-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TfM6GaSie190behKyYow888W4uokST/IJpuVa8IhwW2jumPMZfhl/1LN8tODj/sm xYGXng05XLiN/983obZfcg== /in/edgar/work/20000804/0000950144-00-009458/0000950144-00-009458.txt : 20000921 0000950144-00-009458.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950144-00-009458 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000624 FILED AS OF DATE: 20000804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARSH SUPERMARKETS INC CENTRAL INDEX KEY: 0000062737 STANDARD INDUSTRIAL CLASSIFICATION: [5411 ] IRS NUMBER: 350918179 STATE OF INCORPORATION: IN FISCAL YEAR END: 0329 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-01532 FILM NUMBER: 686612 BUSINESS ADDRESS: STREET 1: 9800 CROSSPOINT BLVD CITY: INDIANAPOLIS STATE: IN ZIP: 46256 BUSINESS PHONE: 3175942100 10-Q 1 e10-q.txt MARSH SUPERMARKETS, INC. 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 June 24, 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 July 10, 2000: Class A Common Stock - 4,040,308 shares Class B Common Stock - 4,376,456 shares --------- 8,416,764 shares ========= 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MARSH SUPERMARKETS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share amounts) (Unaudited)
12 Weeks Ended ---------------------- June 24, June 19, 2000 1999 ---- ---- Sales and other revenues $436,609 $394,266 Cost of merchandise sold, including warehousing and transportation 329,769 296,183 -------- -------- Gross profit 106,840 98,083 Selling, general and administrative 89,774 82,623 Depreciation 6,096 5,640 -------- -------- Operating income 10,970 9,820 Interest and debt expense amortization 5,771 4,871 -------- -------- Income before income taxes 5,199 4,949 Income taxes 1,722 1,668 -------- -------- Net income $ 3,477 $ 3,281 ======== ======== Earnings per common share $ .42 $ .39 ======== ======== Earnings per common share - assuming dilution $ .38 $ .36 ======== ======== Dividends per share $ .11 $ .11 ======== ========
See notes to condensed consolidated financial statements. 2 3 MARSH SUPERMARKETS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
June 24, April 1, June 19, 2000 2000 1999 ---- ---- ---- (Unaudited) (Note A) (Unaudited) ASSETS Current assets: Cash and equivalents $ 38,813 $ 31,435 $ 24,263 Accounts receivable 45,694 44,315 39,978 Inventories, less LIFO reserve; June 24, 2000 - $8,418; April 1, 2000 - $8,343; June 19, 1999 - $12,216 125,376 125,383 109,079 Prepaid expenses 5,203 6,068 4,751 Recoverable income taxes 598 1,960 -- --------- --------- --------- Total current assets 215,684 209,161 178,071 Property and equipment, less allowances for depreciation 303,179 299,589 279,557 Other assets 61,755 58,255 50,044 --------- --------- --------- $ 580,618 $ 567,005 $ 507,672 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable to bank $ 3,880 $ 10,000 $ 300 Accounts payable 80,120 79,097 73,834 Accrued liabilities 49,108 55,042 46,204 Current maturities of long-term liabilities 3,344 28,097 3,133 --------- --------- --------- Total current liabilities 136,452 172,236 123,471 Long-term liabilities: Long-term debt 265,446 218,724 218,486 Capital lease obligations 14,156 14,266 13,344 --------- --------- --------- Total long-term liabilities 279,602 232,990 231,830 Deferred items: Income taxes 12,794 12,744 11,936 Other 16,591 16,123 13,522 --------- --------- --------- Total deferred items 29,385 28,867 25,458 Shareholders' Equity: Common stock, Classes A and B 25,459 25,455 25,393 Retained earnings 119,927 117,360 111,183 Cost of common stock in treasury (8,352) (7,858) (6,962) Deferred cost - restricted stock (1,379) (1,574) (2,223) Notes receivable - stock options (476) (471) (478) --------- --------- --------- Total shareholders' equity 135,179 132,912 126,913 --------- --------- --------- $ 580,618 $ 567,005 $ 507,672 ========= ========= =========
See notes to condensed consolidated financial statements. 3 4 MARSH SUPERMARKETS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
12 Weeks Ended ----------------------- June 24, June 19, 2000 1999 ---- ---- OPERATING ACTIVITIES Net income $ 3,477 $ 3,281 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 6,096 5,640 Amortization of other assets 1,421 1,363 Changes in operating assets and liabilities (3,993) 4,934 Other 359 (957) -------- -------- Net cash provided by operating activities 7,360 14,261 INVESTING ACTIVITIES Net acquisition of property, equipment and land (8,538) (6,753) Other investing activities (5,767) (2,956) -------- -------- Net cash used for investing activities (14,305) (9,709) FINANCING ACTIVITIES Proceeds from (repayments of) short-term borrowings (6,120) 300 Proceeds from long-term borrowing 22,458 25,000 Repayments of long-term debt and capital leases (599) (35,747) Proceeds from sale/leaseback -- 1,000 Purchases of shares for treasury (504) (422) Cash dividends paid (923) (940) Other financing activities 11 -- -------- -------- Net cash provided by (used for) financing activities 14,323 (10,809) Net increase (decrease) in cash and equivalents 7,378 (6,257) Cash and equivalents at beginning of period 31,435 30,520 -------- -------- Cash and equivalents at end of period $ 38,813 $ 24,263 ======== ========
