<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended April 1, 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)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Class A Common Stock
Class B Common Stock
7% Convertible Subordinated Debentures, due 2003
8 7/8% Senior Subordinated Notes, due 2007
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,
and (2) has been subject to such filing requirements for the past 90 days.
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 the 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:
Aggregate market value of Class A Common Stock and Class B Common Stock
held by non-affiliates of the Registrant as of June 1, 2000: $36,455,232 and
$40,533,291, respectively. This calculation assumes all shares of Common Stock
beneficially held by officers and members of the Board of Directors of the
Registrant are owned by "affiliates", a status which each of the officers and
directors individually disclaims.
At June 1, 2000, there were 4,004,408 shares of Class A Common Stock
and 4,505,956 shares of Class B Common Stock outstanding.
Portions of the 2000 Annual Report to Shareholders for the year ended
April 1, 2000 are incorporated by reference into Parts I and II.
Portions of the Proxy Statement for the Annual Shareholders' Meeting to
be held August 1, 2000, are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
GENERAL
At April 1, 2000, Marsh Supermarkets, Inc. (the "Company" or "Marsh") operated
93 supermarkets and 179 Village Pantry convenience stores in central Indiana and
western Ohio. The Company believes that Marsh supermarkets have one of the
largest market shares of supermarket chains operating in its market area and
Village Pantry has one of the largest market shares of convenience stores in its
market area. Marsh owns and operates a specialized convenience store
distribution business which serves its Village Pantry stores, as well as 1,310
unaffiliated convenience stores in an eight-state area. Marsh also owns and
operates a food services division, which provides upscale catering, vending,
concession and business cafeteria management services, and a floral division,
which operates four upscale retail floral shops under the name of McNamara and
one business florist under the name Enflora.
SUPERMARKETS
At April 1, 2000, the Company operated 80 supermarkets in central Indiana and 13
in western Ohio. The 39 stores in the Indianapolis metropolitan market area
constitute the Company's major market. The remaining supermarkets operate in 37
other communities. Revenues from supermarket operations represent approximately
65% of the Company's fiscal 2000 consolidated sales and other revenues.
The Company's supermarket merchandising strategy emphasizes service, quality and
convenient one-stop shopping at competitive prices. Of the Company's
supermarkets, 61 are open 24 hours a day and 9 are open until midnight, with the
remainder having various other schedules. All stores are open seven days a week.
The Company believes providing quality merchandise is an important factor in
maintaining and expanding its customer base. In recent years, the Company has
devoted a greater proportion of new and remodeled stores to fresh, high quality
perishables, such as produce, delicatessen items, baked goods, prepared foods,
seafood and floral items. The Company believes fresh produce is an important
customer draw; therefore, it focuses on buying premium quality produce
worldwide. The geographic concentration of the Company's supermarkets enables
the Company to deliver fresh items to its stores quickly and frequently. An
extension of this theme is convenient, high quality, ready to eat meals. The
"Chef Fresh" program offers take-home items for immediate consumption in 37
stores. These products are prepared in the Company's central kitchen, which is
now a shared facility, providing fresh items to most of the Company's divisions.
The Company's new and expanded large superstore format offers customers
convenient one-stop shopping. Its Marsh supermarkets feature an extended line of
traditional grocery store items as well as service and specialty departments
such as delicatessens, bakeries, prepared foods, prime cut meats, fresh seafood,
floral and video rental. The Company features nationally advertised and
distributed merchandise along with products under its own trademarks, service
marks and trade names. Service and specialty departments included in Marsh
supermarkets include delicatessens (93 stores), hot prepared foods (61),
bakeries (93), prime cut service meat (57), fresh seafood (58), sushi shops
(18), floral shops (59), imported cheese shops (58), wines and beer (87), salad
bars (37), video rental (63), cosmetic counters (5) and shoe repair (6). Thirty
of the Company's supermarkets include pharmacies in food and drug combination
stores. In addition, banks or savings institutions operate branch facilities in
25 of the Company's stores, and 71 stores offer ATM machines. Home delivery of
orders placed by customers via telephone, fax or the Internet is offered to the
Indianapolis metropolitan market.
The Company's superstore format is in excess of 75,000 square feet, and its
modern conventional supermarket format is approximately 55,000 to 65,000 square
feet. The Company currently operates six superstores and 11 modern conventional
supermarkets. Approximately one-third of the sales area in these stores is
devoted to merchandising fresh, high quality perishable products such as
delicatessens, bakeries, prepared foods and produce. Since 1991, approximately
50% of the total supermarket square footage is new or remodeled.
The Company has developed a smaller, low-price supermarket format with limited
service and specialty departments as an alternative to the large, full service
Marsh supermarket. As of April 1, 2000, the Company operated 23 of its
supermarkets under this concept. Subsequent to April 1, 2000, a new store was
opened. The stores operate under the trade name LoBill Foods. There is an
ongoing development program to remodel selected Marsh supermarkets to the LoBill
format. The Company believes the LoBill format offers an
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opportunity to maximize its market area by expanding into smaller communities
and inner city metropolitan areas that can be better served by that format and
to appeal to the price motivated consumer in markets currently serviced by
traditional Marsh stores. In 1999, the Company opened a 7,500 square foot
limited selection, stock-up grocery store with an every day low price format
operating under the trade name Savin$.
