WEIS MARKETS INC

(1) Significant Accounting Policies

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

(2) Current Relevant Accounting Standards

The Company regularly monitors recently issued accounting standards and assesses their applicability and future impact. The Company believes there are two accounting standard updates (ASU) that will have an impact on the Company’s disclosures.

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09,Income Taxes (Topic 740):* *Improvements to Income Tax Disclosures (“ASU 2023-09”), that is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires disclosures of reconciliation of the expected tax at the applicable statutory federal income tax rate to the reported tax in a tabular format, using both percentages and amounts, broken out into specific categories with certain reconciling items of five percent or greater of the expected tax further broken out by nature and/or jurisdiction, disclosure of income taxes paid, net of refunds received, broken out between federal and state and local income taxes and payments to individual jurisdictions representing five percent or more of the total income tax payments must also be separately disclosed. The disclosures are effective for annual periods beginning after December 15, 2025, with early adoption permitted. The disclosures in ASU 2023-09 should be applied on a prospective basis. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.

In November 2024, the FASB issued ASU 2024-03,Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires incremental disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. The new guidance is effective for annual reporting periods after December 15, 2026, and interim periods with annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.

(3) Marketable Securities

The Company’s marketable securities are all classified as available-for-sale within “Current Assets” in the Company’s Condensed Consolidated Balance Sheets. The 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 and commercial paper portfolio is valued using a combination of pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models utilizing observable inputs, which are considered Level 2 inputs.

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

The Company accrues interest on its bond and commercial paper portfolio throughout the life of each bond and commercial paper held. Unrealized gains and losses on debt securities are recognized in “Accumulated other comprehensive income (loss)” on the Company’s Condensed Consolidated Balance Sheets. Dividends from the equity securities are recognized as received. Interest, dividends and unrealized gains and losses on equity securities are recognized in “Investment income (loss) and interest expense” on the Company’s Condensed Consolidated Statements of Income. The Company recognized investment income of$4.8 million in the thirteen weeks ended March 29, 2025, which included an unrealized gain in equity securities of $1.1 million. In the thirteen weeks ended March 30, 2024, the Company recognized investment income of $4.1 million, which included an unrealized gain in equity securities of $234 thousand.

Marketable securities, as of March 29, 2025 and December 28, 2024, consisted of:

Maturities of marketable securities classified as available-for-sale at March 29, 2025, were as follows:

SERP Investments

The Company also maintains a non-qualified supplemental executive retirement plan for certain of its employees which allows them to defer income to future periods. Participants in the plans earn a return on their deferrals based on mutual fund investments. The Company chooses to invest in the underlying mutual fund investments to offset the liability associated with the non-qualified deferred compensation plans. Such investments are reported on the Company’s Condensed Consolidated Balance Sheets as “SERP investment,” are classified as trading securities and are measured at fair value using Level 1 inputs with gains and losses included in “Investment income (loss) and interest expense” on the Company’s Condensed Consolidated Statements of Income. The Company recognized an investment loss of $357 thousand and investment income of $1.4 million in the thirteen weeks ended March 29, 2025 and March 30, 2024, respectively. The changes in the underlying liability to the employees are recorded in “Other income (expense).”

(4) Accumulated Other Comprehensive Income

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

(5) Long-Term Debt

On September 1, 2016, Weis Markets entered into a revolving credit agreement with Wells Fargo Bank, N.A. (the “Credit Agreement”), which was last amended on September 29, 2023, and matures on October 1, 2027. The Credit Agreement provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $30.0 million with an additional discretionary amount available of $70.0 million. As of March 29, 2025, the availability under the Credit Agreement was $14.5 million, net of $15.5 million letters of credit. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company. The Company has not had an obligation on the Credit Agreement since the second quarter of 2018.

Interest expense related to long-term debt was $10 thousand and $16 thousand in the thirteen weeks ended March 29, 2025, and March 30, 2024, respectively.

(6) Revenue Recognition

The following table represents net sales by product category and other revenue for the thirteen weeks ended March 29, 2025, and March 30, 2024:

(7) Segment Reporting

The Company manages the business activities on a consolidated basis and hasone operating segment: retail. The Company derives all its revenue from sales within Pennsylvania and surrounding states. The Company’s retail segment derives revenues from customers through the retail sale of a range of products including grocery, pharmaceutical and fuel from company owned supermarkets. See Note 6 for the disaggregation of revenue by product category. The accounting policies of the Company’s single segment are the same as those described in the Company’s Significant Accounting Policies.

The Company’s chief operating decision maker is the Chief Operating Officer. The chief operating decision maker assesses performance for the segment and decides how to allocate resources based on operating income and net income that is also reported on the accompanying Consolidated Statements of Income. The measure of segment assets used to assess performance and allocate resources is reported on the Consolidated Balance Sheets as total assets. The chief operating decision maker uses operating income and net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the segment, such as for acquisitions. Operating income and net income are used to monitor budget versus actual results. The chief operating decision maker also uses operating income and net income in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment.

The following table presents the retail segment’s revenue, significant segment expenses, and segment operating and net income for the thirteen weeks ended March 29, 2025 and March 30, 2024:

(8) Leases

As of March 29, 2025, the Company leased approximately 47% of its open store facilities under operating leases that expire at various dates through 2038, with the remaining store facilities being owned. These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus variable lease costs related to real estate taxes and insurance as well as contingent rentals based on apercentage of annual sales or increases periodically based on inflation. These variable lease costs are not included in the measurement of the operating lease right-to-use assets or lease liabilities and are charged to the related expense category included in “Operating, general and administrative expenses.” Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 5 to 20 years. Additionally, the Company has operating leases for certain transportation and other equipment.

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

The following is a schedule of the lease costs included in “Operating, general and administrative expenses” for the thirteen weeks ended March 29, 2025 and March 30, 2024.

(9) Acquisition of Business

In the first quarter of 2025, the Company acquired and opened the former Saylor’s Market store located in Newville, Pennsylvania. The completion of this acquisition expands the Company’s footprint in the Cumberland County region. The results of operations of the former Saylor’s Market store is included in the accompanying Consolidated Financial Statements from the date of acquisition. The former Saylor’s Market store contributed$2.9 million to sales in 2025. The cash purchase price paid was$7.5 million for the property, equipment, inventories, and goodwill related to this purchase. The Company accounted for this transaction as a business combination in accordance with the acquisition method. The fair value of property and equipment were determined based on external appraisals. Goodwill of$4.5 million was recorded, based upon the expected benefits to be derived from new management business strategy and cost synergies. The$4.5 million of goodwill is deductible for tax purposes. The purchase price has been allocated to the acquired assets as follows:

(10) Prior Year Revisions

As of December 28, 2024, the Company corrected the presentation of commission income which had previously been included in “Operating, general and administrative expenses” to be reflected as “Other revenue”.

The table below summarizes the effect of the correction of the previously reported Condensed Consolidated Financial Statements for the thirteen weeks ended March 30, 2024.