-----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, FriJmspWoHfaiqs+MvAq2D66u0JRs74tdG+c21SW0aVawYfsgqgNh0lF8P8K/UXY dS5VqtI7EXyZtLnEKZOOuA== 0000950144-96-003765.txt : 19960629 0000950144-96-003765.hdr.sgml : 19960629 ACCESSION NUMBER: 0000950144-96-003765 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19960330 FILED AS OF DATE: 19960627 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARSH SUPERMARKETS INC CENTRAL INDEX KEY: 0000062737 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 350918179 STATE OF INCORPORATION: IN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-01532 FILM NUMBER: 96587300 BUSINESS ADDRESS: STREET 1: 9800 CROSSPOINT BLVD CITY: INDIANAPOLIS STATE: IN ZIP: 46256 BUSINESS PHONE: 3175942100 10-K 1 MARSH SUPERMARKETS, INC. FORM 10-K 3-30-96 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 March 30, 1996 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 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 the definitive proxy statement 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 held by non-affiliates of the Registrant as of June 3, 1996: $38,735,525. 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 3, 1996, there were 3,850,698 shares of Class A Common Stock and 4,544,855 shares of Class B Common Stock outstanding. Portions of the 1996 Annual Report to shareholders for the year ended March 30, 1996 are incorporated by reference into Parts I and II. Portions of the Proxy Statement for the Annual Shareholders' Meeting to be held August 6, 1996 are incorporated by reference into Part III. 2 PART I ITEM 1. BUSINESS GENERAL At March 30, 1996, Marsh Supermarkets, Inc. (the "Company" or "Marsh") operated 90 supermarkets and 181 Village Pantry convenience stores in central Indiana and western Ohio. The Company believes 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 services its Village Pantry stores as well as over 1,360 unaffiliated convenience stores in a nine state area. Marsh also owns and operates a food services division. SUPERMARKETS At March 30, 1996, the Company operated 90 supermarkets, 77 in central Indiana and 13 in western Ohio. The 37 stores in the Indianapolis metropolitan market area constitute the Company's major market. The remaining supermarkets operate in 35 other communities. Sales from supermarket operations represent approximately 71% of the Company's fiscal 1996 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, 63 are open 24 hours a day, 15 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. An extension of this theme is convenient, high quality, ready to eat meals. These are offered as take-home items and for immediate consumption in 13 of the newer stores. The geographic concentration of the supermarkets enables the Company to deliver fresh items to its stores quickly and frequently. The Company's new and expanded large supermarket store 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 and products under its own trademarks, service marks and trade names. Service and specialty departments included in Marsh supermarkets include delicatessens (90 stores), hot prepared foods (59), bakeries (90), prime cut service meat (60), fresh service seafood (61), floral shops (59), imported cheese shops (49), wines and beer (83), salad bars (43), video rental (79), cosmetic counters (17 stores), and shoe repair (20). Twenty-two of the Company's supermarkets include pharmacies in food and drug combination stores. To combat increasing competition from other retail formats, such as wholesale clubs, 59 of the Company's supermarkets also include warehouse-type sections offering large size and multi-pack products typically featured by wholesale clubs, priced competitively with club prices. In addition, banks or savings institutions operate branch facilities in 41 of the Company's stores, and 36 stores offer ATM machines. Home delivery of orders placed by customers via telephone, fax or computer modem is offered to the Indianapolis metropolitan market. The Company's large 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 five superstores and nine 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, and approximately 5,000 square feet are devoted to warehouse-type merchandising of bulk club pack merchandise. The Company has developed a smaller, low-price supermarket format with limited service and specialty departments as an alternative to the large, full service supermarket. As of March 30, 1996, the Company operated eleven of its supermarkets under this concept. Subsequent to March 30, 1996, an additional conventional Marsh supermarket was converted to this format. The stores operate under the trade name LoBill Foods. There is an ongoing development program within the Company's market area to remodel selected Marsh supermarkets to the LoBill format. The Company believes the LoBill format offers an 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. 2 3 The Company's supermarkets range in size from 15,000 to 81,500 square feet. The average size is approximately 37,200 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 50,000 to 60,000 square feet, with superstores in excess of 80,000 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:
Number Square Feet of Stores ----------- --------- More than 70,000 . . . . . . . . . . . . . . . . . . . . . . . . 5 50,000 - 70,000 . . . . . . . . . . . . . . . . . . . . . . . . 9 40,000 - 49,999 . . . . . . . . . . . . . . . . . . . . . . . . 7 30,000 - 39,999 . . . . . . . . . . . . . . . . . . . . . . . . 35 20,000 - 29,999 . . . . . . . . . . . . . . . . . . . . . . . . 31 Less than 20,000 . . . . . . . . . . . . . . . . . . . . . . . . 3 90 ==
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 promotes a quality and service image rather than specific products and prices. The Indianapolis television market covers approximately 80% of the Company's stores. 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." This card functions as a check cashing card, video rental card and electronic coupons. Further, a customer may select a VISA co-branded credit card option for their Fresh I.D.E.A. card. Customers earn rebates on all credit card purchases, regardless of the merchant. CONVENIENCE STORES At March 30, 1996, the Company operated 181 convenience stores under the Village Pantry trade name. These self-service stores offer a broad selection of grocery, bakery, dairy and delicatessen items including freshly prepared food products. Approximately 60% of the stores also offer petroleum products. Sales from the convenience stores represented approximately 13% of the Company's fiscal 1996 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, all but six of the Company's convenience stores are open 24 hours a day; the remaining stores close at 11:00 P.M. or midnight. All stores are open seven days a week. These stores offer fresh pastry products and sandwiches prepared in the stores. The Company has added higher margin food and beverage products, such as store-prepared pizza (39 stores), broasted chicken (43 stores), self-service fountain drinks, as well as sit-down eating areas in a number of stores. 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 3,700-4,500 square feet, compared to 1,800-2,500 square feet for older stores. The larger size accommodates the new food products. In constructing new, and remodeling and expanding existing stores, the Company tailors the format to each specific market, with heavy emphasis on food 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, a wholly-owned subsidiary of the Company, serves the Company's Village Pantry stores and over 1,360 unaffiliated stores in a nine state area. CSDC distributes a wide range of products typically sold in convenience stores, including groceries, cigarette and other tobacco products, snack items, housewares and health and beauty aids. 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 75% of capacity. CSDC utilizes its own trucks and drivers for its transportation needs. The CSDC sales and marketing staff of approximately 27 employees services existing customers and actively solicits new customers. CSDC accounted for approximately 15% of the Company's fiscal 1996 consolidated sales and other revenues. 3 4 FOOD SERVICE The Company focuses on presenting expertly prepared cuisine, of unsurpassed freshness and quality in all of its food service operations. The Company's food service operation does business as Crystal Food Services. It offers a range of services including banquet hall catering, special events catering, concession services, vending, and cafeteria management. The Company began its food service operations in 1993 with ALLtimate Catering, and expanded in 1994, with the acquisition of Crystal Catering. In 1995, the Company expanded again with the acquisition of Martz and Associates Food Services. The Company intends to grow the food services operations through the solicitation of new period customers and possible acquisition of businesses that will complement the existing operations. The union of these operations created a unique range of services, products and facilities. Crystal's banquet hall facilities include the Crystal Yacht Club, the Marott, the Indiana Roof Ballroom, the Murat Shrine Centre, and the Schnull-Rausch House. The Company does special event catering at the Indianapolis Motor Speedway, Connor Prairie Museum, Indianapolis Museum of Art, the Eiteljorg Western Museum of Art, and the RCA Tennis championships. Crystal performs concession services at the Indianapolis Zoo, Conner Prairie and the Indiana State Fairgrounds. Further, Crystal provides cafeteria management to 10 major employers and vending services to over 100 clients throughout the greater Indianapolis area. 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 128,000 square foot perishable products facility in Yorktown, Indiana. Non-food products are distributed from 180,000 square feet of the 388,000 square foot Company owned warehouse (and former corporate headquarters facility) in Yorktown. In addition, the Company leases a 150,000 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. The Company believes its distribution centers, with the exception of perishable products facility, are adequate for its needs for the foreseeable future without major additional capital investment. The perishable products facility will be expanded during the summer and fall of 1996. The Company estimates the balance of its 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 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 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 aid, 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 operates a commissary to produce products sold through the delicatessen departments of its supermarkets and convenience stores and to third parties through CSDC. A Company owned greenhouse provides many of the live potted plants sold in the supermarket floral departments. The Company's supermarket transportation function is performed by 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 sixty 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. A subsidiary of the Company leases most of its tractor/trailer fleet from Ruan under long-term, full service leases. 4 5 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. 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. 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 22 food and drug combination stores, and time keeping for payroll processing. Future supermarket applications, currently under development, include computer-assisted reordering. 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. 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. 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, and Meijer, Inc. 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, 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 12,400 employees. Approximately 7,200 employees are employed on a part-time basis. All employees are non-union, except approximately 150 supermarket distribution facility employees who are unionized under two three-year collective bargaining agreements which extend to May, 1997. The Company considers its employee relations to be excellent. REGULATORY MATTERS As a retailer of alcoholic beverages 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 nine Village Pantry locations 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. 5 6 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.
Per Store Footage Operated Average 0-5 Years 5-10 Years Over 10 Years ---------------- ------- --------- ---------- ------------- Supermarkets 3,349,000 37,200 38% 34% 28% Convenience Stores 506,000 2,800 20 35 45 ---------- 3,855,000 =========
Owned and leased retail facilities are summarized as follows:
Convenience Supermarkets Stores ------------ ------- Owned 35 124 Leased: Fixed rentals only 26 28 Fixed plus contingent rentals 29 29 -- --- 55 57 -- --- 90 181 == === Lease expirations: Within five years 29 49 Five to ten years 20 7 Beyond ten years 6 1 -- --- 55 57 == ===
All leases, except for three supermarkets and fourteen 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 20 closed stores, of which 18 were subleased at March 30, 1996. 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 are utilized for grocery warehousing operations. The remainder consists of a floral design center and office space. A 128,000 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 financed by an economic development bond lease. Ownership was transferred to the Company in 1996. Marsh owns an additional 388,000 square foot facility in Yorktown. 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 corporate offices currently is vacant. The Company leases a 172,000 square foot warehouse in Indianapolis for storage of forward purchases of merchandise and seasonal items. A second 24,000 square foot warehouse in Indianapolis is leased for use as a 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. One supermarket (considered owned for purposes of the foregoing analysis) is leased under an equity lease arrangement pursuant to which ownership is transferred to the Company at the expiration of the leases. 6 7 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. TEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Shareholders on August 1, 1995 (the "Annual Meeting"). At the Annual Meeting, shareholders voted to approve an amendment to the 1991 Employee Stock Incentive Plan. The table below sets forth the number of votes cast for, against and abstained with respect to such proposal. For Against Abstain --- ------- ------- 2,579,252 227,109 51,744 EXECUTIVE OFFICERS OF 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 1996 or upon election of his successor by the Board of Directors.
