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1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended April 2, 1994
__ Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ______ to ______.
Commission File Number: 0-1532
MARSH SUPERMARKETS, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-0918179
(State of Incorporation) (I.R.S. Employer
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
Indicate by check mark whether the 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: Yes X No
---- ----
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 Registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K:
X
- - --
Aggregate market value of Class A Common Stock held by non-affiliates of the
Registrant as of June 1, 1994: $27,753,463. 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, 1994, there were 3,932,598 shares of Class A Common Stock and
4,509,404 shares of Class B Common Stock outstanding.
Portions of the annual shareholders report for the year ended April 2, 1994,
are incorporated by reference into Parts I and II.
Portions of the proxy statement for the annual shareholders' meeting to be held
August 2, 1994, are incorporated by reference into Part III.
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PART I
ITEM 1 BUSINESS
GENERAL
At April 2, 1994, Marsh Supermarkets, Inc. (the "Company" or "Marsh") operated
87 supermarkets and 177 Village Pantry convenience stores in central Indiana
and western Ohio. The Company believes 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 also owns and operates a specialized convenience store
distribution business which services its Village Pantry stores as well as over
1,300 unaffiliated convenience stores in an eight-state area.
SUPERMARKETS
At April 2, 1994, the Company operated 87 supermarkets, 74 in central Indiana
and 13 in western Ohio. The 35 stores in the Indianapolis metropolitan market
area constitute the Company's major market. The remaining supermarkets operate
in 35 other communities. Sales from supermarket operations represent
approximately 73% of the Company's fiscal 1994 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, 62 are open 24 hours a day, 16 are open until midnight, with the
remainder having various other schedules. All stores are open seven days a
week.
The Company believes a commitment to 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 supermarkets
enables the Company to deliver fresh items to its stores quickly and
frequently.
The Company's new and expanded large supermarket store format offers customers
convenient one-stop shopping. Its Marsh supermarkets feature an extended line
of traditional grocery store items as well as a broad array of 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 and products under its own
trademarks, service marks and trade names. Service and specialty departments
included in Marsh supermarkets include delicatessens and prepared foods (87
stores), bakeries (87), prime cut service meat (58), fresh service seafood
(61), floral shops (57), imported cheese shops (46), salad bars (49), video
rental (85), and shoe repair (21). Twenty of the Company's supermarkets include
pharmacies in food and drug combination stores. To combat increasing
competition from other retail formats such as wholesale clubs, 46 of the
Company's supermarkets also include warehouse-type sections offering large size
and multi-pack products typically featured by wholesale clubs, priced
competitively with club prices. In addition, banks or savings institutions
operate branch facilities in 38 of the Company's stores.
The Company has expanded on its large supermarket store format with a new
generation superstore in excess of 75,000 square feet. The Company currently
operates three such stores and plans to build an additional one in Indianapolis
within the next year. Approximately one-third of the sales area in this type
of store is devoted to merchandising fresh, high quality perishable products,
with heavy emphasis on delicatessens/bakeries, prepared foods and produce. In
addition, up to approximately 5,000 square feet are devoted to the
warehouse-type merchandising of bulk club pack merchandise.
The Company has developed a smaller, low-price supermarket format with limited
service and specialty departments as an alternative to the large, full service
supermarket. The Company currently operates seven of its supermarkets under
this concept. The stores operate under the trade name LoBill. There is an
ongoing development program within its market area to construct new LoBill
stores and to remodel selected Marsh stores to the LoBill format. The Company
believes the LoBill format offers the opportunity to maximize its market area
by expanding into smaller communities that can be better served by that format,
and to appeal to the price motivated consumer in markets currently serviced by
traditional Marsh store.
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3
The Company's supermarkets range in size from 15,000 to 81,530 square
feet. The average size is approximately 35,400 square feet. The Company has an
ongoing development program of constructing larger Marsh stores 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 50,000 to 60,000 square feet, with superstores in excess
of 80,000 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 70,000 . . . . . . . . . . . . . . . . . . . . . . . . 3
50,000 - 70,000 . . . . . . . . . . . . . . . . . . . . . . . . 7
40,000 - 49,999 . . . . . . . . . . . . . . . . . . . . . . . . 7
30,000 - 39,999 . . . . . . . . . . . . . . . . . . . . . . . . 36
20,000 - 29,999 . . . . . . . . . . . . . . . . . . . . . . . . 30
Less than 20,000 . . . . . . . . . . . . . . . . . . . . . . . . 4
--
87
==
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 promotes a
quality and service image rather than specific products and prices. The
Indianapolis television market covers approximately 80% of the Company's
stores. 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.
