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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended March 31, 2001
Commission File Number: 0-1532
MARSH SUPERMARKETS, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-0918179
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9800 CROSSPOINT BOULEVARD
INDIANAPOLIS, INDIANA 46256-3350
(Address of principal executive offices) (Zip Code)
317-594-2100
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Class A Common Stock
Class B Common Stock
7% Convertible Subordinated Debentures, due 2003
8 7/8% Senior Subordinated Notes, due 2007
Registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K:
Aggregate market value of Class A Common Stock and Class B Common Stock
held by non-affiliates of the Registrant as of June 1, 2001: $29,595,225 and
$48,614,359, respectively. This calculation assumes all shares of Common Stock
beneficially held by officers and members of the Board of Directors of the
Registrant are owned by "affiliates", a status which each of the officers and
directors individually disclaims.
At June 1, 2001, there were 3,884,298 shares of Class A Common Stock and
4,137,404 shares of Class B Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2001 Annual Report to Shareholders are incorporated by
reference into Part II.
Portions of the Proxy Statement for the Annual Shareholders' Meeting to
be held August 7, 2001 are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
GENERAL
At March 31, 2001, Marsh Supermarkets, Inc. (the "Company" or "Marsh") operated
101 supermarkets and 187 Village Pantry convenience stores in central Indiana
and western Ohio. The Company believes that Marsh supermarkets have one of the
largest market shares of supermarket chains operating in its market area and
Village Pantry has one of the largest market shares of convenience stores in its
market area. Marsh owns and operates a specialized convenience store
distribution business which serves its Village Pantry stores, as well as 1,000
unaffiliated convenience stores in a nine-state area. Marsh also owns and
operates a food services division, which provides upscale catering, vending,
concession and business cafeteria management services, and a floral division,
which operates four upscale retail floral shops under the name of McNamara and
one business florist under the name Enflora. The Company may from time to time
explore various strategic alternatives regarding one or more of its business
divisions.
SUPERMARKETS
At March 31, 2001, the Company operated 88 supermarkets in central Indiana and
13 in western Ohio. The 38 stores in the Indianapolis metropolitan market area
constitute the Company's major market. The remaining supermarkets operate in 38
other communities. Revenues from supermarket operations represented
approximately 67% of the 2001 consolidated sales and other revenues.
The Company's supermarket merchandising strategy emphasizes service, quality and
convenient one-stop shopping at competitive prices. Of the Company's
supermarkets, 63 are open 24 hours a day and nine are open until midnight, with
the remainder having various other schedules. All stores are open seven days a
week.
The Company believes providing quality merchandise is an important factor in
maintaining and expanding its customer base. In recent years, the Company has
devoted a greater proportion of new and remodeled stores to fresh, high quality
perishables, such as produce, delicatessen items, baked goods, prepared foods,
seafood and floral items. The Company believes fresh produce is an important
customer draw; therefore, it focuses on buying premium quality produce
worldwide. The geographic concentration of the Company's supermarkets enables
the Company to deliver fresh items to its stores quickly and frequently. An
extension of this theme is convenient, high quality, ready to eat meals. The
"Chef Fresh" program offers take-home items for immediate consumption in 40
stores. These products are prepared in the Company's central kitchen, which
provides fresh items to most of the Company's divisions.
The Company's large superstore format offers customers convenient one-stop
shopping. Its Marsh supermarkets feature an extended line of traditional grocery
store items as well as service and specialty departments, such as delicatessens,
bakeries, prepared foods, prime cut meats, fresh seafood, floral and video
rental. The Company features nationally advertised and distributed merchandise
along with products under its own trademarks, service marks and trade names.
Service and specialty departments included in Marsh supermarkets include
delicatessens (99 stores), hot prepared foods (65), bakeries (99), prime cut
service meat (57), fresh seafood (60), sushi shops (19), floral shops (60),
imported cheese shops (53), wines and beer (90), salad bars (36), video rental
(56), express shipping (61), shoe repair (6) and dry cleaning (2). Thirty-five
of the Company's supermarkets include pharmacies in food and drug combination
stores. In addition, banks or savings institutions operate branch facilities in
31 of the Company's stores, and 86 stores offer automated teller machines (ATM).
The Company's superstore format is in excess of 75,000 square feet, and its
modern conventional supermarket format is approximately 55,000 to 65,000 square
feet. The Company currently operates six superstores and 12 modern conventional
supermarkets. Approximately one-third of the sales area in these stores is
devoted to merchandising fresh, high quality perishable products such as
delicatessen items, baked goods, prepared foods and produce. Since 1991,
approximately 56% of the total supermarket square footage is new or remodeled.
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The Company has developed a smaller, low-price supermarket format with limited
service and specialty departments as an alternative to the large, full service
Marsh supermarket. As of March 31, 2001, the Company operated 27 of its
supermarkets utilizing this concept under the trade name LoBill Foods. There is
an ongoing development program to remodel selected Marsh supermarkets to the
LoBill format. The Company believes the LoBill format offers an opportunity to
maximize its market area by expanding into smaller communities and inner city
metropolitan areas that can be better served by that format and to appeal to the
price motivated consumer in markets currently serviced by traditional Marsh
stores. The Company also operates two limited selection, stock-up grocery stores
with an every day low price format operating under the trade name Savin*$.
