<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 14, 2000
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 BOULEVARD
INDIANAPOLIS, INDIANA 46256-3350
(Address of principal executive offices) (Zip Code)
(317) 594-2100
(Registrant's telephone number, including area code)
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.
Number of shares outstanding of each class of the registrant's common
stock as of October 30, 2000:
Class A Common Stock - 3,993,908 shares
Class B Common Stock - 4,279,387 shares
---------
8,273,295 shares
=========
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
16 Weeks Ended 28 Weeks Ended
------------------------ ------------------------
October 14, October 9, October 14, October 9,
2000 1999 2000 1999
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
Sales and other revenues $600,457 $534,729 $1,037,066 $928,995
Cost of merchandise sold, including
warehousing and transportation 453,888 405,720 783,657 701,737
-------- -------- ---------- --------
Gross profit 146,569 129,009 253,409 227,258
Selling, general and administrative 126,981 110,754 216,755 193,542
Depreciation 8,508 8,033 14,604 13,673
-------- -------- ---------- --------
Operating income 11,080 10,222 22,050 20,043
Interest and debt expense amortization 7,857 6,560 13,628 11,431
-------- -------- ---------- --------
Income before income taxes 3,223 3,662 8,422 8,612
Income taxes 1,084 1,047 2,806 2,715
-------- -------- ---------- --------
Net income $ 2,139 $ 2,615 $ 5,616 $ 5,897
======== ======== ========== ========
Earnings per common share $ .26 $ .31 $ .68 $ .71
======== ======== ========== ========
Earnings per common share
- assuming dilution $ .25 $ .30 $ .63 $ .65
======== ======== ========== ========
Dividends per share $ .11 $ .11 $ .22 $ .22
======== ======== ========== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 3
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
October 14, April 1, October 9,
2000 2000 1999
--------- --------- ---------
(Unaudited) (Note A) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 39,219 $ 31,435 $ 28,462
Accounts receivable 43,425 44,315 36,257
Inventories, less LIFO reserve: October 14, 2000 - $8,518; 131,681 125,383 118,260
April 1, 2000 - $ 8,343; October 9, 1999 - $12,316
Prepaid expenses 5,378 6,068 5,086
Recoverable income taxes 246 1,960 1,597
--------- --------- ---------
Total current assets 219,949 209,161 189,662
Property and equipment, less allowances for depreciation 301,024 299,589 288,545
Other assets 51,540 58,255 53,134
--------- --------- ---------
$ 572,513 $ 567,005 $ 531,341
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to bank $ -- $ 10,000 $ 19,204
Accounts payable 84,719 79,097 75,420
Accrued liabilities 56,901 55,042 47,902
Current maturities of long-term liabilities 2,758 28,097 2,893
--------- --------- ---------
Total current liabilities 144,378 172,236 145,419
Long-term liabilities:
Long-term debt 250,085 218,724 217,869
Capital lease obligations 14,005 14,266 13,367
--------- --------- ---------
Total long-term liabilities 264,090 232,990 231,236
Deferred items:
Income taxes 12,862 12,744 12,291
Other 16,473 16,123 13,482
--------- --------- ---------
Total deferred items 29,335 28,867 25,773
Shareholders' Equity:
Common stock, Classes A and B 25,588 25,455 25,423
Retained earnings 121,131 117,360 112,863
Cost of common stock in treasury (9,867) (7,858) (6,949)
Deferred cost - restricted stock (1,119) (1,574) (1,963)
Notes receivable - stock options (1,023) (471) (461)
--------- --------- ---------
Total shareholders' equity 134,710 132,912 128,913
--------- --------- ---------
$ 572,513 $ 567,005 $ 531,341
========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
28 Weeks Ended
-----------------------
October 14, October 9,
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,616 $ 5,897
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 14,604 13,673
Amortization of other assets 3,008 3,228
Changes in operating assets and liabilities 4,599 1,196
Other operating activities 361 (424)
-------- --------
Net cash provided by operating activities 28,188 23,570
INVESTING ACTIVITIES
Net acquisition of property, equipment and land (25,263) (25,494)
Other investing activities (3,459) (6,444)
-------- --------
Net cash used for investing activities (28,722) (31,938)
FINANCING ACTIVITIES
Proceeds (repayments) of short-term borrowings (10,000) 19,204
Proceeds of long-term borrowings 42,010 --
Repayments of long-term debt and capital leases (36,249) (11,581)
Proceeds from sale/leasebacks 16,282 1,000
Purchases of shares for treasury (2,719) (540)
Stock options exercised 800 103
Cash dividends paid (1,849) (1,876)
Other financing activities 43 --
-------- --------
Net cash provided by financing activities 8,318 6,310
-------- --------
Net increase (decrease) in cash and equivalents 7,784 (2,058)
Cash and equivalents at beginning of period 31,435 30,520
-------- --------
Cash and equivalents at end of period $ 39,219 $ 28,462
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
MARSH SUPERMARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts or as otherwise noted)
OCTOBER 14, 2000
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Marsh
Supermarkets, Inc. and subsidiaries were prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions to Form 10-Q. Accordingly, they do not include all 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 Company's
Consolidated Financial Statements for the year ended April 1, 2000. The balance
sheet at April 1, 2000 has been derived from the audited financial statements at
that date.
