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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 27, 1999
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 the definitive proxy statement
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 held by non-affiliates of
the Registrant as of June 1, 1999: $49,600,485. 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 may individually disclaim.
At June 1, 1999, there were 4,010,108 shares of Class A Common Stock
and 4,510,478 shares of Class B Common Stock outstanding.
Portions of the 1999 Annual Report to Shareholders for the year ended
March 27, 1999 are incorporated by reference into Parts I and II.
Portions of the Proxy Statement for the Annual Shareholders' Meeting to
be held August 3, 1999 are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
GENERAL
At March 27, 1999, Marsh Supermarkets, Inc. (the "Company" or "Marsh") operated
90 supermarkets and 175 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 1,310
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.
SUPERMARKETS
At March 27, 1999, the Company operated 77 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 37
other communities. Revenues from supermarket operations represent approximately
67% of the Company's fiscal 1999 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, 60 are open 24 hours a day and 10 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 38
stores. These products are prepared in the Company's central kitchen, which is
now a shared facility, providing fresh items to most of the Company's divisions.
The Company's new and expanded 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 (90 stores), hot prepared foods (61),
bakeries (90), prime cut service meat (58), fresh seafood (56), sushi shops (6),
floral shops (58), imported cheese shops (49), wines and beer (83), salad bars
(36), video rental (62), cosmetic counters (14) and shoe repair (17).
Twenty-seven 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 35 of the Company's
stores, and 70 stores offer ATM machines. Home delivery of orders placed by
customers via telephone, fax or the Internet is offered to the Indianapolis
metropolitan market.
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 eight modern
conventional supermarkets. Approximately one-third of the sales area in these
stores is devoted to merchandising fresh, high quality perishable products such
as delicatessens, bakeries, prepared foods and produce, and approximately 5,000
square feet are devoted to warehouse-type merchandising of bulk club pack
merchandise.
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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 27, 1999, the Company operated 17 of its
supermarkets under this concept. Subsequent to March 27, 1999, a conventional
Marsh supermarket was converted to this format. The stores operate 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. In 1999, the Company opened a
7,500 square foot limited selection, stock-up grocery store with an every day
low price format operating under the trade name Savin$.
The Company's supermarkets range in size from 7,500 to 81,500 square feet. The
average size is approximately 38,300 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 . . . . . . . . . . . . . . . 8
45,000 - 54,999 . . . . . . . . . . . . . . . 7
35,000 - 44,999 . . . . . . . . . . . . . . . 20
25,000 - 34,999 . . . . . . . . . . . . . . . 42
Less than 25,000 . . . . . . . . . . . . . . 7
--
90
==
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
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 functions
as a check cashing card, video rental card and automatically provides electronic
coupons. Further, a customer 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.
CONVENIENCE STORES
At March 27, 1999, the Company operated 175 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 100 stores have automated teller bank machines.
Approximately 52% of the stores also offer petroleum products. Two-thirds of the
petroleum stores are branded by Marathon, a marketer to 3,100 locations in 12
midwestern and southeastern states. Revenues from the convenience stores
represented approximately 11% of the Company's fiscal 1999 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. In Indiana, all but 11 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.
The Company has added higher margin food and beverage products, such as
store-prepared pizza (42 stores), chicken (48), and self-service fountain
drinks, as well as sit-down eating areas in 49 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 also
partnered with Shell Oil Company in the Kokomo, Indiana and Anderson, Indiana
markets whereby the Company receives a fixed fee and a commission based on fuel
sales above a base level without investing capital in the fuel inventory or
dispensing equipment. Six stores have drive-thru car washes.
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
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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 over 1,300 unaffiliated
stores in a nine-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 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 20% of the
Company's fiscal 1999 consolidated sales and other revenues.
