WEIS MARKETS INC - Annual Report: 2002 (Form 10-K)

Table of Contents

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 SECURITES EXCHANGE ACT OF 1934
	For the fiscal year ended December 28, 2002
	OR
[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________to_________
	Commission File Number 1-5039

WEIS MARKETS, INC.
(Exact name of registrant as specified in its charter)

PENNSYLVANIA (State or other jurisdiction of incorporation or organization)		24-0755415 (I.R.S. Employer Identification No.)
1000 S. Second Street P. O. Box 471 Sunbury, Pennsylvania (Address of principal executive offices)		17801-0471 (Zip Code)

Registrant's telephone number, including area code: (570) 286-4571         Registrant's web address: www.weismarkets.com

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Common stock, no par value		Name of each exchange on which registered New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act None

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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 an accelerated filer (as defined in Exchange Act Rule 12-b-2).   Yes [X]  No   [   ]

The aggregate market value of Common Stock held by non-affiliates of the Registrant is approximately $421,798,000.
Shares of common stock outstanding as of March 7, 2003 - 27,193,537.

DOCUMENTS INCORPORATED BY REFERENCE:  Selected portions of the Weis Markets, Inc. definitive proxy statement dated March 7, 2003 are incorporated by reference in Part III of this Form 10-K.

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  WEIS MARKETS, INC.

TABLE OF CONTENTS

FORM 10-K				Page
Part I
	Item 1. Business			1
	Item 2. Properties			3
	Item 3. Legal Proceedings			3
	Item 4. Submission of Matters to a Vote of Security Holders			3
Part II
	Item 5. Market for Registrant's Common Equity and Related Stockholder Matters			4
	Item 6. Selected Financial Data			4
	Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations			5
		Item 7a. Quantitative and Qualitative Disclosures about Market Risk		9
	Item 8. Financial Statements and Supplementary Data			10
	Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			27
Part III
	Item 10. Directors and Executive Officers of the Registrant			28
	Item 11. Executive Compensation			28
	Item 12. Security Ownership of Certain Beneficial Owners and Management			28
	Item 13. Certain Relationships and Related Transactions			28
	Item 14. Controls and Procedures			28
Part IV
	Item 15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K			29
Signatures				30
Certification - CEO				31
Certification - CFO				32
Exhibit 21
Exhibit 99.1
Exhibit 99.2

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WEIS MARKETS, INC.

 PART I

Item 1.      Business:

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 and pet supplies in Pennsylvania and surrounding states. There was no material change in the nature of the company's business during fiscal 2002. 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 62% 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 President and Secretary. Both are involved in the day-to-day operations of the business.

On May 7, 2001, the company repurchased approximately 14.5 million shares of its common stock from the family of the late Sigfried Weis for approximately $434.3 million in cash. The company sold Weis Food Service, its regional food service division, in April of 2000.

The company's retail food stores sell groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, prescriptions, deli/bakery products, prepared foods, fuel and general merchandise items, such as health and beauty care and household products. In addition, customer convenience is addressed at many locations by offering services such as company-operated photo labs and third parties providing in-store banks, laundry services and take-out restaurants. The company advertises through various media, including circulars, newspapers, radio and television. Printed circulars are used extensively on a weekly basis to advertise featured items. The company utilizes a loyalty card program, "Weis Club Preferred Shopper," which provides shoppers with an opportunity to receive discounts, promotions and rewards. The company owns and operates 160 retail food stores and owns SuperPetz, LLC, a chain of 33 pet supply stores.

The percentage of net sales contributed by each class of similar products for each of the previous five fiscal years was:

Year	Grocery	Meat	Produce	Pharmacy	Pet Supply	Other
1998	56.00	13.84	11.69	5.99	4.00	8.48
1999	55.86	13.97	12.05	6.66	3.28	8.18
2000	57.61	15.22	12.75	7.82	3.17	3.43
2001	57.74	15.54	12.95	8.89	3.25	1.63
2002	55.39	15.29	14.73	9.83	3.28	1.48

Retail food store locations by state and by trade name are as follows:

			Mr. Z's	King's	Cressler's	Scot's
State	Total	Weis Markets	Food Mart	Supermarkets	Marketplace	Lo-Cost	Save-A-Lot
Pennsylvania	132	103	17	6	1	3	2
Maryland	21	21
New Jersey	3	3
New York	2	2
Virginia	1	1
West Virginia	1	1
Total	160	131	17	6	1	3	2

Page 1 of 32 (Form 10-K)

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WEIS MARKETS, INC.

Item 1. Business (continued)

All trade names, except Scot's Lo-Cost and Save-A-Lot, operate as conventional supermarkets. Scot's Lo-Cost operates under a warehouse format, while Save-A-Lot's format caters to the price motivated consumer. The retail food stores range in size from 8,000 to 65,000 square feet, with an average size of approximately 45,000 square feet. The following summarizes the number of stores by size categories:

Square feet	Number of stores
55,000 to 65,000	18
45,000 to 54,999	77
35,000 to 44,999	37
25,000 to 34,999	19
Under 25,000	9
Total	160

The following schedule shows the changes in the number of retail food stores, total square footage and store additions/remodels:

(square feet in thousands)	2002		2001		2000		1999		1998
Beginning store count	163		163		163		158		154
New stores	1		2		2		5		4
Relocations	3		---		3		---		1
Acquistions	---		---		4		4		1
Closed stores	(2	)	(2	)	(4	)	(3	)	(1	)
Relocated stores	(3	)			(5	)	(1	)	(1	)
Sold	(2	)	---		---		---		---
Ending store count	160		163		163		163		158
Total square feet, at year-end	7,154		7,168		7,087		6,909		6,527
Additions/major remodels	5		6		6		6		13

The company supports the retail operations through a centrally located distribution facility, its own transportation fleet and three manufacturing facilities.  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 the warehouse facilities. The manufacturing facilities consist of a meat processing plant, an ice cream plant, an ice plant and a milk processing plant.