The Company's fiscal year ends on Saturday of the thirteenth week of each
calendar year. All references herein to "2001" and "2000" relate to the fiscal
years ending March 31, 2001 and April 1, 2000, respectively.
The condensed consolidated financial statements for the sixteen and twenty-eight
week periods ended October 14, 2000 and October 9, 1999, respectively, were not
audited by independent auditors. Preparation of the financial statements
requires management to make estimates that affect the reported amounts of
assets, liabilities, revenues and expenses for the reporting periods. In the
opinion of management, the statements reflect all adjustments (consisting of
normal recurring accruals) considered necessary to present fairly, on a
consolidated basis, the financial position, results of operations and cash flows
for the periods presented. Certain amounts in the 2000 financial statements were
reclassified to conform with the 2001 presentation.
Operating results, for the twenty-eight week period ended October 14, 2000, are
not necessarily indicative of the results that may be expected for the full
fiscal year ending March 31, 2001.
NOTE B - LONG-TERM DEBT AND GUARANTOR SUBSIDIARIES
Other than three inconsequential subsidiaries, all of the Company's subsidiaries
(the "Guarantors") have fully and unconditionally guaranteed on a joint and
several basis the Company's obligations under the $150.0 million of 8 7/8%
Senior Subordinated Notes. The Guarantors are 100% wholly-owned subsidiaries of
the Company. The Company has not presented separate financial statements and
other disclosures concerning each Guarantor because management has determined
that such information is not material to investors.
Summarized combined financial information for the Guarantors is set forth below:
<TABLE>
<CAPTION>
October 14, April 1, October 9,
2000 2000 1999
-------- -------- --------
<S> <C> <C> <C>
Current assets $219,451 $203,772 $187,953
Current liabilities 134,697 162,458 137,948
Noncurrent assets 310,843 314,866 298,193
Noncurrent liabilities 115,416 67,139 61,641
</TABLE>
<TABLE>
<CAPTION>
16 Weeks Ended 28 Weeks Ended
----------------------- ------------------------
October 14, October 9, October 14, October 9,
2000 1999 2000 1999
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Total revenues $ 600,443 $ 534,726 $ 1,037,047 $ 928,988
Gross profit 146,555 129,007 253,390 227,252
Net income 6,319 6,945 13,027 13,476
</TABLE>
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<PAGE> 6
NOTE C - EARNINGS PER SHARE
The following table sets forth the computation of the numerators and
denominators used in the computation of earnings per share and diluted earnings
per share:
<TABLE>
<CAPTION>
16 Weeks Ended 28 Weeks Ended
----------------------- ------------------------
October 14, October 9, October 14, October 9,
2000 1999 2000 1999
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Numerator for earnings per share $ 2,139 $ 2,615 $ 5,616 $ 5,897
Effect of convertible debentures 285 307 501 520
--------- --------- ----------- ---------
Numerator for diluted earnings per share -
income after assumed conversions $ 2,424 $ 2,922 $ 6,117 $ 6,417
========= ========= =========== =========
Weighted average shares outstanding 8,338 8,504 8,362 8,507
Non-vested restricted shares (115) (170) (119) (173)
--------- --------- ----------- ---------
Denominator for earnings per share 8,223 8,334 8,243 8,334
Effect of dilutive securities:
Non-vested restricted shares 115 170 119 173
Stock options 94 76 85 51
Convertible debentures 1,290 1,290 1,290 1,290
--------- --------- ----------- ---------
Denominator for diluted earnings per share -
adjusted weighted average shares 9,722 9,870 9,737 9,848
========= ========= =========== =========
</TABLE>
NOTE D - BUSINESS SEGMENTS
