Marsh Supermarkets Reports Second-Quarter Results of Operations

INDIANAPOLIS - Marsh Supermarkets, Inc. has reported results of operations for the 16 weeks ended Oct. 11.

Net income for the quarter was $375,000, compared with $306,000 last year. Last year's results included an $18,000 loss on the disposal of discontinued operations net of tax and a $708,000 gain net of tax resulting from an increase in cigarette state excise taxes. Gains from sales of real estate were comparable in both years. Diluted earnings per common share were $0.05, compared with $0.04 last year.

Sales and other revenues for the second quarter were $508,955,000, compared with $512,722,000 last year -- a 0.7 percent decrease. Sales in comparable supermarkets and convenience stores decreased 1.9 percent to $472.1 million from $481.1 million, while sales in comparable stores, excluding fuel sales, decreased 3.3 percent to $434.8 million from $449.7 million. The decline is believed to be attributable to a weak economy, high unemployment, and competitive new supermarket square footage. The company excludes fuel sales from its analysis of revenues and comparable store sales because fuel prices fluctuate widely and frequently.

Long-term debt, including current maturities, of $215,067,000 was reduced by $35,184,000 from last year. Net cash provided by operating activities of $28,352,000 was up $11,046,000, or 63.8 percent, from last year's $17,306,000. This was partly due to the reduction of inventory by $15,274,000 and 11.1 percent from last year.

The company purchased at a discount, and subsequently retired, $7,250,000 of senior subordinated notes during the quarter, resulting in a gain of $327,000. The purchase was funded with cash available from the company's bank lines. At current short-term interest rates, annual interest expense should be reduced by approximately $400,000.

During the second quarter, the company acquired one supermarket that is being operated as an O'Malia Food Market, and closed one Savin*$ store. Subsequent to quarter end, the company acquired a supermarket that is being operated under the LoBill Foods banner. Two new Marsh stores will open in the third and fourth quarters, one in Noblesville, Ind. and one in Ft. Wayne, Ind., respectively.

"Due to the current economic and competitive climate, we continue to concentrate on expense reduction and inventory and capital management," said Don E. Marsh, chairman and c.e.o. "Selling, general, and administrative expenses are below last year and have been below last year for four consecutive quarters. Our focus on inventory reduction has resulted in improved cash flow. We will continue our efforts on expense controls, asset management, and operating efficiency, which will make us well positioned for the future as the economy and employment market improve."
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