##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 9, 2004 Commission File Number 0-1532 MARSH SUPERMARKETS, INC.  INDIANA
(State or other jurisdiction of
incorporation or organization)
    
    35-0918179
(IRS Employer
Identification No.)
 9800 CROSSPOINT BOULEVARD INDIANAPOLIS, INDIANA
(Address of principal executive offices)
    
    46256-3350
(Zip Code)
 (317) 594-2100
(Registrants telephone number, including area code) 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 twelve months
and (2) has been subject to such filing requirements for at least the past 90
days. Indicate by check mark whether the registrant is an accelerated filer (as


defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [x] Number of shares outstanding of each class of the registrants common
stock as of October 29, 2004: Class A Common Stock
    
    -
    
    
    3,741,990
    
    
    sharesClass B Common Stock
    
    -
    
    
    4,155,567
    
    
    shares7,897,557
    
    
    shares




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TABLE OF CONTENTS  PART I FINANCIAL INFORMATIONItem 1. Financial StatementsCONDENSED CONSOLIDATED BALANCE SHEETSCONDENSED CONSOLIDATED STATEMENTS OF INCOMECONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 2. Changes in Securities, Use of Proceeds and Issuers Purchases of Equity SecuritiesItem 3. Defaults upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSIGNATURESEX-31.1  SECTION 302 CEO CERTIFICATIONEX-31.2  SECTION 302 CFO CERTIFICATIONEX-32.1  SECTION 906 CEO CERTIFICATIONEX-32.2  SECTION 906 CFO CERTIFICATION    Table of Contents  
 PART I FINANCIAL INFORMATION 
 Item 1. Financial Statements MARSH SUPERMARKETS, INC. 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 October 9,
    
    March 27,
    
    October 11,2004
    
    2004
    
    2003(Unaudited)
    
    (Note A)
    
    (Unaudited)AssetsCurrent assets:Cash and equivalents
    
    $
    37,188
    
    
    $
    27,584
    
    
    $
    27,368Accounts receivable, net
    
    
    19,944
    
    
    
    23,864
    
    
    
    26,094Inventories
    
    
    130,059
    
    
    
    126,840
    
    
    
    118,396Prepaid expenses
    
    
    5,232
    
    
    
    6,495
    
    
    
    4,711Recoverable income taxes
    
    
    4,647
    
    
    
    5,400
    
    
    
    2,319Total current assets
    
    
    197,070
    
    
    
    190,183
    
    
    
    178,888Property and equipment, less allowances for depreciation
    
    
    303,528
    
    
    
    297,028
    
    
    
    307,533Other assets
    
    
    52,526
    
    
    
    55,194
    
    
    
    50,921Total Assets
    
    $
    553,124
    
    
    $
    542,405
    
    
    $
    537,342Liabilities
and Shareholders EquityCurrent liabilities:Accounts payable
    
    
    74,981
    
    
    
    80,614
    
    
    
    69,519Accrued liabilities
    
    
    53,826
    
    
    
    48,170
    
    
    
    51,611Current maturities of long-term liabilities
    
    
    5,255
    
    
    
    3,427
    
    
    
    3,250Total current liabilities
    
    
    134,062
    
    
    
    132,211
    
    
    
    124,380Long-term liabilities:Long-term debt
    
    
    179,597
    
    
    
    174,161
    
    
    
    183,335Capital lease obligations
    
    
    27,767
    
    
    
    28,188
    
    
    
    28,482Pension and post-retirement benefits
    
    
    45,176
    
    
    
    42,725
    
    
    
    43,723Total long-term liabilities
    
    
    252,540
    
    
    
    245,074
    
    
    
    255,540Deferred items:Income taxes
    
    
    18,558
    
    
    
    18,309
    
    
    
    12,673Gains from sale/leasebacks
    
    
    14,975
    
    
    
    15,238
    
    
    
    14,975Other
    
    
    4,403
    
    
    
    3,297
    
    
    
    2,030Total deferred items
    
    
    37,936
    
    
    
    36,844
    
    
    
    29,678Shareholders Equity:Common stock, Classes A and B
    
    
    26,615
    
    
    
    26,570
    
    
    
    26,455Retained earnings
    
    
    131,683
    
    
    
    130,813
    
    
    
    131,788Cost of common stock in treasury
    
    
    (15,656
    )
    
    
    (15,011
    )
    
    
    (15,014
    )Deferred
cost - restricted stock
    
    
    (170
    )
    
    
    (211
    )
    
    
    (25
    )Notes
receivable - stock purchases
    
    
    (11
    )
    
    
    (11
    )
    
    
    (76
    )Accumulated other comprehensive loss
    
    
    (13,875
    )
    
    
    (13,874
    )
    
    
    (15,384
    )Total shareholders equity
    
    
    128,586
    
    
    
    128,276
    
    
    
    127,744Total Liabilities and Shareholders Equity
    
    $
    553,124
    
    
    $
    542,405
    
    
    $
    537,342
 See notes to condensed consolidated financial statements. 2




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MARSH SUPERMARKETS, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 16 Weeks Ended
    
    28 Weeks EndedOctober 9,
    
    October 11,
    
    October 9,
    
    October 11,2004
    
    2003
    
    2004
    
    2003Sales and other revenues
    
    $
    524,074
    
    
    $
    508,955
    
    
    $
    923,470
    
    
    $
    886,965Gains from sales of property
    
    
    818
    
    
    
    1,814
    
    
    
    1,274
    
    
    
    1,814Total revenues
    
    
    524,892
    
    
    
    510,769
    
    
    
    924,744
    
    
    
    888,779Cost of merchandise sold, including warehousing
and transportation, excluding depreciation
    
    
    370,200
    
    
    
    358,385
    
    
    
    651,323
    
    
    
    622,464Gross profit
    
    
    154,692
    
    
    
    152,384
    
    
    
    273,421
    
    
    
    266,315Selling, general and administrative
    
    
    139,996
    
    
    
    138,053
    
    
    
    246,035
    
    
    
    240,172Depreciation
    
    
    7,787
    
    
    
    7,660
    
    
    
    13,572
    
    
    
    13,422Operating income
    
    
    6,909
    
    
    
    6,671
    
    
    
    13,814
    
    
    
    12,721Interest
    
    
    5,704
    
    
    
    5,925
    
    
    
    9,987
    
    
    
    10,495Other non-operating income
    
    
    (838
    )
    
    
    (327
    )
    
    
    (838
    )
    
    
    (961
    )Income before income taxes
    
    
    2,043
    
    
    
    1,073
    
    
    
    4,665
    
    
    
    3,187Income taxes
    
    
    739
    
    
    
