Acquisition of Business

12 Months Ended

Dec. 31, 2016

Acquisition of Business [Abstract]

Acquisition of Business

Note 9  Acquisition of Business
Fiscal 2016 Acquisitions

On August 1, 2016, the Company purchased five Mars Super Market stores located in Maryland.  Weis Markets, Inc. acquired these locations and their operations in an effort to expand its presence in the Baltimore County region.  The results of operations of the former Mars Super Market acquisition are included in the accompanying Consolidated Financial Statements from the date of acquisition.  The five former Mars Super Market stores contributed $38.0 million to sales in 2016.  The cash purchase price paid was $24.6 million for the property, equipment, inventories, prepaid expenses 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 intangibles was determined based on the discounted cash flow model and property and equipment were determined based on external appraisals.  Weis Markets, Inc. assumed two lease obligations in the acquisition of the former Mars Super Market stores and entered into two new lease agreements.  Goodwill of $13.3 million has been recorded, based upon the expected benefits to be derived from new management business strategy and cost synergies.  The $13.3 million of goodwill is deductible for tax purposes.  The purchase price has been allocated to the acquired assets as follows.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition. The fair values of the acquired assets and assumed liabilities are reported below.

	5 Mars Super Market Stores
(dollars in thousands)	August 1, 2016
Inventories	$	1,267
Accounts receivable and prepaid expenses		248
Property and equipment		7,305
Goodwill		13,255
Intangibles - favorable leasehold interest, net		2,495
Total fair value of assets acquired	$	24,570

Note 9  Acquisition of Business (continued)
Fiscal 2016 Acquisitions (continued)

In September 2016, the Company began its acquisition of 38 former Food Lion, LLC stores.  Within eight weeks, ending in October 2016, Weis Markets acquired 21 Maryland, 13 Virginia and 4 Delaware former Food Lion, LLC stores.  The results of operations of the 38 former Food Lion, LLC stores are included in the accompanying Consolidated Financial Statements from the date of acquisition.  The Company accounted for this transaction as a business combination in accordance with the acquisition method.  The fair value of intangibles was determined based on the discounted cash flow model and property and equipment were determined based on external appraisals.  The acquired locations were part of a FTC forced diversiture in the approval process of the merger of Ahold and Delhaize Group, which resulted in a below fair value purchase price consideration.  The cash purchase price paid  was  $29.4 million for the property, equipment, inventories, prepaid expenses and liabilities.  Weis Markets, Inc. assumed thirty lease obligations and ownership of eight locations.  The Company recognized a gain of $23.9 million on the purchase of the 38 former Food Lion, LLC stores.  The 38 acquired Food Lion, LLC locations contributed $92.5 million to sales in 2016.  

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.  The fair values of the acquired assets and assumed liabilities are reported below. 

	38 Food Lion, LLC Stores
(dollars in thousands)	Sept. 11 - Oct. 30, 2016
Assets	$
Current:
Accounts receivable, net		146
Inventories		7,614
Prepaid expenses and other current assets		1,044
Total current assets		8,804
Property and equipment, net		60,735
Intangibles - favorable leasehold interest		4,583
Total assets		74,122
Liabilities
Current:
Accrued expenses		(428)
Total current liabilities		(428)
Other - unfavorable leasehold interest		(3,738)
Deferred tax liability		(16,663)
Total liabilities		(20,829)
Total fair value of assets acquired and liabilities assumed	$	53,293
Gain on bargain purchase	$	23,879

Note 9  Acquisition of Business (continued)

Fiscal 2016 Acquisitions (continued)

On October 30, 2016, Weis Markets acquired a former Nell’s Family Market store located in East Berlin, PA from C&S Wholesale Grocers.  The results of operations of the former Nell’s Family Market acquisition are included in the accompanying Consolidated Financial Statements from the date of acquisition.  The purchase price was $13.0 million , of which $3.4 million is payable over a 4 year term for the property, equipment, inventory, prepaid expenses and liabilities.  The Company accounted for this transaction as a business combination in accordance with the acquisition method.  The fair value of intangibles was determined based on the discounted cash flow model and property and equipment were determined based on external appraisals.  The former Nell’s Family Market contributed $3.0 million worth of sales in 2016.  Goodwill of $3.9 million has been recorded, based upon the expected benefits to be derived from new management business strategy and cost synergies.  The $3.9 million of goodwill is deductible for tax purposes.  

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.  The fair values of the acquired assets and assumed liabilities are reported below.

	Nell's Family Market Store
(dollars in thousands)	October 30, 2016
Assets	$
Current:
Inventories		401
Prepaid expenses and other current assets		39
Total current assets		440
Property and equipment, net		8,625
Goodwill		3,913
Intangible and other assets, net		23
Total assets		13,001
Liabilities
Current:
Accrued expenses		(3)
Total current liabilities		(3)
Total fair value of assets acquired and liabilities assumed	$	12,998

The pro forma information includes historical results of operations of the 38 former Food Lion Supermarket and 5 former Mars Super Market stores but does not include efficiencies, cost reductions, synergies or investments in lower prices for the Company’s customers expected to result from the acquisitions.  The unaudited pro forma financial information is not necessarily indicative of the results that actually would have occurred had the 38 former Food Lion Supermarket and the 5 former Mars Super Market stores been acquired at the beginning of 2014.  Pro forma results of sales, assuming the acquisitions had taken place at the beginning of 2014, are included in the following table.  The Company does not have reliable information to provide additional pro forma disclosures.

(dollars in thousands)
For the Fiscal Years Ended December 31, 2016,	2016		2015		2014
December 26, 2015 and December 27, 2014	(53 weeks)		(52 weeks)		(52 weeks)
Sales	$	3,563,145	$	3,424,414	$	3,317,174

Fiscal 2015 Acquisitions

The Company paid $7.9 million for the property and equipment related to the purchase of a store in Hanover, Pennsylvania on August 31, 2015 from C&S Wholesale Grocers to expand current market share.  The purchase price was allocated between land, building and equipment of $1.9 million, $5.9 million and $112,000, respectively, in accordance with our accounting policies for business combinations.  No Goodwill was recognized.

Fiscal 2014 Acquisitions

There were no acquisitions for fiscal 2014.