Marsh Supermarkets, Inc. First-Quarter Results of Operations


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 or at

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.
                    (in thousands except per share amounts)

                                                 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.
                                (in thousands)

                                                 June 21,     June 22,
                                                   2003         2002
                                                   ----         ----
 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.


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