail Stop 3561
Washington, D.C. 20549
RE: Form 10-K for Fiscal Year
Ended December 31, 2005
Filed March 3,
2006
File No.
001-5039
Dear Mr. Ohsiek:
We reviewed
your letter dated April 19, 2006, regarding the Weis Markets,
Inc. December 31, 2005 Form 10-K and have addressed each of
your comments in this response letter. Where indicated, we will
revise disclosures in future filings as you have
suggested.
Form 10-K for Fiscal Year Ended December
31, 2005
Item 8. Financial Statements and
Supplementary Data, page 11
Notes to Consolidated Financial
Statements, page 15
General
The company did provide a disclosure
in its 2005 third quarter 10-Q for EITF Issue No.
05-06, "Determining the Amortization Period for
Leasehold Improvements Purchased After Lease Inception
or Acquired in a Business Combination" and will provide
a disclosure for FASB Staff Position FAS 13-1,
"Accounting for Rental Costs Incurred during a
Construction Period" in its 2006 first quarter
10-Q.
In future filings, the company will
disclose the impact recently issued accounting
standards will have on our financial position and
results of operations when such standards are adopted
in a future period.
Note 1(t) Vendor Allowances, page 18
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 its 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 our 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 $40.7 million in 2005, $42.9
million in 2004, and $44.1 million in 2003. Vendor paid
cooperative advertising credits totaled $16.8 million
in 2005, $17.5 million in 2004, and $16.6 million in
2003. These credits were netted against advertising
costs within "Operating, general and administrative
expenses." The company had accounts receivable due from
vendors of $800,000 and $1.6 million for earned
advertising credits and $3.9 million and $5.3 million
for earned promotional discounts as of December 31,
2005 and December 25, 2004, respectively. The company
had $1.8 million and $3.5 million in unearned revenue
included in accrued liabilities for unearned vendor
programs under long-term contracts for display and
shelf space allocation as of December 31, 2005 and
December 25, 2004, respectively.
Note 6. Retirement Plans, page 21
When the company makes a contribution
to the Profit Sharing Plan or Employee Stock Bonus
Plan, the participants' accounts in these deferred
compensation plans are credited with the same amount,
if any, that would have been allocated to their Profit
Sharing Plan or Employee Stock Bonus Plan accounts had
they not been excluded from participation in these
qualified plans. On an annual basis, a participant's
account balance is adjusted in the same manner as if
the funds had been invested for the participant in the
qualified plans.
As required in Statement of Financial
Accounting Standards No. 87, "Employers' Accounting for
Pensions," the estimated cost to the company for the
deferred compensation plans is accrued during the
employee's service period. The aggregate amount accrued
equals the present value of the benefits expected to be
provided to the employee or their beneficiaries up to
that date.
Distribution of the value of a
participant's account balance is made according to the
terms of the "Participant's Deferral Agreement" and the
deferred compensation plan. Distribution payments from
the deferred compensation plans are made the earlier of
(1) after five years from the end of the plan year
following termination of service; or (2) after the end
of the plan year in which the participant reaches the
age of 65. Since these deferred compensation plans are
unfunded, benefits are paid from the general assets of
the company.
In further review of the footnote
disclosure made in the Form 10-K for fiscal 2005, it is
apparent we have neglected to tell our readers that the
supplemental executive retirement plan and the
pharmacist deferred compensation plan are unfunded and
are accounted for on an accrual basis. We will revise
future filings to further clarify this
fact.
If you have
any further comments, questions or suggestions, please feel
free to write or call me. My direct dial number is (570)
286-3229 and my e-mail address is
rmills@weismarkets.com.
Sincerely,
/S/William R. Mills
William R. Mills
Senior Vice President and Treasurer/CFO