The Company's supermarkets range in size from 7,500 to 82,300 square feet. The
average size is approximately 38,600 square feet. The Company has an ongoing
development program of constructing larger Marsh supermarkets within its market
area and remodeling, enlarging and replacing existing supermarkets. Future
development will continue to focus on a food and drug combination store format
of approximately 55,000 to 65,000 square feet, with superstores in excess of
75,000 square feet in select locations. The Company believes a larger store
format enables it to offer a wider variety of products and expanded service and
specialty departments, thereby strengthening its competitive position. The
following summarizes the number of stores by size categories:
Number
Square Feet of Stores
----------- ---------
More than 75,000 ......................... 6
55,000 - 75,000 ......................... 12
45,000 - 54,999 ......................... 8
35,000 - 44,999 ......................... 20
25,000 - 34,999 ......................... 45
Less than 25,000 ......................... 10
---
101
===
The Company advertises through various media, including circulars, newspapers,
radio and television. Printed circulars are used extensively on a weekly basis
to advertise featured items. The focus of the television campaign is to promote
a quality and service image rather than specific products and prices. The
Indianapolis television market covers approximately 80% of the Company's
supermarkets. Various sales enhancement promotional activities, including free
grocery and other programs designed to encourage repeat shoppers, are conducted
as an important part of the Company's merchandising strategy. The Company
utilizes a frequent shopper card program, "Fresh I.D.E.A.(R)". The card provides
shoppers electronic coupons, opportunities to win trips and other prizes, and
functions as a video rental card. Over one million cards are in circulation.
Further, customers may select a VISA(R) co-branded credit card option for their
Fresh I.D.E.A. card and earn rebates on all credit card purchases regardless of
the merchant. The credit card rebates are funded by the Company's bank partner.
In 2000, the Company implemented a "Marsh Kid's Club" program to emphasize
marketing opportunities to families.
CONVENIENCE STORES
At March 31, 2001, the Company operated 187 convenience stores under the Village
Pantry trade name. These self-service stores offer a broad selection of grocery,
bakery, dairy and delicatessen items, including fresh pastry products and
sandwiches prepared in the stores. All of the stores sell money orders and
lottery tickets and 109 stores have ATMs. Additionally, 100 of these stores
offer petroleum products. More than 90% percent of the petroleum stores are
branded by major fuel suppliers, including Marathon, Shell, and Amoco. Twenty of
the stores operate drive-thru car washes. Revenues from the convenience stores
represented approximately 13% of the 2001 consolidated sales and other revenues.
Carry-out cold beer, a high-volume item typically found in convenience stores in
other states, may be sold only by package liquor stores and taverns in Indiana;
accordingly, it is not sold in the Company's convenience stores in Indiana. All
but 12 of the Company's convenience stores are open 24 hours a day; the
remaining stores close at midnight. All stores are open seven days a week.
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The Company has added higher margin food and beverage products, such as
store-prepared pizza (51 stores), chicken (62), and self-service fountain
drinks, as well as sit-down eating areas in 72 stores. The Company is a Taco
Bell Express franchisee in three stores, which increases the variety of
available fast food. These stores include drive-thru service.
The Company has an ongoing program of remodeling, upgrading and replacing
existing Village Pantry stores with particular emphasis on developing locations
that will yield a high volume of gasoline sales. New stores generally average
3,700-5,000 square feet, compared to 1,800-2,500 square feet for older stores.
The larger size accommodates the aforementioned new food products. In
constructing new stores and remodeling and expanding existing stores, the
Company tailors the format to each specific market, with heavy emphasis on food
service in areas which the Company believes to be less susceptible to intense
competition from major fast food operators, such as smaller towns and high
density neighborhoods.
CONVENIENCE STORE DISTRIBUTING COMPANY ("CSDC")
CSDC serves the Company's Village Pantry stores and 1,000 unaffiliated
convenience stores in a nine-state area, distributing a wide range of products
typically sold in convenience stores, including groceries, cigarette and other
tobacco products, snack items, housewares and health and beauty care products.
Customers have the opportunity to order most product lines in single units. CSDC
owns a 210,000 square foot warehouse and distribution facility in Richmond,
Indiana, which the Company estimates is operating at 70% of capacity. CSDC
utilizes its own trucks and drivers for its transportation needs. The CSDC sales
and marketing staff of approximately 45 employees services existing customers
and actively solicits new customers. CSDC accounted for approximately 18% of the
2001 consolidated sales and other revenues.
CRYSTAL FOOD SERVICES
The Company's food service operation does business under the trade name Crystal
Food Services. It offers a range of services including banquet hall catering,
special events catering, concession services, vending and cafeteria management.
The Company focuses on presenting expertly prepared cuisine in all of its food
service operations. The Company began its food service operations in 1993 and
expanded it in January 1995 with the acquisition of Crystal Catering. In May
1995, the Company expanded again with the acquisition of Martz and Associates
Food Services. Vending operations were expanded in 1999 with the acquisitions of
Capitol Vending and Crown Vending. The Company intends to expand the food
services operations through the solicitation of new customers and possible
acquisition of businesses that will complement the existing operations.