    390
    
    
    
    1,743
    
    
    
    1,246Net income
    
    $
    1,304
    
    
    $
    683
    
    
    $
    2,922
    
    
    $
    1,941Earnings per common share:Basic
    
    $
    .17
    
    
    $
    .09
    
    
    $
    .37
    
    
    $
    .24Diluted
    
    
    .16
    
    
    
    .09
    
    
    
    .36
    
    
    
    .24Dividends declared per share
    
    
    .13
    
    
    
    .13
    
    
    
    .26
    
    
    
    .26
 See notes to condensed consolidated financial statements. 3




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MARSH SUPERMARKETS, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 28 Weeks EndedOctober 9,
    
    October 11,2004
    
    2003Operating activitiesNet income
    
    $
    2,922
    
    
    $
    1,941Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation
    
    
    13,572
    
    
    
    13,422Amortization of other assets
    
    
    760
    
    
    
    817Changes in operating assets and liabilities
    
    
    4,514
    
    
    
    11,539Other operating activities
    
    
    (844
    )
    
    
    633Net cash provided by operating activities
    
    
    20,924
    
    
    
    28,352Investing activitiesNet acquisition of property, equipment and land
    
    
    (29,331
    )
    
    
    (8,462
    )Other investing activities
    
    
    861
    
    
    
    (1,756
    )Net cash used for investing activities
    
    
    (28,470
    )
    
    
    (10,218
    )Financing activitiesRepayments of short-term borrowings
    
    
    
    
    
    
    (1,700
    )Proceeds of long-term borrowings
    
    
    55,000
    
    
    
    20,000Proceeds of sale/leasebacks
    
    
    11,372
    
    
    
    298Repayments of long-term debt and capital leases
    
    
    (48,157
    )
    
    
    (35,542
    )Cash dividends paid
    
    
    (2,058
    )
    
    
    (2,065
    )Purchases of shares for treasury
    
    
    (821
    )
    
    
    (129
    )Other financing activities
    
    
    1,814
    
    
    
    59Net cash provided by (used for) financing activities
    
    
    17,150
    
    
    
    (19,079
    )Net increase (decrease) in cash and equivalents
    
    
    9,604
    
    
    
    (945
    )Cash and equivalents at beginning of period
    
    
    27,584
    
    
    
    28,313Cash and equivalents at end of period
    
    $
    37,188
    
    
    $
    27,368
 See notes to condensed consolidated financial statements. 4




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MARSH SUPERMARKETS, INC. 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 October 9, 2004 Note A  Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Marsh
Supermarkets, Inc. and subsidiaries were prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions to Form 10-Q. Accordingly, they do not include all the information
and footnotes necessary for a fair presentation of financial position, results
of operations, and cash flows in conformity with accounting principles
generally accepted in the United States. This report should be read in
conjunction with the Companys Consolidated Financial Statements for the year
ended March 27, 2004. The balance sheet at March 27, 2004, has been derived
from the audited financial statements at that date. The Companys fiscal year ends on Saturday of the thirteenth week of each
calendar year. All references herein to 2005 and 2004 relate to the fiscal
years ending April 2, 2005 and March 27, 2004, respectively. The condensed consolidated financial statements for the sixteen and
twenty-eight week periods ended October 9, 2004 and October 11, 2003,
respectively, were not audited by independent auditors. Preparation of the
financial statements requires management to make estimates that affect the
reported amounts of assets, liabilities, revenues and expenses for the
reporting periods. In the opinion of management, the statements reflect all
adjustments (consisting of normal recurring accruals) considered necessary to
present fairly, on a consolidated basis, the financial position, results of
operations and cash flows for the periods presented. Operating results for the sixteen and twenty-eight week periods ended October
9, 2004, are not necessarily indicative of the results that may be expected for
the full fiscal year ending April 2, 2005. Note B  Earnings Per Share The following table sets forth the computation of the numerators and
denominators used in the computation of basic and diluted earnings per share: 16 Weeks Ended
    
    28 Weeks EndedOctober 9,
    
    October 11,
    
    October 9,
    
    October 11,2004
    
    2003
    
    2004
    
    2003Net income
    
    $
    1,304
    
    
    $
    683
    
    
    $
    2,922
    
    
    $
    1,941Weighted average shares outstanding
    
    
    7,913
    
    
    
    7,950
    
    
    
    7,918
    
    
    
    7,950Non-vested restricted shares
    
    
    (16
    )
    
    
    (3
    )
    
    
    (17
    )
    
    
    (5
    )Denominator for basic earnings per share
    
    
    7,897
    
    
    
    7,947
    
    
    
    7,901
    
    
    
    7,945Effect of dilutive securities:Non-vested restricted shares
    
    
    16
    
    
    
    3
    
    
    
    17
    
    
    
    5Stock options
    
    
    72
    
    
    
    64
    
    
    
    96
    
    
    
    63Denominator for diluted earnings per share
- adjusted weighted average shares
    
    
    7,985
    
    
    
    8,014
    
    
    
    8,014
    
    
    
    8,013
 5




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Note C  Stock Option Plans The Companys stock option plans are accounted for under the intrinsic value
method of APB Opinion 25 and related interpretations. The following table
illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of FAS 123: 16 Weeks Ended
    
    28 Weeks EndedOctober 9,
    
    October 11,
    
    October 9,
    
    October 11,2004
    
    2003
    
    2004
    
    2003Net income, as reported
    
    $
    1,304
    
    
    $
    683
    
    
    $
    2,922
    
    
    $
    1,941Compensation expense recorded
    
    
    14
    
    
    
    9
    
    
    
    23
    
    
    
    19Compensation expense using
the fair value method, net of tax
    
    
    (212
    )
    
    
    (255
    )
    
    
    (392
    )
    
    
    (473
    )Pro-forma net income
    
    $
    1,106
    
    
    $
    437
    
    
    $
    2,553
    
    
    $
    1,487Earnings per share, as reported:Basic
    
    $
    .17
    
    
    $
    .09
    
    
    $
    .37
    
    
    $
    .24Diluted
    
    
    .16
    
    
    
    .09
    
    
    
    .36
    
    
    
    .24Earnings per share, pro-forma:Basic
    
    
    .14
    
    
    
    .06
    
    
    
    .32
    
    
    
    .19Diluted
    
    
    .14
    
    
    
    .05
    
    
    
    .32
    
    
    
    .19
 6




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Note D  Long-Term Debt and Guarantor Subsidiaries Other than three minor subsidiaries, all of the Companys subsidiaries (the
Guarantors) have fully and unconditionally guaranteed on a joint and several
basis the Companys obligations under its 8 7/8% senior subordinated notes. The
Guarantors are wholly-owned subsidiaries of the Company. Balance sheet as of October 9, 2004: GuarantorParent
    
    subsidiaries
    
    TotalAssetsCurrent assets:Cash and equivalents
    
    $
    
    
    
