Marsh Supermarkets, Inc. Announces Fourth Quarter and Fiscal 2003 Results

INDIANAPOLIS, Indiana, UNITED STATES


INDIANAPOLIS, June 9, 2003 (PRIMEZONE) -- Marsh Supermarkets, Inc. (Nasdaq:MARSA) (Nasdaq:MARSB) reports results of operations for the 12 and 52 weeks ended March 29, 2003.

Total sales and other revenues for fiscal year 2003 were $1,655,735,000, an increase of $13,136,000 over last year's $1,642,599,000.

Sales in comparable stores, which includes remodels, expansions and relocations, declined 3.1% from last year. The decline is believed to be attributable to a difficult economic environment causing worried consumers to trade down, high unemployment, food-price deflation, the war in Iraq, increased competitive promotions and square footage, and the timing of Easter sales. Fiscal 2003 did not have an Easter selling season, due to an early Easter in calendar 2002 and the late Easter in calendar 2003. Both Easter selling seasons fell outside of this fiscal year.

Net income, which includes results from discontinued operations, was $3,691,000, or $0.46 per diluted share, compared to $13,408,000, or $1.51 per diluted share last year. Last year's results included the gain on the sale of CSDC -- our convenience store wholesale division, of $2,762,000, net of tax. Income from continuing operations was $4,045,000, or $0.50 per diluted share, compared to $11,541,000, or $1.31 per diluted share last year. The year's results included a $1,250,000 non-recurring charge, included in selling, general and administrative expense, associated with the reorganization of our corporate staff.

Adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, LIFO and gain on sale of CSDC) was $56,586,000 compared to $65,022,000 last year. Adjusted EBITDA as a percentage of revenue was 3.4% compared to 3.6% last year. Operating income as a percentage of revenue was 1.7% compared to 2.4% last year.

The ratio of long-term debt to adjusted EBITDA was 4.1x, which is equal to last year. Long-term debt, including current maturities, of $230,609,000 was reduced by $35,874,000 from last year. Net cash provided by operating activities of $38,352,000 was comparable to last year's actual of $37,665,000.

"Fiscal 2003 was a challenging year for our industry. We remained focused on our long-term goal of being the best store in town. In the face of unfavorable economic conditions and unprecedented levels of new competitive stores, we took significant steps to streamline our processes, enhance our efficiency and direct our resources toward strengthening operations across the board. These actions have not only allowed us to maintain leadership in our primary markets, they have also positioned us to make even greater strides as we go forward. Our operational efficiencies are the best in our Company's history. Our focus is to implement strategies that will result in a stronger future for our Company," said Don E. Marsh, Chairman and Chief Executive Officer.

For the twelve weeks ended March 29, 2003, revenues were $373,261,000 compared to $373,283,000 in the fourth quarter of last year. Comparable store sales decreased 2.2%, an improvement of 160 basis points from last quarter's 3.8% decrease. "We are pleased with the sales improvement over the third quarter considering the shift in Easter timing. Easter sales were included in last year's fourth quarter while this year's Easter will be included in Fiscal 2004's first-quarter results," Marsh said.

The net loss for the quarter was $824,000, or $0.10 per diluted share, compared to net income of $1,940,000, or $0.22 per diluted share last year. On a continuing operating basis, the quarter's net loss is reduced to $644,000. The quarter included a non-recurring charge of $1,125,000 relating to a reduction in headquarters staff expenses, included in selling, general and administrative expense. Don Marsh continued, "If you exclude the non-recurring charge, net income would have been positive for the quarter." Long-term debt of $230,609,000, including current maturities, was reduced by $5,007,000 since the third quarter.

The annual dividend rate of $0.44 was increased to $0.52 per share effective with the quarterly dividend payable in May. At recent stock prices, the dividend yield approximates 4.2%.

During the fourth quarter, Marsh Supermarkets acquired two supermarkets that are being operated under the O'Malia Food Markets banner, and closed a nearby LoBill Foods unit. The remodel of 102 Village Pantry locations was completed during the quarter. Subsequent to quarter end, the Company completed the remodel of one Marsh Supermarket to the "Fresh" format.

Our future plans, including those implemented or completed in the fourth quarter, now include:



 -- Identified potential annualized expense and gross-margin
    improvements of approximately $30,000,000, of which up to
    $24,000,000 should be achieved in fiscal 2004.

    Certain headquarters staff expenses, included in selling, general
    and administrative expense, have been reduced by approximately
    $3,000,000 annually.  This reduction was largely accomplished by
    consolidating our multi-division supermarket operation into a
    single central service operation, and consolidating purchasing
    functions for greater leverage with vendors.

    Other identified improvements include energy savings, changes to
    medical plans, outsourcing of retail maintenance, improved labor
    and transportation scheduling, warehouse efficiencies and other
    actions, some of which are discussed in this release.

    The Company retired its 7% convertible debentures during the
    fiscal year.  By using proceeds from the revolving credit facility
    to retire this debt, annual interest expense should be reduced by
    approximately $600,000 at current short-term rates.