The combination of these operations has created a unique range of services,
products and facilities. The Company's banquet hall facilities include the
Riverwalk Banquet Center, the Fountains, the Indiana Roof Ballroom, the Murat
Shrine Centre, Union Station, and the NCAA Headquarters in Indianapolis,
Indiana, and the Horizon Convention Center in Muncie, Indiana. The Company
caters special events at the Indianapolis Motor Speedway, Conner Prairie Museum,
Indianapolis Museum of Art, the Eiteljorg Western Museum of Art, and the RCA
Tennis Championships in Indianapolis. The Company also provides concession
services at the Indianapolis Zoo, Prairie View Golf Club and Eagle Point Resort
Cafe, cafeteria management to 13 major employers, and vending services to over
100 clients throughout the greater Indianapolis area.
SUPPLY AND DISTRIBUTION
The Company supplies its supermarkets from three Company-operated distribution
facilities. Dry grocery and frozen food products are distributed from a 409,000
square foot leased facility in Indianapolis. Produce and meat products are
distributed from a 191,000 square foot Company owned perishable products
facility in Yorktown, Indiana. Non-food products are distributed from 180,000
square feet of a 388,000 square foot Company owned warehouse in Yorktown. In
addition, the Company leases a 172,000 square foot warehouse for storage of
forward purchases of merchandise and seasonal items. Additional outside
warehouse space is leased as needed to meet seasonal demand.
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The Company's distribution centers are modern and automated. Merchandise is
controlled through an on-line computerized buying and inventory control system.
The Company believes its distribution centers are adequate for its needs for the
foreseeable future without major additional capital investment. The Company
estimates the supermarket distribution centers currently operate at
approximately 75% of capacity. Approximately 80% of the delivery trips from
distribution centers to supermarkets are 75 miles or less. The Company also
operates a commissary and a central kitchen to produce products sold through the
delicatessen departments of its supermarkets and convenience stores, to support
Crystal Food Services for large catering events and vending operations, and to
serve third parties through CSDC.
The Company believes centralized direct buying from major producers and growers
and its purchasing and distribution functions provide it with advantages
compared to purchasing from a third-party wholesaler. Direct buying, centralized
purchasing, and controlled distribution reduce merchandise cost by allowing the
Company to minimize purchases from wholesalers and distributors and to take
advantage of volume buying opportunities and forward purchases of merchandise.
Centralized purchasing and distribution promote a consistent merchandising
strategy throughout the Company's supermarkets. Rapid inventory turnover at the
warehouse permits the Company's stores to offer consistently fresh, high-quality
products. Through frequent deliveries to the stores, the Company is able to
reduce in-store stockroom space and increase square footage available for retail
selling.
Some products, principally bakery, dairy and beverage items, and snack foods are
delivered directly to the supermarkets and convenience stores by distributors of
national and regional brands.
CSDC supplies grocery, produce, housewares, health and beauty care, and
cigarette and tobacco products to the Company's convenience stores from a
Company owned distribution facility. Also, CSDC supplies cigarette and tobacco
products to the Company's supermarkets.
The Company's supermarket transportation function is performed through a
subsidiary which leases most of its tractor/trailer fleet under long term, full
service leases with Ruan Transportation Management Systems ("Ruan"), an
unaffiliated transportation management and equipment leasing company. This
service is provided under a seven year contract, dated September 18, 1987, which
is automatically renewed for successive one year terms unless canceled by Ruan
or the Company at least 60 days prior to the anniversary date, subject to early
cancellation in stages under certain conditions. Under the arrangement, Ruan
employs the drivers, dispatchers and maintenance personnel who perform the
Company's distribution function.
MANAGEMENT INFORMATION SYSTEMS
All of the Company's supermarkets are equipped with electronic scanning checkout
systems to minimize item pricing, provide more efficient and accurate checkout
line operation, and provide product movement data for merchandising decisions
and other purposes. The checkout systems are integrated with the Company's
frequent shopper card program to provide customer specific data to facilitate
individualized marketing programs. Additionally, the Company upgraded the
supermarket front-end systems and scale equipment, and implemented new
inventory/procurement distribution software in 1999. Point-of-sale electronic
funds transfer and credit card systems are in place in the supermarkets. Through
the use of a bank debit card, a customer can authorize the immediate transfer of
funds from their account to the Company at the point of purchase. Village Pantry
utilizes 100% scanning at the front-end.
The Company utilizes in-store micro-computers in the supermarkets to automate
various tasks, such as electronic messaging, processing the receiving and
billing of vendor direct-store-delivered (DSD) merchandise, processing of video
rentals, processing pharmacy records in the 35 food and drug combination stores,
and time keeping for payroll processing. In 1998, the Company completed
installation of a wide area network for data communications between the
corporate office, supermarkets, warehouses and CSDC. Future supermarket
applications currently under development include computer-assisted reordering
and an electronic shelf tag program. All convenience stores are equipped with
micro-computers for electronic transmission of accounting and merchandising data
to headquarters, electronic messaging and processing DSD merchandise receiving
and billing.
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In 1998, the Company began broadcasting live video communications by satellite
to its supermarkets from the corporate office. The Company believes this medium
has greater appeal to a generation of employees accustomed to learning from
television. In addition, the immediacy of live broadcasts reduces the barriers
of time, distance and consistency in communicating competitive strategies and
other information to retail operations. These communications are further
enhanced through a toll free telephone line which permits questions to be asked
and answered during each broadcast. The network is currently used for
merchandising, training and employee benefits communications.