NAME POSITION AGE FAMILY RELATIONSHIP ---- -------- --- ------------------- DON E. MARSH Chairman of the Board, President 58 Son of Garnet R. Marsh, and Chief Executive Officer brother of C. Alan Marsh and of William L. Marsh 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. - ------------------------------------------------------------------------------------------------------------------------- C. ALAN MARSH Vice Chairman of the Board and 54 Son of Garnet R. Marsh, Senior Vice President - Corporate brother of Don E. Marsh and Development William L. Marsh Mr. C. Alan Marsh has held his current position since February 23, 1992. For more than five years prior thereto, he served as President and Chief Operating Officer, Marsh Village Pantries, Inc. He has been employed by the Company in various supervisory and executive capacities since 1965. - ------------------------------------------------------------------------------------------------------------------------- P. LAWRENCE BUTT Vice President, Counsel and Secretary 54 None Mr. P. Lawrence Butt has held his current position for more than the past five years. He has been employed by the Company in various executive capacities since 1977. - ------------------------------------------------------------------------------------------------------------------------- DOUGLAS W. DOUGHERTY Vice President, Chief Financial Officer 52 None and Treasurer Mr. Douglas W. Dougherty 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. - ------------------------------------------------------------------------------------------------------------------------- WILLIAM L. MARSH Vice President - General Manager, 52 Son of Garnet R. Marsh, Property Management brother of Don E. Marsh and C. Alan Marsh Mr. William L. Marsh has held his current position for more than the past five years. On May 2, 1991, he was elected a director of the Company. He has been employed by the Company in various supervisory and executive capacities since 1974. - ------------------------------------------------------------------------------------------------------------------------- RONALD R. WALICKI President and Chief Operating Officer, 58 None Supermarket Division Mr. Ronald R. Walicki has held his current position since August 2, 1994. Prior thereto, he served as Executive Vice President, Supermarket Division since February 7, 1994, and President and Chief Operating Officer of Marsh Village Pantries, Inc. since February 1992. For more than five years prior to February 1992, he served as Vice President - General Manager, Supermarket Division. He has been employed by the Company in various supervisory and management positions since 1965. - -------------------------------------------------------------------------------------------------------------------------
7 8 DAVID M. REDDEN President and Chief Operating Officer, 48 None Village Pantry Division Mr. David M. Redden has held his current position since February 7, 1994. Prior thereto, he served as Vice President - General Manager, Supermarket Division since February 1992, and as Vice President - Warehousing and Transportation from April 1988 to February 1992. He has been employed by the Company in various supervisory and management positions since 1969. - ------------------------------------------------------------------------------------------------------------------------- THEODORE R. VARNER President and Chief Operating Officer, 60 None Convenience Store Distributing Company Division Mr. Theodore R. Varner has held his current position, since August 2, 1994. For more than five years thereto, he served as Vice President - General Manager, Convenience Store Distributing Company Division. - ------------------------------------------------------------------------------------------------------------------------- JACK J. BAYT President and Chief Operating Officer, 39 None Catering division Mr. Jack J. Bayt has held his current position, since January 1, 1995. For more than five years thereto, he was President and Chief Executive Officer of Crystal Catering of Indiana, Inc. - ------------------------------------------------------------------------------------------------------------------------- MICHAEL D. CASTLEBERRY Assistant Treasurer and 38 None Director of Corporate Accounting Mr. Michael D. Castleberry has held his current position, as Assistant Treasurer, since August 2, 1994. Prior thereto, he served as Director of Corporate Accounting since March 1991. - -------------------------------------------------------------------------------------------------------------------------
PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS Information on Common Stock and Shareholder Matters on pages 17 and 35 of the 1996 Annual Report to Shareholders is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA Selected Financial Data on page 16 of the 1996 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 18 through 21 of the 1996 Annual Report to Shareholders for the year ended March 30, 1996 is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements and notes thereto on pages 23 to 33 of the 1996 Annual Report to Shareholders are incorporated herein by reference. Quarterly Financial Data on page 17 of the 1996 Annual Report to Shareholders are 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 the Registrant's definitive Proxy Statement pursuant to Regulation 14A, to be filed with the Commission not later than 120 days after March 30, 1996, 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. 8 9 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 1996 Annual Report to Shareholders for the year ended March 30, 1996 are incorporated by reference in Item 8. Consolidated Balance Sheets as of March 30, 1996 and April 1, 1995. Consolidated Statements of Income for each of the three years in the period ended March 30, 1996. Consolidated Statements of Changes in Shareholders' Equity for each of the three years in the period ended March 30, 1996. Consolidated Statements of Cash Flows for each of the three years in the period ended March 30, 1996. 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 February 16, 1996. 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. Bank, as successor to Merchants National Bank and Trust Company of Indianapolis - Incorporated by reference to Form 10-Q for the quarter ended October 14, 1989. (f) - Amendment No. 1, dated as of May 1, 1991, to Rights Agreement, dated as of August 1, 1989 - Incorporated by reference to Form 10-K for the year ended March 30, 1991. (g) - 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). (h) - Society National Bank, as Trustee, including form of Indenture - Incorporated by reference to Registration Statement on Form S-2 (File No. 33-56738). 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. 9 10 (e) - Amended and Restated Employment and Severance Agreements, dated December 3, 1992 - Incorporated by reference to Registration Statement on Form S-2 (File No. 33-56738). (f) - Severance Agreements, dated December 31, 1991 - Incorporated by reference to Registration Statement on Form S-2 (File No. 33-56738). (g) - Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated by reference to Registration Statement on Form S-8 (File No. 2-74859). (h) - Amendment to the Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated by reference to Proxy Statement, dated March 22, 1991, for a Special Meeting of Shareholders held May 1, 1991. (i) - Supplemental Retirement Plan of Marsh Supermarkets, Inc. and Subsidiaries - Incorporated by reference to Registration Statement on Form S-2 (File No. 33-17730). (j) - Indemnification Agreements - Incorporated by reference to Form 10-Q for quarter ended January 6, 1990. (k) - 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. (l) - Marsh Supermarkets, Inc. Executive Life Insurance Plan - Incorporated by reference to Form 10-K for the year ended March 30, 1991. (m) - Marsh Supermarkets, Inc. Executive Supplemental Long-Term Disability Plan - Incorporated by reference to Form 10-K for the year ended March 30, 1991. (n) - 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. (o) - Employment contracts, dated January 1, 1995 - Incorporated by reference to Form 10-Q for the quarter ended January 7, 1995. (p) - 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. Exhibit 11 - Statement re: Computation of Per Share Earnings Exhibit 13 - 1996 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 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 March 30, 1996. 10 11 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 17, 1996 By: /s/ Don E. Marsh ------------------------------------- Don E. Marsh, Chairman of the Board, 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 17, 1996 /s/ Don E. Marsh ---------------------------------------------------- Don E. Marsh, Chairman of the Board, President, Chief Executive Officer and Director June 17, 1996 /s/ Douglas W. Dougherty ---------------------------------------------------- Douglas W. Dougherty, Vice President, Chief Financial Officer and Treasurer June 17, 1996 /s/ Michael D. Castleberry ---------------------------------------------------- Michael D. Castleberry, Assistant Treasurer and Director Corporate Accounting June 17, 1996 /s/ C. Alan Marsh ---------------------------------------------------- C. Alan Marsh, Vice Chairman of the Board and Senior Vice President - Corporate Development and Director June 17, 1996 /s/ Garnet R. Marsh ---------------------------------------------------- Garnet R. Marsh, Director June 17, 1996 /s/ William L. Marsh ---------------------------------------------------- William L. Marsh, Vice President - General Manager, Property Management and Director June 17, 1996 /s/ Jack E. Buckles ----------------------------------------------------- Jack E. Buckles, Director June 17, 1996 /s/ Charles R. Clark ----------------------------------------------------- Charles R. Clark, Director June 17, 1996 /s/ Stephen M. Huse ----------------------------------------------------- Stephen M. Huse, Director June 17, 1996 /s/ James K. Risk, III ----------------------------------------------------- James K. Risk, III, Director June 17, 1996 /s/ K. Clay Smith ----------------------------------------------------- K. Clay Smith, Director June 17, 1996 /s/ J. Michael Blakely ----------------------------------------------------- J. Michael Blakely, Director
11 12
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 February 16, 1996. 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) - Rights Agreement, dated as of August 1, 1989, between Marsh Supermarkets, Inc. and National City Bank, as successor to Merchants National Bank and Trust Company of Indianapolis - Incorporated by reference to Form 10-Q for the quarter ended October 14, 1989. (f) - Amendment No. 1, dated as of May 1, 1991, to Rights Agreement, dated as of August 1, 1989 - Incorporated by reference to Form 10-K for the year ended March 30, 1991. (g) - 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). (h) - Indenture dated as of February 15, 1993, between Marsh Supermarkets, Inc. and Society National Bank, as Trustee, including form of Indenture - Incorporated by reference to Registration Statement on Form S-2 (File No. 33-56738). 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) - Amended and Restated Employment and Severance Agreements, dated December 3, 1992 - Incorporated by reference to Registration Statement on Form S-2 (File No. 33-56738). (f) - Severance Agreements, dated December 31, 1991 - Incorporated by reference to Registration Statement on Form S-2 (File No. 33-56738). (g) - Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated by reference to Registration Statement on Form S-8 (File No. 2-74859). (h) - Amendment to the Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated by reference to Proxy Statement, dated March 22, 1991, for a Special Meeting of Shareholders held May 1, 1991. (i) - Supplemental Retirement Plan of Marsh Supermarkets, Inc. and Subsidiaries - Incorporated by reference to Registration Statement on Form S-2 (File No. 33-17730). (j) - Indemnification Agreements - Incorporated by reference to Form 10-Q for the quarter ended January 6, 1990. (k) - 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. (l) - Marsh Supermarkets, Inc. Executive Life Insurance Plan - Incorporated by reference to Form 10-K for the year ended March 30, 1991. (m) - Marsh Supermarkets, Inc. Executive Supplemental Long-Term Disability Plan - Incorporated
12 13 Exhibit Index Page No. ------------- -------- by reference to Form 10-K for the year ended March 30, 1991. (n) - 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. (o) - Employment contracts, dated January 1, 1995 - Incorporated by reference to Form 10-Q for the quarter ended January 7, 1995. (p) - 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. Exhibit 11 - Statement re: Computation of Per Share Earnings 14 Exhibit 13 - Annual Report to Shareholders (only portions specifically incorporated by reference are included herein) Exhibit 21 - Subsidiaries of the Registrant 15 Exhibit 23 - Consent of Independent Auditors 16 Exhibit 27 - Financial Data Schedule (SEC Use Only) 17
13 EX-3.(B) 2 BYLAWS AS AMENDED 2-16-96 1 EXHIBIT 3(b) BY-LAWS OF MARSH SUPERMARKETS, INC. As Restated in Full on August 7, 1990 and amended on February 16, 1996 ARTICLE I SHAREHOLDERS SECTION 1. Annual Meeting. The Annual Meeting of the Shareholders of this Corporation shall be held within the State of Indiana on the first Tuesday in August of each year or such other date and at such time or place as established by the Board of Directors for the election of directors and the transaction of such business as may lawfully come before the meeting. Such annual meetings shall be general meetings, that is to say, open for the transaction of any business within the powers of the Corporation without special notice of such business, except in cases in which special notice is required by the Articles of Incorporation, by statute or by these By-Laws. SECTION 2. Special Meetings. Special meetings may be called by the majority of the Board of Directors, by the Chairman of the Board of Directors or by the President by notifying the Secretary, in written form, of the desire for such a meeting and stating the purposes of such a meeting. SECTION 3. Notice. (a) A written or printed notice, stating the place, day and hour of the annual meeting, and in case of a special meeting, the purpose thereof, shall be delivered or mailed, postage prepaid, to such address as appears upon the records of the Corporation by the Secretary, or the officers or persons calling the meeting to each shareholder of record entitled to vote at such meeting, at least 10 days prior to such meeting. (b) At an Annual Meeting of Shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be brought properly before an Annual Meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a shareholder. For business to be brought properly before an Annual Meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice (other than a request for inclusion of a proposal in the Corporation's proxy statement pursuant to Rule 14a-8 of the Securities Exchange Act of 1934) must be delivered to or mailed and received at the principal executive offices of the 2 Corporation, not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the date on which such notice of the date of the Annual Meeting was mailed or such public disclosure was made. A shareholders' notice to the Corporation shall set forth as to each matter the shareholder proposes to bring before the Annual Meeting (i) a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, (ii) the name and record address of the shareholder proposing such business, (iii) the class and number of shares of the Corporation that are beneficially owned by the shareholder, and (iv) any material interest of the shareholder in such business. Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at an Annual Meeting except in accordance with the procedures set forth in this Section. The Chairman of an Annual Meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. At any special meeting of the shareholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board of Directors. (c) It shall not be requisite to the validity of any meeting of shareholders that notice thereof, whether prescribed by law, by the Restated Articles of Incorporation or by these By-Laws, shall have been given to any shareholder who attends in person or by proxy, or to any shareholder who, in writing, executed and filed with the records of the meeting before the holding thereof, a waiver of notice setting forth in reasonable detail the purpose or purposes for which the meeting is called and the time and place thereof. No notice of adjourned meetings of shareholders need be given. SECTION 4. Voting. (a) Each shareholder of record of this Corporation, as determined in accordance with Article IV, Section 6 of these By-Laws, may vote in person or by proxy one vote for each outstanding share of voting stock standing in his or her name on the records of the Corporation. (b) Any shareholder entitled to vote at any meeting of shareholders may vote either in person or by proxy, but no proxy which is dated more than eleven months before the meeting at which it is offered shall be accepted, unless such proxy shall, on its face, name a longer period for which it is to remain in force. Every proxy shall be in writing, subscribed by the shareholder or his duly authorized attorney, and dated, but need not be sealed, witnessed or acknowledged. 2 3 (c) No share shall be voted at any meeting: (i) on which an installment is due and unpaid; or (ii) which shall have been transferred on the books of the Corporation within ten days preceding the date of the meeting; or (iii) which belongs to the Corporation. (d) Voting shares held by fiduciaries may be voted by the fiduciaries in such manner as the instrument or order appointing such fiduciaries may direct. In the absence of such direction or the inability of the fiduciaries to act in accordance therewith, then such shares shall be voted as follows: (i) where shares are held jointly by three or more fiduciaries, such shares shall be voted in accordance with the will of the majority; or (ii) where the fiduciaries, or a majority of them cannot agree, or where they are equally divided, upon the question of voting such shares, they shall be voted in accordance with the order of any court of equitable jurisdiction obtained as in the statutes provided. (e) Unless otherwise provided in the agreement of pledge, pledged shares which shall have been transferred to the pledgee on the books of the Corporation may be voted by the pledgee. SECTION 5. Quorum. At all meetings of shareholders, a majority, in number of shares outstanding and entitled to vote, present in person or by proxy, shall constitute a quorum for the transaction of business; but in the absence of a quorum the shareholders present in person or by proxy at the time and place fixed by Section 1 of this Article I for an annual meeting, or designated in the notice of a special meeting, or at the time and place of any adjournment thereof, by majority vote may adjourn the meeting from time to time without notice other than by announcement at the meeting, until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original called meeting. SECTION 6. List of Shareholders. The Secretary, an Assistant Secretary, or other-officer in charge of the stock transfer books of the Corporation shall make, at least five (5) days before each shareholders' meeting, a complete list of the shareholders entitled by the Restated Articles of Incorporation to vote at said meeting, with the shareholders' names arranged in alphabetical order, which list shall be on file at the principal office of the Corporation and subject to inspection upon written demand by any shareholder entitled to vote at the meeting. Such list shall be produced and kept open at the time and place of the meeting and subject to inspection upon written demand by any shareholder entitled to vote at the meeting during the holding of such meeting. The original stock register or transfer book or a duplicate thereof, kept in this State, 3 4 shall be the only evidence as to the shareholders entitled to examine such list or the stock ledger or transfer book or vote at any meeting of the shareholders. SECTION 7. Organization. The Chairman of the Board of Directors, and in his absence the President and in his absence the Vice-President, and in their absence any shareholder chosen by the shareholders present, shall call meetings of the shareholders to order and shall act as Chairman of such meetings, and the Secretary of the Company shall act as Secretary of all meetings of the shareholders, but in the absence of the Secretary, the presiding officer may appoint any shareholder to act as Secretary of the meeting. ARTICLE II BOARD OF DIRECTORS SECTION 1. Election. (a) The members of the Board of Directors shall be elected by the shareholders at their annual meeting. Directors need not be shareholders. Each director shall hold office for a period of three years, or until his successor shall have been duly chosen and qualified or until he shall have resigned, or shall have been removed in the manner provided in Section 4 of this Article II, or unless he shall have been elected to a shorter term, as provided in Article IX of the Articles of Incorporation of this Corporation. (b) Only persons who are nominated in accordance with the procedures set forth in this Section shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of shareholders by or at the direction of the Board of Directors or by any shareholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such shareholder's notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Corporation which are beneficially owned by such person and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the shareholder giving 4 5 the notice (i) the name and record address of such shareholder and (ii) the class and number of shares of the Corporation which are beneficially owned by such shareholder. No persons shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the By-Laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. SECTION 2. Duties and Powers. The business and property of the Corporation shall be conducted and managed by its Board of Directors, which may exercise all of the powers of the Corporation except such as are by statute, by the Articles of Incorporation or by these By-Laws, conferred upon or reserved to the shareholders. The corporate power of this Corporation shall be vested in the Board of Directors, who shall have the management and control of the business of the Corporation and shall employ such agents and servants as the Board of Directors may deem advisable, and who may fix the rate of compensation of all agents, employees and officers. SECTION 3. Resignation. A director may resign at any time by filing his written resignation with the Secretary. SECTION 4. Removal. Any director may be removed at any time at any regular or special meeting of the shareholders of the Corporation called for such purpose by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of directors. SECTION 5. Vacancies. In case of any vacancy in the Board of Directors through death, resignation, or created by any other cause, including an increase in the number of members of the Board of Directors through amendment to the Articles of Incorporation or the By-Laws, the vacancy shall be filled by the majority vote of the remaining members of the board, the newly elected member to serve until the next Annual Meeting of Shareholders. SECTION 6. Special Meetings. Special meetings of the Board of Directors shall be held whenever called by the Secretary upon the direction of the Chairman of the Board of Directors, the President or upon the written request of any four directors. SECTION 7. Regular Meetings. (a) The regular annual meeting of the directors shall be held within five days after the adjournment of the Annual Meeting of the Shareholders, at the office of the Corporation for the purpose of organization and the transaction of other business or at such other time and place as may be designated by the shareholders at such annual meeting. No notice of such first meeting shall be necessary. (b) In addition to the first regular meeting, regular meetings of the Board of Directors shall be held on such dates as may be fixed, from time to time, by the Board of Directors. 