<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 1994
Commission File Number 0-1532
MARSH SUPERMARKETS, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-0918179
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9800 CROSSPOINT BLVD.
INDIANAPOLIS, INDIANA 46256-3350
(Address of principal executive offices) (Zip Code)
317-594-2100
(Registrant's telephone number, including area code)
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 twelve months and (2) has been subject to such filing
requirements for at least the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical date.
Shares outstanding at January 1, 1994:
Class A Common Stock - 3,932,598 shares
Class B Common Stock - 4,509,404 shares
---------
8,442,002 shares
=========
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(All amounts in thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
12 Weeks Ended 40 Weeks Ended
------------------------- -------------------------
January 1, January 2, January 1, January 2,
1994 1993 1994 1993
------------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Sales and other revenues $ 291,191 $ 275,913 $ 951,147 $ 900,571
Costs and expenses:
Cost of merchandise sold, including
warehousing and transportation 220,933 210,723 719,742 686,985
Selling, general and administrative 60,745 56,030 197,412 179,903
Depreciation and amortization 4,093 3,771 13,168 12,362
--------- --------- --------- ---------
Operating profit 5,420 5,389 20,825 21,321
Interest and debt expense amortization 2,982 2,271 9,944 7,889
--------- --------- --------- ---------
Income before income tax provision
and cumulative effect of changes in
accounting principles 2,438 3,118 10,881 13,432
Income Taxes 870 1,264 4,075 4,777
--------- --------- --------- ---------
Income before cumulative effect of
changes in accounting principles 1,568 1,854 6,806 8,655
Cumulative effect of changes in
accounting principles (net of tax
benefits) Note B - - 1,941 -
--------- --------- --------- ---------
Net income $ 1,568 $ 1,854 $ 8,747 $ 8,655
========= ========== ========= =========
Earnings per share -
Per primary share outstanding:
Before cumulative effect of
accounting changes $ .19 $ .24 $ .81 $ 1 .10
Cumulative effect of accounting
changes - - .23 -
--------- --------- --------- ---------
Net income $ .19 $ .24 $ 1.04 $ 1 .10
========= ========= ========= =========
Assuming full dilution:
Before cumulative effect of
accounting changes $ .18 $ .24 $ .77 $ 1 .10
Cumulative effect of accounting
changes - - .20 -
--------- -------- --------- ---------
Net Income $ .18 $ .24 $ .97 $ 1.10
========= ======== ========= =========
Dividends per share $ .11 $ .11 $ .33 $ .33
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 3
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
<TABLE>
<CAPTION>
January 1, 1994 March 27, 1993
--------------- --------------
(Unaudited) (Note)
<S> <C> <C>
Assets
Current Assets:
Cash and equivalents $ 24,603 $ 40,529
Accounts receivable 17,229 14,723
Inventories, less LIFO reserve
(January 1, 1994 - $19,637;
March 27, 1993 - $20,068) 81,902 74,891
Prepaid expenses 4,677 6,511
-------- -------
Total current assets 128,411 136,654
Property and equipment, less
allowances for depreciation 212,508 190,179
Capitalized lease property, less amortization 9,621 10,424
Other assets 19,280 15,254
-------- --------
$369,820 $352,511
======== ========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 46,091 $ 37,281
Accrued liabilities 34,957 35,514
Current maturities of long-term liabilities 8,421 4,529
-------- ---------
Total current liabilities 89,469 77,324
Long-term Liabilities
Long-term debt 140,448 143,988
Capital lease obligations 10,714 11,456
------- -------
Total long-term liabilities 151,162 155,444
Deferred Items
Federal income taxes 13,240 13,141
Other 6,722 5,063
------- -------
Total deferred items 19,962 18,204
Shareholders' Equity
Common stock 24,013 22,881
Retained earnings 91,413 85,451
Cost of common stock in treasury (6,071) (6,345)
Deferred cost - employee stock plan (128) (448)
-------- --------
Total shareholders' equity 109,227 101,539
-------- --------
Total liabilities and shareholders' equity $369,820 $352,511
======== ========
</TABLE>
Note: The balance sheet at March 27, 1993, has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. See notes to condensed financial
statements.
