INDIANAPOLIS, Nov. 25, 2003 (PRIMEZONE) -- Marsh Supermarkets, Inc. (Nasdaq:MARSA) (Nasdaq:MARSB) reports results of operations for the 16 weeks ended October 11, 2003.
Net income for the quarter was $375,000 compared to $306,000 last year. Last year's results included an $18,000 loss on the disposal of discontinued operations net of tax and a $708,000 gain net of tax resulting from an increase in cigarette state excise taxes. Gains from sales of real estate were comparable in both years. Diluted earnings per common share were $0.05 compared to $0.04 last year
Sales and other revenues for the second quarter were $508,955,000 compared to $512,722,000 last year -- a 0.7% decrease. Sales in comparable supermarkets and convenience stores decreased 1.9% to $472.1 million from $481.1 million, while sales in comparable stores excluding fuel sales decreased 3.3% to $434.8 million from $449.7 million. The decline is believed to be attributable to a weak economy, high unemployment, and competitive new supermarket square footage. The Company excludes fuel sales from its analysis of revenues and comparable store sales because fuel prices fluctuate widely and frequently.
Long-term debt, including current maturities, of $215,067,000 was reduced by $35,184,000 from last year. Net cash provided by operating activities of $28,352,000 was up $11,046,000, or 63.8%, from last year's $17,306,000. This was partly due to the reduction of inventory by $15,274,000 and 11.1% from last year.
The Company purchased at a discount, and subsequently retired, $7,250,000 of senior subordinated notes during the quarter, resulting in a gain of $327,000. The purchase was funded with cash available from the Company's bank lines. At current short-term interest rates, annual interest expense should be reduced by approximately $400,000.
During the second quarter, the Company acquired one supermarket that is being operated as an O'Malia Food Market, and closed one Savin*$ store. Subsequent to quarter end, the Company acquired a supermarket that is being operated under the LoBill Foods banner. Two new Marsh stores will open in the third and fourth quarters, one in Noblesville, Indiana, and one in Ft. Wayne, Indiana, respectively.
"Due to the current economic and competitive climate, we continue to concentrate on expense reduction, and inventory and capital management. Selling, general and administrative expenses are below last year and have been below last year for four consecutive quarters. Our focus on inventory reduction has resulted in improved cash flow. We will continue our efforts on expense controls, asset management, and operating efficiency, which will make us well positioned for the future as the economy and employment market improve. Construction is underway for our two 'New Lifestyle' stores in Noblesville, Indiana and Ft. Wayne, Indiana. Our vision for the future is reflected in these stores," said Don E. Marsh, Chairman and Chief Executive Officer.
Adjusted EBITDA is presented as an attachment because it is a calculation derived from the Company's debt covenants and the Company believes it is used by the Company's lenders, security analysts, investors and other interested parties to evaluate the Company's operating results and ability to service debt and comply with debt covenants.
Marsh is a leading regional supermarket chain operating 66 Marsh(r), 36 LoBill Foods(r) stores, 1 Savin*$(r), 9 O'Malia Food Markets, and 167 Village Pantry(r) convenience stores in central Indiana and western Ohio. The Company also operates Crystal Food Services(tm) which provides upscale catering, cafeteria management, office coffee, vending and concessions; Primo Banquet Catering and Conference Centers; McNamara(r) Florist and Enflora -- Flowers for Business(r).
Cautionary Note Regarding Forward-Looking Statements
This report includes certain forward-looking statements (all statements other than those made solely with respect to historical fact). Actual results could differ materially and adversely from those contemplated by the forward-looking statements due to known and unknown risks and uncertainties, many of which are beyond the Company's control. The forward-looking statements and the Company's future results, liquidity and capital resources are subject to risks and uncertainties including, but not limited to, the following: the entry of new competitive stores and their impact on the Company; softness in the local and national economies and the general retail food industry; the level of discounting and promotional spending by competitors; the Company's ability to improve comparable store sales; the Company's ability to implement its improvement initiatives; the ability of the Company to predict and respond to changes in customer preferences and lifestyles; food price deflation; uncertainties regarding future real estate gains due to limited real estate holdings available for sale; stability and timing of distribution incentives from suppliers; the Company's ability to control cost including labor, medical, rent, credit card, and workers compensation and general liability expense; the impact of any acquisitions and dispositions; the level of margins achievable in the Company's operating divisions; uncertainties regarding gasoline prices and margins; the success of the Company's new and remodeled stores, including image and rebranding programs; the successful economic implementation of new technology; uncertainties associated with pension and other retirement obligations; uncertainties related to state and federal taxation and tobacco and environmental legislation; the successful integration of acquisitions; potential interest rate increases on variable rate debt, as well as terms, costs and availability of capital; the timely and on budget completion of store construction, expansion, conversion and remodeling; the ability to complete share repurchases, and other known and unknown risks and uncertainties. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(In thousands, except per share amounts)