5 6 SECTION 8. Notice of Meetings. Notice of the place, day and hour of every regular and special meeting shall be given to each director in advance of each such meeting by delivering or telephoning the same to him personally, or by sending the same to him by telegraph, or by leaving the same at his residence or usual place of business, or, in the alternative, by mailing it, postage pre-paid, and addressed to him at his last known post office address, according to the records of the Corporation. It shall not be requisite to the validity of any meeting of the Board of Directors that notice thereof shall have been given to any director who attends, or to any director who, in writing executed and filed with the records of the meeting, waives such notice. No notice of adjourned meetings of the Board of Directors need be given. SECTION 9. Dissent. A director who is present at a meeting of the Board of Directors when corporate action is taken is deemed to have assented to such action unless: (i) he objects at the beginning of the meeting (or promptly upon his arrival) to holding the meeting or transacting business at the meeting; (ii) his dissent or abstention from the action taken is entered in the minutes of the meeting; or (iii) he delivers written notice of his dissent or abstention to the presiding officer of the meeting before its adjournment or to the Corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken. SECTION 10. Quorum. A majority of the actual number of directors elected and qualified shall constitute a quorum for the transaction of business except for filling of vacancies, but if, at any meeting of the board, there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time. The transaction of any business or the approval of any resolution shall require the affirmative vote of a majority of all directors regardless of the number in actual attendance. SECTION 11. Organization. The Chairman of the Board of Directors and in his absence the President and in their absence any director chosen by the directors present, shall call meetings of the Board of Directors to order, and shall act as Chairman of such meetings. The Secretary of the Company shall act as Secretary of the Board of Directors, and in the absence of the Secretary, the presiding officer may appoint any director to act as Secretary of the meeting. 6 7 SECTION 12. Order of Business. The order of business at all meetings of the Board of Directors shall be as follows: (i) Roll Call (ii) Reading of the Minutes of the preceding meeting and action thereof (iii) Reports of Officers (iv) Reports of Committees (v) Unfinished Business (vi) Miscellaneous Business (vii) New Business SECTION 13. Executive Committee and Other Committees. (a) The Board of Directors may by resolution establish an Executive Committee which shall consist of the Chief Executive Officer and not fewer than two (2) nor more than four (4) other members of the Board of Directors. Each member of such Committee, as a prerequisite to service on the Committee, shall have served at least one (1) year on the Board of Directors. Committee members shall hold office so long as they are members of the Board of Directors and until removed or replaced by the Board of Directors. The Chairman of such committee shall be named by the Board of Directors, or, if none shall be named, shall be named by a majority of such committee. During the intervals between the meetings of the Board of Directors, the Executive Committee shall possess and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation unless otherwise restricted by statute or resolution of the Board of Directors. The Executive Committee shall keep minutes of the business which it transacts. All action by the Executive Committee shall be reported to the Board of Directors at its meeting next succeeding such action. Vacancies in the Executive Committee shall be filled by the Board of Directors. (b) The Board of Directors may by resolution establish an Audit Committee and such other committees as the Board of Directors may from time to time deem to be appropriate. Each member of each such committee shall be a member of the Board of Directors, shall be elected by a majority of the Board of Directors and shall serve until his resignation, removal or re-placement by the Board of Directors. The chairman of such committee shall be named by the Board of Directors, or, if none shall be named, shall be named by a majority of the members of such committee. Each such committee shall have and exercise the authority conferred upon it by the Board of Directors. Each such committee shall keep minutes of its meeting. All action by any such committee shall be reported to the Board of Directors at its meeting next succeeding such action. Vacancies in such committees shall be filled by the Board of Directors. (c) Meetings of Committees. Unless otherwise provided by these By-Laws, each committee established by the Board of Directors shall fix its own rules of procedure and shall meet as provided by such rules or by resolution of the Board of Directors, and it shall also meet at the call of the chairman or of any two members of the committee. A majority of the Executive Committee, including the presence of the Chief Executive Officer, shall be necessary to constitute a quorum for the transaction of business, unless the Chief Executive Officer, either before or after 7 8 a meeting, waives the requirement that he be present to constitute a quorum, in which case any majority of the Executive Committee shall constitute a quorum. The transaction of any business or the approval of any resolution by the Executive Committee shall require the affirmative vote of a majority of all members of the Executive Committee, regardless of the number in actual attendance. SECTION 14. Number. The number of directors of the Corporation shall be ten (10). ARTICLE III GENERAL OFFICERS SECTION 1. Designation. The offices of the Corporation shall consist of the President, one or more Vice Presidents, a Secretary, a Treasurer, and other subordinate officers as may be appointed by the Board of Directors from time to time. The Board of Directors of the Corporation may create such offices as in its judgment the business of the Corporation requires. The Chairman of the Board of Directors and the Chief Executive Officer shall be chosen from among the directors, but other officers need not be directors. Officers need not be shareholders of the Corporation. Any two or more offices may be held by the same person, except that the duties of the President and the Secretary shall not be performed by the same person. SECTION 2. Election and Removal. Officers shall be elected by the Board of Directors at its annual meeting and shall hold office for one year each or until their respective successors have been elected and qualified. The Board of Directors may remove any officer at any time, with or without cause. Vacancies in offices occurring by reason of death, resignation, removal or increase in the number of officers of the Corporation may be filled by the Board of Directors, except as otherwise provided by the law, and the officer elected to fill any such vacancy shall hold office until the next annual meeting of the Board of Directors or until his or her successor is elected and qualified. SECTION 3. President. The President shall serve as Chief Executive Officer and shall have active executive management of the operations of the Corporation, subject, however, to the control of the Board of Directors. He shall, in general, perform all duties incident to the office of President and such other duties as, from time to time, may be assigned to him by the Board of Directors. SECTION 4. Vice President. Each Vice President shall have such powers and perform such duties as the Board of Directors may from time to time prescribe or as the President may from time to time delegate. The Board of Directors may designate one of the vice presidents as an Executive Vice President who shall temporarily discharge the duties of the President in the case of his absence, death or inability to act. In the case of the death of the President and the Executive Vice President or in the case of their simultaneous absence or inability to act, a Vice President shall be designated by the Board of Directors to temporarily perform the duties of the President. 8 9 SECTION 5. Secretary. The Secretary shall attend all meetings of the shareholders, the Board of Directors and committees of the Board of Directors (unless the chairman of any such committee shall designate one of its members as secretary to such committee) and shall record, or cause to be recorded, accurate minutes of such meetings. He shall attend to the proper issuance of all notices of the Corporation and shall have custody of the minute books of the Corporation. In general, he shall perform all duties which are by law or custom incident to such office, and such other duties as may, from time to time, be assigned to him by the Board of Directors or the President. SECTION 6. Treasurer. The Treasurer shall have charge and custody, and be responsible for, all funds of the Corporation, and shall deposit such funds in such depositories as shall be selected by the Board of Directors. The Treasurer shall keep all books of account relating to the business of the Corporation and shall render a statement of the Corporation's financial condition whenever requested to do so by the Board of Directors. In general, he shall perform all the duties incident to such office, and such other duties as may, from time to time, be assigned to him by the Board of Directors or the President. SECTION 7. Assistant Officers. The Board of Directors may elect one or more assistant secretaries and one or more assistant treasurers, and such assistant officers, if any, shall hold office for such period and shall have such authority and perform such duties as the Board of Directors may prescribe. SECTION 8. Execution of Documents. All documents shall, unless otherwise (i) directed by the Board of Directors (ii) required by law or (iii) provided by these By-Laws, be executed on behalf of the Corporation, in the following manner: (a) All notes, bonds, leases, commercial paper and other evidences of indebtedness and deeds, mortgages, security agreements and other documents which provide for the sale or encumbrance of the assets of the Corporation shall be executed by the President and the Treasurer. (b) All checks, drafts, bills of exchange and orders for payment of money of the Corporation shall be executed by the President or the Treasurer. (c) All other instruments in writing and legal documents shall be executed by the President and attested by the Secretary. In the event of their absence or inability to act, the President, Treasurer or Secretary may designate an Executive Vice President, Vice President or subordinate officer to execute documents on his or her behalf. 9 10 ARTICLE IV CAPITAL STOCK SECTION 1. Certificates of Stock. (a) The Corporation shall issue to each shareholder a certificate signed by the President or a Vice President, and the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him. Where such certificate is also signed by a transfer agent or registrar, the signatures of any such President, Vice President, Secretary or Assistant Secretary and the impression of the corporate seal may be facsimiles. The certificate shall state, the name of the registered holder, the number of shares represented thereby, the par value of each share or a statement that such shares have no par value, and whether such shares have been fully paid. If such shares have not been fully paid, the certificate shall be legibly stamped to indicate the percent which has been paid, and as further payments are made thereon the certificate shall be stamped accordingly. (b) If the Corporation issues more than one class, every certificate issued shall state the kind and class of shares represented thereby, and the relative rights, interest, preferences and restrictions of such class, or a summary thereof. SECTION 2. Form of Certificate. The stock certificates, representing the shares of the capital stock of this Corporation, shall be in such form, not inconsistent with the laws of the State of Indiana, as may be adopted by the Board of Directors. SECTION 3. Transfer. Title to a certificate and to the shares represented thereby can be transferred only: (i) By delivery of the certificate with a written assignment of the certificate endorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby; or (ii) By delivery of the certificate with a written assignment of the certificate or a power of attorney to sell, assign or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a specified person. SECTION 4. Transfer Agents and Registrars. The Corporation may have one or more transfer agents and one or more registrars of its stock, whose respective duties the Board of Directors may, from time to time, define. No certificate of stock shall be valid until countersigned by a transfer agent, if the Corporation has a transfer agent, or until registered by a registrar, if the Corporation has a registrar. The duties of transfer agent and registrar may be combined. SECTION 5. Stock Ledgers. An original or duplicate stock list, containing a complete and accurate list of the names and addresses of the shareholders of the Corporation and the 10 11 number of shares held by them respectively, shall be kept at the principal office of the Corporation. The original or duplicate stock ledger required by Article IV, Section 5 of these By-Laws shall be open to inspection and examination at the Corporation's principal office during the usual business hours of such office for all proper purposes by any shareholder of the Corporation, or his duly authorized agent or attorney. Any shareholder wishing to make such inspection or examination shall make a request therefor, under oath in writing at the Corporation's principal office, setting forth therein in detail the reasons for requesting such inspection or examination. SECTION 6. Record Dates. The Board of Directors is hereby authorized to fix the date, not exceeding seventy (70) days or in the absence of such determination by the directors, ten (10) days preceding the date of any meeting of shareholders. The Board of Directors is also hereby authorized to fix the date of any dividend payment date or any date for the allotment of rights, including voting rights. For the purpose of taking such record, the books of the Corporation shall be closed at the close of business on such date, and only shareholders of record on such date shall be entitled to notice of and to vote at such meetings, or to receive such dividends or rights, as the case may be. SECTION 7. Mutilated, Lost or Destroyed Certificates. The holder of any certificate representing shares of stock of the Corporation shall immediately notify the Corporation of any mutilation, loss or destruction thereof, and the proper officers of the Corporation may cause one or more new certificates, for the same number of shares in the aggregate, to be issued to such holder upon the surrender of the mutilated certificate, or in the case of loss or destruction of the certificate, upon satisfactory proof of such loss or destruction and in all cases, upon the deposit of any open penalty bond or of indemnity by way of bond or otherwise, in an amount of at least equal to the then market value of the mutilated, lost or destroyed certificates and in such form and with such sureties or securities as the proper officers may approve to indemnify the Corporation against loss or liability by reason of the issuance of such new certificates; but the officers may, in their discretion, refuse to issue such new certificates, save upon the order of some court having jurisdiction in such matters. SECTION 8. Dividends. The Board of Directors may, from to time, declare and the Corporation may pay dividends on its outstanding shares of capital stock, out of the unreserved and unrestricted earned surplus or out of any other source permitted by statutes. Dividends may be paid in cash, in property or in shares of the capital stock of the Corporation, but no dividend payable in cash or property shall be paid out of surplus due to or arising from unrealized appreciation in value or from revaluation of assets. SECTION 9. Transfers to Capital. The Board of Directors may, from time to time, increase the capital of the Corporation by transfer of all or a part of the surplus of the Corporation to stated capital. 11 12 ARTICLE V MISCELLANEOUS SECTION 1. Fiscal Year. The fiscal year of this Corporation shall begin on the first day following the end of the thirteenth week of each calendar year, and shall end on the last day of the thirteenth week of each calendar year. SECTION 2. Methods of Calling Subscriptions. The subscriptions for stock shall be payable in full at the time of making such subscriptions unless the Board of Directors shall authorize time be given and other terms of payment to be set forth in the stock subscription itself. In no event shall credit be given beyond eighteen months from the date of the subscription. SECTION 3. Amendments. These By-Laws may be adopted, amended or repealed at any meeting of the Board of Directors by the affirmative vote of three-fourths of the total directors regardless of the number in actual attendance. SECTION 4. Seal. This Corporation shall have a corporate seal which shall be as follows: A circular disc, on the outer margin of which shall appear the corporate name and State of Incorporation, with the words "Corporate Seal" through the center, so mounted that it may be used to impress these words in raised letters upon paper, and same shall be kept by the Secretary. SECTION 5. Waiver of Notice. Any shareholder, director or officer may, in writing, waive the giving and the mailing of any notice required to be given or mailed either by the statutes of Indiana, the Articles of Incorporation or by the By-Laws of this Corporation. 12 EX-11 3 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 -STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (All amounts in thousands except per share amounts)
Year Ended ----------------------------------------- March 30, April 1, April 2, 1996 1995 1994 ---- ---- ---- Primary earnings per share: - --------------------------- Average shares outstanding 8,403 8,424 8,430 Net effect of dilutive stock options - based on the Treasury Stock method using average market price 36 5 12 ------ ------ ------- Total primary shares and equivalents 8,439 8,429 8,442 ====== ====== ======= Income before cumulative effect of changes in accounting principles $9,033 $8,573 $ 8,526 ------ ------ ------- Per primary share amount $ 1.07 $ 1.02 $ 1.01 ====== ====== ======= Net income $9,033 $8,573 $10,467 ------ ------ ------- Per primary share amount $ 1.07 $ 1.02 $ 1.24 ====== ====== ======= Fully diluted earnings per share: - --------------------------------- Average shares outstanding 8,403 8,424 8,430 Net effect of dilutive stock options - based on the Treasury Stock method using higher of average market or last price 47 6 12 Assumed conversion of 7% convertible subordinated debentures 1,290 1,290 1,290 ------ ------ ------- Total shares and equivalents 9,740 9,720 9,732 ====== ====== ======= Income before cumulative effect of changes in accounting principles $9,033 $8,573 $ 8,526 Add 7% convertible subordinated debentures interest, net of tax benefit 895 948 906 ------ ------ ------- Total $9,928 $9,521 $ 9,432 ------ ------ ------- Per fully diluted share amount $ 1.02 $ 0.98 $ 0.97 ====== ====== ======= Net income $9,033 $8,573 $10,467 Add 7% convertible subordinated debentures interest, net of tax benefit 895 948 906 ------ ------ ------- Total $9,928 $9,521 $11,373 ------ ------ ------- Per fully diluted share amount $ 1.02 $ 0.98 $ 1.17 ====== ====== =======