The Company's supermarkets range in size from 7,500 to 82,300 square feet. The
average size is approximately 38,800 square feet. The Company has an ongoing
development program of constructing larger Marsh supermarkets within its market
area and remodeling, enlarging and replacing existing supermarkets. Future
development will continue to focus on a food and drug combination store format
of approximately 55,000 to 65,000 square feet, with superstores in excess of
75,000 square feet in select locations. The Company believes a larger store
format enables it to offer a wider variety of products and expanded service and
specialty departments, thereby strengthening its competitive position. The
following summarizes the number of stores by size categories:
<TABLE>
<CAPTION>
Number
Square Feet of Stores
----------- ---------
<S> <C>
More than 75,000. . . . . . . . . . . . . . . . . 6
55,000 - 75,000 . . . . . . . . . . . . . . . . . 11
45,000 - 54,999 . . . . . . . . . . . . . . . . . 7
35,000 - 44,999 . . . . . . . . . . . . . . . . . 19
25,000 - 34,999 . . . . . . . . . . . . . . . . . 40
Less than 25,000 . . . . . . . . . . . . . . . . 10
----
93
====
</TABLE>
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 focus of the television campaign is to promote
a quality and service image rather than specific products and prices. The
Indianapolis television market covers approximately 80% of the Company's
supermarkets. Various sales enhancement promotional activities, including free
grocery and other programs designed to encourage repeat shoppers, are conducted
as an important part of the Company's merchandising strategy. The Company
utilizes a frequent shopper card program, "Fresh I.D.E.A.(R)". The card provides
shoppers electronic coupons, opportunities to win trips and other prizes, and
functions as a video rental card. Over one million cards are in circulation.
Further, a customer may select a VISA(R) co-branded credit card option for their
Fresh I.D.E.A. card and earn rebates on all credit card purchases regardless of
the merchant. The credit card rebates are funded by the Company's bank partner.
The Company recently implemented a "Marsh Kid's Club" program to emphasize
marketing opportunities to families.
CONVENIENCE STORES
At April 1, 2000, the Company operated 179 convenience stores under the Village
Pantry trade name. These self-service stores offer a broad selection of grocery,
bakery, dairy and delicatessen items, including fresh pastry products and
sandwiches prepared in the stores. All of the stores sell money orders and
lottery tickets and 114 stores have automated teller bank machines.
Additionally, 99 of theses stores offer petroleum products. Ninety-three percent
of the petroleum stores are branded by major fuel suppliers, including Marathon,
Shell, and Amoco. Thirteen of the stores operate drive-thru car washes. Revenues
from the convenience stores represented approximately 12% of the Company's
fiscal 2000 consolidated sales and other revenues. Carry-out cold beer, a
high-volume item typically found in convenience stores in other states, may be
sold only by package liquor stores and taverns in Indiana; accordingly, it is
not sold in the Company's convenience stores in Indiana. In Indiana, all but 10
of the Company's convenience stores are open 24 hours a day; the remaining
stores close at midnight. All stores are open seven days a week.
The Company has added higher margin food and beverage products, such as
store-prepared pizza (43 stores), chicken (48), and self-service fountain
drinks, as well as sit-down eating areas in 70 stores. The Company is a Taco
Bell Express franchisee in three stores which increases the variety of available
fast food. These stores include drive-thru service.
The Company has an ongoing program of remodeling, upgrading and replacing
existing Village Pantry stores with particular emphasis on developing locations
that will yield a high volume of gasoline sales. New stores generally average
3,700-5,000 square feet, compared to 1,800-2,500 square feet for older stores.
The larger size accommodates the aforementioned new food products. In
constructing new stores, and remodeling and expanding existing stores, the
Company tailors the format to each specific market, with heavy emphasis on food
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service in areas which the Company believes to be less susceptible to intense
competition from major fast food operators, such as smaller towns and high
density neighborhoods.
CONVENIENCE STORE DISTRIBUTING COMPANY ("CSDC")
CSDC serves the Company's Village Pantry stores and over 1,300 unaffiliated
stores in an eight-state area, distributing a wide range of products typically
sold in convenience stores, including groceries, cigarette and other tobacco
products, snack items, housewares and health and beauty care products. Customers
have the opportunity to order most product lines in single units. CSDC owns a
210,000 square foot warehouse and distribution facility in Richmond, Indiana,
which the Company estimates is operating at 90% of capacity. CSDC utilizes its
own trucks and drivers for its transportation needs. The CSDC sales and
marketing staff of approximately 45 employees services existing customers and
actively solicits new customers. CSDC accounted for approximately 21% of the
Company's fiscal 2000 consolidated sales and other revenues.
CRYSTAL FOOD SERVICES
The Company's food service operation does business under the trade name Crystal
Food Services. It offers a range of services including banquet hall catering,
special events catering, concession services, vending and cafeteria management.
The Company focuses on presenting expertly prepared cuisine of unsurpassed
freshness and quality in all of its food service operations. The Company began
its food service operations in 1993 with ALLtimate Catering and expanded in
January 1995 with the acquisition of Crystal Catering. In May 1995, the Company
expanded again with the acquisition of Martz and Associates Food Services.
Vending operations were expanded in 1999 with the acquisition of Capitol Vending
and Crown Vending. The Company intends to expand the food services operations
through the solicitation of new customers and possible acquisition of businesses
that will complement the existing operations.
The combination of these operations has created a unique range of services,
products and facilities. The Company's banquet hall facilities include the
Crystal Yacht Club, the Indiana Roof Ballroom, the Murat Shrine Centre, Union
Station, and the NCAA Headquarters in Indianapolis, Indiana, and the Horizon
Convention Center in Muncie, Indiana. The Company caters special events at the
Indianapolis Motor Speedway, Conner Prairie Museum, Indianapolis Museum of Art,
the Eiteljorg Western Museum of Art, and the RCA Tennis Championships in
Indianapolis. The Company also provides concession services at the Indianapolis
Zoo, Conner Prairie, Prairie View Golf Club and Eagle Point Resort Cafe,
cafeteria management to 17 major employers, and vending services to over 100
clients throughout the greater Indianapolis area. The Company's food service
operation also provides meals at the child development centers for Marsh and Eli
Lilly and Company in Indianapolis.