CONVENIENCE STORES
At April 2, 1994, the Company operated 177 convenience stores under the Village
Pantry trade name. These self-service stores offer a broad selection of
grocery, bakery, dairy and delicatessen items including freshly prepared food
products. Approximately 60% of the stores also offer petroleum products. Sales
from the convenience stores represented approximately 13% of the Company's
fiscal 1994 consolidated sales and other revenues. Cold beer, a high-volume
item typically found in convenience stores in other states, may only be sold
by package liquor stores in Indiana; accordingly, it is not sold in the
Company's Indiana convenience stores. All but eight of the convenience stores
are open 24 hours a day. The remainder close at either midnight or 11:00 p.m.
All stores are open seven days a week.
These stores offer fresh donuts and sandwiches prepared in the stores. The
Company has added higher margin food and beverage products, such as
store-prepared pizza (35 stores), broasted chicken (38 stores), self-service
fountain drinks, as well as sit-down eating areas in a number of stores. 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
3,700-4,400 square feet, compared to 1,800-2,500 square feet for older stores.
The larger size accommodates the new food products. In constructing new, 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, a wholly-owned subsidiary of the Company, serves Village Pantry stores
and over 1,300 unaffiliated stores in an eight-state area. CSDC distributes a
wide range of products typically sold in convenience stores, including
groceries, cigarette and other tobacco products, snack items, housewares and
health and beauty aids. Customers have the opportunity to order most product
lines in single units. CSDC owns a 187,000 square foot warehouse and
distribution facility in Richmond, Indiana, which the Company estimates
presently is operated at 70% of capacity. CSDC utilizes its own trucks and
drivers for its transportation needs. The CSDC sales staff of approximately 27
employees services existing customers and is actively soliciting new customers.
The CSDC wholesale operation accounted for approximately 14% of the Company's
fiscal 1994 consolidated sales and other revenues.
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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 leased 128,000 square foot perishable products facility in
Yorktown, Indiana. Non-food products are distributed from 180,000 square feet
of the 388,000 square foot Company owned warehouse (and former corporate
headquarters facility) in Yorktown. In addition, the Company leases a 150,000
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.
The Company's distribution centers are modern and highly 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 its supermarket distribution centers presently are
operated at approximately 75% of capacity. Approximately 80% of the delivery
trips from distribution centers to supermarkets are 75 miles or less.
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 most grocery, produce, housewares, and health and beauty aid
products to the Company's convenience stores.
The Company operates a commissary to produce products sold through the
delicatessen departments of its supermarkets and convenience stores and to
third parties through CSDC. A Company owned greenhouse provides many of the
live potted plants sold in the supermarket floral departments.
The Company's supermarket transportation function is performed by Ruan
Transportation Management Systems ("Ruan"), an unaffiliated transportation
management and equipment leasing company. This service is provided under a
subcontract arrangement entered into on September 18, 1987 and extending to
September 18, 1994, with an automatic renewal for successive one year terms
unless canceled by Ruan or the Company at least sixty 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. A
subsidiary of the Company leases most of its tractor/trailer fleet from Ruan
under long-term, full service leases.
MANAGEMENT INFORMATION SYSTEMS
All of the Company's supermarkets are equipped with electronic scanning
checkout systems. This minimizes item pricing, allows more efficient and
accurate checkout line operation, and provides product movement data for
merchandising decisions and other purposes.
The Company utilizes in-store micro-computers in the supermarkets to
automate various tasks, such as processing the receiving and billing of vendor
direct-store-delivered (DSD) merchandise at the store level, processing of
video rentals, processing pharmacy records in the 20 food and drug combination
stores, and time keeping for payroll processing. Future applications, currently
under development, include computer-assisted reordering and electronic
messaging.
All convenience stores are equipped with micro-computers which are utilized for
electronic transmission of accounting and merchandising data to headquarters,
electronic messaging and processing DSD merchandise receiving and billing.
4
5
A point-of-sale electronic funds transfer and credit card system is in
place in 53 supermarkets. Through the use of a bank debit card, a customer can
authorize the immediate transfer of funds from the customer's account to the
Company at the point of purchase.
COMPETITION
The retail food industry is highly competitive. Marsh believes competitive
factors include quality of 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 all of 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 that 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.