    The Company purchased at a discount, and subsequently retired,
    $30,455,000 of senior subordinated notes.  At current short term
    interest rates, annual interest expense should be reduced by
    approximately $1,600,000.

    The Fresh Express home delivery operation and twenty-two under-
    performing Village Pantry convenience stores were closed.

 -- Opening two new supermarkets, one of which will be a new concept
    store in a market area where no sales will be transferred from
    existing Marsh units.

 -- The opening of two O'Malia Food Markets on the south side of the
    Indianapolis metro area, and the closing of a nearby LoBill Foods
    location.

 -- Maximizing the benefit of the Village Pantry upgrade and re-
    imaging program.

 -- Remodeling four to six supermarkets.

 -- A new state-of-the-art frozen food warehouse was opened.  The
    additional space was needed because of the growing importance of
    this category.

 -- The Company introduced "MyMarsh", which we believe is a
    significant leap forward in loyalty-card marketing.  This system
    includes a touch screen at the point of sale and delivers static-
    and motion-based communications.  The technology provides an
    economically viable method to communicate information, incentives
    and rewards to specific customers or customer groups.  The system
    is a step toward fulfilling the promise of customer specific one-
    to-one marketing.  Additionally, individual MyMarsh kiosks are
    being installed at each Marsh store location so customers may also
    receive offers as they begin their shopping experience.

 -- The Ticketmaster in-store ticket centers began utilizing the Fresh
    Idea Card to offer exclusive Marsh customer discounts on specified
    community events.  Marsh also continues to serve as a ticket
    center for not-for-profit community events.

"As a result of these and other initiatives, I am confident that we will have improved operating results as we move through fiscal 2004 in an improving retail climate," said Don E. Marsh.

Marsh's management will discuss the quarter and year-end results today at 2:00 p.m. central time in a conference call. The conference call will be simulcast on the Internet and will be available for replay on the Marsh website at http://www.marsh.net or at http://www.irconnect.com/marsa.

Marsh is a leading regional chain, operating 67 Marsh(r) supermarkets, 34 LoBill Foods(r) stores, 3 Savin*$(r), 8 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 Florist and Enflora -- Flowers for Business(r).

Cautionary Note Regarding Forward-Looking Statements

This report includes certain forward-looking statements (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 out of 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 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 related to state and federal taxation and tobacco and environmental legislation; the successful integration of acquisitions; potential interest rate increases on variable rate debt; 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.
                   CONSOLIDATED STATEMENTS OF INCOME
               (in thousands, except per share amounts)

                         12 Weeks Ended            52 Weeks Ended
                     ---------------------   -------------------------
                     March 29,   March 30,    March 29,      March 30,
                       2003        2002         2003           2002
                     --------    --------    ----------    ----------
 Sales and
  other revenues     $369,012    $370,044    $1,647,534    $1,636,702
 Gains from
  sales of
  property              4,249       3,239         8,201         5,897
                     --------    --------    ----------    ----------
 Sales and
  other revenues      373,261     373,283     1,655,735     1,642,599
 Cost of
  merchandise sold,
  including
  warehousing and
  transportation      262,471     255,368     1,157,599     1,143,883
                     --------    --------    ----------    ----------
 Gross profit         110,790     117,915       498,136       498,716
 Selling, general
  and
  administrative      102,241     103,367       445,480       435,697
 Depreciation           5,714       5,407        24,464        22,883
                     --------    --------    ----------    ----------
 Operating income       2,835       9,141        28,192        40,136
 Interest               5,021       5,600        23,270        22,523
 Other non-
  operating income     (1,209)       --          (2,180)         --
                     --------    --------    ----------    ----------
 Income (loss)
  from continuing
  operations
  before income
  taxes                  (977)      3,541         7,102        17,613
 Income taxes            (333)      1,442         3,057         6,072
                     --------    --------    ----------    ----------
 Income (loss)
  from continuing
  operations             (644)      2,099         4,045        11,541
 Discontinued
  operation:
   Loss from
    operations,
     net of tax          --          --            --            (859)
   Gain (loss)
    on disposal,
    net of tax           (180)       (159)         (354)        2,762
                     --------    --------    ----------    ----------
      Net income
       (loss)        $   (824)   $  1,940    $    3,691    $   13,408
                     ========    ========    ==========    ==========

 Basic earnings
  per common share:
   Continuing
    operations       $   (.08)   $    .26    $      .50    $     1.45
   Discontinued
    operation            --          --            --            (.11)
   Gain (loss) on
    disposal of
    discontinued
    operation            (.02)       (.02)         (.04)          .34
                     --------    --------    ----------    ----------
 Net income
  (loss)             $   (.10)   $    .24    $      .46    $     1.68
                     ========    ========    ==========    ==========