EX-13.(C) 4 ANNUAL REPORT TO SHAREHOLDERS 1 EXHIBIT 13C FINANCIAL HIGHLIGHTS (in thousands, except per share amounts)
1996 1995 1994 ---- ---- ---- Sales and other revenues . . . . . . . . . . . . . . . . . . . . . . $1,390,543 $1,303,261 $1,263,191 Income before accounting changes . . . . . . . . . . . . . . . . . . 9,033 8,573 8,526 Cumulative effect of accounting changes, net of tax benefits . . . . . . . . . . . . . . . . . . . - - 1,941 ---------- ---------- ---------- Net income (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,033 $ 8,573 $ 10,467 ========== ========== ========== Income before cumulative effect of accounting changes, per share-fully diluted . . . . . . . . . . . . $ 1.02 $ .98 $ .97 Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . $ .44 $ .44 $ .44 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 387,294 $ 378,471 $ 375,683 Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . 135,066 143,102 148,818 Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . 118,158 114,314 109,794 Book value per share . . . . . . . . . . . . . . . . . . . . . . . . $ 14.07 $ 13.59 $ 13.01 Number of shares outstanding at year end . . . . . . . . . . . . . . 8,396 8,414 8,442 Net income as a percentage of: Sales and other revenues . . . . . . . . . . . . . . . . . . . . . .6% .7% .8% Average shareholders' equity . . . . . . . . . . . . . . . . . . . 7.7% 7.7% 9.9% Stores open at year-end: Supermarkets . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 88 87 Convenience stores . . . . . . . . . . . . . . . . . . . . . . . . 181 181 177
(a) Reflects cumulative effect of accounting changes (see notes to financial statements). Fiscal 1994 contained 53 weeks. ================================================================================ Marsh Supermarkets, Inc. was founded in 1931 with one store in Muncie, Indiana. In 1953, the Company went public with sixteen stores. Today, it is a leading regional food retailer headquartered in Indianapolis, Indiana. The Company operates 78 Marsh(R) Supermarkets, 12 LoBill Foods(R), 181 Village Pantry(R) convenience stores in Indiana and Ohio, Convenience Store Distributing Company (CSDC(R)) serving 1,360 non-affiliated convenience stores in nine states, and Crystal Food Services(TM), the largest food service operator in Indianapolis. The 12,400 Marsh employees serve more than two million customers each week. 2 SELECTED FINANCIAL DATA (in thousands, except per share amounts)
March 30, April 1, April 2, March 27, March 28, As of and for the year ended 1996 1995 1994 1993 1992 - ----------------------------------------------------------------------------------------------------------------------- Sales and other revenues . . . . . . . . . . . . . . $1,390,543 $1,303,261 $1,263,191 $1,170,398 $1,131,326 Income before income taxes and changes in accounting principles . . . . . . . . . . . . 14,284 12,790 13,517 15,569 15,268 Income before cumulative effect of changes in accounting principles . . . . . . . . 9,033 8,573 8,526 9,828 9,725 Cumulative effect of accounting changes . . . . . . . - - 1,941 - - ---------- ---------- ---------- ---------- ---------- Net income . . . . . . . . . . . . . . . . . . . . . $ 9,033 $ 8,573 $ 10,467 $ 9,828 $ 9,725 ========== ========== ========== ========== ========== Income per share before cumulative effect of changes in accounting principles Primary . . . . . . . . . . . . . . , . . . . . . . $ 1.07 $ 1.02 $ 1.01 $ 1.24 $ 1.23 Fully diluted (a) . . . . . . . . . . . . . . . . 1.02 .98 .97 1.23 1.23 Net income per share Primary . . . . . . . . . . . . . . . . . . . . . $ 1.07 $ 1.02 $ 1.24 $ 1.24 $ 1.23 Fully diluted (a) . . . . . . . . . . . . . . . . . 1.02 .98 1.17 1.23 1.23 Dividends declared per share . . . . . . . . . . . $ .44 $ .44 $ .44 $ .44 $ .43 Total assets . . . . . . . . . . . . . . . . . . . . $ 387,294 $ 378,471 $ 375,683 $ 352,511 $ 305,031 Long-term liabilities . . . . . . . . . . . . . . . . 135,066 143,102 148,818 155,444 128,029 Total shareholders' equity . . . . . . . . . . . . . 118,158 114,314 109,794 101,539 88,584
(a) Earnings per share for 1996, 1995, 1994 and 1993 reflect dilutive options and convertible debentures issued in March 1993. Earnings per share for 1992 reflect only dilutive options. 3 SELECTED QUARTERLY FINANCIAL DATA (unaudited) (in thousands, except per share amounts)
------------------------------------- ------------------------------------ 1996 1995 Fourth Third Second First Fourth Third Second First ------------------------------------- ------------------------------------ Sales and other revenues . . . . . . . $316,022 $329,275 $425,781 $319,465 $296,506 $307,355 $397,029 $302,371 Gross profit . . . . . . . . . . . . . 79,884 79,685 105,037 78,744 72,724 72,563 95,459 72,478 Selling, general and administrative . . 69,391 69,202 91,891 66,538 62,607 62,834 81,954 61,271 Depreciation and amortization . . . . . 4,488 4,456 5,779 4,234 4,328 4,286 5,597 4,265 -------- -------- -------- -------- -------- -------- -------- -------- Operating profit . . . . . . . . . . . 6,005 6,027 7,367 7,972 5,789 5,443 7,908 6,942 Interest and debt expense amortization 3,084 3,099 3,854 3,050 3,154 2,971 4,023 3,144 -------- -------- -------- -------- -------- -------- -------- -------- Income before income tax provision . . 2,921 2,928 3,513 4,922 2,635 2,472 3,885 3,798 Income taxes . . . . . . . . . . . . . 1,067 1,115 1,282 1,787 578 722 1,499 1,418 -------- -------- -------- -------- -------- -------- -------- -------- Net income . . . . . . . . . . . . . . $ 1,854 $ 1,813 $ 2,231 $ 3,135 $ 2,057 $ 1,750 $ 2,386 $ 2,380 ======== ======== ======== ======== ======== ======== ======== ======== NET INCOME PER SHARE - Per primary share outstanding . . . . . $ .22 $ .21 $ .26 $ .37 $ .24 $ .21 $ .28 $ .28 Assuming full dilution . . . . . . . . .21 .21 .26 .34 .24 .20 .27 .27 COMMON STOCK PRICES: Class A - High . . . . . . . . . $ 14.12 $ 14.00 $ 15.75 $ 12.00 $ 12.00 $ 12.00 $ 12.00 $ 11.00 Low . . . . . . . . . 11.75 11.75 11.50 9.75 9.75 10.00 10.25 9.50 Class B - High . . . . . . . . . 13.75 13.25 14.00 11.00 10.25 10.75 11.00 10.50 Low . . . . . . . . . 12.00 10.75 10.50 9.25 9.13 9.00 9.25 9.00 CASH DIVIDEND: Class A . . . . . . . $ .11 $ .11 $ .11 $ .11 $ .11 $ .11 $ .11 $ .11 Class B . . . . . . . .11 .11 .11 .11 .11 .11 .11 .11
Cash dividends have been paid on the common stock during each quarter of the past 36 years. - -------------------------------------------------------------------------------- Quarterly earnings per share are based on weighted average shares outstanding and dilutive effect of options and convertible securities outstanding for the quarter. The sum of the quarters may not equal the full year earnings per share amount. The first, third and fourth quarters are 12 weeks, and the second quarter is 16 weeks. Unusual or infrequently occurring items recognized in net income in the quarterly results are as follows: Fourth quarter 1996: Income per fully diluted share increased $.14 from sales of surplus real estate. Second quarter 1996: Income per fully diluted share increased $.03 from sales of surplus real estate. First quarter 1996: Income per fully diluted share increased $.02 from sales of surplus real estate. Fourth quarter 1995: Income per fully diluted share increased $.07 from sales of surplus real estate, and $.04 from a change in the effective income tax rate due to charitable donations and research credits. 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following discussion includes certain forward-looking statements. Actual results could differ materially from those reflected by the forward-looking statements in the discussion, and a number of factors could adversely affect future results, liquidity and capital resources. These factors include softness in the general retail food industry, the entry of new competitive stores 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 level of margins achievable in the Company's operating divisions and their ability to minimize operating expenses. Although management believes it has the business strategy and resources needed for improved operations, future revenue and margin trends cannot be reliably predicted. The following table sets forth certain income statement components, expressed as a percentage of sales and other revenues, and the year-to-year percentage changes in such components:
Percentage of Revenues Year Ended Percentage Change ---------------------------------- ----------------- March 30, April 1, April 2, 1996 1995 1996 1995 1994 vs. 1995 vs. 1994 ---- ---- ---- -------- -------- Sales and other revenues . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 6.7% 3.2% Gross profit . . . . . . . . . . . . . . . . . . . . 24.7 24.0 24.4 9.6 1.7 Selling, general and administrative . . . . . . . . . 21.4 20.6 20.8 10.6 2.2 Depreciation and amortization . . . . . . . . . . . . 1.4 1.4 1.4 2.6 1.5 Operating profit . . . . . . . . . . . . . . . . . . 2.0 2.0 2.1 4.9 (2.9) Interest and debt amortization expense . . . . . . . 0.9 1.0 1.1 (1.5) (0.3) Income before income taxes and cumulative effect of changes in accounting principles . . . . . . . . 1.0 1.0 1.1 11.7 (5.4) Income taxes . . . . . . . . . . . . . . . . . . . . 0.4 0.3 0.4 24.5 (15.5) Income before cumulative effect of changes in accounting principles . . . . . . . . . . . . . . 0.6 0.7 0.7 5.4 0.6 Cumulative effect of changes in accounting principles . . . . . . . . . . . . . . . . . . . . - - 0.2 - - Net income . . . . . . . . . . . . . . . . . . . . . 0.6 0.7 0.8 5.4 (18.1) ===== ===== =====
SALES AND OTHER REVENUES Consolidated sales and other revenues of $1,390.5 million increased $87.3 million, or 6.7%, in 1996 from 1995. Consolidated sales and revenues for 1996 include gains from the disposal of real estate and marketable securities of $2.8 million and $170,000, respectively, compared to $1.4 million from sales of real estate in 1995. Supermarket, convenience retail (Village Pantry), convenience wholesale (CSDC), and food service (Crystal Food Services) revenues accounted for 71%, 13%, 15%, and 1%, respectively, of consolidated revenues. Approximately $45.5 million of the increase was from supermarkets, $22.0 million from CSDC, $14.5 million from Crystal Food Services, and $3.6 million from Village Pantry. Retail sales (excluding fuel sales) increased 4.6%. Sales in comparable stores (including replacement supermarkets and convenience stores and format conversions) in 1996, increased 1.1% from 1995. Low rates of food price inflation and competitive activity constrained comparable stores sales growth. The sales increase in Supermarkets and Village Pantry were due principally to stores opened in 1996. The sales increase at CSDC resulted from the addition of new customers and volume increases from existing customers. At the end of 1996, CSDC served 1,360 non-related stores, compared to 1,350 at the end of 1995. The increase in food service sales and other revenues is attributable to the acquistions of Crystal Catering in January 1995, and Martz & Associates Food Services, Inc. in May 1995. In 1995, a 52 week year, revenues increased $40.1 million, or 3.2%, from 1994, a 53 week year. Approximately $23.6 million, or 2%, of the 1994 revenues were attributable to the additional week. Supermarket, Village Pantry and CSDC sales accounted for 72%, 13%, and 15%, respectively, of 1995 consolidated revenues. The supermarket, Village Pantry and CSDC operations increased revenues compared to 1994. The increases were $12.8 million, $10.1 million, and $13.0 million, respectively. The supermarket sales increase was due principally to new stores opened in 1994. The Village Pantry sales increase was largely due to growth in comparable stores. CSDC sales to unaffiliated customers increased largely due to a 3.8% increase in customers. Excluding fuel sales, retail sales in comparable stores (excluding the 53rd week of 1994) improved 0.7% in 1995 from 1994. This compared to a 1994 increase of 0.4% from 1993. New conventional supermarkets, discount stores, and wholesale clubs opened by competitors partially offset the benefit of a strengthening economy; however, the comparable store sales trend has been positive since reaching a negative 3.2% in the second quarter of 1993. The Company anticipates continued improvement in the comparable store sales trend. Recent economic improvement, the return of moderate food price inflation, and recently constructed stores should offset the impact of increased competitive activity. GROSS PROFIT Gross profit is net of warehousing, transportation and promotional expenses. In 1996, gross profit of $343.4 million increased $30.1 million, or 9.6%, compared to 1995. This increase was primarily attributable to improvements of $16.5 million in supermarkets, $10.1 million in Crystal Food Services, $1.8 million in CSDC, $89,000 in Village Pantry, and $1.6 million in additional gains from sales of real estate and marketable securities. Expressed as a percentage of revenue, consolidated gross profit was 24.7% in 1996, an increase of 0.7% from the 24.0% in 1995. The increase was primarily 5 attributable to a five-fold increase in sales of the food service operations, related to the aforementioned acquisitions, which have gross profit margins significantly higher than the average of the Company's other operations. The food service increase was accompanied by improvements in supermarket and CSDC operations. Gains in these operations more than offset a decline in Village Pantry. The Village Pantry decline resulted from a disproportionate increase in fuel sales, which have a lower gross margin than food products, accompanied by decreases in fuel margins in the second half of 1996. In 1995, consolidated gross profit increased $5.4 million, or 1.7%, from the prior year. Expressed as a percentage of revenue, consolidated gross profit was 24.0% in 1995 and 24.4% in 1994. This 0.4% decline was primarily attributable to lower margins in Village Pantry and CSDC. Pricing and promotional reductions, implemented by major cigarette manufacturers during the second and third quarters of 1994, impacted CSDC gross profit as a percentage of revenue. The lower Village Pantry gross profit resulted from a disproportionate increase in fuel sales. Supermarket gross profit was slightly higher in 1995, compared to 1994. LIFO inventory adjustments increased consolidated gross profit by $637 thousand in 1996, compared to a decrease of $100 thousand in 1995, and an increase of $1.3 million in 1994. For calendar year 1995, retail food (food-at-home) prices grew 3.3% compared to 2.9% in 1994, as measured by the "Consumer Price Index (CPI) for all Urban Consumers, U.S. City Average." However, the Company benefited from deflation in meat, frozen and cereal products in its fourth quarter. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses in 1996, compared to 1995, increased $28.4 million or 10.6%, to $297.0 million. Expressed as a percentage of revenues, selling, general and administrative expenses increased 0.8% from 20.6% in 1995, to 21.4% in 1996. This compared to a 0.2% decrease in 1995 from 1994. The increased expenses were primarily attributable to increases of $18.0 million in supermarkets, $8.9 million in the expanded Crystal Food Services and $2.0 million in Village Pantry. The increase in supermarkets resulted primarily from increases in occupancy expenses related to stores opened in the last twenty-four months, retail wages and related expenses, and advertising and promotional expenses. A tight labor market resulted in a shift to more full-time employees, wage increases and increased overtime. This resulted in an increase of 1.6% in identical store wages. The Company expects a tight labor market to continue as long as the economy remains at current levels. Selling, general and administrative expenses in 1995, compared to 1994, increased $5.9 million or 2.2%, to $268.7 million. Reductions in corporate overhead of $5.1 million resulted from the cost reduction plan announced in the fourth quarter of 1994. Savings from the cost reduction plan partially offset an $11.0 million increase in selling expenses. The increased selling expenses were primarily attributable to stores opened during 1994 and 1995. In 1995, selling expenses benefited from a decrease in direct wages in comparable stores. However, healthcare and pension costs increased $1.9 million, or 18.6%, from 1994. Advertising expense increased by $1.0 million, or 7.1%, primarily in response to competition in the Indianapolis market. Other occupancy expenses increased due to stores opened during 1994. DEPRECIATION AND AMORTIZATION EXPENSE Depreciation and amortization, expressed as a percentage of revenue, remained constant at 1.4% for 1996, 1995 and 1994. Depreciation and amortization expense for 1996 was $19.0 million, an increase of $481,000, or 2.6%, from 1995. The increase was due primarily to opening new stores. From 1994 to 1995, depreciation and amortization expense increased $270,000, or 1.5%, to $18.5 million. OPERATING PROFIT Operating profit (earnings from continuing operations before interest and taxes) was $27.4 million, or 2.0% of consolidated sales and other revenues for 1996. This compares to $26.1 million, or 2.0%, in 1995. The gross profit increase of $30.1 million more than offset increases of $28.4 million in selling, general and administrative expenses and $481,000 in depreciation and amortization expense. As a percentage of revenues, operating profit declined slightly to 2.0% in 1995 from 2.1% in 1994. As a percentage of revenues, an improvement in administrative expense offset a decline in gross profit and an increase in selling expenses. INTEREST EXPENSE Interest expense in 1996 was $13.1 million, compared to $13.3 million in 1995. The decrease of $205,000, or 1.5%, resulted from lower principal balances and an increased level of capitalized construction interest. In 1995, principal reductions caused interest expense to decrease $44 thousand, or 0.3%, compared to 1994. INCOME TAXES The effective income tax rate was 36.8% in 1996, 33.0% in 1995, and 36.9% in 1994. The 1996 effective rate increase resulted from a dramatic decrease in Targeted Jobs Tax Credits and a decreased level of charitable donations as compared to 1995. The benefit of Targeted Jobs Tax Credits was significantly less in 1996, since the credit expired for employees hired after December 31, 1994. The 1995 effective rate decrease resulted from increased charitable contributions, Targeted Jobs Tax Credits and Research and Experimental Credits. CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES The Company provides certain health care benefits to early retirees. In the first quarter of 1994, the Company adopted FAS Statement ("FAS") No. 106, "Employers Accounting for Postretirement Benefits Other than Pensions." Accordingly, the expected cost of such benefits are accrued over the employees' years of service. Previously, these costs were expensed when paid (amounts were not material). The Company recognized a $1.7 million (net of tax benefit) accrued benefit obligation upon adoption. Future expense is expected to be immaterial and approximate the expense previously recorded on the "pay as you go" basis. 6 Also, in the first quarter of 1994, the Company adopted FAS No. 109, "Accounting for Income Taxes," which requires the Company to utilize the liability method of accounting for income taxes. The cumulative effect of this change increased net income by $3.6 million. See Note G to the consolidated financial statements for a detailed analysis of the Company's income tax accounts. The net effect of the above changes increased 1994 earnings by $1.9 million, or $.20 per fully diluted share. NET INCOME Net income for 1996, of $9.0 million, or 0.6% of revenue, improved from $8.6 million, or 0.7% of revenue, in 1995. Fiscal 1996 benefited from the sale of surplus real estate and marketable securities and a favorable LIFO adjustment. Supermarket and Village Pantry earnings were lower than the prior year, while CSDC and Crystal Food Services increased. In 1995, income before the cumulative effect of changes in accounting principles of $8.6 million compared to $8.5 million in 1994. Fiscal 1995 benefited from sales of surplus real estate, partly offsetting earnings from 1994's extra week and a favorable LIFO adjustment. Supermarket and Village Pantry earnings exceeded 1994, while CSDC earnings were lower. OTHER In the retail food industry, changes in product cost generally result in higher or lower retail prices with gross margin percentages remaining relatively stable. Periods of very moderate food price inflation or price deflation tend to affect operating results adversely since revenues are reduced while inflationary increases continue in certain expense categories. Through the use of the LIFO inventory costing method, current costs are reflected in the cost of merchandise sold. CAPITAL EXPENDITURES Capital expenditures and major capital projects completed during the last three years consisted of:
1996 1995 1994 ---- ---- ---- Capital expenditures (millions) . . . . . . . . . . . . . . . $22.7 $30.6 $44.3 ===== ===== ===== Supermarkets New/acquired stores . . . . . . . . . . . . . . . . . 3 1 6 Closed stores . . . . . . . . . . . . . . . . . . . . 1 0 3 Major remodels/expansions . . . . . . . . . . . . . . 5 0 2 Convenience stores New/acquired stores . . . . . . . . . . . . . . . . . 1 5 5 Closed stores . . . . . . . . . . . . . . . . . . . . 1 1 2 All years include land acquisitions for future store development.