At year-end, SuperPetz, LLC operated 2 stores in Alabama, 1 store in Georgia, 1 store in Indiana, 1 store in Kentucky, 1 store in Maryland, 2 stores in Michigan, 8 stores in Ohio, 1 store in North Carolina, 7 stores in Pennsylvania, 5 stores in South Carolina, and 4 stores in Tennessee.

The business of the company is highly competitive. The number of competitors and the variety of competition experienced by the company's stores vary by market area. National, regional and local food chains, as well as independent food stores comprise the company's principal competition, although the company also faces substantial competition from convenience stores, membership warehouse clubs, specialty retailers, supercenters and large-scale drug and pharmaceutical chains. The company competes based on price, quality, location and service.

The company has approximately 19,000 full-time and part-time associates.

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WEIS MARKETS, INC.

Item 2.      Properties:

The company owns and operates 81 of its retail food stores, and leases and operates 79 stores under operating leases that expire at various dates up to 2024. SuperPetz leases all 33 of its retail store locations. The company owns all of its 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 warehouse in Milton, Pennsylvania of approximately 1,109,000 square feet, and one in Northumberland, Pennsylvania totaling approximately 76,000 square feet. The company also owns one warehouse in Sunbury, Pennsylvania totaling approximately 564,000 square feet of which 290,000 is sublet. The company operates an ice cream plant, meat processing plant, ice plant and milk processing plant in the remaining 274,000 square feet at its Sunbury location.

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.

Item 4.      Submission of Matters to a Vote of Security Holders:

There were no matters submitted to a vote of security holders during the fourth quarter of 2002.

Page 3 of 32 (Form 10-K)

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WEIS MARKETS, INC.

PART II

Item 5.      Market for Registrant's Common Equity and Related Stockholder Matters:

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 28, 2002 as provided by the company's transfer agent was 5,614. High and low stock prices and dividends paid per share for the last two fiscal years were:

	2002			2001
	Stock Price		Dividend	Stock Price		Dividend
Quarter	High	Low	Per Share	High	Low	Per Share
First	$30.62	$26.90	$.27	$38.25	$32.48	$.27
Second	38.18	29.30	.27	35.70	31.45	.27
Third	39.50	31.03	.27	35.30	25.80	.27
Fourth	35.45	29.79	.27	29.76	26.52	.27

Item 6.      Selected Financial Data:

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

		52 Weeks		52 Weeks		53 Weeks		52 Weeks		52 Weeks
		Ended		Ended		Ended		Ended		Ended
(dollars in thousands, except per share amounts)		Dec. 28, 2002		Dec. 29, 2001		Dec. 30, 2000		Dec. 25, 1999		Dec. 26, 1998
Net sales	$	1,999,364	$	1,971,665	$	2,042,329	$	1,992,791	$	1,853,892
Costs and expenses		1,919,957		1,908,725		1,962,246		1,899,756		1,777,466
Income from operations		79,407		62,940		80,083		93,035		76,426
Other income and expense		15,279		18,907		36,729		30,980		58,072
Income before provision for income taxes		94,686		81,847		116,812		124,015		134,498
Provision for income taxes		35,537		31,792		42,989		44,290		50,815
Net income		59,149		50,055		73,823		79,725		83,683
Retained earnings, beginning of year		648,522		1,069,986		1,040,354		1,003,170		960,419
		707,671		1,120,041		1,114,177		1,082,895		1,044,102
Stock purchase and cancellation		---		434,317		---		---		---
Cash dividends		29,377		37,202		44,191		42,541		40,932
Retained earnings, end of year	$	678,294	$	648,522	$	1,069,986	$	1,040,354	$	1,003,170
Weighted-average shares outstanding		27,201,170		32,298,696		41,695,347		41,718,188		41,775,991
Cash dividends per share	$	1.08	$	1.08	$	1.06	$	1.02	$	0.98
Basic and diluted earnings per share	$	2.17	$	1.55	$	1.77	$	1.91	$	2.00
Working capital	$	114,937	$	102,331	$	496,906	$	481,728	$	489,475
Total assets	$	716,699	$	704,185	$	1,085,904	$	1,058,221	$	1,029,202
Long-term obligations	$	---	$	25,000	$	---	$	---	$	---
Shareholders' equity	$	552,432	$	525,364	$	947,886	$	918,477	$	890,641
Number of grocery stores		160		163		163		163		158
Number of pet supply stores		33		33		33		34		36

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WEIS MARKETS, INC.

Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations

Sales increased 1.4% or $27.7 million to $1.999 billion for the 52-week fiscal year ended December 28, 2002 compared to sales of $1.972 billion for the 52 weeks of fiscal 2001. Sales decreased $70.7 million in 2001 from the 53 weeks of fiscal 2000. Same store sales increased 1.4% in 2002, decreased 1.4% in 2001, and increased 2.3% in 2000.