<PAGE> 4
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
<TABLE>
<CAPTION>
40 Weeks Ended (Unaudited)
---------------------------
January 1, 1994 January 2, 1993
--------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 8,747 $ 8,655
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 13,168 12,362
Amortization of other assets 4,784 3,573
Changes in operating assets and liabilities 4,495 (2,949)
Other operating activities 558 (15)
Cumulative effect of accounting changes (1,941) -
--------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 29,811 21,626
INVESTING ACTIVITIES
Net acquisition of property, equipment,
and land for expansion (38,423) (19,554)
Other investing activities ( 5,551) (3,368)
---------- -----------
NET CASH USED FOR INVESTING ACTIVITIES (43,974) (22,922)
FINANCING ACTIVITIES
Proceeds of long-term borrowings 4,000 74,000
Repayments of long-term debt and capital
lease obligations (4,390) (62,173)
Proceeds of public offering,
Class B common stock 836 -
Proceeds of stock options exercised 569 128
Cash dividends paid (2,778) (2,568)
--------- ---------
NET CASH PROVIDED (USED) FOR
FINANCING ACTIVITIES (1,763) 9,387
-------- --------
NET INCREASE (DECREASE) IN
CASH AND EQUIVALENTS (15,926) 8,091
--------- --------
Cash and equivalents at beginning of period 40,529 9,174
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $ 24,603 $ 17,265
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5
MARSH SUPERMARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 1, 1994 (Unaudited)
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Marsh
Supermarkets, Inc. and subsidiaries have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. This report should be read in conjunction with
the Consolidated Financial Statements of Marsh Supermarkets, Inc., for the year
ended March 27, 1993.
The condensed consolidated financial statements for the 12 and 40 week periods
ended January 1, 1994, and January 2, 1993, were not audited by independent
auditors. In the opinion of management, the statements reflect all adjustments
(consisting of normal recurring accruals) considered necessary to present
fairly, on a condensed basis, the financial position, results of operations and
cash flows for the period.
Certain income and expense items were reclassified for the 12 and 40 week
periods ended January 2, 1993, to conform with the basis of presentation used
for the 12 and 40 week periods ended January 1, 1994. Previously, per share
earnings were reported based on "average shares outstanding"; however, since
the issuance of convertible debentures earnings per share are now reported on
"primary shares" and "fully diluted shares". Refer to the attached Exhibit 11
"Computation of Earnings per Share".
Operating results for the 12 and 40 week periods ended January 1, 1994, are not
necessarily indicative of the results that may be expected for the fiscal year
ending April 2, 1994.
Note B - Accounting Changes
Effective March 28, 1993, the Company adopted FASB Statement No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions" and
FASB Statement No. 109, "Accounting for Income Taxes". The cumulative
effect of these accounting changes was $1,941,000 net of tax and is included in
the financial statements for the 40 week period ended January 1, 1994. The
impact of each of these changes was as follows:
<TABLE>
<S> <C>
(Expense)/Income
FASB Statement No. 106 adjustment $(2,700,000)
Tax effect of FASB No. 106 adjustment 1,005,000
-----------
(1,695,000)
FASB Statement No. 109 adjustment 3,636,000
-----------
Net effect of accounting changes $1,941,000
==========
</TABLE>
<PAGE> 6
Postretirement Health Benefits
Effective March 28, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions". Previously, the Company accounted for postretirement benefits,
other than pensions, on a "pay as you go" basis (amounts have not been material
and only applied to early retirees from age 55 to age 65). Under Statement No.
106, the expected cost of benefits is accrued over the employees' years of
service. The Company elected to recognize the entire unaccrued benefit
obligation as of March 28, 1993.
As a result of this adoption, the Company recorded an accumulated
postretirement benefit obligation of $2,700,000, before taxes, for active
employees and retirees as of March 28, 1993.
The Company's contributory defined benefit postretirement plans provide health
care benefits for its non-union retirees and their eligible spouses.