In recent years, the principal supermarket chain competitors have been
The Kroger Co. and Super Valu Food Stores, Inc., operating in the Indianapolis
market through its "Cub Foods" stores. Meijer, Inc. currently operates two of
its large food and general merchandise combination stores in the Company's
market area in Ohio and recently opened two stores in the Indianapolis market
and has two other stores under construction that are scheduled to open during
the next twelve months.
The Company believes Village Pantry is one of the largest convenience store
chains operating in its market area. Its major competitors are petroleum
marketing companies which have been converting or expanding gasoline locations
to include convenience food operations. Major national convenience store chains
do not have a significant presence in the Company's marketing 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, 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 11,300 employees, of whom approximately 6,800 are
employed on a part-time basis. All employees are non-union, with the exception
of the approximately 150 supermarket distribution facility employees who are
unionized under two three-year collective bargaining agreements which extend to
May, 1997. The Company considers its employee relations to be excellent.
REGULATORY MATTERS
As a retailer of alcoholic beverages and gasoline, the Company is subject to
federal, state and local statutes, ordinances and regulations concerning the
storage and sale of these products. Current environmental laws and regulations
require the removal or abandonment of underground storage tanks (UST's) at 26
Village Pantry locations prior to December, 1998. Earlier removal or
abandonment would be required in the event any of these UST's fail any leak
detection test, which the Company performs at least annually. All UST's at
these 26 locations passed the most recent leak detection tests in December
1993, which results were consistent with data from the Company's established
petroleum product inventory control program.
5
6
In addition to the 26 sites, the Company is aware of the existence of
petroleum contamination at nine other Village Pantry locations and has commenced
remediation at each of these sites. The cost of remediation may vary
significantly depending on the extent, source and location of the contamination,
geological and hydrological conditions and other factors. The cost to remove or
abandon the remaining UST's at these nine locations and to remediate the
unknown contamination has been estimated at approximately $870,000. The Company
has charged this amount to earnings.
The Company currently estimates the maximum aggregate cost remaining to be
incurred in connection with compliance to existing environmental laws and
regulations applicable to owners and operators of UST's will not exceed
approximately $2.0 million through December 1998. This estimate of accrued or
potential compliance costs does not consider any potential recovery the Company
may receive from either the State of Indiana Underground Storage Tank Excess
Liability Fund, which reimburses owners and operators of UST's for a portion of
the costs incurred in connection with the remediation of soil and groundwater
contamination, or from third parties which may be responsible for all or part
of the contamination at one of the nine locations referenced above.
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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.
Footage Operated Per Store Average 0-5 Years 5-10 Years Over 10 Years
---------------- ----------------- --------- ---------- -------------
Supermarkets 3,077,000 35,400 41% 29% 30%
Convenience Stores 485,000 2,740 25 37 38
---------
3,562,000
=========
Owned and leased retail facilities are summarized as follows:
Convenience
Supermarkets Stores
------------ -------
Owned 32 121
Leased:
Fixed rentals 24 29
Fixed plus contingent rentals 31 27
-- ---
55 56
-- ---
87 177
== ===
Lease expirations:
Within five years 29 45
Five to ten years 17 7
Beyond ten years 9 4
-- ---
55 56
== ===
Substantially all leases 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 18 closed stores, of which 11 were subleased at April 2, 1994.
The non-perishable grocery products warehouse in Indianapolis is leased with an
initial lease term expiring in 2000 and options available through 2014. 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 catering commissary and office space.
A 128,000 square foot refrigerated perishable products handling facility in
Yorktown, Indiana, serves as the distribution center for meat, produce and
delicatessen items. The leased facility was completed in 1981.
Marsh owns an additional 388,000 square foot facility in Yorktown.
Approximately 180,000 square feet of this facility is used for the non-food
warehouse operation, approximately 21,000 square feet is used by the retail
maintenance department, and an additional 55,000 square feet of warehouse space
is leased to third parties. The portion of this facility formerly utilized for
the corporate offices currently is vacant.
The Company leases a 172,000 square foot warehouse in Indianapolis for storage
of forward purchases of merchandise and seasonal items.
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 187,000 square foot warehouse and distribution facility in
Richmond, Indiana.
One supermarket and two warehouses (considered owned for purposes of the
foregoing analysis) are leased under equity lease arrangements pursuant to
which ownership is transferred to Marsh at the expiration of the lease term.
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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.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year ended April 2, 1994.
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EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by Item 10 with respect to the executive officers of the
Registrant is set forth below. Each officer has been elected for a term to
expire in August, 1994, or upon election of his successor by the Board of
Directors.