COMPETITION
The retail food industry is highly competitive. Marsh believes competitive
factors include quality perishable products, service, price, location, product
variety, physical layout and design of store interior, ease of ingress and
egress to the store and minimal out-of-stock conditions. Marsh endeavors to
concentrate its efforts on these factors with special emphasis on maintaining
high quality store conditions, high quality perishable products, expanded
service and specialty departments, and competitive pricing.
The Company believes it is one of the largest supermarket chains operating in
its market area. The Company's supermarkets are subject to competition from
local, regional and national supermarket chains, independent supermarkets, and
other retail formats, such as discount stores and wholesale clubs. The number of
competitors and degree of competition experienced by the Company's supermarkets
vary by location, with the Indianapolis metropolitan market generally being
subject to more price competition than the smaller markets. The principal
supermarket chain competitors are The Kroger Co., Meijer, Inc., and Wal-Mart
supercenters.
The Company believes Village Pantry is one of the largest convenience store
chains in its market area. Major competitors are petroleum marketing companies
which have converted or expanded gasoline locations to include convenience food
operations. National convenience store chains do not have a significant presence
in the Company's market area. The Company believes the principal competitive
factor for convenience stores is location, and it actively pursues the
acquisition of attractive sites for replacing existing stores and future
development of new stores.
The Company believes the primary competitive factors in CSDC's wholesale
distribution business are pricing, and the timeliness and accuracy of
deliveries. CSDC's major competitors are McLane Company, Inc. and several
regional wholesale distributors.
SEASONALITY
Marsh's supermarket sales are subject to some seasonal fluctuation, as are other
retail food chains. Traditionally, higher sales occur during the third quarter
holiday season, and lower sales occur in the warm weather months of the second
quarter. Convenience store sales traditionally peak in the summer months.
EMPLOYEES
The Company has approximately 14,800 employees. Approximately 8,900 employees
are employed on a part-time basis. All employees are non-union, except
approximately 200 supermarket distribution facility employees who are unionized
under two collective bargaining agreements which extend to May 2005. The Company
considers its employee relations to be very good.
REGULATORY MATTERS
As a retailer of alcoholic beverages, tobacco products and gasoline, the Company
is subject to federal and state statutes, ordinances and regulations concerning
the storage and sale of these products. The Company is aware of the existence of
petroleum contamination at 30 Village Pantry locations and at one distribution
center, all located in Indiana, and has commenced remediation at each of these
sites. The cost of remediation varies significantly depending on the extent,
source and location of the contamination, geological and hydrological conditions
and other factors. An Indiana excess liability fund has reimbursed the Company
for more than 95% of remediation costs incurred over the past two years, and it
is expected that the fund will continue to reimburse for future costs.
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EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by Item 10 with respect to the Registrant's executive
officers is set forth below. Each officer has been elected for a term to expire
in August 2001 or upon election of the officer's successor by the Board of
Directors.
NAME POSITION AGE FAMILY RELATIONSHIP
---- -------- --- -------------------
DON E. MARSH Chairman of the Board, President 63 Son of Garnet R. Marsh,
and Chief Executive Officer brother of William L. Marsh,
father of David A. Marsh
Mr. Don E. Marsh has held his current position as Chairman of the Board of
Directors, President and Chief Executive Officer of the Company for more than
the past five years. He has been employed by the Company in various supervisory
and executive capacities since 1961.
FRANK J. BRYJA President and Chief Operating 59 None
Officer, Supermarket Division
Mr. Frank J. Bryja has held his current position since August 1996. For more
than five years prior thereto, he served as Vice President-Merchandising. He has
been employed by the Company in various supervisory and executive capacities
since 1965.
P. LAWRENCE BUTT Senior Vice President, Counsel 59 None
and Secretary
Mr. P. Lawrence Butt has held his current position since August 1997. For more
than the five years prior thereto, he served as Vice President, Counsel and
Secretary. In May 1999, he was elected to serve as a director of the Company. He
has been employed by the Company in various executive capacities since 1977.
DOUGLAS W. DOUGHERTY Senior Vice President, 57 None
Chief Financial Officer
and Treasurer
Mr. Douglas W. Dougherty has held his current position since August 1997. He has
been employed by the Company as Chief Financial Officer since March 1994. Prior
experience includes senior management and financial executive positions at
Dayton Hudson Corp., Hartmarx, Inc. and The May Department Stores Company.
DAVID A. MARSH Executive Vice President, 38 Son of Don E. Marsh,
Supermarket Division grandson of Garnet R. Marsh,
President and Chief Operating nephew of William L. Marsh
Officer, LoBill Foods
Division
Mr. David A. Marsh has held his current position since August 2000. Prior
thereto, he served as Senior Vice President, LoBill Foods Division since 1998,
Vice President, LoBill Foods Division since 1996 and Director, LoBill Foods
Division since 1995. He has been employed by the Company in various retail,
supervisory and executive capacities since 1979.
WILLIAM L. MARSH Senior Vice President - Property 57 Son of Garnet R. Marsh,
Management brother of Don E. Marsh
uncle of David A. Marsh
Mr. William L. Marsh has held his current position since August 1997. For more
than five years prior thereto, he served as Vice President-General Manager,
Property Management. In May 1991, he was elected to serve as a director of the
Company. He has been employed by the Company in various supervisory and
executive capacities since 1974.