    $
    37,188
    
    
    $
    37,188Accounts receivable
    
    
    
    
    
    
    19,944
    
    
    
    19,944Inventories
    
    
    
    
    
    
    130,059
    
    
    
    130,059Prepaid expenses
    
    
    
    
    
    
    5,232
    
    
    
    5,232Recoverable income taxes
    
    
    4,647
    
    
    
    
    
    
    
    4,647Total current assets
    
    
    4,647
    
    
    
    192,423
    
    
    
    197,070Property and equipment, less allowances for depreciation
    
    
    32,304
    
    
    
    271,224
    
    
    
    303,528Other assets
    
    
    3,275
    
    
    
    49,251
    
    
    
    52,526Total Assets
    
    $
    40,226
    
    
    $
    512,898
    
    
    $
    553,124Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    74,981
    
    
    $
    74,981Accrued liabilities
    
    
    9,053
    
    
    
    44,713
    
    
    
    53,826Current maturities of long-term liabilities
    
    
    1,668
    
    
    
    3,587
    
    
    
    5,255Total current liabilities
    
    
    10,721
    
    
    
    123,341
    
    
    
    134,062Long-term liabilities:Long-term debt
    
    
    111,364
    
    
    
    68,233
    
    
    
    179,597Capital lease obligations
    
    
    
    
    
    
    27,767
    
    
    
    27,767Pension and post-retirement benefits
    
    
    40,879
    
    
    
    4,297
    
    
    
    45,176Total long-term liabilities
    
    
    152,243
    
    
    
    100,297
    
    
    
    252,540Deferred items:Income taxes
    
    
    18,558
    
    
    
    
    
    
    
    18,558Other
    
    
    56
    
    
    
    19,322
    
    
    
    19,378Total deferred items
    
    
    18,614
    
    
    
    19,322
    
    
    
    37,936Amounts due parent from subsidiaries
    
    
    (145,842
    )
    
    
    145,842
    
    
    
    Shareholders Equity:Common stock, Classes A and B
    
    
    26,615
    
    
    
    
    
    
    
    26,615Retained earnings
    
    
    7,587
    
    
    
    124,096
    
    
    
    131,683Cost of common stock in treasury
    
    
    (15,656
    )
    
    
    
    
    
    
    (15,656
    )Deferred
cost - restricted stock
    
    
    (170
    )
    
    
    
    
    
    
    (170
    )Notes
receivable - stock purchase
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )Accumulated other comprehensive loss
    
    
    (13,875
    )
    
    
    
    
    
    
    (13,875
    )Total shareholders equity
    
    
    4,490
    
    
    
    124,096
    
    
    
    128,586Total Liabilities and Shareholders equity
    
    $
    40,226
    
    
    $
    512,898
    
    
    $
    553,124
 7




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Balance sheet as of March 27, 2004: GuarantorParent
    
    subsidiaries
    
    TotalAssetsCurrent assets:Cash and equivalents
    
    $
    
    
    
    $
    27,584
    
    
    $
    27,584Accounts and notes receivable, net
    
    
    
    
    
    
    23,864
    
    
    
    23,864Inventories
    
    
    
    
    
    
    126,840
    
    
    
    126,840Prepaid expenses
    
    
    
    
    
    
    6,495
    
    
    
    6,495Recoverable income taxes
    
    
    5,400
    
    
    
    
    
    
    
    5,400Total current assets
    
    
    5,400
    
    
    
    184,783
    
    
    
    190,183Property and equipment, less allowances for depreciation
    
    
    32,717
    
    
    
    264,311
    
    
    
    297,028Other assets
    
    
    3,247
    
    
    
    51,947
    
    
    
    55,194Total Assets
    
    $
    41,364
    
    
    $
    501,041
    
    
    $
    542,405Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    80,614
    
    
    $
    80,614Accrued liabilities
    
    
    8,722
    
    
    
    39,448
    
    
    
    48,160Current maturities of long-term liabilities
    
    
    1,587
    
    
    
    1,840
    
    
    
    3,427Total current liabilities
    
    
    10,309
    
    
    
    121,902
    
    
    
    132,211Long-term liabilities:Long-term debt
    
    
    112,173
    
    
    
    61,988
    
    
    
    174,161Capital lease obligations
    
    
    
    
    
    
    28,188
    
    
    
    28,188Pension and post-retirement benefits
    
    
    38,541
    
    
    
    4,184
    
    
    
    42,725Total long-term liabilities
    
    
    150,714
    
    
    
    94,360
    
    
    
    245,074Deferred items:Income taxes
    
    
    18,309
    
    
    
    
    
    
    
    18,309Other
    
    
    55
    
    
    
    18,480
    
    
    
    18,535Total deferred items
    
    
    18,364
    
    
    
    18,480
    
    
    
    36,844Amounts due parent from subsidiaries
    
    
    (145,664
    )
    
    
    145,664
    
    
    
    Shareholders Equity:Common stock, Classes A and B
    
    
    26,570
    
    
    
    
    
    
    
    26,570Retained earnings
    
    
    10,178
    
    
    
    120,635
    
    
    
    130,813Cost of common stock in treasury
    
    
    (15,011
    )
    
    
    
    
    
    
    (15,011
    )Deferred
cost - restricted stock
    
    
    (211
    )
    
    
    
    
    
    
    (211
    )Notes
receivable - stock purchases
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )Accumulated other comprehensive loss
    
    
    (13,874
    )
    
    
    
    
    
    
    (13,874
    )Total shareholders equity
    
    
    7,641
    
    
    
    120,635
    
    
    
    128,276Total Liabilities and Shareholders Equity
    
    $
    41,364
    
    
    $
    501,041
    
    
    $
    542,405
 8




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Statement of income for the sixteen weeks ended October 9, 2004: Guarantor
    
    ConsolidatingParent
    
    subsidiaries
    
    entries
    
    TotalSales and other revenues
    
    $
    1,529
    
    
    $
    524,055
    
    
    $
    (1,510
    )
    
    $
    524,074Gains (losses) from sales of property
    
    
    (19
    )
    
    
    837
    
    
    
    
    
    
    
    818Total revenues
    
    
    1,510
    
    
    
    524,892
    
    
    
    (1,510
    )
    
    
    524,892Cost of merchandise sold, including warehousing
and transportation, excluding depreciation
    
    
    
    
    
    
    370,200
    
    
    
    
    
    
    