SUPPLY AND DISTRIBUTION
The Company supplies its supermarkets from three Company-operated distribution
facilities. Dry grocery and frozen food products are distributed from a 409,000
square foot leased facility in Indianapolis. Produce and meat products are
distributed from a 191,000 square foot perishable products facility in Yorktown,
Indiana. Non-food products are distributed from 180,000 square feet of a 388,000
square foot Company owned warehouse in Yorktown. In addition, the Company leases
a 172,000 square foot warehouse for storage of forward purchases of merchandise
and seasonal items. Additional outside warehouse space is leased as needed to
meet seasonal demand.
The Company's distribution centers are modern and highly automated. Merchandise
is controlled through an on-line computerized buying and inventory control
system. In fiscal 1997, the perishable products facility was expanded by
approximately 67,000 square feet to provide additional capacity. The receiving
dock was modified to enhance product flow. Also, new state-of-the-art banana
rooms were added to ensure high quality bananas with consistent color. The
Company believes its distribution centers are adequate for its needs for the
foreseeable future without major additional capital investment. The Company
estimates the supermarket distribution centers currently operate at
approximately 75% of capacity. Approximately 80% of the delivery trips from
distribution centers to supermarkets are 75 miles or less. The Company also
operates a commissary and a central kitchen to produce products sold through the
delicatessen departments of its supermarkets and convenience stores, to support
Crystal Food Services for large catering events and vending operations, and to
service third parties through CSDC.
The Company believes centralized direct buying from major producers and growers
and its purchasing and distribution functions provide it with advantages
compared to purchasing from a third-party wholesaler. Direct
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buying, centralized purchasing, and controlled distribution reduce merchandise
cost by allowing the Company to minimize purchases from wholesalers and
distributors and to take advantage of volume buying opportunities and forward
purchases of merchandise. Centralized purchasing and distribution promote a
consistent merchandising strategy throughout the Company's supermarkets. Rapid
inventory turnover at the warehouse permits the Company's stores to offer
consistently fresh, high-quality products. Through frequent deliveries to the
stores, the Company is able to reduce in-store stockroom space and increase
square footage available for retail selling.
Some products, principally bakery, dairy and beverage items, and snack foods are
delivered directly to the supermarkets and convenience stores by distributors of
national and regional brands.
CSDC supplies grocery, produce, housewares, health and beauty care, and
cigarette and tobacco products to the Company's convenience stores. Also, CSDC
supplies cigarette and tobacco products to the Company's supermarkets.
The Company's supermarket transportation function is performed through a
subsidiary which leases most of its tractor/trailer fleet under long term, full
service leases with Ruan Transportation Management Systems ("Ruan"), an
unaffiliated transportation management and equipment leasing company. This
service is provided under a seven year contract, dated September 18, 1987, which
is automatically renewed for successive one year terms unless canceled by Ruan
or the Company at least 60 days prior to the anniversary date, subject to early
cancellation in stages under certain conditions. Under the arrangement, Ruan
employs the drivers, dispatchers and maintenance personnel who perform the
Company's distribution function.
MANAGEMENT INFORMATION SYSTEMS
All of the Company's supermarkets are equipped with electronic scanning checkout
systems to minimize item pricing, provide more efficient and accurate checkout
line operation, and provide product movement data for merchandising decisions
and other purposes. The checkout systems are integrated with the Company's
frequent shopper card program to provide customer specific data to facilitate
individualized marketing programs. Additionally, the Company recently upgraded
the supermarket front-end systems and scale equipment, and implemented new
inventory/procurement distribution software in 1999. Point-of-sale electronic
funds transfer and credit card systems are in place in the supermarkets. Through
the use of a bank debit card, a customer can authorize the immediate transfer of
funds from their account to the Company at the point of purchase. Village Pantry
now utilizes 100% scanning at the front-end.
The Company utilizes in-store micro-computers in the supermarkets to automate
various tasks, such as electronic messaging, processing the receiving and
billing of vendor direct-store-delivered (DSD) merchandise, processing of video
rentals, processing pharmacy records in the 30 food and drug combination stores,
and time keeping for payroll processing. In 1998, the Company completed
installation of a wide area network for data communications between the
corporate office, supermarkets, warehouses and CSDC. Future supermarket
applications currently under development include computer-assisted reordering
and an electronic shelf tag program. All convenience stores are equipped with
micro-computers for electronic transmission of accounting and merchandising data
to headquarters, electronic messaging and processing DSD merchandise receiving
and billing.
In 1998, the Company began broadcasting live video communications by satellite
to its supermarkets from the corporate office. The Company believes this medium
has greater appeal to a generation of employees accustomed to learning from
television. In addition, the immediacy of live broadcasts reduces the barriers
of time, distance and consistency in communicating competitive strategies and
other information to retail operations. These communications are further
enhanced through a toll free telephone line which permits questions to be asked
and answered during each broadcast. The network is currently used for
merchandising, training and employee benefits communications.
COMPETITION
The retail food industry is highly competitive. Marsh believes competitive
factors include quality perishable products, service, price, location, product
variety, physical layout and design of store interior, ease of ingress and
egress to the store and minimal out-of-stock conditions. Marsh endeavors to
concentrate its efforts on all of these factors with special emphasis on
maintaining high quality store conditions, high quality perishable products,
expanded service and specialty departments, and competitive pricing.