Eligibility for these benefits is limited to retirees with ten or more years of
vested service after age 55, who have not attained age 65. Spousal coverage is
optional and continues for the lesser of five years after retirement or until
the spouse reaches age 65. Benefits generally cease after reaching age 65,
since the retiree (spouse) is generally eligible for Medicare.
The funded status and amounts recognized in the consolidated balance sheet for
the Company's contributory defined benefit postretirement plans at March 28,
1993, were as follows:
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees $1,170,000
Fully eligible active plan participants 1,110,000
Other active plan participants 420,000
----------
2,700,000
Plan assets at fair value -
----------
Accrued postretirement benefit cost $2,700,000
==========
</TABLE>
For measurement purposes, the weighted average discount rate used in
determining the accumulated postretirement benefit obligation was 8.5%. The
Company's health care cost trend rate is 12% for fiscal year 1994 and decreases
to 5% by fiscal year 2002, and thereafter. If these trend rates were to
increase by one percentage point each year, the accumulated postretirement
benefit obligation would increase by approximately 4%.
Statement No. 106 is not expected to have a material effect on earnings for
fiscal year 1994, or future fiscal years. Management anticipates the annual
recorded expense to be similar to the previous "pay as you go" basis.
<PAGE> 7
Income Taxes
The Company adopted FASB Statement No. 109, "Accounting for Income Taxes" in
the first quarter of fiscal 1994. The adoption was effective March 28, 1993,
and resulted in a cumulative adjustment that increased net income by
$3,636,000.
Under the liability method of accounting for income taxes prescribed by
Statement No. 109, deferred tax assets and liabilities are based on differences
between financial reporting and tax basis of assets and liabilities, and are
measured using enacted tax rates and laws expected to be in effect when the
differences are expected to reverse. Before the adoption of Statement No. 109,
income tax expense was determined by using the deferred method. Deferred tax
expense was based on items of income and expense, reported in different years
in the financial statements and tax returns, measured at the tax rate in effect
in the year the difference originated. As permitted by Statement No. 109, the
Company elected not to restate the financial statement of any prior years.
Following is the analysis of deferred taxes calculated under the provisions of
Statement No. 109:
<TABLE>
<CAPTION>
March 28, 1993
--------------
(All amounts in thousands)
<S> <C>
Deferred tax assets:
Self insurance reserves $ 1,117
Merchandising allowances 944
Compensation and benefit accruals 677
Inventory valuation reserves 504
Federal tax benefit for deferred state taxes 452
Other 442
---------
Total deferred tax assets $ 4,136
---------
Deferred tax liabilities:
Property and equipment, including
leased property $(11,223)
Prepaid employee benefits (1,730)
State income taxes (1,329)
Other (496)
--------
Total deferred tax liabilities $(14,778)
--------
Net deferred tax liability $(10,642)
========
</TABLE>
Due to the enactment of the Budget Reconciliation Act of 1993, the estimated
annual effective tax rate and deferred tax balances were adjusted during the
second quarter. The net effect of revalued deferred tax assets and liabilities
were not a material component of the Company's income tax expense during the 40
week period ended January 1, 1994.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations:
Results of operations for interim periods are not indicative of results for a
full year and do not necessarily reflect the results that may be expected for
the fiscal year ending April 2, 1994.
The following table sets forth certain income statement components expressed as
a percentage of sales and other revenues and the percentage change in such
components.
<TABLE>
<CAPTION>
Third Quarter Year-to-Date
Percent of Revenues Pct. Percent of Revenues Pct.