    370,200Gross profit
    
    
    1,510
    
    
    
    154,692
    
    
    
    (1,510
    )
    
    
    154,692Selling, general and administrative
    
    
    904
    
    
    
    140,602
    
    
    
    (1,510
    )
    
    
    139,996Depreciation
    
    
    432
    
    
    
    7,355
    
    
    
    
    
    
    
    7,787Operating income
    
    
    174
    
    
    
    6,735
    
    
    
    
    
    
    
    6,909Interest
    
    
    562
    
    
    
    5,142
    
    
    
    
    
    
    
    5,704Other non-operating income
    
    
    
    
    
    
    (838
    )
    
    
    
    
    
    
    (838
    )Income (loss) before income taxes
    
    
    (388
    )
    
    
    2,431
    
    
    
    
    
    
    
    2,043Income taxes (benefit)
    
    
    (138
    )
    
    
    877
    
    
    
    
    
    
    
    739Net income (loss)
    
    $
    (250
    )
    
    $
    1,554
    
    
    $
    
    
    
    $
    1,304
 Statement of income for the sixteen weeks ended October 11, 2003: Guarantor
    
    ConsolidatingParent
    
    subsidiaries
    
    entries
    
    TotalSales and other revenues
    
    $
    1,513
    
    
    $
    508,952
    
    
    $
    (1,510
    )
    
    $
    508,955Gains from sales of property
    
    
    
    
    
    
    1,814
    
    
    
    
    
    
    
    1,814Total revenues
    
    
    1,513
    
    
    
    510,766
    
    
    
    (1,510
    )
    
    
    510,769Cost of merchandise sold, including warehousing
and transportation, excluding depreciation
    
    
    
    
    
    
    358,385
    
    
    
    
    
    
    
    358,385Gross profit
    
    
    1,513
    
    
    
    152,381
    
    
    
    (1,510
    )
    
    
    152,384Selling, general and administrative
    
    
    807
    
    
    
    138,756
    
    
    
    (1,510
    )
    
    
    138,053Depreciation
    
    
    550
    
    
    
    7,110
    
    
    
    
    
    
    
    7,660Operating income
    
    
    156
    
    
    
    6,515
    
    
    
    
    
    
    
    6,671Interest
    
    
    562
    
    
    
    5,363
    
    
    
    
    
    
    
    5,925Other non-operating income
    
    
    (327
    )
    
    
    
    
    
    
    
    
    
    
    (327
    )Income (loss) before income taxes
    
    
    (79
    )
    
    
    1,152
    
    
    
    
    
    
    
    1,073Income taxes (benefit)
    
    
    (33
    )
    
    
    423
    
    
    
    
    
    
    
    390Net income (loss)
    
    $
    (46
    )
    
    $
    729
    
    
    $
    
    
    
    $
    683
 9




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##### Table of Contents



Statement of income for the
twenty-eight weeks ended October 9, 2004: Guarantor
    
    ConsolidatingParent
    
    subsidiaries
    
    entries
    
    TotalSales and other revenues
    
    $
    2,662
    
    
    $
    923,451
    
    
    $
    (2,643
    )
    
    $
    923,470Gains from sales of property
    
    
    
    
    
    
    1,274
    
    
    
    
    
    
    
    1,274Total revenues
    
    
    2,662
    
    
    
    924,725
    
    
    
    (2,643
    )
    
    
    924,744Cost of merchandise sold, including warehousing
and transportation, excluding depreciation
    
    
    
    
    
    
    651,323
    
    
    
    
    
    
    
    651,323Gross profit
    
    
    2,662
    
    
    
    273,402
    
    
    
    (2,643
    )
    
    
    273,421Selling, general and administrative
    
    
    1,433
    
    
    
    247,245
    
    
    
    (2,643
    )
    
    
    246,035Depreciation
    
    
    752
    
    
    
    12,820
    
    
    
    
    
    
    
    13,572Operating income
    
    
    477
    
    
    
    13,337
    
    
    
    
    
    
    
    13,814Interest
    
    
    982
    
    
    
    9,005
    
    
    
    
    
    
    
    9,987Other non-operating income
    
    
    
    
    
    
    (838
    )
    
    
    
    
    
    
    (838
    )Income (loss) before income taxes
    
    
    (505
    )
    
    
    5,170
    
    
    
    
    
    
    
    4,665Income taxes (benefit)
    
    
    (180
    )
    
    
    1,923
    
    
    
    
    
    
    
    1,743Net income (loss)
    
    $
    (325
    )
    
    $
    3,247
    
    
    $
    
    
    
    $
    2,922
 Statement of income for the twenty-eight weeks ended October 11, 2003: Guarantor
    
    ConsolidatingParent
    
    subsidiaries
    
    entries
    
    TotalSales and other revenues
    
    $
    2,648
    
    
    $
    886,960
    
    
    $
    (2,643
    )
    
    $
    886,965Gains from sales of property
    
    
    
    
    
    
    1,814
    
    
    
    
    
    
    
    1,814Total revenues
    
    
    2,648
    
    
    
    888,774
    
    
    
    (2,643
    )
    
    
    888,779Cost of merchandise sold, including warehousing
and transportation, excluding depreciation
    
    
    
    
    
    
    622,464
    
    
    
    
    
    
    
    622,464Gross profit
    
    
    2,648
    
    
    
    266,310
    
    
    
    (2,643
    )
    
    
    266,315Selling, general and administrative
    
    
    1,463
    
    
    
    241,352
    
    
    
    (2,643
    )
    
    
    240,172Depreciation
    
    
    961
    
    
    
    12,461
    
    
    
    
    
    
    
    13,422Operating income
    
    
    224
    
    
    
    12,497
    
    
    
    
    
    
    
    12,721Interest
    
    
    981
    
    
    
    9,514
    
    
    
    
    
    
    
    10,495Other non-operating income
    
    
    (961
    )
    
    
    
    
    
    
    
    
    
    
    (961
    )Income before income taxes
    
    
    204
    
    
    
    2,983
    
    
    
    
    
    
    
    3,187Income taxes
    
    
    86
    
    
    
    1,160
    
    
    
    
    
    
    
    1,246Net income
    
    $
    118
    
    
    $
    1,823
    
    
    $
    
    
    
    $
    1,941
 10




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##### Table of Contents



Statement of cash flows for the twenty-eight weeks ended October 9, 2004: GuarantorParent
    
    subsidiaries
    
    TotalNet cash provided by operating activities
    
    $
    3,923
    
    
    $
    17,001
    
    
    $
    20,924Net cash used for investing activities
    
    
    (320
    )
    
    
    (28,150
    )
    
    
    (28,470
    )Financing activitiesProceeds of long-term borrowings
    
    
    