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The Company believes it is one of the largest supermarket chains operating in
its market area. The Company's supermarkets are subject to competition from
local, regional and national supermarket chains, independent supermarkets, and
other retail formats, such as discount stores and wholesale clubs. The number of
competitors and degree of competition experienced by the Company's supermarkets
vary by location, with the Indianapolis metropolitan market generally being
subject to more price competition than the smaller markets. The principal
supermarket chain competitors are The Kroger Co., Super Valu Food Stores, Inc.,
operating in the Indianapolis market through its "Cub Foods" stores, Meijer,
Inc., and Wal-Mart supercenters.
The Company believes Village Pantry is one of the largest convenience store
chains in its market area. Major competitors are petroleum marketing companies
which have converted or expanded gasoline locations to include convenience food
operations. National convenience store chains do not have a significant presence
in the Company's marketing area. The Company believes the principal competitive
factor for convenience stores is location, and it actively pursues the
acquisition of attractive sites for replacing existing stores and future
development of new stores.
The Company believes the primary competitive factors in CSDC's wholesale
distribution business are pricing, and the timeliness and accuracy of
deliveries. CSDC's major competitors are McLane Company, Inc. and several
regional wholesale distributors.
SEASONALITY
Marsh's supermarket sales are subject to some seasonal fluctuation, as are other
retail food chains. Traditionally, higher sales occur during the third quarter
holiday season, and lower sales occur in the warm weather months of the second
quarter. Convenience store sales traditionally peak in the summer months.
EMPLOYEES
The Company has approximately 14,600 employees. Approximately 8,700 employees
are employed on a part-time basis. All employees are non-union, except
approximately 200 supermarket distribution facility employees who are unionized
under two three-year collective bargaining agreements which extend to May 2001.
The Company considers its employee relations to be very good.
The Company opened a child development center in fiscal 1997 in an effort to
help employees meet day care needs. The operation is located in a 12,500 square
foot facility near one of the Company's supermarkets in Carmel, Indiana. Marsh
owns the building and the equipment, but an unaffiliated child care firm
operates the center. The service is limited to the Company's employees and
immediate family members and operates five days a week.
REGULATORY MATTERS
As a retailer of alcoholic beverages, tobacco products and gasoline, the Company
is subject to federal and state statutes, ordinances and regulations concerning
the storage and sale of these products. The Company is aware of the existence of
petroleum contamination at 30 Village Pantry locations and at one distribution
center and has commenced remediation at each of these sites. The cost of
remediation varies significantly depending on the extent, source and location of
the contamination, geological and hydrological conditions and other factors.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by Item 10 with respect to the Registrant's executive
officers is set forth below. Each officer has been elected for a term to expire
in August 2000 or upon election of the officer's successor by the Board of
Directors.
<TABLE>
<CAPTION>
NAME POSITION AGE FAMILY RELATIONSHIP
---- -------- --- -------------------
<S> <C> <C> <C>
DON E. MARSH Chairman of the Board, President 62 Son of Garnet R. Marsh,
and Chief Executive Officer brother of William L. Marsh
</TABLE>
Mr. Don E. Marsh has held his current position as Chairman of the Board of
Directors, President and Chief Executive Officer of the Company for more than
the past five years. He has been employed by the Company in various supervisory
and executive capacities since 1961.
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<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANK J. BRYJA President and Chief Operating 58 None
Officer, Supermarket Division
</TABLE>
Mr. Frank J. Bryja has held his current position since August 1996. For more
than five years prior thereto, he served as Vice President-Merchandising. He has
been employed by the Company in various supervisory and executive capacities
since 1965.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
P. LAWRENCE BUTT Senior Vice President, Counsel 58 None
and Secretary
</TABLE>
Mr. P. Lawrence Butt has held his current position since August 1997. For more
than the five years prior thereto, he served as Vice President, Counsel and
Secretary. In May 1999, he was elected to serve as a director of the Company. He
has been employed by the Company in various executive capacities since 1977.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DOUGLAS W. DOUGHERTY Senior Vice President, Chief 56 None
Financial Officer and Treasurer
</TABLE>
Mr. Douglas W. Dougherty has held his current position since August 1997. He has
been employed by the Company as Chief Financial Officer since March 1994. His
prior experience includes senior financial executive positions with Hartmarx,
Inc. from November 1990 to March 1994. Prior experience includes senior
management positions at Dayton Hudson Corp. and The May Department Stores
Company.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WILLIAM L. MARSH Senior Vice President - Property 56 Son of Garnet R. Marsh,
Management brother of Don E. Marsh
</TABLE>
Mr. William L. Marsh has held his current position since August 1997. For more
than five years prior thereto, he served as Vice President-General Manager,
Property Management. In May 1991, he was elected to serve as a director of the
Company. He has been employed by the Company in various supervisory and
executive capacities since 1974.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RANDOLPH L. POKORZYNSKI President and Chief Operating 47 None
Officer, Village Pantry Division
</TABLE>
Mr. Randolph L. Pokorzynski has held his current position since August 1998.
