Marsh Supermarkets, Inc. First Quarter Results Of Operations Net Income Up 28.6%


INDIANAPOLIS, July 30, 2004 (PRIMEZONE) -- Marsh Supermarkets, Inc. (Nasdaq:MARSA) (Nasdaq:MARSB) reports results of operations for the 12 weeks ended June 19, 2004.

Net income for the quarter was $1,618,000 compared to $1,258,000 last year -- a 28.6% improvement. Earnings per diluted common share were $0.20 compared to $0.16 last year. Operating income for the first quarter improved 14.1% to $6,905,000 from $6,050,000 last year. This is the third consecutive quarter of improved operating income.

Sales and other revenues for the first quarter were $399,852,000, an increase of $21,842,000 or 5.8% over last year.

Sales in comparable supermarkets and convenience stores were above last year by 3.2%. Comparable store merchandise sales, which excludes gasoline sales, declined 0.4% from last year. This is a 2.9 percentage point improvement from the comparable store sales rate reported last quarter. The direction of the comparable store merchandise sales change is positive. The Company excludes gasoline sales from its analysis of comparable store merchandise sales because retail gasoline prices fluctuate widely and frequently, which make analytical comparisons difficult.

"We are encouraged by the improving economy, but believe Indiana is lagging behind the U.S. recovery because of the heavy manufacturing base in central Indiana, which experienced significant job losses and plant closings in the past two years. Marsh has a competitive advantage over other supermarkets and supercenters by offering superior service and quality, combined with a pleasant and convenient shopping experience. In an improved economy, these strengths will drive sales and profitability," said Don E. Marsh, Chairman and Chief Executive Officer.

During the quarter, the Company converted one Marsh supermarket to the LoBill Foods banner. Crystal Food Service opened a new casual, quick service restaurant, Trios Di Tuscanos, adjacent to a new McNamara Florist location. The combined units utilize the floral shop to provide a unique visual effect.

Subsequent to quarter end, the Company opened a new concept store called Arthur's Fresh Market. The Arthur's format, which, at 21,000 square feet, is smaller than a Marsh store, is focused on high quality perishables and customer convenience (easy in and out). The store is designed for efficient operations while carrying a complete line of fresh options and a full variety of grocery items. An O'Malia Store was converted to the LoBill Foods banner and a new LoBill store was also opened after quarter end.

Marsh is a leading regional chain, operating 67 Marsh(r) supermarkets, 39 LoBill(r) Foods stores, 8 O'Malia(r) Food Markets, 164 Village Pantry(r) convenience stores, 1 Arthur's Fresh Market, and 1 Savin*$(SM), in Indiana and western Ohio. The Company also operates Crystal Food Services(SM), which provides upscale catering, cafeteria management, office coffee, coffee roasting, vending and concessions, restaurant management, Primo Banquet Catering and Conference Centers; Floral Fashions(r), McNamara(r) Florist and Enflora(r) -- Flowers for Business.