NAME POSITION AGE FAMILY RELATIONSHIP
---- -------- --- -------------------
DON E. MARSH Chairman of the Board, 56 Son of Garnet R. Marsh,
President and Chief brother of C. Alan Marsh and
Executive Officer of William L. Marsh
Mr. Don E. Marsh has held his current position as President and Chief Executive Officer of the Company for more than the
past five years. On May 2, 1991 he was elected Chairman of the Board of Directors, on which he has served as a member since 1959.
He has been employed by the Company in various supervisory and executive capacities since 1961.
- - -----------------------------------------------------------------------------------------------------------------------------------
C. ALAN MARSH Vice Chairman of the 52 Son of Garnet R. Marsh,
Board and Senior Vice brother of Don E. Marsh and
President - Corporate William L. Marsh
Development
Mr. C. Alan Marsh has held his current position since February 23, 1992. For more than five years prior thereto he served as
President and Chief Operating Officer, Marsh Village Pantries, Inc. He has been employed by the Company in various supervisory and
executive capacities since 1965.
- - -----------------------------------------------------------------------------------------------------------------------------------
P. LAWRENCE BUTT Vice President, Counsel 52 None
and Secretary
Mr. P. Lawrence Butt has held his current position for more than the past five years. He has been employed by the Company in various
executive capacities since 1977.
- - -----------------------------------------------------------------------------------------------------------------------------------
DOUGLAS W. Chief Financial Officer 50 None
DOUGHERTY
Mr. Douglas W. Dougherty has held his current position and been employed by the Company in this position since March 1994. Prior
experience includes senior financial executive positions with Hartmarx, Inc. from November 1990 to March 1994 and Lieberman
Enterprises from August 1988 to November 1990.
- - -----------------------------------------------------------------------------------------------------------------------------------
WILLIAM L. MARSH Vice President - General 50 Son of Garnet R. Marsh,
Manager, Property brother of Don E. Marsh and
Management C. Alan Marsh
Mr. William L. Marsh has held his current position for more than the past five years. On May 2, 1991 he was elected a director of
the Company. He has been employed by the Company in various supervisory and executive capacities since 1974.
- - -----------------------------------------------------------------------------------------------------------------------------------
RONALD R. WALICKI Executive Vice President, 56 None
Supermarket Division
Mr. Ronald R. Walicki has held his current position since February 8, 1994. Prior thereto, he served as President and Chief
Operating Officer of Marsh Village Pantries, Inc. since February 1992, and for more than five years thereto as Vice President -
General Manager, Supermarket Division. He has been employed by the Company in various supervisory and management positions since
1965.
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NAME POSITION AGE FAMILY RELATIONSHIP
---- -------- --- -------------------
DAVID M. REDDEN President and Chief 46 None
Operating Officer
Marsh Village Pantry
Mr. David M. Redden has held his current position since February 8, 1994. Prior thereto, he served as Vice President - General
Manager, Supermarket Division since February 1992, and as Vice President - Warehousing and Transportation from April 1988 to
February 1992. He has been employed by the Company in various supervisory and management positions since 1969.
- - ---------------------------------------------------------------------------------------------------------------------------------
MICHAEL D. Director of Corporate 36 None
CASTLEBERRY Accounting
Mr. Michael D. Castleberry has held his current position since March 1991. Prior thereto, he served as Assistant Controller for
Fleming Inc., at its Fort Worth, Texas division from September 1990, and as Vice President - Finance for Falley's Food-4-Less (a
subsidiary of Food-4-Less, Inc.) from February 1988 to September 1990. From 1976 to February 1988 Mr. Castleberry was employed by
H.E. Butt Grocery Company in San Antonio, Texas, in various positions, the last of which was Assistant Controller.
- - ---------------------------------------------------------------------------------------------------------------------------------
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PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
Information on Common Stock and Shareholder Matters on pages 15 and 34 of the
annual report to shareholders for the year ended April 2, 1994, is incorporated
herein by reference.
ITEM 6 SELECTED FINANCIAL DATA
Selected Financial Data on page 14 of the annual report to shareholders for the
year ended April 2, 1994, 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 on pages 16 through 19 of the annual report to shareholders for the
year ended April 2, 1994, is incorporated herein by reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements on pages 21 to 33 of the annual report to
shareholders for the year ended April 2, 1994, are incorporated herein by
reference.