Prior thereto, he served as Vice President-Grocery Merchandising, Supermarket
Division, since August 1997, Director-Grocery Merchandising, Supermarket
Division, since July 1996, and Director of Marketing, Village Pantry Division
since October 1991. He has been employed by the Company in various supervisory
and management positions since January 1980.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
THEODORE R. VARNER President and Chief Operating 64 None
Officer, Convenience Store
Distributing Company Division
</TABLE>
Mr. Theodore R. Varner has held his current position since August 1994. For more
than five years prior thereto, he served as Vice President - General Manager,
Convenience Store Distributing Company Division.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
JACK J. BAYT President and Chief Operating 43 None
Officer, Crystal Food Services
Division
</TABLE>
Mr. Jack J. Bayt has held his current position since January 1995. For more than
five years prior thereto, he was President and Chief Executive Officer of
Crystal Catering of Indiana, Inc.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MARK A. VARNER Vice President - Corporate
Controller 50 None
</TABLE>
Mr. Mark A. Varner has held his current position since August 1999. For more
than five years prior thereto, he served as Corporate Controller. He has been
employed by the Company in various accounting positions since 1971.
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ITEM 2. PROPERTIES
The following table summarizes the per unit and aggregate size of the retail
facilities operated by Marsh, together with an indication of the age of the
total square footage operated.
<TABLE>
<CAPTION>
Footage Per Store
Operated Average 0-6 Years 6-12 Years Over 12 Years
-------- ------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Supermarkets 3,605,000 38,800 31% 41% 28%
Convenience Stores 523,000 2,900 18% 36% 46%
---------
4,128,000
=========
</TABLE>
Owned and leased retail facilities are summarized as follows:
<TABLE>
<CAPTION>
Convenience
Supermarkets Stores
------------ ------
<S> <C> <C>
Owned 38 127
Leased:
Fixed rentals only 27 31
Fixed plus contingent rentals 28 21
---- ----
55 52
---- ----
93 179
==== ====
</TABLE>
All leases, except for six supermarkets and 21 Village Pantry stores, have one
to four renewal options for periods of two to five years each. The majority of
leases provide for payment of property taxes, maintenance and insurance by the
Company. In addition, the Company is obligated under leases for 18 closed
stores, of which seven were subleased at April 1, 2000.
The non-perishable grocery products warehouse in Indianapolis is leased with an
initial lease term expiring in 2000 and options available through 2014. The
facility, constructed in 1969, is located on a 44 acre site and has a total of
409,000 square feet, of which 382,000 is utilized for grocery warehousing
operations. The remainder consists of a floral design center and office space.
An owned 191,000 square foot refrigerated perishable products handling facility
in Yorktown, Indiana, serves as the distribution center for meat, produce and
delicatessen items. The facility was completed in 1981 and was expanded and
updated in fiscal 1997.
Marsh owns an additional 388,000 square foot facility in Yorktown, Indiana.
Approximately 180,000 square feet of this facility is used as a distribution
center for non-food products, approximately 21,000 square feet is used by the
retail maintenance department, and an additional 55,000 square feet of warehouse
space is leased to third parties. The portion of this facility formerly utilized
for the Company's corporate offices is currently vacant.
The Company leases a 172,000 square foot warehouse in Indianapolis for storage
of forward purchases of merchandise and seasonal items as well as housing the
Company's product reclamation center.
The 160,000 square foot corporate headquarters in Indianapolis is owned by the
Company. This facility was completed and occupied in May 1991.
CSDC owns a 210,000 square foot warehouse and distribution facility in Richmond,
Indiana.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which Marsh is a party which are
material to its business, financial condition or results of operations or which
would otherwise be required to be disclosed under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders during the fourth
quarter of fiscal 2000.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information on Common Stock and Shareholder Matters on pages 35, 36 and 37 of
the 2000 Annual Report to Shareholders for the year ended April 1, 2000 is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on page 18 of the 2000 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 20 through 23 of the 2000 Annual Report to Shareholders for
the year ended April 1, 2000 is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company, as a policy, does not engage in speculative or derivative
transactions, nor does it hold or issue financial instruments for trading
purposes. The Company is exposed to changes in interest rates primarily as a
result of its borrowing activities. Based on interest rates at April 1, 2000, a
100 basis point change in interest rates would not have a material impact on
the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and notes thereto and the report of the
independent auditors on pages 24 to 37 of the 2000 Annual Report to Shareholders
are incorporated herein by reference.
Quarterly Financial Data on page 19 of the 2000 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
In accordance with Instruction G(3), except as indicated in the following
sentence, the information called for by Items 10, 11, 12 and 13 is incorporated
by reference from those parts of Registrant's definitive Proxy Statement
captioned "Election of Directors", "Compensation of Executive Officers",
"Security Ownership of Management and Certain Beneficial Owners", and "Certain
Relationships and Related Transactions", respectively, pursuant to Regulation
14A, to be filed with the Commission not later than 120 days after April 1,
2000, the end of the fiscal year covered by this report. As permitted by
Instruction G(3), the information on executive officers called for by Item 10 is
included in Part I of this Annual Report on Form 10-K under the caption
"Executive Officers of the Registrant".
9
<PAGE> 10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The following consolidated financial statements of Marsh
Supermarkets, Inc. and subsidiaries, included in the 2000
Annual Report to Shareholders for the year ended April 1, 2000
are incorporated by reference in Item 8.
Consolidated Balance Sheets as of April 1, 2000 and March 27,
1999.
Consolidated Statements of Income for each of the three years
in the period ended April 1, 2000.
Consolidated Statements of Changes in Shareholders' Equity for
each of the three years in the period ended April 1, 2000.
Consolidated Statements of Cash Flows for each of the three
years in the period ended April 1, 2000.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
(2) The following consolidated financial statement schedules of
Marsh Supermarkets, Inc. and subsidiaries are included in Item
14(d):
Note: All schedules for which provision is made in
the applicable accounting regulation of the
Securities and Exchange Commission are not required
under the related instructions, or are inapplicable,
and therefore have been omitted.