See notes to condensed consolidated financial statements. 4 5 MARSH SUPERMARKETS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts, or as otherwise noted) JUNE 24, 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 twelve week periods ended June 24, 2000 and June 19, 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 items in the 2000 condensed consolidated financial statements were reclassified to conform with the 2001 presentation. Operating results for the twelve week period ended June 24, 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:
June 24, April 1, June 19, 2000 2000 1999 ---- ---- ---- Current assets $ 216,024 $ 203,772 $ 178,071 Current liabilities 123,328 162,458 114,820 Noncurrent assets 322,468 314,866 285,434 Noncurrent liabilities 114,672 67,139 61,647
12 Weeks Ended ------------------------ June 24, June 19, 2000 1999 ---- ---- Total revenues $ 436,604 $ 394,262 Gross profit 106,835 98,079 Net income 6,707 6,520
5 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:
12 Weeks Ended ----------------------- June 24, June 19, 2000 1999 ---- ---- Numerator for earnings per share $ 3,477 $ 3,281 Effect of convertible debentures 216 214 ------- ------- Numerator for diluted earnings per share - income after assumed conversions $ 3,693 $ 3,495 ======= ======= Weighted average shares outstanding 8,393 8,511 Non-vested restricted shares (124) (178) ------- ------- Denominator for earnings per share 8,269 8,333 Effect of dilutive securities: Non-vested restricted shares 124 178 Employee stock options 72 26 Convertible debentures 1,290 1,290 ------- ------- Denominator for diluted earnings per share - adjusted weighted average shares 9,755 9,827 ======= =======
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:
Retail Wholesale Consolidated ------ --------- ------------ Twelve weeks ended June 24, 2000 External revenues $ 342,153 $ 94,456 $ 436,609 Intersegment revenues 8,335 21,990 30,325 Income before income taxes 4,252 947 5,199 Twelve weeks ended June 19, 1999 External revenues $ 314,495 $ 79,771 $ 394,266 Intersegment sales 7,743 21,345 29,088 Income before income taxes 4,342 607 4,949
NOTE E - ACQUISITION On May 6, 2000, the Company acquired the capital stock of A.L. Ross & Sons, which operates five supermarkets and three pharmacies in Muncie, Indiana. The results of operations, assets and liabilities, and cash flows of A.L. Ross & Sons for the period ended June 24, 2000, are not material. 6 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 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, and 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:
First Quarter -------------------------------------- Percentage of Revenues ---------------------- Percentage 2001 2000 Change ---- ---- ------ Sales and other revenues 100.0% 100.0% 10.7% Gross profit 24.5% 24.9% 8.9% Selling, general and administrative 20.6% 21.0% 8.7% Depreciation 1.4% 1.4% 8.1% Operating income 2.5% 2.5% 11.7% Interest and debt expense amortization 1.3% 1.2% 18.5% Income taxes 0.4% 0.4% 3.2% Net income 0.8% 0.8% 6.0%
SALES AND OTHER REVENUES In the first quarter of 2001, consolidated sales and other revenues increased $42.3 million, or 10.7%, from the first quarter of 2000 to $436.6 million. Supermarket revenues increased $16.1 million, Village Pantry revenues increased $9.5 million, Convenience Store Distributing Company (CSDC) revenues increased $14.7 million and Crystal Food Services revenues increased $1.1 million. Retail sales, excluding fuel sales, increased 6.4%. Sales in comparable supermarkets and convenience stores, including replacement stores and format conversions, but excluding fuel, increased 3.2% from the first quarter of 2000. Approximately half of the increase in supermarket revenues was attributable to comparable store sales gains with the remainder attributable to two supermarkets and three LoBill stores opened since the beginning of the year earlier quarter. Village Pantry inside store revenues increased 6.7% and fuel gallons sold increased 9.8%. Approximately $5.5 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. 7 8 GROSS PROFIT Gross profit is calculated net of warehousing, transportation, and promotional expenses. In the first quarter of 2001, consolidated gross profit increased $8.8 million, or 8.9%, from the first quarter of 2000 to $106.8 million as compared to $98.0 million for the year earlier quarter. As a percentage of revenues, gross profit was 24.5% in the first quarter of 2001 compared to 24.9% for the prior year. As a percentage of revenues, gross profit increased in supermarkets and Crystal Food Services. Consolidated gross profit, as a percentage of revenues, declined due to significantly higher retail fuel prices in Village Pantry and higher wholesale cigarette prices in CSDC; both commodities are sold at profit margins well below the gross profit percentages achieved on grocery and foodservice sales. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES In the first quarter of 2001, selling, general and administrative (SG&A) expenses increased $7.2 million, or 8.7%, from the comparable quarter of 2000 to $89.8 million. As a percentage of revenues, SG&A expenses were 20.6% in 2001 compared to 21.0% in 2000. The higher expenses were primarily attributable to a $4.9 million increase in wage and fringe benefits costs, a $0.7 million decrease in advertising, a $2.0 million increase in store occupancy costs and a $1.0 million increase in other store operating and administrative costs. Wage expense in stores open in both quarters, excluding supermarket conversions to the LoBill format, increased 2.9% due to wage rate increases and increased labor hours resulting from same store sales gains. DEPRECIATION EXPENSE Depreciation expense for the first quarter of 2001 was $6.1 million, compared to $5.6 million for the first quarter of 2000. As a percentage of revenues, depreciation expense was 1.4% for both quarters. OPERATING INCOME Operating income (income from continuing operations before interest and taxes) increased $1.2 million to $11.0 million for the first quarter of 2001 from $9.8 million for the first quarter of 2000. Operations contributed $1.9 million to the increase, but $0.7 million of income generated from the disposal of assets in the year earlier quarter did not recur in the current quarter. Operating income, as a percentage of revenues, was 2.5% for both quarters. INTEREST EXPENSE Interest expense for the first quarter of 2001 was $5.8 million, compared to $4.9 million in the first quarter of 2000 and, as a percentage of revenues, was 1.3% in 2001 and 1.2% in 2000. INCOME TAXES For the quarter ended June 24, 2000 the effective income tax rate was 33.1% compared to 33.7% for the year earlier quarter. The first quarter effective rate is based on the overall expected rate for 2001. NET INCOME Net income for the first quarter of fiscal 2001 was $3.5 million, compared to $3.3 million for the first quarter of 2000. As a percentage of revenues, net income was 0.8% for both quarters. 8 9 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 quarter of 2001, the following stores were opened, acquired, remodeled, converted or were under construction:
Square Store Type Category Feet Location Status ---------- -------- ---- -------- ------ 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 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 Under construction Convenience New 3,500 McCordsville, IN Under construction Convenience Replacement 3,500 Wabash, IN Under construction Convenience Replacement 3,500 Muncie, IN Under construction Convenience - kiosk New 200 Mooresville, IN Under construction
During the quarter, the Company also acquired five supermarkets and three pharmacies in Muncie, Indiana, and the assets of Primo Catering, a mid-scale caterer in Indianapolis, Indiana. In 2001, the Company also plans to remodel one supermarket, open four to six new convenience stores and 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 $20.0 million through equipment leasing, $40.0 million through sale/leasebacks and believes it can finance the balance with current cash balances and internally generated funds. As of June 24, 2000, the Company had expended $8.5 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. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities in the first quarter of 2001 was $7.4 million, compared to $14.3 million in the first quarter of 2000. The decline in net cash provided by operating activities was due primarily to payments of both notes payable to bank and accrued liabilities. Working capital increased $42.3 million from April 1, 2000. Changes in working capital included a $7.4 million increase in cash and equivalents, a $6.1 million decrease in notes payable to bank, a $5.9 million decrease in accrued liabilities and a $24.8 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 decrease in accrued liabilities was due primarily to the payment of accrued compensation and related payroll taxes, and the payment of property taxes. The decrease in current maturities of long-term liabilities was due to the payment of amounts borrowed under revolving credit facilities. 9 10 During the quarter, $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 June 24, 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 $3.9 million was utilized at June 24, 2000. The Company believes amounts available under its revolving credit agreement and notes payable to bank, 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. 10 11 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 Not Applicable. 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. 11 12 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. August 2, 2000 By: /s/ Douglas W. Dougherty -------------------------------------- Douglas W. Dougherty Senior Vice President, Chief Financial Officer and Treasurer August 2, 2000 By: /s/ Mark A. Varner -------------------------------------- Mark A. Varner Chief Accounting Officer Vice President - Corporate Controller 13 Exhibit Index Exhibit 27 - Financial Data Schedule for the quarter for which this report is filed (for SEC use only). EX-27 2 ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S 10-Q FOR THE PERIOD ENDED JUNE 24, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO. 1,000 3-MOS MAR-31-2001 APR-02-2000 JUN-24-2000 38,813 0 45,694 0 125,376 215,684 484,016 180,837 580,618 136,452 279,602 0 0 8,369,563 109,720 580,618 436,609 436,609 329,769 419,543 6,096 0 5,771 5,199 1,722 3,477 0 0 0 3,477 $.42 $.38 Number of Class A and Class B shares outstanding, Multiplier is 1. Includes (i) $329,769 of Cost of Goods Sold (Item 5-03(b)2(a) of Regulation S-X) and (ii) $89,774 of Selling, General and Administrative Expenses (Item 5-03(b)4 of Regulation S-X). Multiplier is 1 for per share data.
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