(Unaudited)
16 Weeks Ended 28 Weeks Ended
-------------------- -------------------
Oct. 11, Oct. 12, Oct. 11, Oct. 12,
2003 2002 2003 2002
--------- -------- -------- --------
Sales and other
revenues $508,955 $512,722 $886,965 $896,217
Gains from sales
of property 1,814 1,875 1,814 3,546
-------- -------- -------- --------
Total revenues 510,769 514,597 888,779 899,763
Cost of merchandise
sold, including
warehousing and
transportation,
excluding
depreciation 358,854 360,019 623,611 626,250
-------- -------- -------- --------
Gross profit 151,915 154,578 265,168 273,513
Selling, general
and
administrative 138,053 138,739 240,172 241,653
Depreciation 7,660 7,527 13,422 13,117
-------- -------- -------- --------
Operating income 6,202 8,312 11,574 18,743
Interest 5,925 7,410 10,495 12,833
Other non-operating
expense (income) (327) - (961) -
-------- -------- -------- --------
Income from
continuing
operations before
income taxes 604 902 2,040 5,910
Income taxes 229 578 852 2,425
-------- -------- -------- --------
Income from
continuing
operations 375 324 1,188 3,485
Loss on disposal of
discontinued
operation,
net of tax - (18) - (199)
-------- -------- -------- --------
Net income $ 375 $ 306 $ 1,188 $ 3,286
======== ======== ======== ========
Basic earnings
per common
share:
Continuing
operations $.05 $.04 $.15 $.44
Loss on disposal
of discontinued
operation - - - (.03)
-------- -------- -------- --------
Net income $.05 $.04 $.15 $.41
======== ======== ======== ========
Diluted earnings per
common share:
Continuing operations $.05 $.04 $.15 $.41
Loss on disposal of
discontinued operation - - - (.02)
-------- -------- -------- --------
Net income $.05 $.04 $.15 $.39
======== ======== ======== ========
Dividends per share $.13 $.11 $.26 $.22
======== ======== ======== ========
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In thousands)
(Unaudited)
October 11, October 12,
2003 2002
Assets
Current assets:
Cash and equivalents $ 27,368 $ 33,066
Accounts receivable 26,094 34,417
Inventories 122,807 138,081
Prepaid expenses 4,711 6,061
Recoverable income taxes 2,319 968
--------- ----------
Total current assets 183,299 212,593
Property and equipment,
less allowances
for depreciation 307,533 315,802
Other assets 50,921 48,142
-------- --------
$541,753 $576,537
======= =======
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable $ 69,519 $ 72,538
Accrued liabilities 51,611 53,754
Current maturities of
long-term liabilities 3,250 3,340
--------- ---------
Total current
liabilities 124,380 129,632
Long-term liabilities:
Long-term debt 183,335 217,474
Capital lease obligations 28,482 29,437
-------- --------
Total long-term
liabilities 211,817 246,911
Deferred items:
Income taxes 14,198 17,337
Pension and post-retirement
benefits 43,723 22,832
Other 17,005 17,490
-------- --------
Total deferred items 74,926 57,659
Shareholders' Equity:
Common stock, Classes
A and B 26,455 26,418
Retained earnings 134,674 137,068
Cost of common stock
in treasury (15,014) (14,713)
Deferred cost -
restricted stock (25) (166)
Notes receivable -
stock options (76) (948)
Accumulated other
comprehensive loss (15,384) (5,324)
------- -------
Total shareholders' equity 130,630 142,335
------- -------
$541,753 $576,537
======= =======
MARSH SUPERMARKETS, INC.
ADJUSTED EBITDA RECONCILIATION(a)
------------------------------
(in thousands)
16 Weeks Ended
----------------------
Oct. 11, Oct. 12,
2003 2002
--------- --------
Adjusted EBITDA
Net income 375 306
Income taxes 229 578
Interest 5,925 7,410
Depreciation 7,660 7,527
Other amortization 477 768
Loss on disposal of
discontinued operation - 18
--------- --------
Adjusted EBITDA $14,666 $16,607
========= ========
(a) Adjusted EBITDA means net income plus income taxes, interest,
depreciation, other amortization, and loss on disposal of a
discontinued operation. Adjusted EBITDA is presented because it
is a calculation derived from the Company's debt covenants and
the Company believes it is used by the Company's lenders,
security analysts, investors and other interested parties to
evaluate the Company's operating results and ability to service
debt and comply with debt covenants. However, other companies may
calculate EBITDA or Adjusted EBITDA differently than the Company
does, and therefore comparability may be limited. Adjusted EBITDA
is not a measure of performance under GAAP, and should not be
considered as an alternative to net income as an indicator of the
Company's operating performance or any other measure of
performance derived in accordance with GAAP. This data should be
read in conjunction with the Company's consolidated financial
statements and related notes included in its filings with the
Securities and Exchange Commission.