Quarterly Financial Data on page 15 of the annual report to shareholders for
the year ended April 2, 1994, are 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 the Registrant's definitive proxy statement pursuant to
Regulation 14A, to be filed with the Commission not later than 120 days after
April 2, 1994, 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 1 of this Annual Report on Form 10-K.
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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 annual report
to shareholders for the year ended April 2, 1994, are incorporated
by reference in Item 8.
Consolidated Balance Sheets as of April 2, 1994 and March 27, 1993.
Consolidated Statements of Income for each of the three years in
the period ended April 2, 1994.
Consolidated Statements of Changes in Shareholders' Equity for
each of the three years in the period ended April 2, 1994.
Consolidated Statements of Cash Flows for each of the three years
in the period ended April 2, 1994.
Notes to Consolidated Financial Statements - April 2, 1994.
(2) The following consolidated financial statement schedules of Marsh
Supermarkets, Inc. and subsidiaries are included in Item 14(d):
Schedule II - Amounts Receivable from Related Parties,
Underwriters, Promoters and Employees
Other Than Related Parties.
Schedule V - Property, Plant and Equipment
Schedule VI - Accumulated Depreciation and Amortization of
Property, Plant and Equipment
Schedule IX - Short-term Borrowings
Schedule X - Supplementary Income Statement Information
Note: All other 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 August 7, 1990 - Incorporated by reference to Form 10-Q for the quarter ended
January 5, 1991.
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 August 7,1990 - Incorporated by reference
to Form 10-Q for the quarter ended January 5, 1991.
(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) Note Agreement dated as of May 1, 1988 for $25,000,000 9.48% Senior Notes due June 30, 2003 -
Incorporated by reference to Form 10-Q for the quarter ended June 25, 1988.
(e) Rights Agreement, dated as of August 1, 1989, between Marsh Supermarkets, Inc. and National City Bank,
as successor to Merchants National Bank and Trust Company of Indianapolis - Incorporated by reference
to Form 10-Q for the quarter ended October 14, 1989.
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(f) Amendment No. 1 dated as of May 1, 1991, to Rights Agreement, dated as of August 1, 1989 -
Incorporated by reference to Form 10-K for the year ended March 30, 1991.
(g) Note Agreement dated as of October 15, 1992 for $35 million 8.54% Senior Notes, Series A, due December
31, 2007 and $15 million 8.13% Senior Notes, Series B, due December 31, 2004 - Incorporated by
reference to Registration Statement on Form S-2 (File No. 33-56738).
(h) Indenture dated as of February 15, 1993, between Marsh Supermarkets, Inc. and Society National Bank,
as Trustee, including form of Indenture - Incorporated by reference to Registration Statement on Form
S-2 (File No. 33-56738).
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) Marsh Supermarkets, Inc. 1987 Stock Option Plan - Incorporated by reference to Registration Statement
on Form S-8 (File No. 33-33427).
(d) Amendment to the Marsh Supermarkets, Inc. 1987 Stock Option Plan - Incorporated by reference by Proxy
Statement, dated March 22, 1991, for a special meeting of shareholders held May 1, 1991.
(e) Amended and Restated Employment and Severance Agreements dated December 3, 1992 - Incorporated by
reference to Registration Statement on Form S-2 (File No. 33-56738).
(f) Severance Agreements, dated December 31, 1991 - Incorporated by reference to Registration Statement on
Form S-2 (File No. 33-56738).
(g) Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated by reference to Registration Statement
on Form S-8 (File No. 2-74859).
(h) Amendment to the Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated by reference to Proxy
Statement, dated March 22, 1991, for a special meeting of shareholders held May 1, 1991.
(i) Supplemental Retirement Plan of Marsh Supermarkets, Inc. and Subsidiaries - Incorporated by
reference to Registration Statement on Form S-2 (File No. 33-17730).
(j) Indemnification agreements - Incorporated by reference to Form 10-Q for the quarter ended January 6,
1990.
(k) 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.
(l) Marsh Supermarkets, Inc. Executive Life Insurance Plan - Incorporated by reference to Form 10-K for
the year ended March 30, 1991.
(m) Marsh Supermarkets, Inc. Executive Supplemental Long-Term Disability Plan - Incorporated by reference
to Form 10-K for the year ended March 30, 1991.
(n) 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.
Exhibit 11 Statement re: Computation of Per Share Earnings
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
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed by the Registrant during the
fourth quarter of its fiscal year ended April 2, 1994.