CRYSTAL FOOD SERVICES
The Company's food service operation does business under the trade name Crystal
Food Service. 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 of unsurpassed
freshness and quality in all of its food service operations. The Company began
its food service operations in 1993 with ALLtimate Catering and expanded 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. 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
Crystal Yacht Club, the Indiana Roof Ballroom and the Murat Shrine Centre. The
Company caters special events at the Indianapolis Motor Speedway, Conner Prairie
Museum, Indianapolis Museum of Art, the Eiteljorg Western Museum of Art, the RCA
Tennis Championships and the Horizon Convention Center in Muncie, Indiana. The
Company also provides concession services at the Indianapolis Zoo, Conner
Prairie, the Indiana State Fairgrounds, Prairie View Golf Club and Eagle Point
Resort Cafe, and cafeteria management to 12 major employers and vending services
to over 100 clients throughout the greater Indianapolis area. The Company's food
service operation also provides meals at the child development centers for Marsh
and Eli Lilly and Company in Indianapolis.
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 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.
The Company's distribution centers are modern and highly automated. Merchandise
is controlled through an on-line computerized buying and inventory control
system. In fiscal 1997, the perishable products facility was expanded by
approximately 67,000 square feet to provide additional capacity. The receiving
dock was modified to enhance product flow. Also, new state-of-the-art banana
rooms were added to ensure high quality bananas with consistent color. 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 and to 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.
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CSDC supplies grocery, produce, housewares, health and beauty care, and
cigarette and tobacco products to the Company's convenience stores. 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 is in the process
of upgrading 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.
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 27 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.
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 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 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., Super Valu Food Stores, Inc.,
operating in the Indianapolis market through its "Cub Foods" stores, and Meijer,
Inc.
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 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, and the timeliness and accuracy of
deliveries. CSDC's major competitors are McLane Company, Inc. and several
regional wholesale distributors.
6
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 13,400 employees. Approximately 7,950 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 three-year collective bargaining agreements which extend to May, 2001.
The Company considers its employee relations to be excellent.
The Company opened a child development center in fiscal 1997 in an effort to
help employees meet day care needs. The operation is located in a 12,500 square
foot facility near one of the Company's supermarkets in Carmel, Indiana. Marsh
owns the building and the equipment. The center is operated by an unaffiliated
child care firm. The service is limited to the Company's employees and immediate
family members and operates five days a week.
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 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.
7
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 3,453,000 38,300 36% 36% 28%
Convenience Stores 509,000 2,900 20% 39% 41%
---------
3,962,000
=========
Owned and leased retail facilities are summarized as follows:
Convenience
Supermarkets Stores
------------ -----------
Owned 33 127
Leased:
Fixed rentals only 29 28
Fixed plus contingent rentals 28 20
-- ---
57 48
-- ---
90 175
== ===
All leases, except for six supermarkets and 16 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 21 closed
stores, of which eight were subleased at March 27, 1999.
One supermarket (considered owned for purposes of the foregoing analysis) is
leased under an equity lease arrangement pursuant to which ownership is
transferred to the Company at the expiration of the lease.
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 floral design center and office space.
A 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 financed by an
economic development bond. Ownership of the facility was conveyed back to the
Company in 1996, and the warehouse 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 is used as a distribution
center for non-food products, 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 Company's 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 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.
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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
No matters were submitted to a vote of the security holders during the fourth
quarter of fiscal 1999.
EXECUTIVE OFFICERS OF 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 1999 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 61 Son of Garnet R. Marsh;
and Chief Executive Officer brother of William L. 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 57 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 57 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 1998, he was elected a director of the Company. He has been
employed by the Company in various executive capacities since 1977.
- --------------------------------------------------------------------------------------------
DOUGLAS W. DOUGHERTY Senior Vice President, Chief Financial 55 None
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. His
prior experience includes senior financial executive positions with Hartmarx,
Inc. from November 1990 to March 1994. Prior experience includes senior
management positions at Dayton Hudson Corp. and The May Department Stores
Company.
- --------------------------------------------------------------------------------
9
- --------------------------------------------------------------------------------------------------
WILLIAM L. MARSH Senior Vice President - Property 55 Son of Garnet R. Marsh;
Management brother of Don E. 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 a director of the Company. He
has been employed by the Company in various supervisory and executive capacities
since 1974.
- --------------------------------------------------------------------------------------------------
RONALD R. WALICKI President and Chief Operating 61 None
Officer, International Division
Mr. Ronald R. Walicki has held his current position since August 1998. Prior
thereto, he served as President and Chief Operating Officer, Village Pantry
Division, since August 1996, Executive Vice President, Supermarket Division,
since February 1994, and President and Chief Operating Officer of Marsh Village
Pantries, Inc. since February 1992. For more than five years prior to February
1992, he served as Vice President - General Manager, Supermarket Division. He
has been employed by the Company in various supervisory and management positions
since 1965.