During 1996, the Company opened the following stores:
SQUARE TYPE/CATEGORY FEET LOCATION OPENED ------------- ---- -------- ------ Superstore New 81,468 Lafayette, IN July 25, 1995 Supermarket New 60,397 Muncie, IN Aug. 3, 1995 Supermarket New 57,294 Indianapolis, IN Nov. 3, 1995 LoBill Conversion 39,055 Anderson, IN May 1, 1995 LoBill Conversion 25,704 Anderson, IN Apr. 6, 1995 LoBill Conversion 26,800 Muncie, IN Apr. 6, 1995 LoBill Conversion 22,400 Indianapolis, IN Sep. 26, 1995 Convenience New 4,624 Muncie, IN Jun. 29, 1995
Subsequent to March 30, 1996, the Company completed the conversion of a Marsh supermarket to the LoBill format. This 31,592 square foot store reopened April 1, 1996. During 1995, the Company opened the following stores:
SQUARE TYPE / CATEGORY FEET LOCATION OPENED --------------- ---- -------- ------ Superstore New 80,430 Fishers, IN Nov. 11, 1994 Convenience New 4,526 Indianapolis, IN Aug. 18, 1994 Convenience New 4,526 Plainfield, IN Sept. 1, 1994 Convenience New 4,465 Brownsburg, IN Nov. 3, 1994 Convenience New 4,465 Kokomo, IN Dec. 15, 1994 Convenience Replace 5,041 Indianapolis, IN Jan. 6, 1995
The projects listed above (net of stores closed) increased sales area square footage by 5.3% and 3.0%, in 1996 and 1995, respectively. In addition to these projects, the Company purchased the assets of Martz & Associates Food Services, Inc. in 1996, for $1.0 million in cash and the issuance of 43,416 shares of Class B Common Stock. In 1995, the Company purchased the assets of Crystal Catering, the largest caterer in Indianapolis, and its affiliated companies for $4.7 million. An additional $900 thousand of purchase price is contingent upon the cumulative performance of Crystal Food Services for 1996 through 1998. Approximately one third of the contingent purchase price was earned in 1996. For 1997, the Company plans to open two new Marsh supermarkets (one is a replacement store), remodel and expand an existing Marsh supermarket, convert three Marsh supermarkets to the LoBill format, open 5 new convenience stores, expand its perishables products warehouse, construct a central commissary and acquire several sites for future development. The cost of these projects and other routine capital commitments is estimated to be $40 million. Of this amount, the Company plans to fund $10 million through equipment leasing, and believes it can finance the balance with current cash balances and internally generated funds. The Company anticipates completion of most of these projects by December 1996. 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 successfully negotiate 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, and a portion of planned expenditures with respect to projects commenced during the current fiscal year may carry over to the subsequent fiscal year. LIQUIDITY AND CAPITAL RESOURCES As presented in the Consolidated Statements of Cash Flows, net cash provided by operating activities was $27.1 million for 1996. This was an $8.1 million, or 23.0%, decrease from the $35.2 million reported for 1995. The significant changes in working capital were a $5.7 million increase in accounts receivable, a $7.3 million increase in inventory and a $5.1 million increase in accounts payable and accrued expenses. The increase in accounts 7 receivable is largely attributable to short-term notes carried by the Company to finance sales of surplus real estate and an increase in promotional trade receivables from vendors. The inventory increase is largely attributable to new supermarkets opened during the year and an increase in CSDC cigarette inventories. The increase in accounts payable and accrued expenses is attributable to the aforementioned increase in inventory. For 1996, investing activities consisted of $20.7 million net expenditures for acquisition of property, equipment and land for expansion, and $4.4 million in other investing activities (primarily acquisition of rental video tapes, amortized over two years). The Company's capital requirements are traditionally financed through internally generated funds, long-term borrowings and lease financings, including capital and operating leases. The Company anticipates continued access to such financing sources. The $8.0 million increase in notes payable to banks from April 1, 1995 to March 30, 1996, is largely a function of principal reductions on long term borrowings and capital lease obligations. Other investing activities, for 1996, included the net repurchase of 27,025 shares of Class A Common Stock and 35,225 shares of Class B Common Stock for $696,000 and dividend payments of $3.7 million. At March 30, 1996, the Company's long-term debt and capital lease obligations amounted to $135.1 million, compared to $143.1 million at April 1, 1995. Of the total long-term debt and capital lease obligations at March 30, 1996, 96% are at fixed rates of interest averaging 8.4%, and 4% are at fluctuating rates of interest averaging 5.8%. Bank revolving credit agreements provide $40 million of financing, of which $2.2 million was utilized at March 30, 1996. Commitments for short-term bank borrowings provide an additional $15 million. At March 30, 1996, $15 million was outstanding on short-term bank borrowings. The Company's senior note agreements prohibit additional long-term borrowings if the Company's total long-term liabilities, including capital lease obligations, would exceed 60% of the Company's consolidated net tangible assets. The most restrictive of these agreements limit additional long-term borrowings to approximately $36 million as of March 30, 1996. The senior note agreements also prohibit the Company from entering into any operating leases having an original term greater than three years, unless consolidated income available for fixed charges, as defined in the agreements, exceeds 150% of fixed charges in three of the four most recently completed fiscal years. As of March 30, 1996, fixed charges exceeded 150% of consolidated income available for fixed charges in each of the four most recently completed fiscal years. Accordingly, the Company will not be able to enter into any lease with a term in excess of three years in 1997. ACCOUNTING PRONOUNCEMENTS The Company will adopt Statement of Financial Accounting Standards (FAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," in the first quarter of 1997. The statement establishes accounting standards for recognizing and measuring the impairment of long-lived assets, and requires the carrying amount of any impaired assets be reduced to fair value. The adoption of this standard is expected to result in a charge to earnings, of approximately $2.5 to $3.5 million, net of tax, in the first quarter of 1997. In October 1995, FAS No. 123 "Accounting for Stock Based Compensation" was issued. This statement defines a fair value based method of accounting for stock and stock options issued to compensate employees and others. However, FAS No. 123 allows companies to continue using existing methods for recognizing the expense of these plans if they provide pro forma disclosures in the financial statements and earnings per share using the fair value method prescribed in the statement. The Company intends to follow the current approach in its 1997 financial statements. Consequently, FAS No. 123 will have no impact on the Company's 1997 consolidated financial position or results of operations. 8 REPORT OF MANAGEMENT ON RESPONSIBILITY FOR FINANCIAL REPORTING The management of Marsh Supermarkets, Inc. is responsible for the preparation and integrity of the consolidated financial statements included in this annual report. The financial statements were prepared in accordance with generally accepted accounting principles and necessarily include some amounts based on management's best estimates and judgment. All financial information appearing in this annual report is consistent with that in the financial statements. The Company maintains a system of internal controls designed to provide reasonable assurance, on a cost-effective basis, that assets are safeguarded and transactions are properly authorized and recorded accurately in the financial records. The Company believes its control system is enhanced by its long-standing emphasis on conducting business in accordance with the highest standards of conduct and ethics. Independent auditors, Ernst & Young LLP, have audited the accompanying financial statements. Their report is included herein. Their audits, conducted in accordance with generally accepted auditing standards, included review and evaluation of selected internal accounting controls for purposes of designing their audit tests. The Audit Committee of the Board of Directors meets periodically with the independent auditors to discuss the scope and results of their audit work, their assessment of internal controls, and the quality of financial reporting. The independent auditors are engaged by the Board of Directors, upon recommendation of the Audit Committee. Don E. Marsh Douglas Dougherty Michael D. Castleberry Chairman of the Board, Vice President, Assistant Treasurer and President and Chief Financial Officer and Director of Accounting Chief Executive Officer Treasurer
- -------------------------------------------------------------------------------- REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS To the Shareholders and Board of Directors of Marsh Supermarkets, Inc. We have audited the accompanying consolidated balance sheets of Marsh Supermarkets, Inc. and subsidiaries as of March 30, 1996 and April 1, 1995, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years in the period ended March 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Marsh Supermarkets, Inc. and subsidiaries at March 30, 1996 and April 1, 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 30, 1996, in conformity with generally accepted accounting principles. As discussed in Note A to the consolidated financial statements, in 1994 the Company changed its methods of accounting for postretirement health benefits and income taxes. Ernst & Young LLP Indianapolis, Indiana May 17, 1996 9 CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)
YEAR ENDED March 30, 1996 April 1, 1995 April 2, 1994 - ------------------------------------------------------------------------------------------------------------------------ Sales and other revenues . . . . . . . . . . . . . . . . . . . . . $1,390,543 $1,303,261 $1,263,191 Cost of merchandise sold, including warehousing and transportation. . . . . . . . . . . . . . . . . . . . . . . . . . 1,047,193 990,037 955,340 ---------- ---------- ---------- Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . 343,350 313,224 307,851 Selling, general and administrative . . . . . . . . . . . . . . . . 297,022 268,666 262,792 Depreciation and amortization . . . . . . . . . . . . . . . . . . . 18,957 18,476 18,206 ---------- ---------- ---------- Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . 27,371 26,082 26,853 Interest and debt expense amortization - Note C . . . . . . . . . . 13,087 13,292 13,336 ---------- ---------- ---------- Income before income taxes and cumulative effect of changes in accounting principles . . . . . . . . . . . . . . . . . . . . . 14,284 12,790 13,517 Income taxes - Note G . . . . . . . . . . . . . . . . . . . . . . . 5,251 4,217 4,991 ---------- ---------- ---------- Income before cumulative effect of changes in accounting principles . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,033 8,573 8,526 Cumulative effect of changes in accounting principles (net of tax benefits) - Notes F and G . . . . . . . . . . . . . - - 1,941 ---------- ---------- ---------- NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,033 $ 8,573 $ 10,467 ========== ========== ========== EARNINGS PER SHARE: Primary Before cumulative effect of changes in accounting principles . . . $ 1.07 $ 1.02 $ 1.01 Cumulative effect of accounting changes . . . . . . . . . . . . . . - - .23 ---------- ---------- ---------- NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.07 $ 1.02 $ 1.24 ========== ========== ========== Fully diluted Before cumulative effect of changes in accounting principles . . . $ 1.02 $ .98 $ .97 Cumulative effect of accounting changes . . . . . . . . . . . . . . - - .20 ---------- ---------- ---------- NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.02 $ .98 $ 1.17 ========== ========== ========== Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . $ .44 $ .44 $ .44 ========== ========== ==========
- -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements. 10 CONSOLIDATED BALANCE SHEETS (in thousands)
March 30,1996 April 1, 1995 ------------- ------------- ASSETS Current Assets Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,822 $ 15,366 Accounts receivable, less allowances of $970 in 1996, and $893 in 1995 . . . . 23,790 18,117 Inventories - Note B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,746 82,408 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,764 5,537 Recoverable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361 504 Deferred income taxes - Note G . . . . . . . . . . . . . . . . . . . . . . . . . 1,510 3,810 -------- -------- TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,993 125,742 Property and Equipment - Note C Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,311 41,027 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,107 121,589 Fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,469 100,739 Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,670 46,832 Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,912 3,604 Property under capital leases . . . . . . . . . . . . . . . . . . . . . . . . . 13,014 17,681 -------- -------- 344,483 331,472 Allowances for depreciation and amortization . . . . . . . . . . . . . . . . . . 114,552 107,103 -------- -------- TOTAL PROPERTY AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . 229,931 224,369 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,370 28,360 -------- -------- $387,294 $378,471 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes payable to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,000 $ 7,000 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,629 50,611 Employee compensation and other liabilities . . . . . . . . . . . . . . . . . . 10,329 10,023 State and local taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,579 9,944 Other accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . 15,923 13,727 Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 924 926 Current maturities of long-term liabilities . . . . . . . . . . . . . . . . . . 7,022 7,142 -------- -------- TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . 114,406 99,373 Long-term Liabilities Long-term debt - Note C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,854 133,939 Capital lease obligations - Note D . . . . . . . . . . . . . . . . . . . . . . . 5,212 9,163 -------- -------- TOTAL LONG-TERM LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . 135,066 143,102 Deferred Items Income taxes - Note G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,700 12,531 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,964 9,151 -------- -------- TOTAL DEFERRED ITEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,664 21,682 Shareholders' Equity - Notes C and H Series A Junior Participating Cumulative Preferred stock: Authorized: 5,000,000 shares; Issued: None Class A Common Stock, no par value: Authorized: 15,000,000 shares; Issued: 4,695,253 . . . . . . . . . . . . . . . 8,552 8,552 Class B Common Stock, no par value: Authorized: 15,000,000 shares; Issued: 5,265,158 . . . . . . . . . . . . . . . 16,232 15,974 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,414 97,078 Cost of Common Stock in treasury Class A: 1996 - 844,555; 1995 - 817,530 shares . . . . . . . . . . . . . . . (3,976) (3,677) Class B: 1996 - 720,303; 1995 - 728,494 shares . . . . . . . . . . . . . . . (3,500) (3,301) Additional minimum pension liability . . . . . . . . . . . . . . . . . . . . . . (1,258) - Notes receivable - stock options . . . . . . . . . . . . . . . . . . . . . . . . (306) (312) -------- -------- TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . 118,158 114,314 -------- -------- $387,294 $378,471 ======== ========