    
    
    
    55,000
    
    
    
    55,000Proceeds of sale leaseback/capital lease obligation
    
    
    
    
    
    
    11,372
    
    
    
    11,372Repayments of long-term debt and capital leases
    
    
    (728
    )
    
    
    (47,429
    )
    
    
    (48,157
    )Cash dividends paid
    
    
    (2,058
    )
    
    
    
    
    
    
    (2,058
    )Other financing activities
    
    
    (817
    )
    
    
    1,810
    
    
    
    993Net cash provided by (used for) financing activities
    
    
    (3,603
    )
    
    
    20,753
    
    
    
    17,150Net increase in cash and equivalents
    
    
    
    
    
    
    9,604
    
    
    
    9,604Cash and equivalents at beginning of period
    
    
    
    
    
    
    27,584
    
    
    
    27,584Cash and equivalents at end of period
    
    $
    
    
    
    $
    37,188
    
    
    $
    37,188
 Statement of cash flows for the twenty-eight weeks ended October 11, 2003: GuarantorParent
    
    subsidiaries
    
    TotalNet cash provided by operating activities
    
    $
    19,321
    
    
    $
    9,031
    
    
    $
    28,352Net cash provided by (used for) investing activities
    
    
    160
    
    
    
    (10,378
    )
    
    
    (10,218
    )Financing activitiesRepayments of short-term borrowings
    
    
    
    
    
    
    (1,700
    )
    
    
    (1,700
    )Proceeds of long-term borrowings
    
    
    
    
    
    
    20,000
    
    
    
    20,000Repayments of long-term debt and capital leases
    
    
    (17,345
    )
    
    
    (18,197
    )
    
    
    (35,542
    )Cash dividends paid
    
    
    (2,065
    )
    
    
    
    
    
    
    (2,065
    )Other financing activities
    
    
    (71
    )
    
    
    299
    
    
    
    228Net cash provided by (used for) financing activities
    
    
    (19,481
    )
    
    
    402
    
    
    
    (19,079
    )Net decrease in cash and equivalents
    
    
    
    
    
    
    (945
    )
    
    
    (945
    )Cash and equivalents at beginning of period
    
    
    
    
    
    
    28,313
    
    
    
    28,313Cash and equivalents at end of period
    
    $
    
    
    
    $
    27,368
    
    
    $
    27,368
 11




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##### Table of Contents



Note E  Employee Benefit Plans The components of net periodic benefit cost for the sixteen week periods ended
October 9, 2004, and
October 11, 2003, were as follows: Pension
    
    Post-retirementOctober 9,
    
    October 11,
    
    October 9,
    
    October 11,2004
    
    2003
    
    2004
    
    2003Service cost
    
    $
    297
    
    
    $
    267
    
    
    $
    161
    
    
    $
    172Interest cost
    
    
    1,385
    
    
    
    1,356
    
    
    
    84
    
    
    
    95Expected return on plan assets
    
    
    (1,017
    )
    
    
    (870
    )
    
    
    
    
    
    
    Recognized actuarial loss
    
    
    486
    
    
    
    527
    
    
    
    11
    
    
    
    12Amortization of prior service cost
    
    
    114
    
    
    
    114
    
    
    
    (6
    )
    
    
    2Benefit cost
    
    $
    1,265
    
    
    $
    1,394
    
    
    $
    250
    
    
    $
    281
 The components of net periodic benefit cost for the twenty-eight week periods
ended October 9, 2004, and
October 11, 2003, were as follows: Pension
    
    Post-retirementOctober 9,
    
    October 11,
    
    October 9,
    
    October 11,2004
    
    2003
    
    2004
    
    2003Service cost
    
    $
    520
    
    
    $
    467
    
    
    $
    282
    
    
    $
    300Interest cost
    
    
    2,424
    
    
    
    2,373
    
    
    
    147
    
    
    
    167Expected return on plan assets
    
    
    (1,780
    )
    
    
    (1,522
    )
    
    
    
    
    
    
    Recognized actuarial loss
    
    
    851
    
    
    
    923
    
    
    
    20
    
    
    
    21Amortization of prior service cost
    
    
    199
    
    
    
    199
    
    
    
    (11
    )
    
    
    4Benefit cost
    
    $
    2,214
    
    
    $
    2,440
    
    
    $
    438
    
    
    $
    492
 Note F  Recent Accounting Pronouncements In December 2003, the Medicare Prescription Drug, Improvement and Modernization
Act of 2003 (the Act) was signed. The Act allows a possible subsidy to
retirement health plan sponsors to help offset the costs of participant
prescription drug benefits. In 2004, the FASB issued Staff Position No. 106-2
(FSP No.
106-2), Accounting and Disclosure Requirements Related to the Act, which is
effective for interim or annual periods beginning after June 15, 2004. The
effect of the Act on the Companys consolidated financial statements was not
material. Note G  Contingencies A complaint was filed against the Company on August 26, 2004 in the United
States District Court for the Southern District of Indiana, Indianapolis
Division, entitled C. Alan Marsh v. Marsh Supermarkets, Inc., Cause No.
1:04-CV-1407-SEB-VSS. The case involves claims for breach of contract and
civil conversion and seeks damages and treble damages. The Company disputes
the plaintiffs claims and intends to defend this matter vigorously.
The Company is unable to estimate the amount or range of potential
loss, if any. 12




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations General At October 9, 2004, Marsh Supermarkets, Inc. (the Company or Marsh)
operated 116 supermarkets and 163 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 also owns and operates a food services
division, which specializes in upscale catering, office coffee, coffee
roasting, business cafeteria management, vending and concessions, and a floral
division, which operates eight upscale retail floral shops under the McNamara
banner and a business florist under the name Enflora. Business Overview Revenues from supermarket operations represented 77.7% of total revenues for
the twenty-eight weeks ended October 9, 2004, while convenience stores and
foodservices contributed 17.6% and 3.7% of revenues, respectively. Sales are
generally for cash. Data from various non-affiliated sources reported Marsh
supermarkets market share at #1 or #2 in its marketing area as of February
2004. Market Trends The Companys efforts to increase revenues have been affected primarily by
competitive store openings and store remodels and the challenging local
economy. At October 9, 2004, there were 14 major competitors stores opened or
remodeled within the last 12 months, compared to 8 at October 11, 2003.
Although the Company believes that the number of competitors new store
openings has peaked, it is expected that new stores will continue to be opened
in the market. The Company believes employment in the five largest cities in
the Companys market area decreased 0.9%, or about 10,000 jobs, from September
2002 to September 2004. The Companys ability to increase gross profit rates continues to be a
challenge due to competitors pricing and promotional activity. Also, during
the past few months there have been significant commodity price increases,
particularly in beef, pork and gasoline, creating additional pressures on gross
profit rates. Management Focus Given the continued pressures on revenues and gross profit rates, the Companys
management continues its focus on merchandising plans, expense reduction, asset
management and cash flow. The Companys merchandising plan is currently focused on pricing strategies and
the enhancement of its price image, increasing sales of its private label
products and the effective execution of merchandising programs by store
personnel. The Company continues to pursue the expense reduction initiatives that were
initiated in fiscal year 2003. Those initiatives included, among others,
changes to employee medical benefits plans, seeking greater efficiencies in
store labor scheduling, lowering interest expense by replacing fixed rate debt
with lower variable rate debt, pursuing lower costs of goods, supplies and
services, in-house handling versus outsourcing of certain support services, and
improvements in warehousing and delivery logistics. The initiatives completed
to date have partially offset increases in non-controllable and other selling,
general and administrative expenses. 13