The company's 2002 sales results were affected by a softening economy; deflation in many categories, particularly meat, dairy and key grocery categories; and intensified competition throughout its market. Total sales in 2001 compared to 2000 decreased as a result of the sale of the company's regional food service division in the second quarter and an additional week of business in 2000. Excluding sales from year-over-year comparisons that were generated from the food service division and from the additional week in 2000, the company's sales increased .3%. Adjusting for the extra week of sales, same store sales increased .6% in 2001 and .2% in 2000.

Gross profit as a percentage of sales increased from 25.7% in 2000 to 26.1% in 2001 and to 26.4% in 2002. Gross profit dollars realized on sales in 2002 increased $13.2 million, or 2.6%, to $527.9 million compared to 2001 and decreased $9.5 million in 2001 compared to 2000. Improvements in the company's supply chain network favorably impacted the gross profit rate in 2002. The gross profit rate increase from 2000 to 2001 was attributable to a decline in product costs in key categories and the impact of lower gross profits realized in the food service division.

Operating, general and administrative expenses in 2002 totaled $448.5 million or 22.4% of sales, compared to 22.9% in 2001 and 21.7% in 2000. Several factors contributed to the reduction in expense as a percentage of sales in 2002 as compared to 2001. The company incurred $5.3 million in expenses associated with the stock repurchase in 2001. With the implementation of Statement 142 in 2002 (see Footnote 11), amortization of intangibles was reduced by $2.0 million. The company also realized success in several expense control initiatives throughout the organization.

In 2002, the company's investment income totaled $879,000, a decrease of $9.0 million or 91.1% compared to the same period a year ago. The company sold the majority of its investment portfolio in the first half of 2001 in order to complete its all cash stock repurchase transaction. In 2001, the company earned $9.9 million in investment income, an $8.7 million decrease from 2000. The company realized gains on the sale of marketable securities of $.6 million in 2001 and $1.3 million in 2000.

The company's other income and expense is primarily generated from rental payments, coupon-handling fees, lottery commissions, cardboard salvage, gain or loss on the sale of fixed assets and interest expense. Other income in 2002 totaled $14.8 million or .7% of sales, a $4.4 million or 42.3% increase compared to 2001. Gains realized on the sale of assets in 2002, consisting primarily of closed store facilities, were $3.6 million. In 2000, the company realized $5.8 million in other income from the sale of its food service division.

Interest expense in 2002 totaled $394,000 compared to $1.4 million in 2001 and $0 interest expense in 2000. In 2002, the company entered into a $100 million unsecured revolving credit facility to provide funds for general corporate purposes. As of the end of the year, the company had not borrowed any funds under this loan facility.

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WEIS MARKETS, INC.

Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

The company's combined federal and state effective tax rate was 37.5% in 2002, 38.8% in 2001 and 36.8% in 2000. The tax rate increased in 2001 after the company sold its large position in tax-free investments in order to complete its stock repurchase. The company's federal income tax returns for the years 1997 through 1999 are under a routine audit by the Internal Revenue Service. The Internal Revenue Service has provided the company with a number of preliminary notices of proposed adjustment. The Internal Revenue Service has not completed its audit; however, if it were to propose a deficiency, the amount may be material to the overall financial position of the company. The company believes that it has meritorious defenses and would vigorously contest these matters.

Net income in 2002 was $59.1 million or 3.0% of sales compared to $50.1 million or 2.5% of sales in 2001 and $73.8 million or 3.6% of sales in 2000. Basic and diluted earnings per share of $2.17 in 2002 compared to $1.55 in 2001 and $1.77 in 2000. The impact from the company's large stock repurchase was fully realized in the company's earnings per share results for 2002 and partially realized in 2001. At the end of 2002, the company had 27.2 million shares of common stock outstanding. Basic and diluted earnings per share are computed using weighted-average shares outstanding, which were 27.2 million in 2002, 32.3 million in 2001, and 41.7 million in 2000.

As of the end of the fiscal year, Weis Markets, Inc. operated 160 retail food stores and 33 SuperPetz pet supply stores. The company currently operates supermarkets in Pennsylvania, Maryland, New Jersey, New York, Virginia and West Virginia. SuperPetz operates stores in Alabama, Georgia, Indiana, Kentucky, Maryland, Michigan, North Carolina, Ohio, Pennsylvania, South Carolina and Tennessee.

Liquidity and Capital Resources

Net cash provided by operating activities totaled $106.5 million in 2002 compared with $113.9 million in 2001 and $125.6 million in 2000. Working capital increased 12.3% in 2002, decreased 79.4% in 2001, and increased 3.2% in 2000. The considerable decline in working capital in 2001 was the result of the sale of most of the company's investment portfolio in order to fund the large repurchase of common stock.

Net cash used in investing activities during 2002 was $51.1 million compared to $332.8 million provided by investing activities in 2001 and $82.4 million used in 2000. In 2002 and 2000, these funds were used primarily for the purchase of new securities and the purchase of property and equipment. Property and equipment purchases during fiscal 2002 totaled $46.1 million compared to $48.1 million in 2001 and $56.3 million in 2000. Intangible and other assets increased $13.4 million in 2000 due to grocery store acquisitions. As a percentage of sales, capital expenditures were 2.3%, 2.4% and 2.8% in 2002, 2001 and 2000, respectively.

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 processing and distribution facilities. Company management estimates that its current development plans will require an investment of approximately $72.4 million in 2003.

Net cash used in financing activities during 2002 was $54.7 million compared to $446.8 million in 2001 and $44.4 million in 2000. During 2002, the company cancelled its bridge credit agreement and established a three-year unsecured revolving credit facility in the amount of $100 million to provide funds for general corporate purposes including working capital and letters of credit. In 2001, the company purchased and cancelled 14.5 million shares of common stock for $434.3 million.