- -------------------------------------------------------------------------------------------------
RANDOLPH L. POKORZYNSKI President and Chief Operating 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 63 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 42 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 Corporate Controller 49 None
Mr. Mark A. Varner has held his current position since 1990. He has been
employed by the Company in various accounting positions since 1971.
- -------------------------------------------------------------------------------
10
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 33, 34 and 35 of
the 1999 Annual Report to Shareholders is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on page 16 of the 1999 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 on pages 18 through 21 of the 1999 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk on page 21 of the 1999 Annual Report to Shareholders is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and notes thereto on pages 23 to 35 of the
1999 Annual Report to Shareholders are incorporated herein by reference.
Quarterly Financial Data on page 17 of the 1999 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", and "Certain
Relationships and Related Transactions", respectively, which Proxy Statement
shall, pursuant to Regulation 14A, be filed with the Commission not later than
120 days after March 27, 1999, 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 Registrant".
11
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 1999 Annual
Report to Shareholders are incorporated by reference in Item 8.
Consolidated Balance Sheets as of March 27, 1999 and March 28, 1998.
Consolidated Statements of Income for each of the three years in the
period ended March 27, 1999.
Consolidated Statements of Changes in Shareholders' Equity for each
of the three years in the period ended March 27, 1999.
Consolidated Statements of Cash Flows for each of the three years in
the period ended March 27, 1999.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
(2) The following consolidated financial statement schedules of Marsh
Supermarkets, Inc. and subsidiaries are included in Item 14(d):
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
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) - Amended and Restated Rights Agreement, dated as of December
24, 1998, between Marsh Supermarkets, Inc. and National City
Bank, as rights agent - Incorporated by reference to Form 8-K,
dated December 21, 1998.
(f) - Note Agreement, dated as of October 15, 1992, for $35,000,000
8.54% Senior Notes, Series A, due December 31, 2007, and
$15,000,000 8.13% Senior Notes, Series B, due December 31,
2004 - Incorporated by reference to Registration Statement on
Form S-2 (File No. 33-56738).
(g) - 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).
(h) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $35,000,000 8.54% Senior Notes, Series A,
due December 31, 2007, and $15,000,000 8.13%, Series B, due
December 31, 2004 - Incorporated by reference to form 10-K for
the year ended March 29, 1997.
12
(i) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $25,000,000 9.48% Senior Notes, due June
20, 2003 - Incorporated by reference to Form 10-K for the year
ended March 29, 1997.
(j) - 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).
(k) - 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 Annual Report on Form 10-K for
the year ended March 28, 1998.
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) - Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated
by reference to Registration Statement on Form S-8 (File No.
2-74859).
(g) - 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.
(h) - Supplemental Retirement Plan of Marsh Supermarkets, Inc. and
Subsidiaries - Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-17730).
(i) - Indemnification Agreements - Incorporated by reference to
Form 10-Q for quarter ended January 6, 1990.
(j) - 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.
(k) - Marsh Supermarkets, Inc. Executive Life Insurance Plan -
Incorporated by reference to Form 10-K for the year ended
March 30, 1991.
(l) - Marsh Supermarkets, Inc. Executive Supplemental Long-Term
Disability Plan - Incorporated by reference to Form 10-K for
the year ended March 30, 1991.
(m) - 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.
(n) - Employment contracts, dated January 1, 1995 - Incorporated
by reference to Form 10-Q for the quarter ended January 7,
1995.
(o) - 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.
(p) - Severance Benefits Agreements, dated as of January 1, 1996 -
Incorporated by reference to Form 10-K for the year ended
March 29, 1997.
(q) - 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.
(r) - 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.
(s) - Form of Employment Contract, dated as of June 1, 1997
- Incorporated by reference to Form 10-Q for the quarter ended
October 11, 1997.
(t) - 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.
(u) - 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.
(v) - Executive Stock Purchase Plan of Marsh 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.
Exhibit 13 - 1999 Annual Report to Shareholders (only portions specifically
incorporated by reference are included herein).
13
Exhibit 21 - Subsidiaries of the Registrant.