------------------- -------------------
1994 1993 Change 1994 1993 Change
------------ -------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales and other revenues 100.0% 100.0% 5.5% 100.0% 100.0% 5.6%
Gross profit 24.1% 23.6% 7.8% 24.3% 23.7% 8.3%
Selling, general and administrative 20.9% 20.3% 8.4% 20.7% 20.0% 9.7%
Depreciation and amortization 1.4% 1.3% 8.5% 1.4% 1.3% 6.5%
Operating profit 1.8% 2.0% .6% 2.2% 2.4% (2.3%)
Interest expense 1.0% .8% 31.3% 1.1% .9% 26.0%
Income taxes .3% .5% 31.2% .4% .5% (14.7%)
Income before accounting changes .5% .7% (15.4%) .7% 1.0% (21.4%)
Accounting changes - - N/M .2% - N/M
Net income .5% .7% (15.4%) .9% 1.0% 1.1%
</TABLE>
Sales and other revenues increased $15.3 million, or 5.5%, in the third quarter
of fiscal 1994, compared to the third quarter of fiscal 1993. The increase was
composed of the following: (i) $9.9 million from retail sales, (ii) $4.0
million from wholesale sales to non-related parties by the convenience store
wholesale operation (CSDC), and (iii) $1.4 million from other sources. Retail
sales (excluding fuel sales) increased 4.4%. The increase in retail revenue is
attributed to sales from stores opened within the last twelve months. For the
third quarter, sales in like stores (open in all weeks of the comparable
quarters) declined 1.7%. Year-to-date, like store sales are 1.4% behind the
comparable period of fiscal 1993. Low rates of inflation and continued
competitive activity from retail grocers and restaurants has adversely impacted
retail sales in the supermarket division. In the third quarter of fiscal 1994,
CSDC revenues increased 11.3% compared to the third quarter of fiscal 1993. The
non-related customers serviced by CSDC increased 8.3% to 1,300 from the third
quarter of 1993. For the 40 week period ended January 1, 1994, CSDC revenues
from non-related customers were 16.8% ahead of the same period of the prior
year.
<PAGE> 9
Gross profit is net of warehousing, transportation and promotional
expenses. As a percentage of revenues, gross profit improved .5% during the
third quarter of fiscal 1994 compared to the third quarter of fiscal 1993, and
increased .6% year-to-date compared to same period of fiscal 1993. The
improvement is due principally to improved retail margins in both supermarkets
and convenience stores. Management attributes the improved gross profit
margins to increased emphasis on perishable and prepared foods that
traditionally yield higher gross margins, expanded product lines, improved
merchandising mix in new and enlarged supermarkets, and increased trade
discounts from product procurement.
Selling, general and administrative expenses increased $4.7 million, or .6% as
a percentage of revenues, in the third quarter of fiscal 1994, compared to the
same quarter of fiscal 1993. Year-to-date, these expenses increased $17.5
million, or .7% as a percentage of revenues, compared to the same period of
fiscal 1993. This increase is principally attributable to higher wage, fringe
benefit, occupancy, and advertising expenses associated with the store
expansion program. As the newer units mature, the Company expects selling,
general and administrative expense to decrease as a percentage of revenues.
Direct retail wages increased $1.8 million or 7.5% from the third quarter of
1993, and $5.1 million or 6.4% year-to-date compared to the same period of the
prior year. However, like stores direct retail wages decreased .6% from the
third quarter of fiscal 1993 and .5% year-to-date compared to the same period
of fiscal 1993.
Subsequent to the third quarter, the Company announced an expense reduction
plan encompassing a reduction of 70 non-retail positions, and changes to the
Company automobile program. The staff reductions result from a realignment of
responsibilities at the corporate headquarters, and new operating efficiencies
in warehousing and transportation. The warehouse and transportation
efficiencies relate to a redesign of the physical layout of the Company's dry
grocery distribution center and the removal of an obsolete mechanized system.
These changes will reduce labor and maintenance expense while providing more
efficient space utilization. Additional savings resulted from the successful
implementation of new warehouse labor standards in the Company's perishable
products distribution center, and the linkage of the standards to an employee
incentive program. The fourth quarter pre-tax charge for severance benefits
and other expenses related to the expense reduction plan should approximate $.7
million. Most of this charge is expected to be offset by the savings from the
expense reductions. Net annualized realizable savings from these changes are
projected to be $2.1 million on an after tax basis.
Depreciation and amortization at 1.4% of revenues increased .1% of revenues for
the third quarter and year-to-date of fiscal 1994, compared to the same periods
of fiscal 1993. The increases of $.3 million, quarter to quarter, and $.8
million year-to-date are largely attributable to stores opened during the last
twelve months.