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WEIS MARKETS, INC.

Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Total cash dividend payments on common stock amounted to $1.08 per share in 2002 and 2001 compared to $1.06 in 2000. Treasury stock purchases in the last three years were minimal. The Board of Directors' 1996 resolution authorizing the purchase of 1,000,000 shares of treasury stock has a remaining balance of 546,707 shares. The company has no other commitment of capital resources as of December 28, 2002, other than the lease commitments on its store facilities under operating leases that expire at various dates up to 2024.

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 long-term debt. The company's marketable securities currently consist of Pennsylvania tax-free state and municipal bonds, U.S. Treasury securities, equity securities and other short-term investments.

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.

Under its current policies, the company invests primarily in high-grade marketable securities and does not use interest rate derivative instruments to manage exposure to interest rate fluctuations. Historically, the company's principal investment strategy of obtaining marketable securities with maturity dates between one and five 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. Weis Markets' management continually monitors the risk associated with its marketable securities. A quantitative tabular presentation of risk exposure is located in Item 7a.

Critical Accounting Policies

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.

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.

Vendor Allowances

Vendor rebates, credits and promotional allowances that relate to the company's buying and merchandising activities, including lump-sum payments associated with long-term contracts, are recorded as a component of cost of sales as they are earned, in accordance with its underlying agreement.

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WEIS MARKETS, INC.

Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Accrued 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 eight years. At December 28, 2002, closed store lease liabilities totaled $3.1 million. The company estimates the lease liabilities, net of 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 the change becomes 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 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 is liable for associate health claims up to a lifetime aggregate of $1,000,000 per member and for workers compensation claims up to $1,000,000 per claim. Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $100,000 to $500,000. Significant assumptions used in the development of the actuarial estimates include reliance on our historical claims data including average monthly claims and average lag time between incurrence and payment.

Forward-Looking Statements

In addition to historical information, this Annual Report may contain forward-looking statements. 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.

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WEIS MARKETS, INC.

Item 7a.      Quantitative and Qualitative Disclosures about Market Risk:

(dollars in thousands)		Expected Maturity Dates														Fair Value
December 28, 2002		2003		2004		2005		2006		2007		Thereafter		Total		Dec. 28, 2002
Rate sensitive assets:
Fixed interest rate securities	$	6,000	$	1,500	$	---	$	---	$	---	$	---	$	7,500	$	7,567
Average interest rate		1.98	%	4.40	%	---		---		---		---		2.17	%
Variable interest rate securities	$	25,764	$	---	$	---	$	---	$	---	$	---	$	25,764	$	25,764
Average interest rate		1.23	%	---		---		---		---		---		1.23	%
(dollars in thousands)		Expected Maturity Dates														Fair Value
December 29, 2001		2002		2003		2004		2005		2006		Thereafter		Total		Dec. 29, 2001
Rate sensitive assets:
Fixed interest rate securities	$	15	$	1,000	$	1,500	$	---	$	---	$	---	$	2,515	$	2,584
Average interest rate		4.97	%	4.48	%	4.40	%	---		---		---		4.73	%
Variable interest rate securities	$	11,930	$	---	$	---	$	---	$	---	$	---	$	11,930	$	11,930
Average interest rate		2.80	%	---		---		---		---		---		2.80	%
Rate sensitive liabilities:
Variable interest rate securities	$	25,000	$	---	$	---	$	---	$	---	$	---	$	25,000	$	25,000
Average interest rate		3.00	%	---		---		---		---		---		3.00	%

Other Relevant Market Risks
The company's equity securities at December 29, 2001 had a cost basis of $3,125,000 and a fair value of $14,161,000. The dividend yield realized on these equity investments was 2.90% in 2001. The company's equity securities at December 28, 2002 had a cost basis of $3,125,000 and a fair value of $10,179,000. The dividend yield realized on these equity investments was 4.07% in 2002. 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.

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WEIS MARKETS, INC.

Item 8.      Financial Statements and Supplementary Data:

WEIS MARKETS, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

December 28, 2002 and December 29, 2001

		2002			2001
Assets
Current:
Cash	$	3,929		$	3,255
Marketable securities		43,510			28,675
Accounts receivable, net		30,188			26,530
Inventories		182,832			169,952
Prepaid expenses		3,980			8,294
Income taxes recoverable		---			3,395
Total current assets		264,439			240,101
Property and equipment, net		428,153			439,977
Intangible and other assets		24,107			24,107
	$	716,699		$	704,185
Liabilities
Current:
Accounts payable	$	101,917		$	98,382
Accrued expenses		15,704			11,043
Accrued self-insurance		16,117			15,040
Payable to employee benefit plans		8,950			8,672
Income taxes payable		6,112			---
Deferred income taxes		702			4,633
Total current liabilities		149,502			137,770
Deferred income taxes		14,765			16,051
Long-term debt		---			25,000
Shareholders' Equity
Common stock, no par value, 100,800,000 shares authorized,
32,986,337 and 32,978,037 shares issued, respectively		7,882			7,630
Retained earnings		678,294			648,522
Accumulated other comprehensive income		4,145			6,479
		690,321			662,631
Treasury stock at cost, 5,792,800 and 5,774,830 shares, respectively		(137,889	)		(137,267	)
Total shareholders' equity		552,432			525,364
	$	716,699		$	704,185
See accompanying notes to consolidated financial statements.