For the purposes of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned
registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into registrant's Registration Statements on Form S-8
Nos. 2-74859 (filed December 2, 1981), 33-33427 (filed February 12, 1990),
33-43817 (filed November 7, 1991), 33-56630 (filed December 31, 1992), 33-56624
(filed December 31, 1992) and 33-56626 (filed December 31, 1992).
13
14
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
14
15
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 24, 1994 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 24, 1994 /s/ Don E. Marsh
-------------------------------------
Don E. Marsh, President, Chief
Executive Officer and Director
June 24, 1994 /s/ Douglas W. Dougherty
-------------------------------------
Douglas W. Dougherty,
Chief Financial Officer
June 24, 1994 /s/ Michael D. Castleberry
-------------------------------------
Michael D. Castleberry,
Director-Corporate Accounting
June 24, 1994 /s/ C. Alan Marsh
-------------------------------------
C. Alan Marsh, Senior Vice President
Corporate Development and Director
June 24, 1994 /s/ Garnet R. Marsh
-------------------------------------
Garnet R. Marsh, Director
June 24, 1994 /s/ William L. Marsh
-------------------------------------
William L. Marsh, Vice President -
General Manager, Property
Management and Director
June 24, 1994 /s/ Jack E. Buckles
-------------------------------------
Jack E. Buckles, Director
June 24, 1994 /s/ Charles R. Clark
-------------------------------------
Charles R. Clark, Director
June 24, 1994 /s/ Stephen M. Huse
-------------------------------------
Stephen M. Huse, Director
June 24, 1994 /s/ James K. Risk, III
-------------------------------------
James K. Risk, III, Director
June 24, 1994 /s/ K. Clay Smith
-------------------------------------
K. Clay Smith, Director
15
16
MARSH SUPERMARKETS, INC., AND SUBSIDIARIES
Schedule II - Amounts Receivable from Related Parties and Underwriters,
Promoters, and Employees Other than Related Parties
(in thousands of dollars)
Balance Deductions Balance
---------------------
Beginning Amounts Amounts End of Period
-----------------
Name of Debtor of Period Additions Collected Written off Current Not Current
- - -------------- --------- --------- --------- ----------- ---------------------
YEAR ENDED MARCH 28, 1992
Fishers Station
Development Company $ - $ 268 $ 117 $ 151
===== ===== ===== =====
YEAR ENDED MARCH 27, 1993
Fishers Station
Development Company $ 151 $ 882 $ 414 $ 619
===== ===== ===== =====
YEAR ENDED April 2, 1994
Fishers Station
Development Company $ 619 $ 572 $ 689 $ 502
Don E. Marsh
Chairman, President, and CEO - 224 - 224
----- ----- ----- -----
Total $ 619 $ 796 $ 689 $ 726
===== ===== ===== =====
Amounts due from Fishers Station Development Company represent working capital
advances, due on demand, to a 25%-owned partnership.
Amount due from Don E. Marsh is a note receivable bearing interest at 6% per
annum, and payable in full on May 28, 1995. The note is collateralized by
shares of Marsh common stock.
16
17
MARSH SUPERMARKETS, INC. AND SUBSIDIARIES
Schedule V - Property, Plant and Equipment
(in thousands of dollars)
Balance Other
Beginning Additions Changes Balance
of Period at Cost Retirements Add (Deduct) End of Period
--------- ------- ----------- ------------ -------------
Year Ended March 28, 1992:
Land $ 21,842 $ 3,129 $( 47) $ 703 (B) $ 25,627
Buildings 51,232 26,828 (D) ( 110) 1,237 79,187
Fixtures & Equipment 83,597 14,440 (3,864) 681 94,854
Leasehold Improvements 42,884 3,532 ( 135) - 46,281
Construction in Progress 19,676 (14,568) - ( 418) 4,690
-------- -------- ------- ------- --------
$219,231 $ 33,361 $(4,156) $ 2,203 $250,639
======== ======== ======= ======= ========
Capitalized Lease Property $ 30,343 $ - $(1,433) $ 2 $ 28,912
======== ======== ======= ======= ========
Year Ended March 27, 1993:
Land $ 25,627 $ 210 $( 2) $ 7,796 (B) $ 33,631
Buildings 79,187 9,151 - (2,768) (C) 85,570
Fixtures & Equipment 94,854 8,120 (1,700) (8,662) (C) 92,612
Leasehold Improvements 46,281 1,590 ( 393) (1,741) (C) 45,737
Construction in Progress 4,690 2,893 - ( 270) 7,313
-------- -------- ------- -------- --------
$250,639 $ 21,964 $(2,095) $ (5,645) $264,863
======== ======== ======= ======== ========
Capitalized Lease Property $ 28,912 $ - $ - $ (6,155) (C) $ 22,757
======== ======== ======= ======== ========
Year Ended April 2, 1994:
Land $ 33,631 $ 970 $( 16) $ 3,646 (B) $ 38,231
Buildings 85,570 24,948 ( 51) 2,325 (E) 112,792
Fixtures & Equipment 92,612 14,090 (1,242) (5,173) (C) 100,287
Leasehold Improvements 45,737 1,308 ( 72) (1,036) (C) 45,937
Construction in Progress 7,313 ( 5,019) - 1 2,295
-------- -------- ------- -------- --------
$264,863 $ 36,297 $(1,381) $( 237) 299,542
======== ======== ======= ======== ========
Capitalized Lease Property $ 22,757 $ - $( 87) $( 4,320) (E) $ 18,350
======== ======== ======= ======== ========
(A) The rates used in providing for depreciation of property and equipment
and the amortization of capital lease assets are as follows:
Buildings 2.5% to 3%
Fixtures and Equipment 8.3% to 33.3%
Transportation Equipment 12.5% to 33.3%
Leasehold Improvements 2.125% to 16.67% or lease term if shorter
Capitalized Lease Property Term of lease or in accordance with above rates where lease transfers ownership
to Registrant at the end of the lease term.