Operating profit was $5.4 million, or 1.8% of revenues, for the third quarter
of fiscal 1994. The dollar amounts are comparable to the prior year, but as a
percentage of revenue, operating profit decreased .2% of revenues. Year-to-date
operating profit at $20.8 million, or 2.2% of revenues, was down slightly from
$21.3 million, or 2.4% of
<PAGE> 10
revenues, for the comparable period of fiscal 1993. The decrease in
operating profit is due primarily to higher selling, general and administrative
expense.
Interest and debt expense amortization increased $.7 million, or 31.3%, in the
third quarter of fiscal 1994, compared to the third quarter of fiscal 1993.
Year-to-date interest expense and debt amortization increased $2.1 million, or
26.0%, compared to the same 40 week period of fiscal 1993. The increase is
primarily attributable to the Company's decision, at the end of the third
quarter of fiscal 1993, to shift $50 million of long term financing from
floating rate bank debt to fixed rate senior notes. Additionally, the Company
issued $20 million in convertible debentures during the fourth quarter of
fiscal 1993. For purposes of comparison, the Company's average interest rate
on debt outstanding as of the last day of the third quarter decreased to 8.7%
in fiscal 1994 from 9.0% in fiscal 1993.
Income tax expense for the 40 week period ended January 1, 1994, was $4.1
million or 37.5% of pretax income. This compares to $4.8 million, or 35.6% of
pretax income, for the same period of the prior year. The primary reasons for
the current year increase in the effective tax rate include the retroactive
enactment of increased federal tax rates and additional provisions for state
income taxes. Certain state income taxes previously reported as a component of
selling, general and administrative expenses were reclassified to income tax
expense for the current and prior year to enhance comparability with other
companies.
Income before the cumulative effect of accounting changes and net income for
the third quarter of fiscal 1994 was $1.6 million, or .5% of revenues, compared
to $1.9 million, or .7% of revenues, for the third quarter of fiscal 1993. On a
"primary" share basis, this equals $.19. On a "fully diluted" share basis,
income before the cumulative effect of accounting changes was $.18 for the
third quarter of fiscal 1994. This compared to $.24 primary and fully diluted
for the third quarter of fiscal 1993.
Year-to-date 1994 income, before the cumulative changes in accounting
principles, was $6.8 million, or .7% of revenues and $.81 on a primary share
basis. This compared to $8.7 million, or 1.0% of revenues and $1.10 per primary
share, for the same 40 week period of fiscal 1993. On a "fully diluted" per
share basis, income before the cumulative effect of changes in accounting
principles was $.77 year-to-date for fiscal 1994, compared to $1.10 for the
same period of fiscal 1993.
Net income for the current year includes $1.9 million for the cumulative effect
(net of income tax benefits) of adopting SFAS No. 106 and SFAS No. 109 (see
Note B to the condensed financial statements). Net income year-to-date, after
the cumulative effect of accounting changes, for fiscal 1994 was $8.7 million,
or $1.04 on a primary share basis and $.97 on a fully diluted share basis.
This compares to $8.7 million, or $1.10 per primary and fully diluted share,
for the same period of fiscal 1993. The issuance of $20 million in convertible
debentures and 569,900 shares of Class B Common Stock in the fourth quarter of
fiscal 1993 increased equivalent shares by 23.4%. This has impacted fully
diluted earnings per share in the current fiscal year.
<PAGE> 11
Financial and Liquidity:
The Company has traditionally met its capital requirements through internally
generated funds, long-term borrowings and lease financing, including capital
and operating leases. In March 1993, the Company sold $20.0 million of
convertible subordinated debentures and 569,900 shares of Class B Common Stock
for aggregate net proceeds of approximately $26.0 million (includes $2.5
million of debentures and 69,900 shares of stock issued subsequent to the
fiscal 1993 year end, pursuant to underwriters' over allotment options). The
net proceeds of the Common Stock portion of the offering approximated $6.8
million. In addition to the public offering, the Company completed a private
placement of long-term fixed rate debt of $50.0 million in December 1992. The
Company used a portion of the proceeds to fund expansion during the first three
quarters of fiscal 1994, and plans to invest the remainder similarly over the
next three to six months.