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NAME POSITION AGE FAMILY RELATIONSHIP
---- -------- --- -------------------
RANDOLPH L. POKORZYNSKI President and Chief Operating 48 None
Officer, Village Pantry Division
Mr. Randolph L. Pokorzynski has held his current position since August 1998.
Prior thereto, he served as Vice President-Grocery Merchandising, Supermarket
Division, since August 1997, Director-Grocery Merchandising, Supermarket
Division, since July 1996, and Director of Marketing, Village Pantry Division
since October 1991. He has been employed by the Company in various supervisory
and management positions since January 1980.
THEODORE R. VARNER President and Chief Operating 65 None
Officer, Convenience Store
Distributing Company Division
Mr. Theodore R. Varner has held his current position since August 1994. For more
than five years prior thereto, he served as Vice President - General Manager,
Convenience Store Distributing Company Division.
JACK J. BAYT President and Chief Operating 44 None
Officer, Crystal Food Services
Division
Mr. Jack J. Bayt has held his current position since January 1995. For more than
five years prior thereto, he was President and Chief Executive Officer of
Crystal Catering of Indiana, Inc.
MARK A. VARNER Vice President - Corporate 51 None
Controller
Mr. Mark A. Varner has held his current position since August 1999. For more
than five years prior thereto, he served as Corporate Controller. He has been
employed by the Company in various accounting positions since 1971.
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ITEM 2. PROPERTIES
The following table summarizes the per unit and aggregate size of the retail
facilities operated by Marsh, together with an indication of the age of the
total square footage operated.
Per Store
Footage Operated Average 0-6 Years 6-12 Years Over 12 Years
---------------- ------- --------- ---------- -------------
Supermarkets 3,898,000 38,600 34% 33% 33%
Convenience Stores 547,000 2,900 21% 28% 51%
---------
4,445,000
=========
Owned and leased retail facilities are summarized as follows:
Convenience
Supermarkets Stores
------------ ------
Owned 37 130
Leased:
Fixed rentals only 35 38
Fixed plus contingent rentals 29 19
--- ---
64 57
--- ---
101 187
=== ===
All leases, except for eight supermarkets and 22 Village Pantry stores, have one
to four renewal options for periods of two to five years each. The majority of
leases provide for payment of property taxes, maintenance and insurance by the
Company. In addition, the Company is obligated under leases for 20 closed
stores, of which 11 were subleased at March 31, 2001.
The non-perishable grocery products warehouse in Indianapolis is leased for a
term expiring in 2007 with options available through 2020. The facility,
constructed in 1969, is located on a 44 acre site and has a total of 409,000
square feet, of which 382,000 are utilized for grocery warehousing operations.
The remainder consists of a floral design center and office space.
An owned 191,000 square foot refrigerated perishable products handling facility
in Yorktown, Indiana, serves as the distribution center for meat, produce and
delicatessen items. The facility was completed in 1981 and was expanded and
updated in fiscal 1997.
Marsh owns an additional 388,000 square foot facility in Yorktown, Indiana.
Approximately 180,000 square feet of this facility are used as a distribution
center for non-food products, approximately 21,000 square feet are used by the
retail maintenance department, and an additional 55,000 square feet of warehouse
space are leased to third parties. The portion of this facility formerly
utilized for the Company's corporate offices is currently vacant.
The Company leases a 172,000 square foot warehouse in Indianapolis for storage
of forward purchases of merchandise and seasonal items as well as housing the
Company's product reclamation center.
The 160,000 square foot corporate headquarters in Indianapolis is owned by the
Company. This facility was completed and occupied in May 1991.
CSDC owns a 210,000 square foot warehouse and distribution facility in Richmond,
Indiana.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which Marsh is a party which are
material to its business, financial condition or results of operations or which
would otherwise be required to be disclosed under this item.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders during the fourth
quarter of 2001.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information on Common Stock and Shareholder Matters on pages 36, 37 and 38 of
the 2001 Annual Report to Shareholders for the year ended March 31, 2001 is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on page 20 of the 2001 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the year ended March 31, 2001 on pages 22 through 25 of the 2001
Annual Report to Shareholders is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company, as a policy, does not engage in speculative or derivative
transactions, nor does it hold or issue financial instruments for trading
purposes. The Company is exposed to changes in interest rates primarily as a
result of its borrowing activities. Based on interest rates at March 31, 2001, a
100 basis point change in interest rates would not have had a material impact on
the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and notes thereto and the report of the
independent auditors on pages 26 to 38 of the 2001 Annual Report to Shareholders
are incorporated herein by reference.
Quarterly Financial Data on page 21 of the 2001 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
In accordance with Instruction G(3), except as indicated in the following
sentence, the information called for by Items 10, 11, 12 and 13 is incorporated
by reference from those parts of Registrant's definitive Proxy Statement
captioned "Election of Directors," "Compensation of Executive Officers",
"Security Ownership of Management and Certain Beneficial Owners," "Section 16(a)
Beneficial Ownership Reporting Compliance" and "Certain Relationships and
Related Transactions," respectively, pursuant to Regulation 14A, to be filed
with the Commission not later than 120 days after March 31, 2001, the end of the
fiscal year covered by this report. As permitted by Instruction G(3), the
information on executive officers called for by Item 10 is included in Part I of
this Annual Report on Form 10-K under the caption "Executive Officers of the
Registrant."