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WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share amounts)

For the Fiscal Years Ended December 28, 2002,

December 29, 2001 and December 30, 2000

		2002		2001		2000
Net sales	$	1,999,364	$	1,971,665	$	2,042,329
Cost of sales, including warehousing and distribution expenses		1,471,479		1,457,002		1,518,136
Gross profit on sales		527,885		514,663		524,193
Operating, general and administrative expenses		448,478		451,723		444,110
Income from operations		79,407		62,940		80,083
Investment income		879		9,860		18,557
Other income and expense		14,400		9,047		18,172
Income before provision for income taxes		94,686		81,847		116,812
Provision for income taxes		35,537		31,792		42,989
Net income	$	59,149	$	50,055	$	73,823
Weighted-average shares outstanding		27,201,170		32,298,696		41,695,347
Cash dividends per share	$	1.08	$	1.08	$	1.06
Basic and diluted earnings per share	$	2.17	$	1.55	$	1.77
See accompanying notes to consolidated financial statements.

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WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(dollars in thousands)

For the Fiscal Years Ended December 28, 2002,

December 29, 2001 and December 30, 2000

						Accumulated
						Other				Total
		Common		Retained		Comprehensive		Treasury		Shareholders'
		Stock		Earnings		Income		Stock		Equity
Balance at December 25, 1999	$	7,559	$	1,040,354	$	7,343	$	(136,779	)  $	918,477
Net income		---		73,823		---		---		73,823
Other comprehensive income		---		---		(59	)			(59	)
Comprehensive income										73,764
Shares issued for options (1,250 shares)		35		---		---		---		35
Treasury stock purchased (5,268 shares)		---		---		---		(199	)	(199	)
Dividends paid		---		(44,191	)	---		---		(44,191	)
Balance at December 30, 2000		7,594		1,069,986		7,284		(136,978	)	947,886
Net income		---		50,055		---		---		50,055
Other comprehensive income		---		---		(805	)	---		(805	)
Comprehensive income										49,250
Shares issued for options (1,300 shares)		36		---		---		---		36
Shares purchased and cancelled (14,477,242     shares)		---		(434,317	)	---		---		(434,317	)
Treasury stock purchased (8,708 shares)		---		---		---		(289	)	(289	)
Dividends paid		---		(37,202	)	---		---		(37,202	)
Balance at December 29, 2001		7,630		648,522		6,479		(137,267	)	525,364
Net income		---		59,149		---		---		59,149
Other comprehensive income		---		---		(2,334	)	---		(2,334	)
Comprehensive income										56,815
Shares issued for options (8,300 shares)		252		---		---		---		252
Treasury stock purchased (17,970 shares)		---		---		---		(622	)	(622	)
Dividends paid		---		(29,377	)	---		---		(29,377	)
Balance at December 28, 2002	$	7,882	$	678,294	$	4,145	$	(137,889	) $	552,432
See accompanying notes to consolidated financial statements.

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WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

For the Fiscal Years Ended December 28, 2002,

December 29, 2001 and December 30, 2000

		2002		2001		2000
Cash flows from operating activities:
Net income	$	59,149	$	50,055	$	73,823
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation		41,885		43,755		44,169
Amortization		5,797		7,222		6,682
(Gain) loss on sale of fixed assets		(3,620	)	1,629		(5,913	)
Gain on sale of marketable securities		---		(570	)	(1,279	)
Changes in operating assets and liabilities:
Inventories		(12,880	)	(1,411	)	(1,395	)
Accounts receivable and prepaid expenses		656		(2,923	)	8,508
Income taxes recoverable		3,395		(251	)	1,194
Accounts payable and other liabilities		9,551		14,993		(2,696	)
Income taxes payable		6,112		---		---
Deferred income taxes		(3,561	)	1,381		2,472
Net cash provided by operating activities		106,484		113,880		125,565
Cash flows from investing activities:
Purchase of property and equipment		(46,056	)	(48,046	)	(56,331	)
Proceeds from the sale of property and equipment		14,520		86		11,714
Purchase of marketable securities		(21,754	)	(299,064	)	(259,574	)
Proceeds from maturities of marketable securities		2,929		556,141		108,154
Proceeds from sale of marketable securities		---		123,660		127,043
Increase in intangible and other assets		(702	)	(19	)	(13,379	)
Net cash provided by (used in) investing activities		(51,063	)	332,758		(82,373	)
Cash flows from financing activities:
Proceeds (payments) of long-term debt, net		(25,000	)	25,000		---
Proceeds from issuance of common stock		252		36		35
Dividends paid		(29,377	)	(37,202	)	(44,191	)
Purchase and cancellation of stock		---		(434,317	)	---
Purchase of treasury stock		(622	)	(289	)	(199	)
Net cash used in financing activities		(54,747	)	(446,772	)	(44,355	)
Net increase (decrease) in cash		674		(134	)	(1,163	)
Cash at beginning of year		3,255		3,389		4,552
Cash at end of year	$	3,929	$	3,255	$	3,389

See accompanying notes to consolidated financial statements.

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WEIS MARKETS, INC.

Notes to 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 and pet supplies in Pennsylvania and surrounding states. There was no material change in the nature of the company's business during fiscal 2002.

(b) Definition of Fiscal Year
The company's fiscal year ends on the last Saturday in December. Fiscal 2002, 2001 and 2000 were comprised of 52 weeks, 52 weeks and 53 weeks, respectively.

(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) Marketable Securities
Marketable securities consist of Pennsylvania tax-free state and municipal bonds, U.S. Treasury securities, U.S. Government federal agency notes, equity securities and other short-term investments. By policy, the company invests primarily in high-grade marketable 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 market 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.