(B) Transfer from land held for expansion.
(C) Principally elimination of fully-amortized costs.
(D) Includes approximately $12 million transferred from construction in
progress and approximately $5 million of new expenditures relating to
new corporate headquarters.
(E) Includes approximately $2.3 million transferred from capitalized lease
property, where ownership of two stores transferred to the Company at
the expiration of the lease term.
17
18
MARSH SUPERMARKETS, INC. AND SUBSIDIARIES
Schedule VI - Accumulated Depreciation and Amortization
of Property, Plant and Equipment
(in thousands of dollars)
Balance Balance
Beginning Additions Other Changes End of
of Period at Cost Retirements Add (Deduct) Period
--------- ------- ----------- ------------ ------
Year Ended March 28, 1992:
Buildings $10,539 $ 2,693 $( 33) $ 508 $13,707
Fixtures & Equipment 35,689 8,423 (2,253) 7 41,866
Leasehold Improvements 14,823 3,311 ( 20) - 18,114
------- ------- ------- -------- -------
$61,051 $14,427 $(2,306) $ 515 $73,687
======= ======= ======= ======== =======
Capitalized Lease Property $16,752 $ 1,575 $(1,022) $ 13 $17,318
======= ======= ======= ======== =======
Year Ended March 27, 1993:
Buildings $13,707 $ 2,993 $ - $ (2,861) $13,839
Fixtures & Equipment 41,866 9,014 (1,006) (8,643) 41,231
Leasehold Improvements 18,114 3,388 ( 242) (1,646) 19,614
------- ------- ------- -------- -------
$73,687 $15,395 $(1,248) $(13,150) $74,684
======= ======= ======= ======== =======
Capitalized Lease Property $17,318 $ 1,106 $ - $ (6,090) $12,334
======= ======= ======= ======== =======
Year Ended April 2, 1994:
Buildings $13,839 $ 3,586 $( 43) $ 910 $18,292
Fixtures & Equipment 41,231 10,191 (1,127) ( 5,222) 45,073
Leasehold Improvements 19,614 3,391 ( 30) ( 1,036) 21,939
------- ------- ------- -------- -------
$74,684 $17,168 $(1,200) $( 5,348) $85,304
======= ======= ======= ======== =======
Capitalized Lease Property $12,334 $ 1,037 $( 87) $( 2,373) $10,911
======= ======= ======= ======== =======
18
19
MARSH SUPERMARKETS, INC. AND SUBSIDIARIES
Schedule IX - Short-term Borrowings
(in thousands of dollars)
Weighted
Maximum Average Weighted
Weighted Amount Amount Average
Balance Average Outstanding Outstanding Interest Rate
End of Interest During the During the During the
Period Rate Period Period (B) Period (C)
------ ---- ------ ----------- ----------
Year Ended March 28, 1992
Notes payable to banks (A) - - $8,500 $1,626 5.3%
Year Ended March 27, 1993
Notes payable to banks (A) - - $7,200 $ 776 3.7%
Year Ended April 2, 1994
Notes payable to banks (A) $4,000 - $5,000 $ 190 3.4%
Note A - Represent borrowings under line of credit borrowing arrangements which
have no termination date, but are reviewed annually for renewal.