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) The following consolidated financial statements of Marsh
Supermarkets, Inc. and subsidiaries, included in the 2001
Annual Report to Shareholders for the year ended March 31,
2001 are incorporated by reference in Item 8:
Consolidated Balance Sheets as of March 31, 2001 and April 1,
2000.
Consolidated Statements of Income for each of the three years
in the period ended March 31, 2001.
Consolidated Statements of Changes in Shareholders' Equity for
each of the three years in the period ended March 31, 2001.
Consolidated Statements of Cash Flows for each of the three
years in the period ended March 31, 2001.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
(2) Note: All schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions, or are inapplicable, and therefore have been
omitted.
(3) The following exhibits are included in Item 14(c):
Exhibit 3 (a) - Restated Articles of Incorporation, as amended as of
May 15, 1991 - Incorporated by reference to Form 10-K
for the year ended March 30, 1991.
(b) - By-Laws as amended as of November 26, 1997 -
Incorporated by reference to Form 10-Q for the
quarter ended January 3, 1998.
Exhibit 4 (a) - Articles V, VI and VII of the Company's Restated
Articles of Incorporation, as amended as of May 15,
1991 - Incorporated by reference to Form 10-K for the
year ended March 30, 1991.
(b) - Articles I and IV of the Company's By-Laws, as
amended as of November 26, 1997 - Incorporated by
reference to Form 10-Q for the quarter ended January
3, 1998.
(c) - Agreement of the Company to furnish a copy of any
agreement relating to certain long-term debt and
leases to the Securities and Exchange Commission upon
its request - Incorporated by reference to Form 10-K
for the year ended March 27, 1987.
(d) - Amended and Restated Rights Agreement, dated as of
December 24, 1998, between Marsh Supermarkets, Inc.
and National City Bank - Incorporated by reference to
Form 8-K, dated December 21, 1998.
(e) - Indenture, dated as of February 15, 1993, between
Marsh Supermarkets, Inc. and Society National Bank,
as trustee, including form of Indenture, for
$17,500,000 7% Convertible Subordinated Debentures,
due 2003 - Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-56738).
(f) - Indenture, dated August 5, 1997, between Marsh
Supermarkets, Inc. and certain of its subsidiaries
and State Street Bank and Trust Company, as trustee,
for $150,000,000 8-7/8% Senior Subordinated Notes,
due 2007 - Incorporated by reference to Registration
Statement on Form S-4 (File No. 333-34855).
(g) - First Supplemental Indenture between Marsh
Supermarkets, Inc. and certain of its subsidiaries
and State Street Bank and Trust Company, as trustee,
dated December 31, 1997 - Incorporated by reference
to Form 10-K for the year ended March 28, 1998.
11
12
(h) - Second Supplemental Indenture between Marsh
Supermarkets, Inc. and certain of its subsidiaries
and State Street Bank and Trust Company, as trustee,
dated January 28, 2000 -- Incorporated by reference
to Form 10-K for year ended April 1, 2000.
(i) - Third Supplemental Indenture between Marsh
Supermarkets, Inc. and certain of its subsidiaries
and State Street Bank and Trust Company, as trustee,
dated June 22, 2000 -- Incorporated by reference to
Form 10-K for year ended April 1, 2000.
(j) - Credit Agreement between Marsh Supermarkets, Inc.
and certain of its subsidiaries and The Provident
Bank, as Agent and Arranger, dated June 23, 2000 -
Incorporated by reference to Form 10-K for the year
ended April 1, 2000.
Exhibit 10 (a) - Agreements between Ruan Leasing Company and Marsh
Supermarkets, Inc., dated September 18, 1987 -
Incorporated by reference to Registration Statement
on Form S-2 (File No. 33-17730).
(b) - Lease agreements relating to warehouse located at
333 South Franklin Road, Indianapolis, Indiana -
Incorporated by reference to Registration Statement
on Form S-2 (File No. 33-17730).
Management Contracts and Compensatory Plans:
(c) - Supplemental Retirement Plan of Marsh Supermarkets,
Inc. and Subsidiaries - Incorporated by reference to
Registration Statement on Form S-2 (File No.
33-17730).
(d) - Indemnification Agreements - Incorporated by
reference to Form 10-Q for quarter ended January 6,
1990.
(e) - Marsh Supermarkets, Inc. 1991 Employee Stock
Incentive Plan - Incorporated by reference to Proxy
Statement, dated March 22, 1991, for a Special
Meeting of Shareholders held May 1, 1991.
(f) - Marsh Supermarkets, Inc. Executive Supplemental
Long-Term Disability Plan - Incorporated by reference
to Form 10-K for the year ended March 30, 1991.
(g) - Marsh Supermarkets, Inc. 1992 Stock Option Plan for
Outside Directors - Incorporated by reference to
Proxy Statement, dated June 25, 1992, for the Annual
Meeting of Shareholders held August 4, 1992.
(h) - Amendment to Marsh Supermarkets, Inc. 1991 Employee
Stock Incentive Plan - Incorporated by reference to
Proxy Statement, dated June 22, 1995, for Annual
Meeting of Shareholders held August 1, 1995.
(i) - Severance Benefits Agreements, dated as of January
1, 1996 - Incorporated by reference to Form 10-K for
the year ended March 29, 1997.
(j) - Form of Split Dollar Insurance Agreement for the
benefit of Don E. Marsh - Incorporated by reference
to Form 10-K for the year ended March 29, 1997.