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##### Table of Contents



Results of Operations Results of operations for interim periods do not necessarily reflect the
results that may be expected for the fiscal year. The Company is a party to
litigation from time to time. Unexpected adverse outcomes could materially
affect the Companys results of operations. See Note G of Notes to condensed
consolidated financial statements. The following table sets forth certain income statement components, expressed
as a percentage of sales and other revenues, and the percentage change in such
components: Second Quarter
    
    Year - to - DatePercent of Revenues
    
    Percent
    
    Percent of Revenues
    
    Percent2005
    
    2004
    
    Change
    
    2005
    
    2004
    
    ChangeTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    2.8
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    4.0
    %Gross profit
    
    
    29.5
    %
    
    
    29.8
    %
    
    
    1.5
    %
    
    
    29.6
    %
    
    
    30.0
    %
    
    
    2.7
    %Selling, general and administrative
    
    
    26.7
    %
    
    
    27.0
    %
    
    
    1.4
    %
    
    
    26.6
    %
    
    
    27.0
    %
    
    
    2.4
    %Depreciation
    
    
    1.5
    %
    
    
    1.5
    %
    
    
    1.7
    %
    
    
    1.5
    %
    
    
    1.5
    %
    
    
    1.1
    %Operating income
    
    
    1.3
    %
    
    
    1.3
    %
    
    
    3.6
    %
    
    
    1.5
    %
    
    
    1.4
    %
    
    
    8.6
    %Interest
    
    
    1.1
    %
    
    
    1.2
    %
    
    
    (3.7
    %)
    
    
    1.1
    %
    
    
    1.2
    %
    
    
    (4.8
    %)Other non-operating income
    
    
    (0.2
    %)
    
    
    (0.1
    %)
    
    
    156.3
    %
    
    
    (0.1
    %)
    
    
    (0.1
    %)
    
    
    (12.8
    %)Income taxes
    
    
    0.1
    %
    
    
    0.1
    %
    
    
    89.5
    %
    
    
    0.2
    %
    
    
    0.1
    %
    
    
    39.9
    %Income from continuing operations
    
    
    0.2
    %
    
    
    0.1
    %
    
    
    90.9
    %
    
    
    0.3
    %
    
    
    0.2
    %
    
    
    50.5
    %
 Total Revenues Consolidated total revenues were $524.9 million for the second quarter of 2005,
compared to $510.8 million for the second quarter of 2004. Gasoline sales were
$49.1 million for the second quarter of 2005, compared to $38.4 million for the
second quarter of 2004, and consolidated total revenues excluding gasoline
sales were $475.8 million and $472.4 million for the second quarter of 2005 and
2004, respectively. The Company excludes gasoline sales from its analysis of
revenues and believes it is useful information for others because gasoline
prices fluctuate widely and frequently. Sales in comparable supermarkets and
convenience stores increased 0.4% in the second quarter of 2005 from the second
quarter of 2004, but sales in comparable supermarkets and convenience stores
excluding gasoline sales declined 2.0%. A store is included in comparable store
sales beginning in the four-week period after the store has been open a full
year and includes replacement stores and format conversions. Comparable store
sales continue to be adversely affected by competitors new store openings,
high levels of competitive promotional activity and a weak local economy. Consolidated total revenues were $924.7 million for the twenty-eight weeks of
2005, compared to $888.8 million for the same period of 2004. Gasoline sales
were $87.1 million for the twenty-eight weeks of 2005, compared to $64.6
million for the comparable period of 2004, and consolidated total revenues
excluding gasoline sales were $837.6 million and $824.2 million for the
twenty-eight weeks of 2005 and 2004, respectively. Sales in comparable
supermarkets and convenience stores increased 1.5% for the twenty-eight weeks
of 2005 from the same period of 2004, but sales in comparable supermarkets and
convenience stores excluding gasoline sales declined 1.3%. 14




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##### Table of Contents



Gross Profit Gross profit is calculated net of promotional expenses, and warehousing and
transportation, excluding depreciation. Gross profit as a percentage of
revenues may not be comparable to other supermarket retailers because the
Company does not include purchasing costs and advertising costs in gross
profit. Consolidated gross profit was 29.5% of revenues for the second quarter
of 2005 compared to 29.8% for the same quarter of 2004. The decline is
attributable to the increase in gasoline sales at a profit rate significantly
lower than the profit rates achieved in the Companys other product categories. Consolidated gross profit as a percentage of revenues was 29.6% for the
twenty-eight weeks ended October 9, 2004, compared to 30.0% for the same weeks
of 2004. Increased gasoline sales at a low margin rate compared to the
merchandise gross profit rate accounted for the decline as a percentage of
revenues. Selling, General and Administrative Selling, general and administrative (SG&A) expenses include store expenses,
administrative and corporate expenses, advertising and purchasing personnel
costs. Consolidated SG&A expenses increased $1.9 million for the second quarter
of 2005 compared to the year earlier quarter due to new stores. As a percentage
of revenues, SG&A expenses were 26.7% in the second quarter of 2005 compared to
27.0% in the same quarter of 2004 with the decrease primarily attributable to
higher gasoline sales. Decreases in medical benefits costs and administrative
and corporate expenses partially offset increased store expense. Wage expense
in stores open both quarters, excluding supermarket conversions to the LoBill
format, decreased 2.4% due to a reduction in hours worked. The continued
refinement of store specific labor profiles primarily accounted for the
reduction of hours worked. Consolidated SG&A expenses increased $5.9 million for the twenty-eight weeks in
2005 from the comparable twenty-eight weeks in 2004. The increase in SG&A
expenses resulted primarily from new stores. As a percentage of revenues,
consolidated SG&A expenses decreased to 26.6% for 2005 from 27.0% in 2004 due
to higher gasoline sales. In stores open both periods, wage expense decreased
2.7% from the comparable twenty-eight weeks of the prior year for the reasons
cited above. Depreciation Depreciation for the second quarter of 2005 was $7.8 million, compared to $7.7
million for the second quarter of 2004. As a percentage of revenues,
depreciation was 1.5% for the second quarter of both 2005 and 2004. For the twenty-eight weeks in 2005, depreciation was $13.6 million, compared to
$13.4 million for the twenty-eight weeks in 2004. As a percentage of revenues,
depreciation expense was 1.5% for both 2005 and 2004. Interest Interest for the second quarter of 2005 was $5.7 million, compared to $5.9
million for the second quarter of 2004 due primarily to Company repurchases of
its 8 7/8% senior subordinated notes prior to the end of the year earlier
quarter. Interest as a percentage of revenues was 1.1% in 2005 compared to 1.2%
in 2004. For the twenty-eight weeks of 2005, interest was $10.0 million, compared to
$10.5 million in 2004 due primarily to Company repurchases of its 8 7/8% senior
subordinated notes during 2004. As a percentage of revenues, interest was 1.1%
for the twenty-eight weeks in 2005, compared to 1.2% for the comparable period
in 2004. 15