Exhibit 23 - Consent of Independent Auditors.
Exhibit 27 - Financial Data Schedule for the year for which this report is
filed (for SEC use only).
(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 27, 1999.
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 22, 1999 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 22, 1999 /s/ Don E. Marsh
--------------------------------------------
Don E. Marsh, Chairman of the Board,
President and Chief Executive Officer and
Director
June 22, 1999 /s/ Douglas W. Dougherty
--------------------------------------------
Douglas W. Dougherty, Senior Vice President,
Chief Financial Officer and Treasurer
June 22, 1999 /s/ Mark A. Varner
--------------------------------------------
Mark A. Varner, Corporate Controller
June 22, 1999 /s/ William L. Marsh
--------------------------------------------
William L. Marsh, Senior Vice
President-Property Management, and Director
June 22, 1999 /s/ P. Lawrence Butt
--------------------------------------------
P. Lawrence Butt, Senior Vice President,
Counsel and Secretary, and Director
June 22, 1999 /s/ Garnet R. Marsh
--------------------------------------------
Garnet R. Marsh, Director
June 22, 1999 /s/ J. Michael Blakley
--------------------------------------------
J. Michael Blakley, Director
June 22, 1999 /s/ Charles R. Clark
--------------------------------------------
Charles R. Clark, Director
June 22, 1999 /s/ Stephen M. Huse
-------------------------------------------
Stephen M. Huse, Director
June 22, 1999 /s/ Catherine A. Langham
-------------------------------------------
Catherine A. Langham, Director
June 22, 1999 /s/ James K. Risk
-------------------------------------------
James K. Risk, III, Director
June 22, 1999 /s/ K. Clay Smith
-------------------------------------------
K. Clay Smith, Director
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
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) - Amended and Restated Rights Agreement, dated as of December
24, 1998, between Marsh Supermarkets, Inc. and National City
Bank, as rights agent - Incorporated by reference to Form 8-K,
dated December 21, 1998.
(f) - Note Agreement, dated as of October 15, 1992, for
$35,000,000 8.54% Senior Notes, Series A, due December 31,
2007, and $15,000,000 8.13% Senior Notes, Series B, due
December 31, 2004 - Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-56738).
(g) - 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).
(h) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $35,000,000 8.54% Senior Notes, Series A,
due December 31, 2007, and $15,000,000 8.13%, Series B, due
December 31, 2004 - Incorporated by reference to form 10-K for
the year ended March 29, 1997.
(i) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $25,000,000 9.48% Senior Notes, due June
20, 2003 - Incorporated by reference to Form 10-K for the year
ended March 29, 1997.
(j) - 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).
(k) - 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 Annual Report on Form 10-K for
the year ended March 28, 1998.
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) - Marsh Supermarkets, Inc. 1980 Marsh Stock Plan -
Incorporated by reference to Registration Statement on Form
S-8 (File No. 2-74859).
16
(g) - 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.
(h) - Supplemental Retirement Plan of Marsh Supermarkets, Inc. and
Subsidiaries Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-17730).
(i) - Indemnification Agreements - Incorporated by reference to
Form 10-Q for the quarter ended January 6, 1990.
(j) - 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.
(k) - Marsh Supermarkets, Inc. Executive Life Insurance Plan -
Incorporated by reference to Form 10-K for the year ended
March 30, 1991.
(l) - Marsh Supermarkets, Inc. Executive Supplemental Long-Term
Disability Plan Incorporated by reference to Form 10-K for the
year ended March 30, 1991.
(m) - 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.
(n) - Employment contracts, dated January 1, 1995 - Incorporated
by reference to Form 10-Q for the quarter ended January 7,
1995.
(o) - 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.
(p) - Severance Benefits Agreements, dated as of January 1, 1996.
- Incorporated by reference to Form 10-K for the year ended
March 29, 1997.
(q) - 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.
(r) - 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.
(s) - Form of Employment Contract, dated as of June 1, 1997
-Incorporated by reference to Form 10-Q for the quarter ended
October 11, 1997.
(t) - 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.
(u) - 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.
(v) Executive Stock Purchase Plan of Marsh 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.
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.
Exhibit 27 - Financial Data Schedule for the year for which this report is
filed (for SEC use only).