(e) Inventories
Inventories are valued at the lower of cost or market, using both the last-in, first-out (LIFO) and average cost methods.

(f) Property and Equipment
Property and equipment are carried at cost. Depreciation is provided on the cost of buildings and improvements and equipment principally using accelerated methods. Leasehold improvements are amortized 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 income.

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WEIS MARKETS, INC.

Note 1 Summary of Significant Accounting Policies (continued)

(g) 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 eight years. At December 28, 2002, closed store lease liabilities totaled $3.1 million. The company estimates the lease liabilities, net of sublease income, using the undiscounted rent payments of closed stores.

(h) Intangible Assets
Intangible assets are generally amortized over periods ranging from 15 to 20 years.

(i) Insurance Programs
The company maintains self-insurance programs for the majority of its associate health care benefits and workers compensation 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 is liable for associate health claims up to a lifetime aggregate of $1,000,000 per member and for workers compensation claims up to $1,000,000 per claim. Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $100,000 to $500,000.

(j) Incentive Plans
The company has elected to follow the intrinsic value method of accounting as detailed in the Accounting Principles Board's Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations in accounting for its associate stock options because the alternative fair value accounting provided for under FASB Statement No. 123, "Accounting for Stock-Based Compensation," (Statement No. 123) requires use of option valuation models that were not developed for use in valuing associate stock options. The effect of applying Statement No. 123's fair value method to the company's stock-based awards results in pro forma net income and earnings per share that are not materially different from amounts reported.

(k) Income Taxes
Under the asset and liability method of the FASB Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (Statement No. 109), deferred tax assets and liabilities are recognized 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.

(l) Revenue Recognition
Revenues from the sale of products to the company's customers are recognized at the point of sale.

(m) Vendor Allowances
Vendor rebates, credits and promotional allowances that relate to the company's buying and merchandising activities, including lump-sum payments associated with long-term contracts, are recorded as a component of cost of sales as they are earned, in accordance with its underlying agreement.

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WEIS MARKETS, INC.

Note 1 Summary of Significant Accounting Policies (continued)

(n) Advertising Costs
The company expenses advertising costs as incurred. The company recorded advertising expense of $23.6 million in 2002, $26.3 million in 2001 and $25.4 million in 2000.

(o) New Accounting Standards
As of December 30, 2001, the company adopted Emerging Issues Task Force Issue Nos. 00-14, "Accounting for Certain Sales Incentives;" 00-22, "Accounting for 'Points' and Certain Other Time-Based or Volume-Based Sales Incentives Offers, and Offers for Free Products or Services to Be Delivered in the Future;" and 00-25, "Vendor Income Statement Characterization of Consideration from a Vendor to a Retailer" (EITF Issues). These EITF Issues establish new rules for accounting for certain sales incentives, loyalty programs and vendor contracts; however, the adoption of these EITF Issues do not have an impact on the company's net income or shareholders' equity. These EITF Issues require certain sales incentives, which prior to adoption were reported as expenses or costs of goods sold, to be classified as a reduction of revenue. Prior year financial statements were reclassified to conform to the requirements of these EITF Issues.

In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations" (Statement No. 141) and No. 142, "Goodwill and Other Intangible Assets" (Statement No. 142) effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subjected to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives.

The company applied Statement No. 142 in the first quarter of fiscal 2002. Application of the Statement resulted in an increase in pre-tax net income of approximately $2.0 million for fiscal 2002 due to the elimination of amortization of goodwill. The company performed the required impairment tests of goodwill and determined that the company's goodwill was not impaired.

(p) Earnings Per Share
Basic and diluted earnings per share are the same amounts for each period presented.

(q) 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 financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.

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WEIS MARKETS, INC.

Note 2 Marketable Securities
Marketable securities, as of December 28, 2002 and December 29, 2001, consisted of:

				Gross		Gross
				Unrealized		Unrealized
(dollars in thousands)		Amortized		Holding		Holding		Fair
December 28, 2002		Cost		Gains		Losses		Value
Available-for-sale:
Pennsylvania state and municipal bonds	$	6,514	$	26	$	---	$	6,540
U.S. Treasury securities		1,023		4		---		1,027
Equity securities		3,125		7,064		10		10,179
Other short-term investments		25,764		---		---		25,764
	$	36,426	$	7,094	$	10	$	43,510

				Gross		Gross
				Unrealized		Unrealized
(dollars in thousands)		Amortized		Holding		Holding		Fair
December 29, 2001		Cost		Gains		Losses		Value
Available-for-sale:
Pennsylvania state and municipal bonds	$	1,524	$	---	$	---	$	1,524
U.S. Treasury securities		1,022		38		---		1,060
Equity securities		3,125		11,036		---		14,161
Other short-term investments		11,930		---		---		11,930
	$	17,601	$	11,074	$	---	$	28,675

Maturities of marketable securities classified as available-for-sale at December 28, 2002, were as follows:

		Amortized		Fair
(dollars in thousands)		Cost		Value
Available-for-sale:
Due within one year	$	31,787	$	31,791
Due after one year through five years		1,514		1,540
Equity securities		3,125		10,179
	$	36,426	$	43,510
See additional disclosures regarding marketable securities in notes 1(d) and 13.

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WEIS MARKETS, INC.