The Company operates within two business segments: the retail sale of food and
related products through supermarkets, convenience stores and food services, and
the wholesale distribution of food and related products by CSDC, principally to
unaffiliated convenience stores. Segment information is set forth in the
following table:
<TABLE>
<CAPTION>
Retail Wholesale Consolidated
------ --------- ------------
<S> <C> <C> <C>
Sixteen weeks ended October 14, 2000
------------------------------------
External revenues $478,422 $122,035 $ 600,457
Intersegment sales 10,341 31,618 41,959
Income before income taxes 2,080 1,143 3,223
Sixteen weeks ended October 9, 1999
-----------------------------------
External revenues 422,585 112,144 534,729
Intersegment sales 10,330 29,310 39,640
Income before income taxes 2,255 1,407 3,662
Twenty-eight weeks ended October 14, 2000
-----------------------------------------
External revenues 820,575 216,491 1,037,066
Intersegment sales 18,676 53,608 72,284
Income before income taxes 6,332 2,090 8,422
Twenty-eight weeks ended October 9, 1999
----------------------------------------
External revenues 737,079 191,916 928,995
Intersegment sales 18,074 50,654 68,728
Income before income taxes 6,599 2,013 8,612
</TABLE>
NOTE E - ACQUISITION
On May 6, 2000, the Company acquired the capital stock of A. L. Ross & Sons,
Inc., which operated five supermarkets and three pharmacies in Muncie, Indiana.
The results of operations, assets and liabilities, and cash flows of A. L. Ross
& Sons, Inc. are included in the condensed consolidated statements as of and for
the period ended October 14, 2000.
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion includes certain forward-looking statements (statements
other than solely with respect to historical fact). Actual results could differ
materially from those reflected by the forward-looking statements due to known
and unknown risks and uncertainties which could adversely affect future results,
liquidity and capital resources. The risks and uncertainties include softness in
the general retail food industry, the entry of new competitive stores and
e-retailers in the Company's market, the stability of distribution incentives
from suppliers, the level of discounting by competitors, the timely and on
budget completion of store construction, expansion, conversion and remodeling,
the successful integration of acquisitions, uncertainties relating to tobacco
and environmental regulations, and the level of margins achievable in the
Company's operating divisions and their ability to increase sales and minimize
operating expenses. The Company undertakes no obligation to update or revise any
forward-looking statements to reflect subsequent events or circumstances.
Results of operations for interim periods do not necessarily reflect the results
that may be expected for the fiscal year.
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>
Second Quarter Year - to - Date
------------------------- ------------------------
Percent of Percent of
Revenues Revenues
---------------- Percent ---------------- Percent
2001 2000 Change 2001 2000 Change
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Sales and other revenues 100.0% 100.0% 12.3% 100.0% 100.0% 11.6%
Gross profit 24.4% 24.1% 13.6% 24.4% 24.5% 11.5%
Selling, general and administrative 21.1% 20.7% 14.7% 20.9% 20.8% 12.0%
Depreciation 1.4% 1.5% 5.9% 1.4% 1.5% 6.8%
Operating income 1.8% 1.9% 8.4% 2.1% 2.2% 10.0%
Interest and debt expense amortization 1.3% 1.2% 19.8% 1.3% 1.2% 19.2%
Income taxes 0.2% 0.2% 3.5% 0.3% 0.3% 3.4%
Net income 0.4% 0.5% (18.2%) 0.5% 0.6% (4.8%)
</TABLE>
SALES AND OTHER REVENUES
In the second quarter of 2001, consolidated sales and other revenues increased
$65.7 million, or 12.3%, from the second quarter of 2000 to $600.5 million.