During the third quarter of fiscal 1994, the Company opened the three
supermarkets listed below. All three have extended perishable offerings and
full line pharmacies. Two of these units are new units and one is a replacement
unit.
<TABLE>
Square Feet Store Type Location Opened
----------- ---------- -------- ------
<S> <C> <C> <C>
81,000 Superstore Indianapolis, IN October 29, 1993
55,000 Supermarket Bloomington, IN October 31, 1993
60,000 Supermarket Noblesville, IN November 9, 1993
</TABLE>
Also, during the quarter the Company remodeled and converted its Forest Park,
Ohio store to the LoBill price image format. Subsequent to the close of the
quarter, the Company opened a new 1,800 square foot convenience store in
Shelbyville, Indiana, on January 13, 1994.
The following projects are currently under construction:
<TABLE>
Category Square Feet Store Type Location Anticipated Opening
- -------- ----------- ---------- -------- -------------------
<S> <C> <C> <C> <C>
Expansion 15,000 Supermarket Indianapolis, IN Quarter 4, 1994
New 32,000 LoBill Cincinnati, OH Quarter 4, 1994
</TABLE>
With the completion of the projects discussed above, and two stores completed
in the first quarter of fiscal 1994, the Company will add approximately 305,000
square feet to its store base. This is approximately a 10% increase in retail
selling space over the prior year. The Company is pursuing the acquisition of
several additional sites for future development. The estimated cost of the
projects discussed above, plus routine capital expenditure for 1994,
approximates $60.0 million, with equipment leasing providing approximately
$15.0 million of this amount.
<PAGE> 12
For fiscal year 1995, the Company currently plans to lease a 60,000
square foot replacement supermarket, remodel and expand two existing
supermarkets, and construct five new convenience stores. The Company projects
the cash outlay for these projects, plus acquisition of sites for future
projects and other routine capital expenditures, to be approximately $25
million. Financing will be from internal cash generation and approximately $7
million in equipment leasing.
In light of changing conditions, the Company frequently reviews and revises
plans with respect to new construction, expansion, and remodeling. These
conditions include competitive influences, the ability to complete successful
negotiations of site acquisitions or leases, and zoning and other governmental
regulations. Because of these factors, projects currently planned but not
started may not commence, other projects may be undertaken, and some projects
started in a given fiscal year may not be completed until subsequent fiscal
years.
During the first three quarters, inventories increased $7.0 million. New and
larger replacement retail stores accounted for $3.0 million of this increase.
The balance of the increase is normal seasonal buildup. The increased inventory
levels were substantially financed by increasing trade Accounts Payable $8.8
million during the same period.
The Company's revolving credit agreements provide for borrowings of up to $45.0
million, of which $1.5 million was utilized at January 1, 1994. Additionally,
the Company has commitments from various banks for short-term borrowings up to
$15.0 million at rates equal to or below prime rates of committed banks.
Of the total long-term debt and capital lease obligations outstanding at
January 1, 1994, fixed rate obligations comprise 96% at an average interest
rate of 8.9%. The remaining 4% bear interest at fluctuating rates averaging
4.12%.
The Company's senior note agreements preclude additional long-term borrowings
if the Company's total long-term liabilities, including capital lease
obligations, would exceed 60% of the Company's consolidated net tangible
assets. Under the most restrictive covenant of the existing debt agreements,
the Company may incur an additional $13.1 million of funded debt.
<PAGE> 13
PART II - OTHER INFORMATION
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
The Company did not file any reports on Form 8-K for the twelve and
forty week periods ended January 1, 1994.
The following exhibits are included herein:
4.1 - Form of Indenture dated as of February 15, 1993 between the
Company and Society National Bank, Indiana, as Trustee,
including form of Debenture - Incorporated by reference to
Registration Statement on Form S-2 No. 33-56738.