 Diluted earnings
  per common share:
   Continuing
    operations       $   (.08)   $    .24    $      .50    $     1.31
   Discontinued
    operation            --          --            --            (.09)
   Gain (loss) on
    disposal of
    discontinued
    operation            (.02)       (.02)         (.04)          .29
                     --------    --------    ----------    ----------
 Net income
  (loss)             $   (.10)   $    .22    $      .46    $     1.51
                     ========    ========    ==========    ==========
 Dividends per
  share              $    .13    $    .11    $      .46    $      .44



                       MARSH SUPERMARKETS, INC.
                     CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                              March 29,    March 30,
                                                2003         2002
                                              ---------    ---------
 Assets
 Current Assets:
  Cash and equivalents                        $  28,313    $  37,516
  Accounts receivable, less allowances of
   $2,960 in 2003, and $2,494 in 2002            27,203       33,613
  Inventories                                   135,855      132,940
  Prepaid expenses                                5,731        7,639
  Recoverable income taxes                         --          1,021
                                              ---------    ---------
   Total Current Assets                         197,102      212,729
 Property and Equipment                         311,469      318,650
 Other Assets                                    46,309       51,851
                                              ---------    ---------
                                              $ 554,880    $ 583,230
                                              =========    =========
 Liabilities and Shareholders' Equity
 Current Liabilities
  Notes payable to bank                       $   1,700    $   1,300
  Accounts payable                               71,883       71,640
  Accrued liabilities                            49,665       52,822
  Current maturities of long-term
   liabilities                                    3,452        2,727
                                              ---------    ---------
   Total Current Liabilities                    126,700      128,489

 Long-term Liabilities
  Long-term debt                                198,148      237,823
  Capital lease obligations                      29,009       25,933
                                              ---------    ---------
   Total Long-Term Liabilities                  227,157      263,756

 Deferred Items
  Income taxes                                   11,525       16,472
  Other                                          58,050       33,716
                                              ---------    ---------
   Total Deferred Items                          69,575       50,188

 Shareholders' Equity
  Common stock, classes A and B                  26,439       26,403
  Retained earnings                             135,550      135,534
  Accumulated other comprehensive
   loss (see Note)                              (15,384)      (5,324)
  Cost of common stock in treasury              (14,928)     (14,509)
  Deferred cost - restricted stock                  (54)        (270)
  Notes receivable - stock options                 (175)      (1,037)
                                              ---------    ---------
   Total Shareholders' Equity                   131,448      140,797
                                              ---------    ---------
                                              $ 554,880    $ 583,230
                                              =========    =========

 Note: The comprehensive loss is attributable to a decline in the
       market value of assets held by a "frozen" defined benefit
       pension plan and a decrease in the plan's discount rate. The
       loss, net of tax benefit, is a direct reduction of
       shareholders' equity.


                       MARSH SUPERMARKETS, INC.
                   ADJUSTED EBITDA RECONCILIATION(a)
                            (in thousands)


                         Q4         Q4         FY            FY
                        2003       2002       2003          2002
                      --------   --------   ----------   ----------
 Total Revenues       $373,261   $373,283   $1,655,735   $1,783,469(b)

 Total long term
  liabilities               NA         NA      227,157      263,756
 Current maturities
  of long term
  liabilities               NA         NA        3,452        2,727
                                            ----------   ----------
                                               230,609      266,483
 Adjusted EBITDA(c)
 Net income               (824)     1,940        3,691       13,408
 Income taxes             (430)     1,356        2,867        7,077
 Interest                5,021      5,600       23,270       23,305
 Depreciation            5,714      5,407       24,464       23,256
 Other amortization        439        879        2,180        2,689
 LIFO                     (430)      (736)        (430)        (519)
 Gain on sale of CSDC      277        245          544       (4,194)
                      --------   --------   ----------   ----------
 Adjusted EBITDA         9,767     14,691       56,586       65,022

 Adjusted EBITDA
  margin(d)                2.6%       3.9%         3.4%         3.6%

 Ratio of long term
  debt to Adjusted
  EBITDA(e)                  NA         NA         4.1x         4.1x

 (a) Adjusted EBITDA, adjusted EBITDA margin, and the ratio of long
     term debt to adjusted EBITDA are presented because 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. However, other
     companies may calculate EBITDA differently than the Company does,
     and therefore comparability may be limited. EBITDA, adjusted
     EBITDA margin and the ratio of long term debt to adjusted EBITDA
     are not measures of performance under GAAP, and should not be
     considered as an alternative to cash flows from operating
     activities or as a measure of liquidity or an alternative to net
     income as indicators 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
     combined consolidated financial statements and related notes
     included in its filings with the Securities and Exchange
     Commission.

 (b) FY2002 total revenues represent $1,642,599 from continuing
     operations and $140,870 from discontinued operations.

 (c) Balances represent total company results. Figures may not match
     above as a result of the discontinued operations reporting.

 (d) Adjusted EBITDA as a percentage of total revenues shown above.

 (e) Total long term debt divided by adjusted EBITDA.



        

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