(3) The following exhibits are included in Item 14(c):
Exhibit 3 (a) - 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.
(b) - By-Laws as amended as of November 26, 1997 - Incorporated by
reference to Form 10-Q for the quarter ended January 3, 1998.
Exhibit 4 (a) - 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.
(b) - 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.
(c) - Agreement of the Company to furnish a copy of any agreement
relating to certain long-term debt and leases to the Securities
and Exchange Commission upon its request Incorporated by
reference to Form 10-K for the year ended March 27, 1987.
(d) - Note Agreement, dated as of May 1, 1988, for $25,000,000
9.48% Senior Notes due June 30, 2003 - Incorporated by
reference to Form 10-Q for the quarter ended June 25, 1988.
(e) - Amended and Restated Rights Agreement, dated as of December
24, 1998, between Marsh Supermarkets, Inc. and National City
Bank - Incorporated by reference to Form 8-K, dated December
21, 1998.
(f) - Note Agreement, dated as of October 15, 1992, for $35,000,000
8.54% Senior Notes, Series A, due December 31, 2007, and
$15,000,000 8.13% Senior Notes, Series B, due December 31, 2004
- Incorporated by reference to Registration Statement on Form
S-2 (File No. 33-56738).
10
<PAGE> 11
(g) - Indenture, dated as of February 15, 1993, between Marsh
Supermarkets, Inc. and Society National Bank, as trustee,
including form of Indenture, for $17,500,000 7% Convertible
Subordinated Debentures, due 2003 - Incorporated by reference
to Registration Statement on Form S-2 (File No. 33-56738).
(h) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $35,000,000 8.54% Senior Notes, Series A,
due December 31, 2007, and $15,000,000 8.13%, Series B, due
December 31, 2004 - Incorporated by reference to Form 10-K for
the year ended March 29, 1997.
(i) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $25,000,000 9.48% Senior Notes, due June
20, 2003 - Incorporated by reference to Form 10-K for the year
ended March 29, 1997.
(j) - Indenture, dated August 5, 1997, between Marsh Supermarkets,
Inc. and certain of its subsidiaries and State Street Bank and
Trust Company, as trustee, for $150,000,000 8-7/8% Senior
Subordinated Notes, due 2007 - Incorporated by reference to
Registration Statement on Form S-4 (File No. 333-34855).
(k) - First Supplemental Indenture between Marsh Supermarkets, Inc.
and certain of its subsidiaries and State Street Bank and Trust
Company, as trustee, dated December 31, 1997 - Incorporated by
reference to Form 10-K for the year ended March 28, 1998.
(l) - Second Supplemental Indenture between Marsh Supermarkets,
Inc. and certain of its subsidiaries and State Street Bank and
Trust Company, as trustee, dated January 28, 2000.
(m) - Third Supplemental Indenture between Marsh Supermarkets, Inc.
and certain of its subsidiaries and State Street Bank and Trust
Company, as trustee, dated June 22, 2000.
(n) - Credit Agreement between Marsh Supermarkets, Inc. and certain
of its subsidiaries and The Provident Bank, as Agent and
Arranger, dated June 23, 2000.
Exhibit 10 (a) - Agreements between Ruan Leasing Company and Marsh
Supermarkets, Inc., dated September 18, 1987 - Incorporated by
reference to Registration Statement on Form S-2 (File No.
33-17730).
(b) - Lease agreements relating to warehouse located at 333 South
Franklin Road, Indianapolis, Indiana - Incorporated by
reference to Registration Statement on Form S-2 (File No.
33-17730).
Management Contracts and Compensatory Plans.
(c) - Marsh Supermarkets, Inc. 1987 Stock Option Plan -
Incorporated by reference to Registration Statement on Form
S-8 (File No. 33-33427).
(d) - Amendment to the Marsh Supermarkets, Inc. 1987 Stock Option
Plan - Incorporated by reference to Proxy Statement, dated
March 22, 1991, for a Special Meeting of Shareholders held May
1, 1991.
(e) - Supplemental Retirement Plan of Marsh Supermarkets, Inc. and
Subsidiaries Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-17730).
(f) - Indemnification Agreements - Incorporated by reference to
Form 10-Q for quarter ended January 6, 1990.
(g) - Marsh Supermarkets, Inc. 1991 Employee Stock Incentive Plan -
Incorporated by reference to Proxy Statement, dated March 22,
1991, for a Special Meeting of Shareholders held May 1, 1991.
(h) - Marsh Supermarkets, Inc. Executive Supplemental Long-Term
Disability Plan Incorporated by reference to Form 10-K for the
year ended March 30, 1991.
(i) - Marsh Supermarkets, Inc. 1992 Stock Option Plan for Outside
Directors - Incorporated by reference to Proxy Statement, dated
June 25, 1992, for the Annual Meeting of Shareholders held
August 4, 1992.
(j) - Amendment to Marsh Supermarkets, Inc. 1991 Employee Stock
Incentive Plan Incorporated by reference to Proxy Statement,
dated June 22, 1995, for Annual Meeting of Shareholders held
August 1, 1995.
(k) - Severance Benefits Agreements, dated as of January 1, 1996 -
Incorporated by reference to Form 10-K for the year ended March
29, 1997.
(l) - Form of Split Dollar Insurance Agreement for the benefit of
Don E. Marsh - Incorporated by reference to Form 10-K for the
year ended March 29, 1997.