Supermarket revenues increased $41.0 million, Village Pantry revenues increased
$10.4 million, Convenience Store Distributing Company (CSDC) revenues increased
$10.3 million, and Crystal Food Service revenues increased $2.4 million. Retail
sales (excluding fuel sales) increased 5.5%. Sales in comparable supermarkets
and convenience stores, including replacement stores and format conversions, but
excluding fuel, increased 2.6% from the second quarter of 2000. The increase in
supermarket revenues was comprised of $20.7 million from the acquisition of A.
L. Ross & Sons, Inc., $5.5 million from comparable store sales gains, and $14.8
million from stores opened since the beginning of the year earlier quarter.
Village Pantry inside store revenues increased 6.9%, and fuel gallons sold
increased 7.8%. Approximately $5.4 million of the increase in Village Pantry
revenues resulted from retail fuel prices significantly higher than the year
earlier quarter. The increase in CSDC revenues was primarily attributable to
higher cigarette manufacturer prices passed on to customers.
For the twenty-eight weeks ended October 14, 2000, consolidated sales and other
revenues increased $108.1 million, or 11.6%, from the same twenty-eight week
period of 2000 to $1,037.1 million. Supermarket revenues increased $57.1
million, Village Pantry revenues increased $19.9 million, CSDC revenues
increased $25.0 million, and Crystal Food Service revenues increased $3.5
million. Retail sales (excluding fuel sales) increased 6.2%. Sales in comparable
stores, including replacement stores and format conversions, but
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<PAGE> 8
excluding fuel, increased 2.9% from the prior year. The increase in supermarket
revenues was comprised of $20.7 million from the acquisition of A. L. Ross &
Sons, Inc., $16.2 million from comparable store sales gains and $20.2 million
from stores opened since the beginning of the prior year. Village Pantry inside
store revenues increased 6.8% and fuel gallons sold increased 8.6%.
Approximately $11.0 million of the increase in Village Pantry revenues resulted
from retail fuel prices significantly higher than the year earlier. The increase
in CSDC revenues is essentially attributable to higher cigarette manufacturer
prices passed on to customers.
GROSS PROFIT
Gross profit is calculated net of warehousing, transportation, and promotional
expenses. In the second quarter of 2001, consolidated gross profit increased
$17.6 million, or 13.6%, from the second quarter of 2000 to $146.6 million. As a
percentage of revenues, consolidated gross profit was 24.4% in the current
quarter compared to 24.1% for 2000. Consolidated gross profit included cigarette
price increase gains of $0.4 million in the second quarter of 2001, compared to
$1.2 million in the prior year quarter. Gross profit, as a percentage of
revenues, increased in supermarkets and Crystal Food Services, but declined in
Village Pantry and CSDC. Village Pantry gross profit percentage declined
primarily as a result of higher fuel sales at a gross profit percentage rate
significantly lower than that achieved on inside sales. Also, Village Pantry
fuel margin per gallon was slightly lower than the year earlier quarter. CSDC
gross profit percentage declined due to the aforementioned decline in cigarette
price increase gains and due to highly competitive cigarette pricing currently
in the marketplace.
For the twenty-eight weeks ended October 14, 2000, consolidated gross profit
increased $26.2 million, or 11.5%, from the year earlier period to $253.4
million. As a percentage of revenues, consolidated gross profit decreased to
24.4% from 24.5%. Gross profit, as a percentage of revenues, increased in
supermarkets and in Crystal Food Services, and declined in Village Pantry and
CSDC due to those factors cited above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
In the second quarter of 2001, consolidated selling, general and administrative
expenses (SG&A) increased $16.2 million, or 14.7%, from the second quarter of
2000 to $127.0 million. As a percentage of revenues, SG&A expenses increased to
21.1% from 20.7% in the comparable year earlier quarter. With respect to the
SG&A percentage increase, new stores accounted for .1 percentage point of the
increase, advertising increased .2 percentage points as expenditures were
shifted from the first quarter to provide additional momentum for the holiday
season, comparable store labor costs increased .3 percentage points resulting
from an emphasis on service in order to maintain customer loyalty and drive
sales, and all other costs decreased .2 percentage points. Wage expense in
stores open both quarters, excluding supermarket conversions to the LoBill
format, increased 3.9% due to wage rate increases and increased labor hours
intended to drive same store sales gains.