- -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements. 11 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in thousands)
Class A Class B Cost of Common Common Retained Stock in Stock Stock Earnings Treasury Other Total - ----------------------------------------------------------------------------------------------------------------------- Balance at March 27, 1993 . . . . . . . . . . $8,394 $14,487 $ 85,451 $(6,345) $ (448) $101,539 Net income . . . . . . . . . . . . . . . . 10,467 10,467 Cash dividends declared . . . . . . . . . . (3,714) (3,714) Public offering of 69,900 shares . . . . . 837 837 Exercise of stock options . . . . . . . . . 158 137 275 570 Notes receivable - stock options . . . . . (353) (353) Amortization of deferred cost - employee stock plan . . . . . . . . . . . . . . . 448 448 ------ ------- -------- ------- ------- -------- Balance at April 2, 1994 . . . . . . . . . . 8,552 15,461 92,204 (6,070) (353) 109,794 Net income . . . . . . . . . . . . . . . . 8,573 8,573 Cash dividends declared . . . . . . . . . . (3,699) (3,699) Issuance of shares - Crystal Catering acquisition . . . . . . . . . . . . . . . 513 415 928 Repurchase of 125,425 shares . . . . . . . (1,323) (1,323) Other . . . . . . . . . . . . . . . . . . . 41 41 ------ ------- -------- ------- ------- -------- Balance at April 1, 1995 . . . . . . . . . . 8,552 15,974 97,078 (6,978) (312) 114,314 Net income . . . . . . . . . . . . . . . . 9,033 9,033 Cash dividends declared . . . . . . . . . . (3,696) (3,696) Issuance of shares - Martz & Associates acquisition . . . . . . . . . . . . . . . 258 198 456 Repurchase of 62,250 shares . . . . . . . . (696) (696) Additional minimum pension liability . . . (1,258) (1,258) Other . . . . . . . . . . . . . . . . . . . (1) 6 5 ------ ------- -------- ------- ------- -------- Balance at March 30, 1996 . . . . . . . . . . $8,552 $16,232 $102,414 $(7,476) $(1,564) $118,158 ====== ======= ======== ======= ======= ========
- -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements. 12 CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Year Ended March 30, 1996 April 1, 1995 April 2, 1994 - --------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Income before cumulative effect of changes in accounting principles . $ 9,033 $ 8,573 $ 8,526 Cumulative effect of changes in accounting principles . . . . . . . . - - 1,941 ------- ------- ------- Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,033 8,573 10,467 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . 18,957 18,476 18,206 Amortization of other assets . . . . . . . . . . . . . . . . . . 5,488 6,408 6,370 Decrease in deferred income . . . . . . . . . . . . . . . . . . . - - (661) Increase (decrease) in deferred income taxes . . . . . . . . . . 219 (1,464) 544 Changes in operating assets and liabilities: Accounts receivable . . . . . . . . . . . . . . . . . . . . . . (5,673) (2,097) (1,133) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . (7,338) 4,358 (11,875) Prepaid expenses and recoverable income taxes . . . . . . . . . 916 919 (450) Accounts payable and accrued expenses . . . . . . . . . . . . . 5,148 414 14,795 Cumulative effect of accounting changes . . . . . . . . . . . . . - - (1,941) Other operating activities . . . . . . . . . . . . . . . . . . . 346 (388) 1,961 ------- ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . 27,096 35,199 36,283 INVESTING ACTIVITIES Acquisition of property, equipment and land for expansion . . . . . . (22,736) (30,607) (44,322) Disposition of property and equipment . . . . . . . . . . . . . . . . 2,045 2,835 126 Other investing activities, principally acquisition of rental video tapes . . . . . . . . . . . . . . . . . . . . . . . . (4,397) (6,803) (5,941) ------- ------- ------- NET CASH USED FOR INVESTING ACTIVITIES . . . . . . . . . . . . . (25,088) (34,575) (50,137) FINANCING ACTIVITIES Proceeds of short-term borrowings . . . . . . . . . . . . . . . . . . 8,000 3,000 4,000 Proceeds of long-term borrowings . . . . . . . . . . . . . . . . . . 68,200 10,000 4,000 Payments of long-term debt and capital lease obligations . . . . . . (76,357) (17,345) (7,909) Proceeds of public offering of Class B Common Stock . . . . . . . . . - - 837 Purchase of Class A and Class B Common Stock for treasury . . . . . . (696) (1,323) - Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . (3,699) (3,702) (3,707) Other financing activities . . . . . . . . . . . . . . . . . . . . . - - 216 ------- ------- ------- NET CASH USED FOR FINANCING ACTIVITIES . . . . . . . . . . . . . (4,552) (9,370) (2,563) NET DECREASE IN CASH AND EQUIVALENTS . . . . . . . . . . . . . . . . . (2,544) (8,746) (16,417) Cash and equivalents at beginning of year . . . . . . . . . . . . . . . 15,366 24,112 40,529 ------- ------- ------- CASH AND EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . . . . . . $12,822 $15,366 $24,112 ======= ======= =======
- -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements. 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share amounts or as otherwise noted) NOTE A -- SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies followed in preparation of the consolidated financial statements are: FISCAL YEAR The Company's fiscal year ends on Saturday of the thirteenth week of each calendar year. All references herein to "1996", "1995" and "1994" relate to the fiscal years ended March 30, 1996, April 1, 1995 and April 2, 1994, respectively. Fiscal 1994 includes 53 weeks, with 52 weeks in each of 1996 and 1995. BASIS OF PRESENTATION The consolidated financial statements include the accounts of Marsh Supermarkets, Inc. and all majority owned subsidiaries ("the Company"). Investments in unconsolidated subsidiaries are carried at cost plus equity in undistributed earnings since the date of acquisition. Significant inter-company accounts and transactions have been eliminated. The Company is principally involved in a single significant business segment, the distribution and retail sale of food and related products through supermarkets, convenience stores, and food services. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND EQUIVALENTS Cash equivalents consist of highly liquid investments with a maturity of three months or less when purchased. The carrying amount approximates fair value of these assets. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined by the last-in, first-out ("LIFO") method for the principal components of inventories, and by the first-in, first-out ("FIFO") method for the remainder (see Note B). PROPERTY AND EQUIPMENT Property and equipment are stated at cost, including a provision for capitalized interest. For financial reporting purposes, depreciation is computed by the straight-line method over the estimated useful lives of the assets. For income tax purposes, accelerated methods and statutory lives are used to compute depreciation. CAPITALIZED LEASE PROPERTY Capitalized lease assets are amortized using the straight-line method over the term of the lease or in accordance with practices established for similar owned assets if ownership transfers to the Company at the end of the lease term. Amortization is included with depreciation expense. EXCISE TAXES Sales and cost of merchandise sold include state and federal excise taxes on tobacco, gasoline and alcohol products of approximately $91 million, $86 million and $72 million in 1996, 1995 and 1994, respectively. ADVERTISING COSTS In the first quarter of fiscal 1996, the Company adopted AICPA Statement of Position No. 93-7 "Reporting on Advertising Costs." This statement requires costs of advertising to be expensed in the period incurred or the first time the advertising is distributed. The Company historically capitalized certain costs of advertising (primarily television commercial production) and amortized these costs over the period in which the advertising was used. As of April 1, 1995, all such costs were fully amortized; therefore, the adoption of this Statement did not require the recording of a cumulative change in accounting method. Advertising expenses in the amounts of $16.6 million, $13.8 million, and $12.9 million were recorded for 1996, 1995 and 1994, respectively. COSTS OF OPENING STORES Non-capital expenditures associated with opening new stores are expensed as incurred. EARNINGS PER SHARE Earnings per share are presented on a "primary" and "fully diluted" basis. "Primary" shares are based on the weighted average number of shares of common stock outstanding and the share equivalent effect of dilutive stock options. "Fully diluted" shares consider the dilutive effect of stock options and the conversion of convertible debentures. INCOME TAXES Pursuant to Statement of FAS No. 109, deferred tax assets and liabilities result from differences between financial reporting and tax basis of assets and liabilities, measured using enacted tax rates and laws expected to be in effect when the differences reverse. ACCOUNTING CHANGES Accounting for the Impairment of Long-Lived Assets The Company will adopt FAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," in the first quarter of fiscal 1997. The statement establishes accounting standards for recognizing and measuring impairment of long-lived assets, and requires reducing the carrying amount of any impaired assets to fair value. Adoption of FAS No. 121 is expected to result in a charge to earnings of approximately $2.5 to $3.5 million, net of tax. Accounting for Stock Based Compensation In October 1995, FAS No. 123 "Accounting for Stock Based Compensation" was issued. The statement prescribes accounting and reporting standards for all stock-based compensation plans. FAS No. 123 allows companies to continue using existing methods for recognizing the expense of these plans and provide 14 pro forma disclosures in the financial statements and earnings per share using the fair value method prescribed in the statement. The Company intends to follow this approach in its 1997 financial statements. Postretirement Benefits and Income Taxes Effective March 28, 1993, the Company adopted FAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" and FAS No. 109, "Accounting for Income Taxes." The $1.9 million net of tax, cumulative effect of these changes was as follows:
Income/ Per Share (Expense) Fully Diluted --------- ------------- FAS No. 106. . . . . . . . . . . . . . . . . . . . . . . . $(2,700) Tax effect . . . . . . . . . . . . . . . . . . . . . . . . 1,005 ------- (1,695) $(.17) FAS No. 109 . . . . . . . . . . . . . . . . . . . . . . . . 3,636 37 ------- ----- Cumulative effect of changes . . . . . . . . . . . . . . . $ 1,941 $ .20 ======= =====
ENVIRONMENTAL LIABILITIES The Company recognizes environmental liabilities when environmental assessments indicate remedial efforts are required and the costs can be reasonably estimated. Estimates of liability are based on all currently known facts, prior remediation experience, existing technology, and presently enacted federal and state statutes, ordinances and regulations concerning the storage and dispensing of petroleum products. These estimated liabilities are subject to revision in future periods as actual costs and new information becomes known. The liabilities are recorded in the balance sheet at their undiscounted amounts, and do not consider any potential recovery the Company may receive from either the Indiana Underground Storage Tank Excess Liability Fund, which reimburses owners and operators of underground storage tanks ("USTs") for a portion of the costs incurred in connection with the remediation of soil and groundwater contamination, or from third parties that may be responsible for all or part of the contamination. Current environmental laws and regulations require the removal or abandonment of underground storage tanks (USTs) at 25 Village Pantry locations prior to December 1998. Earlier removal or abandonment is required in the event any UST fails any leak detection test, which the Company performs at least annually. All USTs at these 25 locations passed the most recent leak detection tests in calendar 1995, which results were consistent with data from the Company's established petroleum product inventory control program. The Company is aware of the existence of petroleum contamination at eight Village Pantry locations 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. The cost to remove or abandon the remaining USTs and to remediate known contamination at these eight locations has been estimated at approximately $761,000. The Company has charged this amount to earnings. The Company currently estimates the maximum aggregate cost remaining to be incurred in connection with compliance with existing environmental laws and regulations applicable to owners and operators of USTs will not exceed approximately $1.2 million through December 1998. RECLASSIFICATIONS Certain items in the 1995 and 1994 financial statements were reclassified to conform with the presentation used in 1996. NOTE B -- INVENTORIES Inventories valued by the LIFO method represented approximately 78% and 83% of consolidated inventories at March 30, 1996 and April 1, 1995, respectively. Current inventory cost exceeded the carrying amount of LIFO inventories by $18.2 million at March 30, 1996, and $18.9 million at April 1, 1995. NOTE C -- DEBT ARRANGEMENTS
Long-term debt consisted of the following: 1996 1995 ---- ---- Notes payable to insurance companies: 8.54% Senior Notes, unsecured . . . . . . . . . . . . . . . . . . . $ 35,000 $ 35,000 8.13% Senior Notes, unsecured . . . . . . . . . . . . . . . . . . . 12,273 13,636 9.48% Senior Notes, unsecured . . . . . . . . . . . . . . . . . . . 20,000 22,500 10.05% notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,603 20,191 9.05% notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,313 20,938 7% convertible subordinated debentures. . . . . . . . . . . . . . . . . 20,000 20,000 Economic development bond . . . . . . . . . . . . . . . . . . . . . . . 2,107 2,225 6.4% (average rate) mortgage notes, due in installments through 1999 . . . . . . . . . . . . . . . . . . 3,394 4,000 Revolving credit agreements . . . . . . . . . . . . . . . . . . . . . . 2,220 - Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,119 1,430 Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . (6,175) (5,981) -------- -------- $129,854 $133,939 ======== ========
The 8.54% notes are payable in installments of $3.5 million due each December 31 from 1998 to 2007. The 8.13% notes are payable in installments of $1.4 million due each December 31 through 2004. The 9.48% notes are payable in installments of $2.5 million due each June 30 through 2003. The 10.05% notes are payable in monthly installments (principal and interest) of $220 thousand through 2009. The 9.05% notes are payable in quarterly installments (principal and interest) of $625 thousand through 2011. In 2000, the Company or lender may initiate an interest rate renegotiation or require retirement of the notes. The 7% convertible subordinated debentures mature February 15, 2003. They are convertible, at the holder's option at any time, into Class B Common Stock at a conversion price of $15.50 per share. They are redeemable, at the Company's option, at declining prices which started at 103.5% of the principal amount in 1996. The debentures are subordinate to all present and future senior indebtedness. The economic development bond bears interest at 8.25%, and is due in monthly installments of $25 thousand (principal and interest) through 2006. Real estate with a net carrying amount of approximately $47 million is pledged as collateral to the 10.05% notes, the 9.05% notes, the economic development bond and the mortgage notes. The Company guarantees a $1.5 million portion of two mortgages for a 25% owned, unconsolidated subsidiary. 15 As of March 30, 1996 and April 1, 1995, the carrying amounts of long-term debt, including current maturities, were $136.0 million and $139.9 million, respectively. The estimated fair value, determined using a discounted cash flow method and estimated current incremental borrowing rates for similar types of borrowings, exceeds the carrying amount by $7.8 million, as of March 30, 1996, and $721 thousand as of April 1, 1995.