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; the Company's ability to improve comparable store sales; the level of discounting and promotional spending by competitors; the stability and timing of distribution incentives from suppliers; the level of margins achievable in the Company's operating divisions; softness in the local and national economies and the general retail food industry; the success of the Company's new and remodeled stores, including image and rebranding programs; potential interest rate increases on variable rate debt, as well as terms, costs and the availability of capital; the Company's ability to control employee medical costs; uncertainties regarding future real estate gains due to limited real estate holdings available for sale; the ability of the Company to predict and respond to changes in customer preferences and lifestyles; the ability of the Company to respond to commodity price fluctuations; uncertainties regarding gasoline prices and margins; the Company's ability to control costs including labor, rent, credit card, and workers compensation and general liability expense; the Company's ability to implement cost improvement initiatives; uncertainties related to state and federal taxation and tobacco and environmental legislation; the Company's ability to collect outstanding notes and accounts receivable; uncertainties associated with pension and other retirement obligations; the successful economic implementation of new technology; the impact of any acquisitions and dispositions; the timely and on budget completion of store construction, expansion, conversion and remodeling; 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 19,      June 21,
                                     2004          2003
                                    ---------    ---------
 Sales and other
  revenues                          $ 399,396    $ 378,010
 Gains from sales of
  property                                456           --
                                    ---------    ---------
 Total revenues                       399,852      378,010
 Cost of merchandise
  sold, including
  warehousing and
  depreciation                        281,123      264,079
                                    ---------    ---------
 Gross profit                         118,729      113,931
 Selling, general and
  administrative                      106,039      102,119
 Depreciation                           5,785        5,762
                                    ---------    ---------
 Operating income                       6,905        6,050
 Interest                               4,283        4,570
 Other non-operating
  income                                   --         (634)
                                    ---------    ---------
 Income before income
  taxes                                 2,622        2,114
 Income taxes                           1,004          856
                                    ---------    ---------
 Net income                         $   1,618    $   1,258
                                    =========    =========
 Earnings per common
 Basic                              $     .20    $     .16
 Diluted                                  .20          .16

 Dividends per share                $     .13    $     .13

                       MARSH SUPERMARKETS, INC.
                            (in thousands)

                                      June 19,   June 21,
                                        2004       2003
                                    ---------    ---------
 Current assets:
  Cash and equivalents              $  41,656    $  25,947
  Accounts receivable                  22,924       28,704
  Inventories                         127,280      125,917
  Prepaid expenses                      3,829        4,019
  Recoverable income
   taxes                                3,289           --
                                    ---------    ---------
   Total current assets               198,978      184,587
 Property and
  equipment, less
  allowances for depreciation         294,955      311,417
 Other assets                          52,801       44,998
                                    ---------    ---------
                                    $ 546,734    $ 541,002
                                    =========    =========
 Liabilities and
  Shareholders' Equity
 Current liabilities:
   Accounts payable                 $  76,333    $  70,842
   Accrued liabilities                 46,925       49,287
   Current maturities
   of long-term
   liabilities                          5,080        3,177
                                    ---------    ---------
   Total current
    liabilities                       128,338      123,306

 Long-term liabilities:
  Long-term debt                      181,163      191,312
  Capital lease
   obligations                         27,935       28,787
   Pension and
    benefits                           43,766       41,684
                                    ---------    ---------
 Total long-term
  liabilities                         252,864      261,783

 Deferred items:
    Income taxes                       18,483        9,840
    Gains from
     sale/leasebacks                   15,337       15,329
    Other                               3,526        2,681
                                    ---------    ---------
     Total deferred items              37,346       27,850

 Shareholders' Equity:
   Common stock,
   Classes A and B                     26,588       26,443
   Retained earnings                  131,399      132,137
   Cost of common
    stock in treasury                 (15,724)     (14,917)
   Deferred cost -
    restricted stock                      (11)         (39)
   Notes receivable -
   stock purchases                       (191)        (177)
   Accumulated other
    comprehensive loss                (13,875)     (15,384)
                                    ---------    ---------
   Total shareholders'
    equity                            128,186      128,063
                                    ---------    ---------
                                    $ 546,734    $ 541,002
                                    =========    =========

                       MARSH SUPERMARKETS, INC.
         Reconciliation of Sales and Other Comparable Revenues

                                 12 Weeks Ended
                           June 19,       June 21,        %
                            2004            2003        Change
                           ------         -------         -------
 Sales and Other
  Revenues(1)              $392,405       $378,067        3.79%

 Less:  Other Revenues/
  Non-Comparable Sales       27,528         24,571

 Comparable Retail

 Sales(2)                   364,877        353,496        3.22%

 Less:  Fuel Sales           37,065         24,328

 Comparable Store

 Merchandise Sales          327,812        329,168       (0.41)%

 (1)    Excluding gains from sales of property

 (2)  Comparable supermarkets and convenience stores


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