11
<PAGE> 12
(m) - Form of Restricted Stock Agreement, dated as of September 15,
1997 - Incorporated by reference to Form 10-Q for the quarter
ended October 11, 1997.
(n) - Marsh Supermarkets, Inc. Outside Directors' Stock Plan, as
adopted November 26, 1997 - Incorporated by reference to Form
10-Q for the quarter ended January 3, 1998.
(o) - Marsh Supermarkets, Inc. 1998 Stock Incentive Plan, effective
as of June 1, 1998 - Incorporated by reference to Proxy
Statement, dated June 25, 1998, for the Annual Meeting of
Shareholders held August 4, 1998.
(p) - Executive Stock Purchase Plan of Mash Supermarkets, Inc.,
effective as of September 1, 1998 - Incorporated by reference
to Proxy Statement, dated June 25, 1998, for the Annual Meeting
of Shareholders held August 4, 1998.
(q) - Marsh Deferred Compensation Plan - Incorporated by reference
to Form S-8, dated September 25, 1998 (File No. 333-64343.
(r) 1999 Outside Directors' Stock Option Plan, effective as of June
1, 1999 - Incorporated by reference to Proxy Statement, dated
June 27, 1999, for Annual Meeting of Shareholders held August
3, 1999.
(s) - Form of Employment Agreement, dated as of August 3, 1999
- Incorporated by reference to Form 10-Q for the quarter ended
October 9, 1999.
(t) - 1999 Senior Executive Supplemental Retirement Plan, dated as
of August 3, 1999 Incorporated by reference to Form 10-Q for
the quarter ended October 9, 1999.
(u) - Forms of guarantees related to Executive Stock Purchase Plan
of Marsh Supermarkets, Inc.
Exhibit 13 - 2000 Annual Report to Shareholders (only portions specifically
incorporated by reference are included herein).
Exhibit 21 - Subsidiaries of the Registrant.
Exhibit 23 - Consent of Independent Auditors.
Exhibit 27 - Financial Data Schedule for the year for which this report is
filed (for SEC use only).
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed by the Registrant with
respect to the fourth quarter of its fiscal year ended April 1, 2000.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
June 28, 2000 By: /s/ Don E. Marsh
---------------------------------------
Don E. Marsh, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
June 28, 2000 /s/ Don E. Marsh
--------------------------------------------
Don E. Marsh, Chairman of the Board,
President and Chief Executive Officer and
Director
June 28, 2000 /s/ Douglas W. Dougherty
--------------------------------------------
Douglas W. Dougherty, Senior Vice President,
Chief Financial Officer and Treasurer
June 28, 2000 /s/ Mark A. Varner
--------------------------------------------
Mark A. Varner, Vice President -
Corporate Controller
June 28, 2000 /s/ William L. Marsh
--------------------------------------------
William L. Marsh, Senior Vice
President-Property Management, and Director
June 28, 2000 /s/ Garnet R. Marsh
--------------------------------------------
Garnet R. Marsh, Director
June 28, 2000 /s/ J. Michael Blakley
--------------------------------------------
J. Michael Blakley, Director
June 28, 2000 /s/ P. Lawrence Butt
--------------------------------------------
P. Lawrence Butt, Senior Vice President,
Counsel and Secretary, and Director
June 28, 2000 /s/ Charles R. Clark
--------------------------------------------
Charles R. Clark, Director
June 28, 2000 /s/ Stephen M. Huse
--------------------------------------------
Stephen M. Huse, Director
June 28, 2000 /s/ Catherine A. Langham
--------------------------------------------
Catherine A. Langham, Director
June 28, 2000 /s/ James K. Risk
--------------------------------------------
James K. Risk, III, Director
June 28, 2000 /s/ K. Clay Smith
--------------------------------------------
K. Clay Smith, Director
13
<PAGE> 14
Exhibit Index
Page No.
Exhibit 3 (a) - 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.
(b) - By-Laws, as amended as of November 26, 1997 - Incorporated by
reference to Form 10-Q for the quarter ended January 3, 1998.
Exhibit 4 (a) - 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.
(b) - 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.
(c) - Agreement of the Company to furnish a copy of any agreement
relating to certain long-term debt and leases to the Securities
and Exchange Commission upon its request - Incorporated by
reference to Form 10-K for the year ended March 27, 1987.
(d) - Note Agreement, dated as of May 1, 1988, for $25,000,000
9.48% Senior Notes due June 30, 2003 - Incorporated by
reference to Form 10-Q for the quarter ended June 25, 1988.
(e) - Amended and Restated Rights Agreement, dated as of August 1,
1989, between Marsh Supermarkets, Inc. and National City Bank,
dated as of December 24, 1998 - Incorporated by reference to
Form 8-K, dated December 21, 1998.
(f) - Note Agreement, dated as of October 15, 1992, for $35,000,000
8.54% Senior Notes, Series A, due December 31, 2007, and
$15,000,000 8.13% Senior Notes, Series B, due December 31, 2004
- Incorporated by reference to Registration Statement on Form
S-2 (File No. 33-56738).
(g) - Indenture, dated as of February 15, 1993, between Marsh
Supermarkets, Inc. and Society National Bank, as trustee,
including form of Indenture for $17,500,000 7% Convertible
Subordinated Debentures, due 2003 - Incorporated by reference
to Registration Statement on Form S-2 (File No. 33-56738).
(h) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $35,000,000 8.54% Senior Notes, Series A,
due December 31, 2007, and $15,000,000 8.13%, Series B, due
December 31, 2004 - Incorporated by reference to form 10-K for
the year ended March 29, 1997.