For the twenty-eight weeks in 2001, SG&A increased $23.2 million, or 12.0%, from
the comparable twenty-eight weeks of 2000. As a percentage of revenues,
consolidated SG&A expenses increased to 20.9% from 20.8% in 2000. The increase
is primarily attributable to higher wages and fringe benefit costs of $17.4
million, store occupancy and other costs of $5.1 million, and advertising $0.7
million. In identical stores, wage expense increased 3.3% from the comparable
twenty-eight weeks of the prior year.
DEPRECIATION EXPENSE
Depreciation expense for the second quarter of 2001 was $8.5 million, compared
to $8.0 million for the year earlier quarter. As a percentage of revenues,
depreciation expense was 1.4% for the second quarter of 2001, compared to 1.5%
for the second quarter of 2000.
For the twenty-eight weeks in 2001, depreciation expense was $14.6 million,
compared to $13.7 million for the prior year period. As a percentage of
revenues, depreciation expense was 1.4% for the twenty-eight weeks in 2001,
compared to 1.5% for the comparable weeks of the prior year.
8
<PAGE> 9
OPERATING INCOME
Operating income (income from continuing operations before interest and taxes)
increased $0.9 million to $11.1 million for the second quarter of 2001 from
$10.2 million for the year earlier quarter. Income from operations increased
$1.5 million, gains on real estate sales (reported as revenues) decreased $0.2
million, and cigarette price gains resulting from manufacturers' prices
increases (reported as gross profit) decreased $0.8 million. Additionally, SG&A
expenses reflect a reduction of $0.4 million based on the expected reimbursement
of expenses related to a construction project. Operating income, as a percentage
of revenues, was 1.8% in 2001, compared to 1.9% for the comparable period in
2000.
Operating income was $22.0 million for the twenty-eight weeks in 2001, compared
to $20.0 million for the year earlier period. Income from operations increased
$3.3 million, gains on real estate sales decreased $0.9 million, cigarette price
gains resulting from manufacturers' price increases decreased $0.8 million, and
certain expenses decreased $0.4 million as previously discussed. Operating
income, as a percentage of revenues, was 2.1% for the twenty-eight weeks in
2001, compared to 2.2% for the year earlier.
INTEREST EXPENSE
Interest expense for the second quarter of 2001 was $7.9 million, compared to
$6.6 million for the second quarter of 2000. For the twenty-eight weeks in 2001,
interest expense was $13.6 million, compared to $11.4 million in 2000. The
increases were primarily attributable to increased borrowing to fund new store
construction and acquisitions.
INCOME TAXES
For the second quarter of 2001, the effective income tax rate was 33.6%,
compared to 28.6% for the comparable quarter in 2000. For the twenty-eight weeks
of 2001, the effective income tax rate was 33.3%, compared to 31.5% for the
comparable weeks of the prior year. It is expected the effective rate will be
33.3% for the current year.
NET INCOME
Net income for the second quarter of 2001 was $2.1 million, compared to $2.6
million for the second quarter of 2000. Net income, as a percentage of revenues,
was 0.4% for the second quarter of 2001 compared to 0.5% in 2000.
For the twenty-eight weeks of 2001, net income was $5.6 million, compared to
$5.9 million in 2000. Net income, as a percentage of revenues, was 0.5% for the
twenty-eight weeks of 2001 compared to 0.6% for the year earlier period.
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<PAGE> 10
CAPITAL EXPENDITURES
The Company's capital requirements have traditionally been financed through
internally generated funds, long-term borrowings and lease financings, including
capital and operating leases.