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##### Table of Contents



Other Non-operating Income During the second quarter of 2005, the Company sold its minority interest in a
real estate partnership resulting in a gain of $0.8 million. During the second quarter and twenty-eight weeks of 2004, the Company purchased
and retired $7.25 million and $16.75 million, respectively, of its 8 7/8%
senior subordinated notes at less than face value. The purchases resulted in
gains of $0.3 million and $0.9 million, respectively, for the second quarter
and twenty-eight weeks ended October 11, 2003. Deferred Pension and Post-retirement Benefits Deferred pension and post-retirement benefit obligations increased to $45.2
million at October 9, 2004, from $42.7 million at March 27, 2004. The increase
is primarily attributable to the recognition of current year period expense for
the plans. Capital Expenditures The Companys capital requirements have traditionally been financed through
internally generated funds, long-term borrowings and lease financing, including
capital and operating leases. During the first half of 2005, one Marsh supermarket was remodeled, one new
LoBill Foods was opened, one Marsh supermarket and one OMalia store were
converted to the LoBill format and a new concept 21,000 square foot Arthurs
Fresh Market was opened. Also, construction began on two new Marsh supermarkets
and a second Arthurs market that will open during the second half of the year.
Additionally in 2005, the Company plans to remodel a Marsh supermarket. The
cost of these projects and other capital commitments is estimated to be $60
million. Of this amount, the Company plans to fund $27 million through
sale/leasebacks or build-to-suit arrangements, $13 million through equipment
leasing and the remainder from internally generated funds. Cash capital
expenditures totaled $29.3 million for the twenty-eight weeks ended October 9,
2004. The Companys plans with respect to store construction, expansion, conversion
and remodeling are subject to known and unknown risks and uncertainties and may
be revised in light of changing conditions, such as availability and cost of
financing, competitive influences, its ability to negotiate successfully site
acquisitions or leases, zoning limitations and other governmental regulations.
The timing of projects is subject to normal construction and other delays. It
is possible that projects described above may not commence, others may be
added, a portion of planned expenditures with respect to projects commenced
during the current fiscal year may carry over to the subsequent fiscal year and
the Company may use other or different financing arrangements. 16




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##### Table of Contents



Liquidity and Capital Resources Net cash provided by operating activities in the first half of 2005 was $20.9
million, compared to $28.4 million in the first half of 2004. The decrease in
net cash provided by operating activities was due primarily to a $13.0 million
decrease in inventory in 2004 that was not repeated in 2005. Working capital
increased $5.0 million from March 27, 2004, due primarily to additional amounts
borrowed under the Companys revolving credit facility. The Company has a revolving credit facility that permits total borrowings of up
to $82.5 million. Amounts borrowed are for terms selected by the Company at the
time of borrowing. Interest rates are based on LIBOR or floating prime rate,
and principal and interest are payable at maturity. Commitment fees of 0.5% are
paid on unused amounts and the facility matures in February 2006. The Company
had borrowings of $45.0 million under the facility at October 9, 2004. The
credit facility is secured by land and buildings having a net carrying cost of
$67.7 million at October 9, 2004, and the facility contains certain debt
covenants, including limits on future indebtedness, cash dividends, repurchases
of common stock and disposition of assets. Under the most restrictive debt
covenant, the Company would have had additional permitted borrowing of $34.0
million as of October 9, 2004. During the quarter ended October 11, 2003, the Company chose not to renew a
bank commitment that had previously provided $3.0 million in additional
available borrowings. During the second quarter and twenty-eight weeks of 2004, the Company purchased
and retired $7.25 million and $16.75 million, respectively, of its 8 7/8%
senior subordinated notes at less than face value. The purchases resulted in
gains of $0.3 million and $0.9 million, respectively, for the second quarter
and twenty-eight weeks ended October 11, 2003. On November 11, 2004, Standard & Poors (S&P) Ratings Services placed its
ratings on the Company on CreditWatch with negative implications. S&P stated it
will resolve the CreditWatch listing after further discussions with management
regarding the Companys financial plans. S&P also indicated that the Companys
B+ corporate credit rating might be lowered by one notch. Critical Accounting Policies The preparation of financial statements requires management to make assumptions
and estimates that could have a material impact on the reported results of
operations. Although management applies its judgment based on assumptions
believed to be reasonable under the circumstances, actual results could vary
from those assumptions and it is possible that materially different amounts
would be reported using different assumptions. The Company is self-insured for most healthcare, workers compensation and
general liability claims. Reported claims and related loss reserves are
estimated by third party administrators. Claims incurred but not reported are
recorded based on historical experience and industry trends, which are
continually monitored, and accruals are adjusted when warranted by changes in
facts and circumstances. Pension and other retirement plans are administered by the Retirement Committee
of the Employees Pension Plan of Marsh Supermarkets, Inc. and Subsidiaries. An
independent financial consulting firm is engaged to advise the Retirement
Committee regarding investment manager performance and independent actuaries
are consulted to determine appropriate assumptions and are engaged to calculate
estimated future obligations under the various plans. Long-lived assets are depreciated over estimated useful lives based on the
Companys historical experience and prevailing industry practice. Estimated
useful lives are periodically reviewed to ensure they remain appropriate.
Long-lived assets are tested for impairment whenever an event occurs that
indicates an impairment may exist. 17