Note 3 Inventories
Merchandise inventories, as of December 28, 2002 and December 29, 2001, were valued as follows:

(dollars in thousands)		2002		2001
LIFO	$	145,138	$	134,544
Average cost		37,694		35,408
	$	182,832	$	169,952

If all inventories were valued on the average cost method, which approximates current cost, total inventories would have been $39,006,000 and $41,014,000 higher than as reported on the above methods as of December 28, 2002 and December 29, 2001, respectively.

Although 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, the following summary of net income and per share amounts based on the use of the average cost method for valuing all inventories is presented for comparative purposes.

(dollars in thousands, except per share amounts)		2002		2001		2000
Net income	$	57,975	$	48,947	$	73,477
Basic and diluted earnings per share	$	2.13	$	1.52	$	1.76

Note 4 Property and Equipment
Property and equipment, as of December 28, 2002 and December 29, 2001, consisted of:

	Useful Life
(dollars in thousands)	(in years)		2002		2001
Land		$	64,209	$	69,103
Buildings and improvements	10-60		335,224		325,775
Equipment	3-12		478,570		475,472
Leasehold improvements	5-20		99,690		99,692
Total, at cost			977,693		970,042
Less accumulated depreciation and amortization			549,540		530,065
		$	428,153	$	439,977

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WEIS MARKETS, INC.

Note 5 Lease Commitments
At December 28, 2002, the company leased approximately 58% of its open store facilities under operating leases that expire at various dates up to 2024. 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.

Rent expense on all leases consisted of:

(dollars in thousands)		2002		2001		2000
Minimum annual rentals	$	29,291	$	29,706	$	27,685
Contingent rentals		274		219		297
	$	29,565	$	29,925	$	27,982

The following is a schedule by year of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 28, 2002.

(dollars in thousands)
2003	$	28,781
2004		27,521
2005		24,279
2006		22,068
2007		19,475
Thereafter		141,213
	$	263,337

The company has $3,101,000 accrued 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 for these locations are included in the above schedule.

As of December 28, 2002, the future minimum rentals to be received under non-cancelable leases and subleases were $5,321,000.

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WEIS MARKETS, INC.

Note 6 Retirement Plans
The company has a contributory retirement savings plan (401(k)) covering substantially all full-time associates, a noncontributory profit-sharing plan covering eligible associates, a noncontributory associate stock bonus plan covering eligible associates and two supplemental retirement plans covering certain officers of the company. An eligible associate as defined in the Weis Markets, Inc. Profit Sharing Plan includes salaried associates, store management and administrative support personnel. The company's policy is to fund 401(k), profit-sharing and stock bonus costs as accrued, but not supplemental retirement costs. Contributions to the 401(k) plan, the profit-sharing plan and the stock bonus plan are made at the sole discretion of the company.

The company's supplemental retirement plans provide for the payment of specific amounts of annual retirement benefits to the officers or to their beneficiaries over an actuarially computed normal life expectancy. The actuarial present value of accumulated benefits amounted to $7,824,000 and $7,551,000 at December 28, 2002 and December 29, 2001, respectively.

Retirement plan costs amounted to:

(dollars in thousands)		2002		2001		2000
Retirement savings plan	$	987	$	955	$	945
Profit-sharing plan		850		850		850
Employee stock bonus plan		40		40		40
Supplemental retirement plans		400		303		617
	$	2,277	$	2,148	$	2,452

The company has no other post-retirement benefit plans.

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WEIS MARKETS, INC.

Note 7 Incentive Plans
(a) Stock Option Plan
The company has an incentive stock option plan for officers and other key associates under which 185,480 shares of common stock are reserved for issuance at December 28, 2002. Under the terms of the plan, option prices are 100% of the "fair market value" of the shares on the date granted. Options granted are immediately exercisable and expire ten years after date of grant.

Changes during the three years ended December 28, 2002, in options outstanding under the plan were as follows:

		Weighted-Average		Shares
		Exercise Price		Under Option
Balance, December 25, 1999		$34.37		85,720
Granted		$35.13		35,450
Exercised		$27.30		(1,250	)
Forfeited		$33.53		(3,400	)
Balance, December 30, 2000		$34.70		116,520
Granted		$32.72		5,750
Exercised		$27.81		(1,300	)
Forfeited		$35.40		(950	)
Balance, December 29, 2001		$34.68		120,020
Granted		$35.73		750
Exercised		$30.40		(8,300	)
Forfeited		$35.93		(1,200	)
Balance, December 28, 2002		$34.99		111,270

Exercise prices for options outstanding as of December 28, 2002 ranged from $26.25 to $37.94. The weighted-average remaining contractual life of those options is 5.7 years. As of December 28, 2002, all options are exercisable.

(b) Company Appreciation Plan
Under the company appreciation plan, officers and other associates are awarded rights equivalent to shares of company common stock. At the maturity date, usually one year after the date of award, the value of any appreciation from the original date of issue is paid in cash to the participants.

During 2002, 2001 and 2000, 13,500, 20,100 and 56,750 rights, respectively, were awarded under the program. Earnings were charged $37,000 in 2002, credited $188,000 in 2001 and credited $95,000 in 2000 for appropriate changes to the accrued expense for this plan.

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WEIS MARKETS, INC.