(k) - Form of Restricted Stock Agreement, dated as of
September 15, 1997 - Incorporated by reference to
Form 10-Q for the quarter ended October 11, 1997.
(l) - Marsh Supermarkets, Inc. Outside Directors' Stock
Plan, as adopted November 26, 1997 - Incorporated by
reference to Form 10-Q for the quarter ended January
3, 1998.
(m) - Marsh Supermarkets, Inc. 1998 Stock Incentive Plan,
effective as of June 1, 1998 - Incorporated by
reference to Proxy Statement , dated June 25, 1998,
for the Annual Meeting of Shareholders held August 4,
1998.
(n) - Executive Stock Purchase Plan of Mash Supermarkets,
Inc., effective as of September 1, 1998 -
Incorporated by reference to Proxy Statement, dated
June 25, 1998, for the Annual Meeting of Shareholders
held August 4, 1998.
(o) - Marsh Deferred Compensation Plan - Incorporated by
reference to Form S-8, dated September 25, 1998 (File
No. 333-64343).
(p) - 1999 Outside Directors' Stock Option Plan,
effective as of June 1, 1999 - Incorporated by
reference to Proxy Statement, dated June 27, 1999,
for Annual Meeting of Shareholders held August 3,
1999.
(q) - Form of Employment Agreement, dated as of August 3,
1999 - Incorporated by reference to Form 10-Q for the
quarter ended October 9, 1999.
(r) - 1999 Senior Executive Supplemental Retirement Plan,
dated as of August 3, 1999 - Incorporated by
reference to Form 10-Q for the quarter ended October
9, 1999.
(s) - Forms of Guarantee related to Executive Stock
Purchase Plan of Marsh Supermarkets, Inc. --
Incorporated by reference to Form 10-K for the year
ended April 1, 2000.
12
13
Exhibit 13 - 2001 Annual Report to Shareholders (only portions
specifically incorporated by reference are included
herein).
Exhibit 21 - Subsidiaries of the Registrant.
Exhibit 23 - Consent of Independent Auditors.
(b) Reports on Form 8-K: There were no reports on Form 8-K filed by the
Registrant with respect to the fourth quarter of its fiscal year ended
March 31, 2001.
(c) Exhibits:
See Exhibit Index
13
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MARSH SUPERMARKETS, INC.
June 27, 2001 By: /s/ Don E. Marsh
----------------------------------
Don E. Marsh, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
June 27, 2001 /s/ Don E. Marsh
--------------------------------------
Don E. Marsh, Chairman of the Board,
President and Chief Executive Officer
and Director
June 27, 2001 /s/ Douglas W. Dougherty
--------------------------------------
Douglas W. Dougherty, Senior Vice President,
Chief Financial Officer and Treasurer
June 27, 2001 /s/ Mark A. Varner
--------------------------------------
Mark A. Varner, Vice President -
Corporate Controller
June 27, 2001 /s/ William L. Marsh
--------------------------------------
William L. Marsh, Senior Vice
President-Property Management, and Director
June 27, 2001 /s/ Garnet R. Marsh
--------------------------------------
Garnet R. Marsh, Director
June 27, 2001 /s/ J. Michael Blakley
--------------------------------------
J. Michael Blakley, Director
June 27, 2001 /s/ P. Lawrence Butt
--------------------------------------
P. Lawrence Butt, Senior Vice President,
Counsel and Secretary, and Director
June 27, 2001 /s/ Charles R. Clark
--------------------------------------
Charles R. Clark, Director
June 27, 2001 /s/ Stephen M. Huse
--------------------------------------
Stephen M. Huse, Director
June 27, 2001 /s/ Catherine A. Langham
--------------------------------------
Catherine A. Langham, Director
June 27, 2001 /s/ James K. Risk
--------------------------------------
James K. Risk, III, Director
June 27, 2001 /s/ K. Clay Smith
--------------------------------------
K. Clay Smith, Director
14
15
Exhibit Index Page No.
------------- --------
Exhibit 3 (a) - Restated Articles of Incorporation, as amended as
of May 15, 1991 - Incorporated by reference to Form
10-K for the year ended March 30, 1991.
(b) - By-Laws, as amended as of November 26, 1997 -
Incorporated by reference to Form 10-Q for the
quarter ended January 3, 1998.
Exhibit 4 (a) - Articles V, VI and VII of the Company's Restated
Articles of Incorporation, as amended as of May 15,
1991 - Incorporated by reference to Form 10-K for the
year ended March 30, 1991.
(b) - Articles I and IV of the Company's By-Laws, as
amended as of November 26, 1997 - Incorporated by
reference to Form 10-Q for the quarter ended January
3, 1998.
(c) - Agreement of the Company to furnish a copy of any
agreement relating to certain long-term debt and
leases to the Securities and Exchange Commission upon
its request - Incorporated by reference to Form 10-K
for the year ended March 27, 1987.
(d) - Amended and Restated Rights Agreement, dated as of
August 1, 1989, between Marsh Supermarkets, Inc. and
National City Bank, dated as of December 24, 1998 -
Incorporated by reference to Form 8-K, dated December
21, 1998.
(e) - Indenture, dated as of February 15, 1993, between
Marsh Supermarkets, Inc. and Society National Bank,
as trustee, including form of Indenture for
$17,500,000 7% Convertible Subordinated Debentures,
due 2003 - Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-56738).