4.2 - Articles V, VI and VII of the Company's Restated Articles of
Incorporation, as amended as of May 15, 1991 - Incorporated by
reference to form 10-K for the year ended March 30, 1991.
4.3 - Articles I and IV of the Company's By-Laws, as amended as of
August 7, 1990 - Incorporated by reference to Form 10-Q for the
quarter ended January 5, 1991.
4.4 - Rights Agreement dated as of August 1, 1989 between Marsh
Supermarkets, Inc. and National City Bank, as successor to
Merchants National Bank & Trust Company of Indianapolis-
Incorporated by reference to Form 10-Q for the quarter ended
October 14, 1989.
4.5 - Amendment No. 1 dated as of May 1, 1991 to Rights Agreement
dated as of August 1, 1989 - Incorporated by reference to Form
10-K for the year ended March 30, 1991.
4.6 - Note Agreement dated as of May 1, 1988 for $25 million 9.48%
Senior Notes due June 30, 2003 - Incorporated by reference to
Form 10-Q for the quarter ended June 25, 1988.
4.7 - Note Agreement dated as of October 15, 1992 for $35 million
8.54% Senior Notes, Series A, due December 31, 2007 and $15
million 8.13% Senior Notes, Series B, due December 31, 2004 -
Incorporated by reference to Registration Statement on Form S-2
No. 33-56738.
11 - Statement re: Computation of Earnings per Share
<PAGE> 14
SIGNATURES
Pursuant to the requirements 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.
MARSH SUPERMARKETS, INC.
February 10, 1994 By: /s/ P. Lawrence Butt
---------------------
P. Lawrence Butt
Vice President and Secretary
February 10, 1994 By: /s/ Michael D. Castleberry
---------------------------
Michael D. Castleberry
Director of Corporate Accounting
(Chief Accounting Officer of the
Registrant)
<PAGE> 1
Exhibit 11 - Statement Re: Computation of Earnings Per Share
(All amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
(Unaudited) 12 Weeks Ended 40 Weeks Ended
--------------------------------- --------------------------------
January 1, January 2, January 1, January 2,
---------- ---------- ---------- -----------
1994 1993 1994 1993
---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Primary Earnings per Share:
- ---------------------------
Average shares outstanding 8,442 7,783 8,426 7,782
Net effect of dilutive stock options, based
on treasury stock method using
average market price 3 82 16 121
------- ------- ------ ------
Total primary shares and equivalents 8,445 7,865 8,442 7,903
------- ------- ------ ------
Income before cumulative effect of
changes in accounting principles $1,568 $1,854 $6,806 $8,655
------- ------- ------ ------
Per primary share amount $ .19 $ .24 $ .81 $ 1.10
======= ======= ====== ======
Net Income $1,568 $1,854 $8,747 $8,655
------- ------- ------ ------
Per primary share amount $ .19 $ .24 $ 1.04 $ 1.10
======= ======= ====== ======
Fully Diluted Earnings per Share:
- ---------------------------------
Average shares outstanding 8,442 7,783 8,426 7,782
Net effect of dilutive stock options, based
on treasury stock method using higher of
average market or last price 3 85 14 114
Assumed conversion of 7% convertible
subordinated debentures issued
March 5, 1993 1,290 - 1,290 -
------- ------- ------ ------
Total shares and equivalents 9,735 7,868 9,730 7,896
------- ------- ------ ------
Income before cumulative effect of
changes in accounting principles $1,568 $1,854 $6,806 $8,655
Add 7% convertible subordinated debenture
interest, net of tax effect 210 - 681 -
------- ------- ------ ------
Totals $1,778 $1,854 $7,487 $8,655
------- ------- ------ ------
Per fully diluted share amount $ .18 $ .24 $ .77 $ 1.10
======= ======= ====== ======
Net Income $1,568 $1,854 $8,747 $8,655
Add 7% convertible subordinated debenture
interest, net of tax effect 210 - 681 -
------- ------- ------ ------
Totals $1,778 $1,854 $9,428 $8,655
------- ------- ------ ------
Per fully diluted share amount $ .18 $ .24 $ .97 $1.10
====== ====== ====== =====
</TABLE>