(i) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $25,000,000 9.48% Senior Notes, due June
20, 2003 - Incorporated by reference to Form 10-K for the year
ended March 29, 1997.
(j) - Indenture, dated August 5, 1997, between Marsh Supermarkets,
Inc. and certain of its subsidiaries and State Street Bank and
Trust Company, as trustee, for $150,000,000 8-7/8% Senior
Subordinated Notes, due 2007 - Incorporated by reference to
Registration Statement on Form S-4 (File No. 333-34855).
(k) - First Supplemental Indenture between Marsh Supermarkets, Inc.
and certain of its subsidiaries and State Street Bank and Trust
Company, as trustee, dated December 31, 1997 - Incorporated by
reference to Form 10-K for the year ended March 28, 1998.
(l) - Second Supplemental Indenture between Marsh Supermarkets,
Inc. and certain of its subsidiaries and State Street Bank and
Trust Company, as trustee, dated January 28, 2000.
(m) - Third Supplemental Indenture between Marsh Supermarkets, Inc.
and certain of its subsidiaries and State Street Bank and Trust
Company, as trustee, dated June 22, 2000.
(n) - Credit Agreement between Marsh Supermarkets, Inc. and certain
of its subsidiaries and The Provident Bank, as Agent and
Arranger, dated June 23, 2000
Exhibit 10 (a) - Agreements between Ruan Leasing Company and Marsh
Supermarkets, Inc., dated September 18, 1987 - Incorporated by
reference to Registration Statement on Form S-2 (File No.
33-17730).
(b) - Lease agreements relating to warehouse located at 333 South
Franklin Road, Indianapolis, Indiana - Incorporated by
reference to Registration Statement on Form S-2 (File No.
33-17730).
14
<PAGE> 15
Management Contracts and Compensatory Plans.
(c) - Marsh Supermarkets, Inc. 1987 Stock Option Plan -
Incorporated by reference to Registration Statement on Form S-8
(File No. 33-33427).
(d) - Amendment to the Marsh Supermarkets, Inc. 1987 Stock Option
Plan - Incorporated by reference to Proxy Statement, dated
March 22, 1991, for a Special Meeting of Shareholders held May
1, 1991.
(e) - Supplemental Retirement Plan of Marsh Supermarkets, Inc. and
Subsidiaries - Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-17730).
(f) - Indemnification Agreements - Incorporated by reference to
Form 10-Q for the quarter ended January 6, 1990.
(g) - Marsh Supermarkets, Inc. 1991 Employee Stock Incentive Plan -
Incorporated by reference to Proxy Statement, dated March 22,
1991, for a Special Meeting of Shareholders held May 1, 1991.
(h) - Marsh Supermarkets, Inc. Executive Supplemental Long-Term
Disability Plan - Incorporated by reference to Form 10-K for
the year ended March 30, 1991.
(i) - Marsh Supermarkets, Inc. 1992 Stock Option Plan for Outside
Directors - Incorporated by reference to Proxy Statement, dated
June 25, 1992, for the Annual Meeting of Shareholders held
August 4, 1992.
(j) - Amendment to Marsh Supermarkets, Inc. 1991 Employee Stock
Incentive Plan - Incorporated by reference to Proxy Statement,
dated June 22, 1995, for Annual Meeting of Shareholders held
August 1, 1995.
(k) - Severance Benefits Agreements, dated as of January 1, 1996. -
Incorporated by reference to Form 10-K for the year ended March
29, 1997.
(l) - Form of Split Dollar Insurance Agreement for the benefit of
Don E. Marsh - Incorporated by reference to Form 10-K for the
year ended March 29, 1997.
(m) - Form of Restricted Stock Agreement, dated as of September 15,
1997 - Incorporated by reference to Form 10-Q for the quarter
ended October 11, 1997.
(n) - Marsh Supermarkets, Inc. Outside Directors' Stock Plan, as
adopted November 26, 1997 - Incorporated by reference to Form
10-Q for the quarter ended January 3, 1998.
(o) - Marsh Supermarkets, Inc. 1998 Stock Incentive Plan, effective
as of June 1, 1998 - Incorporated by reference to Proxy
Statement, dated June 25, 1998, for the Annual Meeting of
Shareholders held August 4, 1998.
(p) - Executive Stock Purchase Plan of Mash Supermarkets, Inc.,
effective as of September 1, 1998 - Incorporated by reference
to Proxy Statement, dated June 25, 1998, for the Annual Meeting
of Shareholders held August 4, 1998.
(q) - Marsh Deferred Compensation Plan - Incorporated by reference
to Form S-8, dated September 25, 1998 (File No. 333-64343.
(r) - 1999 Outside Directors' Stock Option Plan, dated as of June
1, 1999 - Incorporated by reference to Proxy Statement, dated
June 27, 1999, for Annual Meeting of Shareholders held August
3, 1999.
(s) - Form of Employment Agreement, dated as of August 3, 1999
- Incorporated by reference to Form 10-Q for the quarter ended
October 9, 1999.
(t) - 1999 Senior Executive Supplemental Retirement Plan, dated as
of August 3, 1999 Incorporated by reference to Form 10-Q for
the quarter ended October 9, 1999.
(u) - Forms of guarantees related to Executive Stock Purchase Plan
of Marsh Supermarkets, Inc.
Exhibit 13 - Annual Report to Shareholders (only portions specifically
incorporated by reference are included herein).
Exhibit 21 - Subsidiaries of the Registrant.
Exhibit 23 - Consent of Independent Auditors.
Exhibit 27 - Financial Data Schedule for the year for which this report is
filed (for SEC use only).
15