During the first twenty-eight weeks of 2001, the following stores were opened or
were under construction:
<TABLE>
<CAPTION>
Square
Store Type Category Feet Location Status
---------- -------- ---- -------- ------
<S> <C> <C> <C> <C>
Supermarket New 55,000 Mooresville, IN Under construction
Supermarket New 55,000 Bloomington, IN Under construction
Supermarket Replacement 55,000 Kokomo, IN Under construction
LoBill Acquired 26,000 Greensburg, IN Open
LoBill New 31,000 Lebanon, IN Open
LoBill Acquired 34,000 Muncie, IN Open
LoBill Acquired 30,000 Muncie, IN Open
LoBill Acquired 35,500 Muncie, IN Open
Convenience Replacement 3,600 Connersville, IN Open
Convenience Replacement 3,800 Muncie, IN Open
Convenience - kiosk New 200 Indianapolis, IN Open
Convenience New 3,500 Martinsville, IN Open
Convenience Replacement 3,500 Muncie, IN Open
Convenience Acquired 3,000 Muncie, IN Open
Convenience Acquired 3,000 Peru, IN Open
Convenience New 3,500 McCordsville, IN Under construction
Convenience Replacement 3,500 Wabash, IN Under construction
Convenience - kiosk New 200 Mooresville, IN Under construction
</TABLE>
The Company also acquired the assets of Primo Catering, a mid-scale caterer in
Indianapolis, Indiana. In 2001, the Company also plans to acquire several sites
for future development. The cost of these projects and other capital commitments
is estimated to be $70.0 million. Of this amount, the Company plans to fund
$15.0 million through equipment leasing, $27.0 million through sale/leasebacks,
$10.0 million from mortgages and believes it can finance the balance with
current cash balances, internally generated funds and amounts available under
the revolving credit facility. As of October 14, 2000, the Company had expended
$29.7 million for capital expenditures.
The Company's plans with respect to store construction, expansion, conversion
and remodeling may be revised in light of changing conditions, such as
competitive influences, its ability to negotiate successfully site acquisitions
or leases, zoning limitations and other governmental regulations. The timing of
projects is subject to normal construction and other delays. It is possible that
projects described above may not commence, others may be added, a portion of the
planned expenditures with respect to projects commenced during the current
fiscal year may carry over to the subsequent fiscal year, and the Company may
use other or different financing arrangements.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities in the first half of 2001 was $28.2
million, compared to $23.6 million in the first half of 2000. The increase in
net cash provided by operating activities was due primarily to a smaller buildup
of seasonal inventory in the current year. Working capital increased $38.6
million from April 1, 2000. Changes in working capital included a $7.8 million
increase in cash and equivalents, a $6.3 million increase in inventory to
support seasonal sales levels, a $10.0 million decrease in notes payables to
bank, a $5.6 million increase in trade accounts payable and a $25.3 million
decrease in current maturities of long-term liabilities. The increase in cash
and equivalents and decrease in notes payable to bank were due primarily to the
receipt of proceeds from the mortgage of two supermarkets. The increase in
inventory was essentially funded by the increase in trade accounts payable. The
decrease in current maturities of long-term liabilities was due to the payment
of amounts borrowed under revolving credit facilities.
During 2001, $50.0 million in bank revolving credit facilities matured and were
replaced with a new three year $90.0 million unsecured revolving credit
facility, of which $35.0 million was utilized at October 14, 2000. The new
facility contains various financial covenants including a funded debt to EBITDA
ratio and a fixed charge coverage ratio. The Company also has a bank commitment
that provides an additional $5.0 million in short-term borrowing at a rate equal
to or below the prime rate of the committed bank, of which none was utilized at
October 14, 2000.
The Company believes amounts available under its revolving credit agreement and
the bank commitment, cash flows from operating activities and lease financings
will be adequate to meet the Company's working capital needs, debt service
obligations and capital expenditures for the foreseeable future.
11
<PAGE> 12
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES OR RIGHTS OF HOLDERS THEREOF
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on August 1, 2000
(the "Annual Meeting"). At the Annual Meeting, shareholders voted on
the following proposal: To elect three directors for terms of three
years each and until their successors are duly elected and qualified.
The table below sets forth the number of votes cast for, against or
withheld with respect to each of such proposals:
<TABLE>
<CAPTION>
For Against Withheld/Abstain
--- ------- ----------------
<S> <C> <C> <C>
1. Election of Directors
Nominees:
Don E. Marsh 3,559,544 N.A. 86,823
William L. Marsh 3,607,602 N.A. 29,747
Stephen M. Huse 3,616,620 N.A. 38,765
</TABLE>
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
Exhibit 27 Financial Data Schedule for the quarter for which
this report is filed.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which
this report is filed.
12
<PAGE> 13
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.
November 27, 2000 By: /s/ Douglas W. Dougherty
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Douglas W. Dougherty
Senior Vice President, Chief Financial
Officer and Treasurer
November 27, 2000 By: /s/ Mark A. Varner
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Mark A. Varner
Chief Accounting Officer,
Vice President - Corporate Controller
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Exhibit Index
Exhibit 27 Financial Data Schedule for the quarter for which this report
is filed (for SEC use only).
14