Note 8 Long-Term Debt
In October 2002, the company entered into a three-year unsecured Revolving Credit Agreement (the "Credit Agreement") in the amount of $100 million to provide funds for general corporate purposes including working capital and letters of credit. The Credit Agreement requires the maintenance of affirmative and negative covenants, which among other things restrict stock purchases, capital expenditures, and asset dispositions. The covenants include the preservation of a minimum consolidated net worth and a fixed charge coverage ratio. Borrowings under the Credit Agreement bear interest at a Base-Rate Option or Euro-Rate Option at the discretion of the company. The Base Rate is the greater of Prime Rate or 0.50% plus the Federal Funds Effective Rate. The Euro-Rate is based upon the London interbank market plus an Applicable Margin. The Applicable Margin equals 0.625% plus a Usage Fee of 0.125% when borrowings exceed 33% of the aggregate committed amounts, or 0.25% when borrowings exceed 67% of the aggregate committed amounts, or 0% in all other cases. The company also pays a commitment fee equal to 0.15% per annum on the unused portion of the Credit Agreement. At December 28, 2002, the company had no cash borrowings but had outstanding letters of credit of approximately $18 million under the Credit Agreement. The letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions.

The company entered into an unsecured $60 million bridge credit agreement on May 7, 2001, to provide funds for general corporate purposes. The availability under the bridge credit agreement was reduced to $45 million on November 15, 2001, $30 million on March 29, 2002, $25 million on May 31, 2002, and cancelled on August 30, 2002. The weighted-average interest rate for funds borrowed via the bridge credit agreement was 2.9% and 3.0% in 2002 and 2001, respectively.

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WEIS MARKETS, INC.

Note 9 Income Taxes
The provision for income taxes consists of:

(dollars in thousands)		2002		2001		2000
Currently payable:
Federal	$	34,665	$	26,637	$	31,367
State		4,433		3,773		9,150
Deferred:
Federal		(2,150	)	1,005		2,151
State		(1,411	)	377		321
	$	35,537	$	31,792	$	42,989

The following is a reconciliation between the applicable income tax expense and the amount of income taxes that would have been provided at the Federal statutory rate. The statutory rate was 35% in 2002, 2001 and 2000.

(dollars in thousands)		2002		2001		2000
Tax at statutory rate	$	33,140	$	28,646	$	40,884
State income taxes, net of federal income tax benefit		1,964		2,697		5,204
Other (principally tax-exempt investment income in 2000)		433		449		(3,099	)
Actual provision (effective tax rate 37.5%, 38.8% and 36.8%, respectively)	$	35,537	$	31,792	$	42,989

Cash paid for income taxes was $29,960,000, $30,051,000 and $39,729,000 in 2002, 2001 and 2000, respectively.

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 28, 2002 and December 29, 2001, are presented below:

(dollars in thousands)		2002			2001
Deferred tax assets:
Accounts receivable	$	517		$	675
Compensated absences		511			680
Employee benefit plans		6,060			4,852
General liability insurance		1,584			1,699
Nondeductible accruals and other		1,200			310
Total deferred tax assets		9,872			8,216
Deferred tax liabilities:
Inventories		(7,635	)		(8,254	)
Unrealized gain on marketable securities		(2,939	)		(4,595	)
Depreciation		(14,765	)		(16,051	)
Total deferred tax liabilities		(25,339	)		(28,900	)
Net deferred tax liability	$	(15,467	)	$	(20,684	)
Current deferred liability - net	$	(702	)	$	(4,633	)
Noncurrent deferred liability - net		(14,765	)		(16,051	)
Net deferred tax liability	$	(15,467	)	$	(20,684	)

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WEIS MARKETS, INC.

Note 10 Comprehensive Income

(dollars in thousands)		2002		2001		2000
Net income	$	59,149	$	50,055	$	73,823
Other comprehensive income by component, net of tax:
Unrealized holding gains (losses) arising during period (Net of deferred taxes of       $1,655, $335 and $488, respectively)		(2,334	)	(471	)	690
Reclassification adjustment for gains included in net income (Net of deferred       taxes of $0, $236 and $530, respectively)		---		(334	)	(749	)
Other comprehensive income, net of tax		(2,334	)	(805	)	(59	)
Comprehensive income	$	56,815	$	49,250	$	73,764

Note 11 Goodwill and Other Intangible Assets - Adoption of Statement 142
The effect of goodwill amortization on net income and earnings per share for 2002, 2001 and 2000, is as follows:

(dollars in thousands, except per share amounts)		2002		2001		2000
Net income	$	59,149	$	50,055	$	73,823
Add: Goodwill amortization, net of tax		---		1,618		1,438
Adjusted net income	$	59,149	$	51,673	$	75,261
Basic and diluted earnings per share	$	2.17	$	1.55	$	1.77
Add: Goodwill amortization, net of tax		---		.05		.03
Adjusted basic and diluted earnings per share	$	2.17	$	1.60	$	1.80

Note 12 Summary of Quarterly Results (Unaudited)
Quarterly financial data for 2002 and 2001 are as follows:

(dollars in thousands,	Thirteen Weeks Ended
except per share amounts)		Mar. 30, 2002		June 29, 2002		Sep. 28, 2002		Dec. 28, 2002
Net sales	$	504,423	$	491,865	$	495,891	$	507,185
Gross profit on sales		131,683		131,718		132,071		132,413
Net income		14,776		13,553		14,846		15,974
Basic and diluted earnings per share		.54		.50		.55		.58

(dollars in thousands,
except per share amounts)		Mar. 31, 2001		June 30, 2001		Sep. 29, 2001		Dec. 29, 2001
Net sales	$	485,695	$	488,915	$	493,401	$	503,654
Gross profit on sales		126,907		127,570		130,380		129,806
Net income		17,194		8,706		11,703		12,452
Basic and diluted earnings per share		.41		.26		.43		.46

Page 24 of 32 (Form 10-K)

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