The fair value of each obligation is: 1996 1995 ---- ---- Notes payable to insurance companies: 8.54% Senior Notes, unsecured . . . . . . . . . . . . . . . . . . . . $ 37,896 $35,929 8.13% Senior Notes, unsecured . . . . . . . . . . . . . . . . . . . . 12,527 13,431 9.48% Senior Notes, unsecured . . . . . . . . . . . . . . . . . . . . 21,531 23,611 10.05% notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,932 21,582 9.05% notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,422 20,949 7% convertible subordinated debentures . . . . . . . . . . . . . . . . . 19,730 17,709 Economic development bond . . . . . . . . . . . . . . . . . . . . . . . . 2,239 2,240 6.4% (average rate) mortgage notes, due in installments through 1999 . . . 3,400 4,010 Revolving credit agreements . . . . . . . . . . . . . . . . . . . . . . . 2,220 - Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 980 1,180 Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . (6,175) (5,981) -------- -------- $137,702 $134,660 ======== ========
Several of the loan agreements require maintenance of minimum working capital and limit cash dividends, repurchases of common stock, future indebtedness, lease obligations, investments, and disposition of assets. Under the most restrictive covenant, retained earnings available for payment of dividends was approximately $25 million at March 30, 1996. The Company's revolving credit agreements permit borrowings up to $40 million. On August 1 of each year, either the Company or the banks may elect not to renew the arrangements, in which event revolving credit borrowings would convert to term loans payable in twenty quarterly installments, on the following July 31. Interest is based on various money market rates selected by the Company at the time of borrowing. The Company pays a commitment fee of 1/4% on unused amounts. The Company has commitments from various banks for short-term borrowings of up to $15 million at rates at or below the prime rates of the committed banks, of which all, at an average rate of 5.8%, was utilized at March 30, 1996. This compares to $7 million at an average rate of 7.0%, utilized at April 1, 1995. Aggregate principal payments of long-term debt outstanding at March 30, 1996 for the succeeding five years and thereafter are: 1997 . . . . . . . . . . . . . . $ 6,175 1998 . . . . . . . . . . . . . . 6,486 1999 . . . . . . . . . . . . . . 10,347 2000 . . . . . . . . . . . . . . 10,480 2001 . . . . . . . . . . . . . . 10,440 Thereafter . . . . . . . . . . . 92,101
Interest expense consisted of: 1996 1995 1994 ---- ---- ---- Long-term debt . . . . . . . . . . . . . . $12,016 $12,059 $11,960 Capital lease obligations . . . . . . . . . 991 1,214 1,376 Other . . . . . . . . . . . . . . . . . . . 80 19 - ------- ------- ------- Total interest expense . . . . . . . . . . $13,087 $13,292 $13,336 ======= ======= ======= Interest capitalized . . . . . . . . . . . $ 714 $ 555 $ 1,257 ======= ======= ======= Cash payments for interest . . . . . . . . $13,632 $13,690 $14,383 ======= ======= =======
The senior note agreements preclude the Company from becoming obligated, as a lessee, under any operating lease having an original term greater than three years, unless at the time the lease is entered into, consolidated income available for fixed charges, as defined by the agreement, exceeds 150% of fixed charges in three of the four most recently completed years. As of March 30, 1996, none of the four most recently completed years had consolidated income available for fixed charges in excess of 150% of fixed charges. Accordingly, the Company will not be able to enter into any lease, with a term of more than three years in 1997. NOTE D -- LEASES Of the Company's 271 retail stores, 112 are commercial lease agreements providing for initial terms generally from 15 to 20 years with options to extend the initial terms up to an additional 20 years. In addition, one supermarket is leased under an equity lease arrangement where ownership transfers to the Company at lease expiration. The net carrying amount at March 30, 1996, included in capitalized lease property, was $659 thousand. The Company also leases a portion of its transportation and store equipment for periods of from three to eight years plus renewal and purchase options. Capitalized lease property consisted of:
1996 1995 ---- ---- Store facilities . . . . . . . . . . . . . $13,014 $13,765 Warehouses . . . . . . . . . . . . . . . . - 3,916 ------- ------- 13,014 17,681 Accumulated amortization . . . . . . . . . (9,197) (11,072) ------- ------- $ 3,817 $ 6,609 ======= =======
Future minimum lease payments under capital and operating leases with terms in excess of one year, and the present value of capital lease obligations, at March 30, 1996, were as follows:
Capital Operating Leases Leases ------ ------ 1997 . . . . . . . . . . . . . . . . . . . $ 1,457 $15,714 1998 . . . . . . . . . . . . . . . . . . . 1,402 14,314 1999 . . . . . . . . . . . . . . . . . . . 1,141 13,474 2000 . . . . . . . . . . . . . . . . . . . 1,027 9,973 2001 . . . . . . . . . . . . . . . . . . . 857 7,912 Later years . . . . . . . . . . . . . . . . 3,549 21,397 ------- ------- 9,433 $82,784 ======= Less: Estimated executory costs . . . . . . . 68 Amounts representing interest . . . . . 3,307 ------- Present value of net minimum lease payments . . . . . . . . . . . . $ 6,058 =======
Minimum annual lease payments will be reduced by $1.0 million from future sublease rentals due over the term of the subleases.
Rental expense consisted of: 1996 1995 1994 ---- ---- ---- Minimum rentals . . . . . . . . . . . . . . $21,740 $19,514 $19,225 Contingent rentals . . . . . . . . . . . . 1,548 242 151 Sublease rental income . . . . . . . . . . (2,217) (2,023) (1,814) ------- ------- ------- $21,071 $17,733 $17,562 ======= ======= =======
16 NOTE E -- RETIREMENT PLANS The Company has a qualified defined benefit pension plan covering the majority of its non-union (retail and administrative) employees and an unfunded supplemental retirement plan that covers eligible corporate officers, as designated by the Board of Directors. The current benefit formula, under the qualified plan, is based upon years of service and the highest consecutive four years of earnings during the last ten years worked. The benefits under both plans are similar; however, the supplemental plan takes into consideration compensation in excess of amounts that can be recognized under the qualified plan. For the qualified plan, the Company's funding policy is consistent with federal laws and regulations. The Company contributed $1.9 million and $2.2 million to the qualified defined benefit pension plan in 1996 and 1995 respectively. Plan assets consist principally of listed stocks, corporate and government notes and bonds, and 92,675 shares each of Class A and Class B Common Stock of the Company. At March 30, 1996, the Company's Common Stock in the qualified plan had a market value of $2.2 million. The supplemental plan is unfunded. The actuarial present value of the projected benefit obligation under the supplemental plan were $3.5 million and $2.9 million at March 30, 1996 and April 1, 1995, respectively. The funded status of the plans and amounts recognized in the consolidated balance sheets at March 30, 1996 and April 1, 1995 were as follows:
Actuarial present value of benefit obligations: 1996 1995 ---- ---- Vested benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,357 $28,558 Nonvested benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,508 3,125 ------- ------- Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . 38,865 31,683 Effect of projected future salary increases. . . . . . . . . . . . . . . . . . . 7,832 6,250 ------- ------- Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 46,697 37,933 Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,570 29,320 ------- ------- Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,127) (8,613) Unrecognized net loss from past experience different from that assumed . . . . . 12,614 10,112 Unrecognized net asset at adoption . . . . . . . . . . . . . . . . . . . . . . . (1,938) (2,270) Unrecognized prior service benefit . . . . . . . . . . . . . . . . . . . . . . . (518) (576) Additional minimum liability . . . . . . . . . . . . . . . . . . . . . . . . . . (2,007) - ------- ------- Accrued pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(3,976) $(1,347) ======= =======
The components of net pension expense included:
1996 1995 1994 ---- ---- ---- Service cost of benefits earned . . . . . . . . . . . . . . . . . . . . . . . $1,784 $1,921 $1,663 Interest on projected benefit obligation . . . . . . . . . . . . . . . . . . 3,154 2,867 2,645 Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . (5,161) (1,436) (1,392) Net amortization and deferral . . . . . . . . . . . . . . . . . . . . . . . . (2,703) (1,026) (1,311) ------ ------ ------ Net pension expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,480 $2,326 $1,605 ====== ====== ======
The following actuarial assumptions were used to compute net pension expense and funded status of the plans:
1996 1995 1994 ---- ---- ---- Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.65% 8.30% 8.00% Rate of increase in compensation . . . . . . . . . . . . . . . . . . . . . . 3.50 3.50 3.50 Expected long-term rate of return on assets . . . . . . . . . . . . . . . . . 9.00 10.00 10.00
The 0.65% change in discount rate increased the projected benefit obligation at March 30, 1996 by approximately $4.6 million. The Company participates in a multi-employer plan that provides defined benefits to its union employees. Company expense for this plan (in thousands) amounted to $648, $583, and $534 in 1996, 1995 and 1994, respectively. The Company provides two defined contribution savings plans. These plans allow 401(k) contributions covering employees who work a minimum of 1,000 hours per year, are age 21 or older and elect to participate. The plans provide additional financial security during retirement by offering employees an incentive to make tax advantaged contributions to a savings plan. Company expense for these plans (in millions) was $1.3, $1.1, and $1.1 in 1996, 1995 and 1994, respectively. NOTE F -- POSTRETIREMENT HEALTH BENEFITS The Company provides certain post retirement health care benefits for its non-union retirees and their eligible spouses. The plans are contributory with retiree contributions adjusted annually and certain other cost sharing features, such as deductibles and coinsurance. Eligibility for these benefits is generally limited to retirees, who are at least age 55 and less than age 65, with ten or more years of vested service. Optional spousal coverage continues for the lesser of five years after retirement or until the spouse reaches age 65. Benefits generally cease after reaching age 65, at which time the retiree or spouse is generally eligible for Medicare. Prior to 1994, these benefits were expensed when paid (amounts were not material). Effective March 28, 1993, the Company adopted FAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," which requires the expected cost of such benefits to be accrued over the employees' years of service. The Company elected to recognize the entire unaccrued benefit obligation as of the date of adoption. Accordingly, the Company recorded an accumulated postretirement benefit obligation of $2.7 million, before taxes, for active employees and retirees as of March 28, 1993. The amounts recognized in the consolidated balance sheet at March 30, 1996 and April 1, 1995, for the Company's contributory defined benefit postretirement plans were as follows:
1996 1995 ---- ---- Accumulated participants benefit obligation: Current retirees . . . . . . . . . . . . . . . . . . . . $ 548 $ 626 Fully eligible active plan participants . . . . . . . . . 787 759 Other active plan participants . . . . . . . . . . . . . 919 790 ------ ------ Total benefit obligation . . . . . . . . . . . . . . . 2,254 2,175 Unrecognized gain . . . . . . . . . . . . . . . . . . . . . . 986 912 ------ ------ Accrued postretirement benefit cost . . . . . . . . . . . . . $3,240 $3,087 ====== ====== Net postretirement benefit expense includes: Service cost of benefits earned during the year. . . . . . $ 185 $ 88 Interest cost on projected benefit obligation. . . . . . . 167 225 Net amortization and deferral. . . . . . . . . . . . . . . (68) - ------ ------ $ 284 $ 313 ====== ======
For measurement purposes, the weighted average discount rate used in determining the accumulated postretirement benefit obligation and related expense was 7.65% and 8.30% for 1996 and 1995, respectively. The Company's assumed healthcare cost trend rate is 11% for 1997, decreasing gradually to 6% by 2011, and thereafter. If these trend rates increased by one percentage point each year, the accumulated postretirement benefit 17 obligation and expense would have increased by approximately 9% and 5%, respectively. NOTE G -- INCOME TAXES Effective March 28, 1993, the Company adopted FAS No. 109, "Accounting for Income Taxes." The adoption resulted in a cumulative effect adjustment that increased 1994 net income by $3.6 million. The following are components of deferred tax assets and liabilities at March 30, 1996 and April 1, 1995:
1996 1995 ---- ---- Deferred tax assets: Compensation and benefit accruals . . . . . . . . . . . . . . . . . $ 3,544 $ 2,647 Self insurance reserves . . . . . . . . . . . . . . . . . . . . . . 1,981 1,556 Federal tax benefit for deferred state taxes . . . . . . . . . . . 355 386 Provision for doubtful accounts . . . . . . . . . . . . . . . . . . 333 371 Contribution carryforward . . . . . . . . . . . . . . . . . . . . . 209 337 EPA remediation reserves . . . . . . . . . . . . . . . . . . . . . 261 332 Targeted jobs tax credit carryforward . . . . . . . . . . . . . . . - 157 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 716 429 ------- ------- Total deferred tax assets . . . . . . . . . . . . . . . . . . . 7,399 6,215 Deferred tax liabilities: Property and equipment, including leased property . . . . . . . . . (12,898) (12,425) State income taxes . . . . . . . . . . . . . . . . . . . . . . . . (1,035) (1,161) Prepaid employee benefits . . . . . . . . . . . . . . . . . . . . . (500) (658) Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (979) (515) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (177) (177) ------- ------- Total deferred tax liabilities . . . . . . . . . . . . . . . . . (15,589) (14,936) ------- ------- Net deferred tax liability . . . . . . . . . . . . . . . . . . . . $(8,190) $(8,721) ======= =======
Income tax expense (credit) consisted of the following:
1996 1995 1994 ---- ---- ---- Current - Federal . . . . . . . . $4,209 $4,023 $4,805 State . . . . . . . . . 887 964 730 Deferred - Federal . . . . . . . . 158 (725) (525) State . . . . . . . . . (3) (45) (19) ------ ------ ------ $5,251 $4,217 $4,991 ====== ====== ====== Cash Payments . . . . . . . . . . . $5,428 $5,947 $5,922 ====== ====== ======
A reconciliation of the effective income tax rate is as follows:
1996 1995 1994 ---- ---- ---- Federal statutory tax rate . . . . . . . . . . . . . 35.0% 35.0% 35.0% State and local, net of federal tax benefit . . . . . 4.0 4.7 3.4 New jobs tax credits . . . . . . . . . . . . . . . . (0.3) (1.9) (0.5) Contributions . . . . . . . . . . . . . . . . . . . . (2.1) (3.9) (1.6) Research and experimental credits . . . . . . . . . . (0.5) (0.9) - Federal income tax rate increase . . . . . . . . . . - - 0.6 Other . . . . . . . . . . . . . . . . . . . . . . . . 0.7 - - ---- ---- ---- Effective income tax rate . . . . . . . . . . . . . . 36.8% 33.0% 36.9% ==== ==== ====
