INDIANAPOLIS, Aug. 4, 2003 (PRIMEZONE) -- Marsh Supermarkets, Inc. (Nasdaq:MARSA) (Nasdaq:MARSB) reports results of operations for the 12 weeks ended June 21, 2003.
Sales and other revenues for the fiscal first quarter were $378,010,000, a decrease of $5,485,000, or 1.4%, from last year's $383,495,000. Sales in comparable stores, which includes remodels, expansions and relocations, declined 2.7%. The decline is believed to be attributable to a difficult economic environment causing worried consumers to trade down, high unemployment, increased competitive promotions, new competitive supermarket square footage, and unseasonably cool, wet weather in the Midwest.
Net income for the quarter was $813,000 compared to $2,980,000 last year. Diluted earnings per common share were $0.10 compared to $0.33 last year. Last year's results included a $181,000 loss on the disposal of discontinued operations net of tax. The current quarterly per share dividend rate is $0.13, and at current stock prices has an annual dividend yield of almost 4.0%.
Net cash provided by operating activities of $14,601,000 was improved by $6,735,000 from last year's $7,866,000. Lower net income was more than offset by changes in operating assets and liabilities.
The Company purchased at a discount, and subsequently retired, $9,500,000 of senior subordinated notes during the quarter, resulting in a gain of $634,000. The purchase was funded with cash available from the Company's bank lines, and, at current short-term interest rates, annual interest expense should be reduced by approximately $450,000.
Long-term debt, including current maturities, of $223,276,000, was reduced from $254,115,000 during the comparable period one year ago and from $230,609,000 at the beginning of the quarter -- an improvement of $30,839,000 and $7,333,000 respectively. Interest expense was $4,570,000 compared to $5,423,000 last year.
"Due to the current economic and competitive climate, we continue to focus on cash flow, expense reduction and inventory and capital management. Selling, general and administrative expenses were below last year levels and long-term debt continues to decline. As we progress through the year, we expect an improving economic and operating climate which we believe will reward our merchandising programs with improved operating results," said Don E. Marsh, Chairman and Chief Executive Officer.
During the first quarter, the Company remodeled one Marsh store and consolidated one Marsh supermarket and an adjacent Savin*$ store into a LoBill Foods format. Subsequent to quarter end, the Company acquired a supermarket in Bloomington, Indiana, that is being operated under the O'Malia Food Markets banner.
Adjusted EBITDA and adjusted EBITDA margin are presented as an attachment 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.
Marsh's management will discuss the quarter results today at 4:00 p.m. eastern 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 66 Marsh(r), 35 LoBill Foods(r) stores, 2 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 (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 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) 12 Weeks Ended -------------------------- June 21, June 22, 2003 2002 ---- ---- Sales and other revenues $ 378,010 $ 383,495 Gains from sales of property -- 1,671 --------- --------- Total revenues 378,010 385,166 Cost of merchandise sold, including warehousing and transportation 264,757 266,231 --------- --------- Gross profit 113,253 118,935 Selling, general and administrative 102,119 102,914 Depreciation 5,762 5,590 --------- --------- Operating income 5,372 10,431 Interest 4,570 5,423 Other non-operating expense (income) (634) -- --------- --------- Income from continuing operations before income taxes 1,436 5,008 Income taxes 623 1,847 --------- --------- Income from continuing operations 813 3,161 Loss on disposal of discontinued operation, net of tax -- (181) --------- --------- Net income $ 813 $ 2,980 ========= ========= Basic earnings per common share: Continuing operations $ .10 $ .40 Loss on disposal of discontinued operation -- (.02) --------- --------- Net income $ .10 $ .38 ========= ========= Diluted earnings per common share: Continuing operations $ .10 $ .35 Loss on disposal of discontinued operation -- (.02) --------- --------- Net income $ .10 $ .33 ========= ========= Dividends per share $ .13(a) $ .11 ========= ========= (a) Annual dividend yield is calculated by annualizing the quarterly dividend ($.13 x 4 = $.52) and dividing that amount by the current price/share ($.52 / average share price of $13.53 at the close of business on Friday, August 1, 2003 = 3.84%). The annual dividend yield is presented because the Company believes it is one factor sometimes used by investors and security analysts with respect to evaluating the Company's stock price and ownership desirability. MARSH SUPERMARKETS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ------------------------------------- (in thousands) (Unaudited) June 21, June 22, 2003 2002 ---- ---- Assets Current assets: Cash and equivalents $ 25,947 $ 30,686 Accounts receivable 28,704 38,334 Inventories 130,797 132,417 Prepaid expenses 4,019 7,013 --------- --------- Total current assets 189,467 208,450 Property and equipment, less allowances for depreciation 311,417 313,554 Other assets 44,998 48,758 --------- --------- $ 545,882 $ 570,762 ========= ========= Liabilities and Shareholders' Equity Current liabilities: Notes payable to bank $ -- $ -- Accounts payable 70,842 71,752 Accrued liabilities 49,287 49,553 Current maturities of long-term liabilities 3,177 3,243 --------- --------- Total current liabilities 123,306 124,548 Long-term liabilities: Long-term debt 191,312 221,168 Capital lease obligations 28,787 29,704 --------- --------- Total long-term liabilities 220,099 250,872 Deferred items: Income taxes 11,526 16,543 Pension and post-retirement benefits 41,684 22,002 Other 18,010 13,822 --------- --------- Total deferred items 71,220 52,367 Shareholders' Equity: Common stock, Classes A and B 26,443 26,407 Retained earnings 135,331 137,640 Cost of common stock in treasury (14,917) (14,419) Deferred cost - restricted stock (39) (280) Notes receivable - stock options (177) (1,049) Accumulated other comprehensive loss (15,384) (5,324) --------- --------- Total shareholders' equity 131,257 142,975 --------- --------- $ 545,882 $ 570,762 ========= ========= MARSH SUPERMARKETS, INC. ADJUSTED EBITDA RECONCILIATION(a) ------------------------------ (in thousands) Q1 Q1 2004 2003 -------- ------- Total Revenues $378,010 $385,166 Adjusted EBITDA (b) Net income 813 2,980 Income taxes 623 1,750 Interest 4,570 5,423 Depreciation 5,762 5,590 Other amortization 297 534 Gain on sale of CSDC -- 278 -------- -------- Adjusted EBITDA 12,065 16,555 Adjusted EBITDA margin (b) 3.2% 4.3% (a) Adjusted EBITDA and adjusted EBITDA margin 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. Adjusted EBITDA and adjusted EBITDA margin are not measures of performance under GAAP, and should not be considered as 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 consolidated financial statements and related notes included in its filings with the Securities and Exchange Commission. (b) Adjusted EBITDA as a percentage of total revenues shown above.