Note B - The average amount outstanding represents the weighte average balances
outstanding.
Note C - The weighted average interest rate during the period was calculated by
dividing total interest on short-term debt by the average amount
outstanding.
19
20
MARSH SUPERMARKETS, INC. AND SUBSIDIARIES
Schedule X - Supplementary Income Statement Information
(in thousands of dollars)
Item Charged to Costs and Expenses
- - -------------------------- --------------------------------------------
Year Ended
--------------------------------------------
April 2, March 27, March 28,
1994 1993 1992
---- ---- ----
Advertising costs $13,033 $ - $ -
Note: Amounts for maintenance and repairs, amortization of intangible
assets, taxes other than payroll and income taxes, and royalties are
not presented as such amounts are less than 1% of consolidated sales
and revenues.
Advertising costs are not presented for years ended March 27, 1993
and March 28, 1992, as they were less than 1% of consolidated sales
and other revenues.
20
21
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 August 7, 1990 -Incorporated by reference to Form 10-Q for the quarter ended January 5,
1991.
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 August 7, 1990 - Incorporated by reference to Form 10-
Q for the quarter ended January 5, 1991.
(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) - Note Agreement, dated as of May 1, 1988, for $25,000,000 9.48% Senior Notes due June 30, 2003 - Incorporated by
reference to Form 10-Q for the quarter ended June 25, 1988.
(e) - Rights Agreement, dated as of August 1, 1989, between Marsh Supermarkets, Inc. and National City Bank, as successor
to Merchants National Bank and Trust Company of Indianapolis - Incorporated by reference to Form 10-Q for the
quarter ended October 14, 1989.
(f) - Amendment No. 1, dated as of May 1, 1991, to Rights Agreement, dated as of August 1, 1989 - Incorporated by
reference to Form 10-K for the year ended March 30, 1991.
(g) - Note Agreement dated as of October 15, 1992 for $35 million 8.54% Senior Notes, Series A, due December 31, 2007 and
$15 million 8.13% Senior Notes, Series B, due December 31, 2004 - Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-56738).
(h) - Indenture dated as of February 15, 1993 between Marsh Supermarkets, Inc. and Society National Bank, as Trustee,
including form of Indenture - Incorporated by reference to Registration Statement on Form S-2 (File No. 33-56738).
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) - Marsh Supermarkets, Inc. 1987 Stock Option Plan - Incorporated by reference to Registration Statement on Form S-8
(File No. 33-33427).
(d) - Amendment to the Marsh Supermarkets, Inc. 1987 Stock Option Plan - Incorporated by reference to Proxy Statement,
dated March 22, 1991, for a special meeting of shareholders held May 1, 1991.
(e) - Amended and Restated Employment and Severance Agreements, dated December 3, 1992 - Incorporated by reference to
Registration Statement on Form S-2 (File No. 33-56738).
(f) - Severance Agreements, dated December 31, 1991 - Incorporated by reference to Registration Statement on Form S-2
(File No. 33-56738).
(g) - Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated by reference to Registration Statement on Form S-8
(File No. 2-74859).
(h) - Amendment to the Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated by reference to Proxy Statement,
dated March 22, 1991, for a special meeting of shareholders held May 1, 1991.
(i) - Supplemental Retirement Plan of Marsh Supermarkets, Inc. and Subsidiaries - Incorporated by reference
to Registration Statement on Form S-2 (File No. 33-17730).
(j) - Indemnification agreements - Incorporated by reference to Form 10-Q for the quarter ended January 6,
1990.
(k) - 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.
(l) - Marsh Supermarkets, Inc. Executive Life Insurance Plan - Incorporated by reference to Form 10-K for
the year ended March 30, 1991.
(m) - Marsh Supermarkets, Inc. Executive Supplemental Long-Term Disability Plan - Incorporated by reference
to Form 10-K for the year ended March 30, 1991.
(n) - Marsh Supermarkets, Inc. 1992 Stock Option Plan for Outside Directors - Incorporated by reference in
Proxy Statement, dated June 25, 1992, for the annual meeting of shareholders held August 4, 1992.
22
Exhibit Index Page No.
------------- ---------
Exhibit 11 - Statement re: Computation of Per Share Earnings 23
Exhibit 13 - Annual Report to Shareholders (only portions specifically incorporated by reference are
included herein) 24
Exhibit 21 - Subsidiaries of the Registrant 53
Exhibit 23 - Consent of Independent Auditors 54