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Income tax assets and liabilities are recognized generally based upon tax
statutes, regulations and case law, but also include estimates. The estimated
amounts are reviewed periodically and adjusted based upon factual changes and
the related impact on managements judgment. The Company receives allowances and credits from many of the vendors whose
products the Company purchases for resale. Allowances related to a specific
purchase quantity are recorded as a component of item cost inventory and
recognized in merchandise costs when the item is sold. Other allowances include
consideration received for new item introduction, item shelf placement and
temporary retail price reduction. Due to system constraints and the nature of
certain of these allowances, it is sometimes not practicable to apply
allowances to the item cost of inventory. In those instances, the allowances
are applied as a reduction of merchandise costs using a systematic and rational
methodology, which results in the recognition of these incentives when the
initial purchase of the related merchandise is sold. Notes and accounts receivable are reviewed for collectibility on a regular and
periodic basis. Valuation allowances are adjusted for small recurring type
transactions based on past experience, while large notes and amounts receivable
are reviewed and adjusted on a specific transaction basis. Cautionary Note Regarding Forward-Looking Statements This report includes certain forward-looking statements (statements other than
those made solely with respect to historical fact). Actual results could differ
materially and adversely from those contemplated by the forward-looking
statements due to known and unknown risks and uncertainties, many of which are
beyond the Companys control. The forward-looking statements and the Companys
future results, liquidity and capital resources are subject to risks and
uncertainties including, but not limited to, the following: the entry of new
competitive stores and their impact on the Company; the Companys ability to
improve comparable store sales; the level of discounting and promotional
spending by competitors; the stability and timing of distribution incentives
from suppliers; the level of margins achievable in the Companys operating
divisions; softness in the local and national economies and the general retail
food industry; the success of the Companys new and remodeled stores, including
image and rebranding programs; potential interest rate increases on variable
rate debt, as well as terms, costs and the availability of capital; the
Companys ability to control employee medical costs; uncertainties regarding
future real estate gains due to limited real estate holdings available for
sale; the ability of the Company to predict and respond to changes in customer
preferences and lifestyles; the ability of the Company to respond to commodity
price fluctuations; uncertainties regarding gasoline prices and margins; the
Companys ability to control costs including labor, rent, credit card, and
workers compensation and general liability expense; the Companys ability to
implement cost improvement initiatives; uncertainties related to state and
federal taxation and tobacco and environmental legislation; the Companys
ability to collect outstanding notes and accounts receivable; uncertainties
associated with pension and other retirement obligations; the successful
economic implementation of new technology; the impact of any acquisitions and
dispositions; the timely and on budget completion of store construction,
expansion, conversion and remodeling; and other known and unknown risks and
uncertainties. The Company undertakes no obligation to update or revise any
forward-looking statements to reflect subsequent events or circumstances. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company, as a policy, does not engage in significant speculative or
derivative transactions, nor does it hold or issue financial instruments for
trading purposes. The Company is exposed to changes in interest rates primarily
as a result of its borrowing activities. Based on interest rates at October 9,
2004, a one percent change in interest rates would not have had a material
impact on the Company. 18




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##### Table of Contents



Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures The Chief Executive Officer and Chief Financial Officer carried out an
evaluation of the effectiveness of the Companys disclosure controls and
procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e)
and 15d-15(e)) as of the end of the period covered by this report. Based on
that evaluation, these officers have concluded that as of the end of the period
covered by this report, the Companys disclosure controls and procedures were
effective and designed to ensure that material information relating to the
Company would be made known to them by others within the Company on a timely
basis. Internal Control over Financial Reporting There was no change in the Companys internal control over financial reporting
during the quarter ended October 9, 2004, that materially affected, or is
reasonably likely to materially affect, the Companys internal control over
financial reporting. 19




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##### Table of Contents



PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings Not Applicable. 
 Item 2. Changes in Securities, Use of Proceeds and Issuers Purchases of
Equity Securities In July 1994, the Board of Directors announced a plan for the repurchase
of its Class A Common Stock and/or Class B Common Stock. The amount originally
authorized has been subsequently amended, most recently to $18.0 million. Share
repurchases during the sixteen weeks ended October 9, 2004, were as
follows: Class A shares
    
    Class B sharesAverage
    
    
    
    
    
    AverageBegin
    
    End
    
    Number
    
    price
    
    Number
    
    price06/20/04
    
    
    07/19/04
    
    
    
    200
    
    
    
    13.75
    
    
    
    
    
    
    
    07/20/04
    
    
    08/19/04
    
    
    
    
    
    
    
    
    
    
    
    599
    
    
    
    11.9008/20/04
    
    
    09/19/04
    
    
    
    600
    
    
    
    11.75
    
    
    
    500
    
    
    
    11.4509/20/04
    
    
    10/09/04
    
    
    
    300
    
    
    
    11.47
    
    
    
    100
    
    
    
    11.59Total
    
    
    
    
    
    
    1,100
    
    
    
    12.04
    
    
    
    1,199
    
    
    
    11.69
 All
of the share purchases during the sixteen weeks ended October 9,
2004, were made under the plan. At October 9, 2004, the maximum amount that may
yet be purchased under the plan was $1.0 million. The plan does not have a
specified termination date. 
 Item 3. Defaults upon Senior Securities Not Applicable. 
 Item 4. Submission of Matters to a Vote of Security Holders On August 3, 2004, the Company held its Annual Meeting of Shareholders. At
the Annual Meeting, the shareholders of the Company elected the following
persons to serve as directors until the Annual Meeting of Shareholders in 2007
and until such time as their respective successors are duly elected and
qualified with the number of votes cast for or withheld as set forth opposite
their names: VotesWithheldNominee
    
    For
    
    AuthorityJohn J. Heidt
    
    
    3,471,355
    
    
    
    12,733Catherine A. Langham
    
    
    3,471,303
    
    
    
    12,785K. Clay Smith
    
    
    3,471,668
    
    
    
    12,420
 
 Item 5. Other Information Not Applicable. 20




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Item 6. Exhibits (a) The following exhibits are included herein:  31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Don E. Marsh.31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Douglas W. Dougherty.32.1
    
    Section 1350 Certification of Don E. Marsh.32.2
    
    Section 1350 Certification of Douglas W. Dougherty. 21




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to Form 10-Q to be signed on its
behalf by the undersigned thereunto duly authorized. MARSH SUPERMARKETS, INC.November 22, 2004
    By:
    /s/ Douglas W. DoughertyDouglas W. DoughertySenior Vice President, Chief Financial Officer
and Treasurer November 22, 2004
    By:
    /s/ Mark A. VarnerMark A. VarnerChief Accounting Officer
Vice President  Corporate Controller 22