(f) - Indenture, dated August 5, 1997, between Marsh
Supermarkets, Inc. and certain of its subsidiaries
and State Street Bank and Trust Company, as trustee,
for $150,000,000 8-7/8% Senior Subordinated Notes,
due 2007 - Incorporated by reference to Registration
Statement on Form S-4 (File No. 333-34855).
(g) - First Supplemental Indenture between Marsh
Supermarkets, Inc. and certain of its subsidiaries
and State Street Bank and Trust Company, as trustee,
dated December 31, 1997 - Incorporated by reference
to Form 10-K for the year ended March 28, 1998.
(h) - Second Supplemental Indenture between Marsh
Supermarkets, Inc. and certain of its subsidiaries
and State Street Bank and Trust Company, as trustee,
dated January 28, 2000 -- Incorporated by reference
to Form 10-K for the year ended April 1, 2000.
(i) - Third Supplemental Indenture between Marsh
Supermarkets, Inc. and certain of its subsidiaries
and State Street Bank and Trust Company, as trustee,
dated June 22, 2000 -- Incorporated by reference to
Form 10-K for the year ended April 1, 2000.
(j) - Credit Agreement between Marsh Supermarkets, Inc.
and certain of its subsidiaries and The Provident
Bank, as Agent and Arranger, dated June 23, 2000 -
Incorporated by reference to Form 10-K for the year
ended April 1, 2000.
Exhibit 10 (a) - Agreements between Ruan Leasing Company and Marsh
Supermarkets, Inc., dated September 18, 1987 -
Incorporated by reference to Registration Statement
on Form S-2 (File No. 33-17730).
(b) - Lease agreements relating to warehouse located at
333 South Franklin Road, Indianapolis, Indiana -
Incorporated by reference to Registration Statement
on Form S-2 (File No. 33-17730).
Management Contracts and Compensatory Plans:
(c) - Supplemental Retirement Plan of Marsh Supermarkets,
Inc. and Subsidiaries - Incorporated by reference to
Registration Statement on Form S-2 (File No.
33-17730).
(d) - Indemnification Agreements - Incorporated by
reference to Form 10-Q for the quarter ended January
6, 1990.
(e) - Marsh Supermarkets, Inc. 1991 Employee Stock
Incentive Plan - Incorporated by reference to Proxy
Statement, dated March 22, 1991, for a Special
Meeting of Shareholders held May 1, 1991.
(f) - Marsh Supermarkets, Inc. Executive Supplemental
Long-Term Disability Plan - Incorporated by reference
to Form 10-K for the year ended March 30, 1991.
15
16
(g) - Marsh Supermarkets, Inc. 1992 Stock Option Plan for
Outside Directors - Incorporated by reference to
Proxy Statement, dated June 25, 1992, for the Annual
Meeting of Shareholders held August 4, 1992.
(h) - Amendment to Marsh Supermarkets, Inc. 1991 Employee
Stock Incentive Plan - Incorporated by reference to
Proxy Statement, dated June 22, 1995, for Annual
Meeting of Shareholders held August 1, 1995.
(i) - Severance Benefits Agreements, dated as of January
1, 1996. - Incorporated by reference to Form 10-K for
the year ended March 29, 1997.
(j) - Form of Split Dollar Insurance Agreement for the
benefit of Don E. Marsh - Incorporated by reference
to Form 10-K for the year ended March 29, 1997.
(k) - Form of Restricted Stock Agreement, dated as of
September 15, 1997 - Incorporated by reference to
Form 10-Q for the quarter ended October 11, 1997.
(l) - Marsh Supermarkets, Inc. Outside Directors' Stock
Plan, as adopted November 26, 1997 - Incorporated by
reference to Form 10-Q for the quarter ended January
3, 1998.
(m) - Marsh Supermarkets, Inc. 1998 Stock Incentive Plan,
effective as of June 1, 1998 - Incorporated by
reference to Proxy Statement , dated June 25, 1998,
for the Annual Meeting of Shareholders held August 4,
1998.
(n) - Executive Stock Purchase Plan of Mash Supermarkets,
Inc., effective as of September 1, 1998 -
Incorporated by reference to Proxy Statement, dated
June 25, 1998, for the Annual Meeting of Shareholders
held August 4, 1998.
(o) - Marsh Deferred Compensation Plan - Incorporated by
reference to Form S-8, dated September 25, 1998 (File
No. 333-64343).
(p) - 1999 Outside Directors' Stock Option Plan, dated as
of June 1, 1999 - Incorporated by reference to Proxy
Statement, dated June 27, 1999, for Annual Meeting of
Shareholders held August 3, 1999.
(q) - Form of Employment Agreement, dated as of August 3,
1999 - Incorporated by reference to Form 10-Q for the
quarter ended October 9, 1999.
(r) - 1999 Senior Executive Supplemental Retirement Plan,
dated as of August 3, 1999 - Incorporated by
reference to Form 10-Q for the quarter ended October
9, 1999.
(s) - Forms of Guarantee related to Executive Stock
Purchase Plan of Marsh Supermarkets, Inc. -
Incorporated by reference to Form 10-K for the year
ended April 1, 2000.
Exhibit 13 - Annual Report to Shareholders (only portions
specifically incorporated by reference are included
herein).
Exhibit 21 - Subsidiaries of the Registrant.
Exhibit 23 - Consent of Independent Auditors.
16