NOTE H -- SHAREHOLDERS' EQUITY AND EMPLOYEE STOCK PLANS COMMON STOCK Class A Common Stock has one vote per share; Class B is non-voting except with respect to certain matters affecting the rights and preferences of that class. Each class is entitled to equal per share dividends and consideration in any merger, consolidation or liquidation of the Company. A person who, subsequent to May 15, 1991, acquires 10% or more of outstanding Class A Common Stock without acquiring a like percentage of Class B Common Stock must make a public tender offer to acquire additional Class B Common Stock. Failure to do so results in suspension of the voting rights of the Class A Common Stock held by such person. STOCK OPTION PLANS AND SHARES RESERVED Option activity under the 1987 Stock Option Plan and the 1991 Employee Stock Incentive Plan was as follows:
Shares Option ------ Price Class A Class B ----- ------- ------- Outstanding at March 27, 1993 . . . . . . . . . . $10.63-15.94 184,050 360,750 Canceled . . . . . . . . . . . . . . . . . . . 10.63-15.94 (15,400) (25,700) -------- ------- Outstanding at April 2, 1994 . . . . . . . . . . 10.63-15.94 168,650 335,050 Granted . . . . . . . . . . . . . . . . . . . . 9.50 - 132,100 Canceled . . . . . . . . . . . . . . . . . . . 9.50-15.30 (6,025) (17,825) -------- ------- Outstanding at April 1, 1995 . . . . . . . . . . 9.50-13.81 162,625 449,325 Granted . . . . . . . . . . . . . . . . . . . 13.50 355,000 - -------- ------- Outstanding at March 30, 1996 . . . . . . . . . . 9.50-13.81 517,625 449,325 ======== =======
Grants made prior to 1992 were under the 1987 Plan at prices equal to 85% of market value at date of grant. They are exercisable pro-rata over a four year period and expire 10 years from date of grant. At March 30, 1996, 1987 Plan options for 325,250 shares were exercisable. No further grants may be made under the 1987 Plan. Under the 1991 Plan (as amended in May 1995) 750,000 shares of common stock, in any combination of Class A and Class B, are reserved for the grant of stock options, stock appreciation rights, restricted stock, deferred stock, stock purchase rights, and/or other stock-based awards. Grants made under this plan represent non-qualified options. Substantially all grants were at market value at date of grant. They become exercisable pro-rata over a four year period beginning one year from date of grant. At March 30, 1996, 190,475 shares were exercisable. Under an expired 1980 plan, options were exercised at $8.28 per share as follows: 1994 - 36,876 Class A and 31,813 Class B shares; 1993 - 11,250 Class A and 7,875 Class B shares; 1992 - 4,187 Class A and 12,624 Class B shares. The Company presently holds notes receivable totaling $306 thousand from four employees of the Company. The notes arose when the Company loaned the employees money to exercise the stock options mentioned above. The notes bear interest at 6% per annum, are due on May 28, 1997, and are collateralized by the shares. The amount of the receivable is shown on the balance sheet as a reduction of equity. At the 1992 Annual Meeting, shareholders approved the 1992 Stock Option Plan for Outside Directors under which 50,000 shares of Class B Common Stock were reserved for the grant of stock options and restricted stock to non-employee directors. Options were granted for 4,500 shares on August 4, 1992 $(15.50 per share), 3,000 shares on August 3, 1993 $(11.75 per share), 1,500 shares on August 4, 1994 $(10.38 per share), and 4,500 shares on August 1, 1995 $(12.25) per share). Options were granted at fair market value at date of grant. The options become exercisable and restrictions lapse in equal installments, on the date of each of the two Annual Meetings following the date of grant. Additionally, 3,000 shares of restricted stock have been issued. 18 As of March 30, 1996, a total of 1,290,323 shares of Class B Common Stock is reserved for conversion of debentures, 108,300 shares in any combination of Class A and Class B are reserved for future awards under the 1991 Plan, and 33,500 shares of Class B are reserved under the Stock Option Plan for Outside Directors. CHANGES IN SHARES OUTSTANDING Changes in shares issued and treasury shares during the three years ended March 30, 1996, were as follow:
Issued shares: Class A Class B ------- ------- Balance at March 27, 1993 . . . . . . . . . . . 4,695,253 5,195,258 Public offering . . . . . . . . . . . . . . . - 69,900 --------- --------- Balance at April 2, 1994, April 1, 1995 and March 30, 1996 . . . . . . . . . . . . . 4,695,253 5,265,158 --------- --------- Treasury shares: Balance at March 27, 1993 . . . . . . . . . . . 799,531 787,567 Exercise of stock options . . . . . . . . . . (36,876) (31,813) --------- --------- Balance at April 2, 1994 . . . . . . . . . . . 762,655 755,754 Acquisition of shares . . . . . . . . . . . . 54,875 70,550 Issuance of shares - Crystal Catering acquisition . . . . . . . - (97,810) --------- --------- Balance at April 1, 1995 . . . . . . . . . . . 817,530 728,494 Acquisition of shares . . . . . . . . . . . 27,025 35,225 Issuance of shares - Martz & Associates acquisition . . . . . . . - (43,416) --------- --------- Balance at March 30, 1996 . . . . . . . . . . . 844,555 720,303 --------- --------- Net outstanding at March 30, 1996 . . . . . . . 3,850,698 4,544,855 ========= =========
MARSH EQUITY OWNERSHIP PLAN The Marsh Equity Ownership Plan is an employee stock ownership plan in which retail and administrative employees, meeting minimum age and service requirements, participate. In 1988 and 1987, the Company sold 238,508 shares of common stock to the plan, for a total of $2.7 million. In connection therewith, the Company re-loaned to the plan such portion of a bank loan, and undertook to make future contributions to the plan sufficient to enable it to meet its debt service requirements. The $2.7 million cost was amortized to expense over a period that ended in 1994. SHAREHOLDER RIGHTS PLAN Under the 1989 Shareholder Rights Plan, preferred stock purchase rights ("Rights") were distributed as a dividend at the rate of one Right for each common share held. Each Right entitles a shareholder to buy one one-hundredth of a share of Series A Junior Participating Cumulative Preferred Stock of the Company at an exercise price of $65. The Rights will be exercisable only if a person or group acquires beneficial ownership of 20% or more of either class of the Company's common stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 20% or more of either class of the Company's common stock. If any person becomes the beneficial owner of 20% or more of either class of the Company's common stock, or if a 20% or more shareholder engages in certain self-dealing transactions or a merger transaction with the Company in which the Company is the surviving corporation and its common shares are not changed or converted, then each Right not owned by such person or related parties will entitle its holder to purchase, at the Right's then-current exercise price, shares of common stock (or, in certain circumstances as determined by the Board, cash, property or other securities of the Company) having a value of twice the Right's exercise price. In addition, if the Company is involved in a merger or other business combination transaction with another person in which its common stock is changed or converted, or sells 50% or more of its assets or earning power to another person, each Right will entitle its holder to purchase, at the Right's then-current exercise price, common shares of such other person having a value of twice the Right's exercise price. The Company will generally be entitled to redeem the rights at $.01 per Right, at any time until the 15th day following public announcement that a 20% position has been acquired. The Rights expire on July 31, 1999. NOTE I -- ACQUISITIONS On January 1, 1995, the Company purchased the assets of the Crystal Catering and affiliated companies, the largest caterer in Indianapolis. The purchase price of $4.8 million included; (i) $2.4 million cash, (ii) a $1.4 million note payable to Crystal, and (iii) issuance of 97,810 shares of Class B Common Stock, valued at $1.0 million. An additional $900 thousand adjustment is contingent on the cumulative performance of the catering division in achieving specified profitability levels for 1996, 1997 and 1998. In the event the contingent payment is earned, it will be treated as a purchase price adjustment and recorded when earned. Goodwill, resulting from this acquisition in the amount of $4.0 million, is being amortized using the straight-line method over a twenty year life. On May 1, 1995, the Company purchased the assets of Martz & Associates Food Services, Inc., an Indianapolis vending and cafeteria management services firm. The purchase price included $1.0 million cash and 43,416 shares of Class B Common Stock, valued at $456,000. Goodwill, resulting from this acquisition in the amount of $568,000, is being amortized using the straight-line method over a twenty year life. 19 SHAREHOLDER INFORMATION STOCK LISTING At March 30, 1996, there were 3,534 record holders of Class A Common Stock and 3,809 record holders of Class B Common Stock (a composite total of 4,104 holders of Marsh common stock). Both classes of common stock trade on the NASDAQ National Market System under the symbols MARSA (Class A Common Stock) and MARSB (Class B Common Stock). As of March 30, 1996, the following firms acted as market makers: A. G. Edwards & Sons, Inc. City Securities Corporation Everen Securities Goldman, Sachs & Co. Herzog, Heine, Geduld, Inc. Howard, Weil, Labouisse, Friedrichs, Inc. J.J.B. Hilliard, W.L. Lyons, Inc. Mayer & Schweitzer, Inc. McDonald & Co. Securities, Inc. Natcity Investments, Inc. Robinson Humphrey Co., Inc. Sherwood Securities Corp. Troster Singer Corp. SHAREHOLDER INVESTMENT PLAN The plan provides shareholders a means by which to acquire shares of common stock through regular dividend reinvestment and voluntary cash payments. For details, contact: Plan Administrator, National City Bank, Corporate Trust Department, 1900 E. Ninth Street, Cleveland, OH 44114-3484; telephone (800) 622-6757. FORM 10-K AND FINANCIAL INFORMATION Shareholders, members of the financial community, and news media desiring further information or copies of the annual report on Form 10-K to the Securities and Exchange Commission should contact: Douglas Dougherty, Chief Financial Officer, Marsh Supermarkets, Inc., 9800 Crosspoint Boulevard, Indianapolis, IN 46256-3350; telephone (317) 594-2628. Financial releases may also be accessed in the following ways 24 hours a day, seven days a week: 1. Via the Internet World Wide Web. Connect to: http://www.cfonews.com. 2. Direct dia by modem. Dial to 718-279-3590 (8N1) and follow the prompts. When asked for the name or ticker symbol of a company, type MARSH or MARS. ANNUAL MEETING OF SHAREHOLDERS The Annual Meeting of Shareholders will be held at 10:00 A.M., Tuesday, August 6, 1996, at the Company's principal executive offices at 9800 Crosspoint Boulevard, Indianapolis, Indiana. 20 BOARD OF DIRECTORS DON E. MARSH J. MICHAEL BLAKLEY JAMES K. RISK III Chairman of the Board, Chairman of the Board and President and Chief Executive Officer, President and Chief Chief Executive Officer, Kirby Risk Supply Co., Inc. Executive Officer The Blakley Corporation Lafayette, Indiana Indianapolis, Indiana GARNET R. MARSH JACK E. BUCKLES K. CLAY SMITH Widow of Ermal W. Marsh, Partner, Beasley Gilkison President and Chief Executive Officer, Founder of the Corporation Retherford Buckles & Clark Underwood Machinery Transport Company, Inc. Muncie, Indiana Muncie, Indiana Indianapolis, Indiana C. ALAN MARSH CHARLES R. CLARK DURWARD S. DOYLE Vice Chairman of the Board Partner, Beasley Gilkison Retired (Honorary) and Senior Vice President- Retherford Buckles & Clark Corporate Development Muncie, Indiana WILLIAM L. MARSH STEPHEN M. HUSE WILLIAM P. GIVENS Vice President-General Manager, President and Chief Executive Officer, Retired (Honorary) Property Management Huse Food Group, Incorporated Chairman of the Board Bloomington, Indiana ======================================================================================================================= CORPORATE OFFICERS DON E. MARSH P. LAWRENCE BUTT DAVID M. REDDEN Chairman of the Board, Vice President, President and Chief Operating Officer, President and Chief Counsel and Secretary Village Pantry Division Executive Officer C. ALAN MARSH DOUGLAS W. DOUGHERTY RONALD P. STOLZ Vice Chairman of the Board Vice President, Chief Financial Vice President- and Senior Vice President- Officer and Treasurer External Services Corporate Development BRUCE A. BAIN LENNIE D. HAYES THEODORE R. VARNER Vice President- Vice President- President and Chief Operating Officer, Human Resources Real Estate Convenience Store Distributing Company Division JACK J. BAYT WILLIAM L. MARSH RONALD R. WALICKI President and Chief Operating Vice President-General Manager, President and Chief Operating Officer, Officer, Property Management Supermarket Division Catering Division DEMETRIO P. BAYT THOMAS V. PARKER MICHAEL D. CASTLEBERRY Executive Vice President, Vice President- Assistant Treasurer Catering Division Loss Prevention FRANK J. BRYJA LOIS A. GROSS Vice President- Assistant Secretary Merchandising
EX-21 5 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 MARSH SUPERMARKETS, INC. AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT
State of Name under which Business Name as Specified Incorporation Done if Different from in Charter or Organization Name Specified in Charter ---------- --------------- ------------------------- Marsh Drugs, Inc. Indiana Marsh Village Pantries, Inc. Indiana Village Pantry Mundy Realty, Inc. Indiana Mar Properties, Inc. Indiana Marlease, Inc. Indiana Marsh International, Inc. Indiana Maraines Greenery, Inc. Indiana Floral Fashions Ron-Michael, Inc. Indiana Convenience Store Distributing Company Ohio CSDC Marsh P.Q., Inc. Indiana S.C.T., Inc. Indiana North Marion Development Corp. Indiana C. E. Publishing, Inc. Indiana Contract Transport, Inc. Indiana Alltimate Catering, LLC Indiana Crystal Foodservice LoBill Foods, LLC Indiana LoBill
EX-23 6 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-K) of Marsh Supermarkets, Inc. of our report dated May 17, 1996, included in the 1996 Annual Report to Shareholders of Marsh Supermarkets, Inc. We also consent to the incorporation by reference in Registration Statement Number 2-74859 on Form S-8 of the 1980 Marsh Stock Plan dated December 2, 1981, Registration Statement Number 33-33427 on Form S-8 of the Marsh Supermarkets, Inc. 1987 Stock Option Plan, dated February 12, 1990, Registration Statement Number 33-43817 on Form S-8 of the Marsh Employees' Monthly Stock Investment Plan - 1977, dated November 7, 1991, Registration Statement Number 33-56630 on Form S-8 of the 1991 Employee Stock Incentive Plan, dated December 31, 1992, Registration Statement Number 33-56624 on Form S-8 of the 1992 Stock Option Plan for Outside Directors, dated December 31, 1992 and Registration Statement Number 33-56626 on Form S-8 of the Marsh Supermarkets, Inc. 401(k) Plan, dated December 31, 1992, of our report dated May 17, 1996, with respect to the consolidated financial statements incorporated herein by reference in this Annual Report (Form 10-K) of Marsh Supermarkets, Inc. Ernst & Young LLP Indianapolis, Indiana June 17, 1996 EX-27 7 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S 10-K FOR THE PERIOD ENDED MARCH 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO. 1,000 YEAR MAR-30-1996 MAR-30-1996 12,822 0 23,790 970 89,746 132,993 344,483 114,552 387,294 114,406 135,066 0 0 8,396 100,850 387,294 1,390,543 1,390,543 1,047,193 1,344,215 18,957 0 13,087 14,284 5,251 9,033 0 0 0 9,033 1.07 1.02 NUMBER OF CLASS A AND CLASS B SHARES OUSTANDING. INCLUDES (i) $1,047,193 OF COST OF GOODS SOLD (ITEM 5-03(b)2(a) OF REGULATION S-X) AND (ii) $297,022 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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