Marsh Supermarkets, Inc. Announces Fourth Quarter and Fiscal 2006 Results

Results Include Charges for Long-Lived Asset Impairment, Restructuring, and Goodwill Impairment of $30.7 Million and $43.5 Million for the Fourth Quarter and Year, Respectively

INDIANAPOLIS, Indiana, UNITED STATES


INDIANAPOLIS, June 23, 2006 (PRIMEZONE) -- Marsh Supermarkets, Inc. (Nasdaq:MARSA) (Nasdaq:MARSB) reports results of operations for the 12 and 52 weeks ended April 1, 2006.

Fourth Quarter Performance

For the 12-week fourth quarter of fiscal 2006 which ended April 1, 2006, total revenues were $377.5 million as compared to $419.1 million for the 13-week fourth quarter of fiscal 2005. Retail sales in comparable supermarkets and convenience stores for the 2006 quarter were 3.8% below sales for the 2005 quarter. Comparable store merchandise sales, which exclude gasoline sales, decreased 5.6% from sales for the 2005 quarter. The Company excludes gasoline sales from its analysis of comparable store merchandise sales because retail gasoline prices fluctuate widely and frequently, making analytical comparisons difficult (see the included schedule reconciling comparable store sales and comparable store merchandise sales). Continued high levels of competitive promotional activity and competitors' new store openings continue to adversely affect comparable store sales.

Net loss for the 2006 quarter was $27.9 million, or $3.53 per diluted share, as compared to a net loss of $1.4 million, or $0.18 per diluted share, for the 2005 quarter. Loss before income taxes for the 2006 quarter was $40.2 million as compared to a loss before income taxes of $2.3 million for the 2005 quarter. The loss before income taxes for the 2006 quarter is primarily attributable to charges recorded in the quarter for long-lived asset impairment, restructuring, and goodwill impairment totaling $30.7 million as discussed below.

"These financial results reflect continuing competitive pressure, as well as some difficult decisions that significantly impacted the bottom line, but which also should enhance our ability to improve future earnings," said Don E. Marsh, Chairman and CEO. "Throughout the strategic alternatives review process, the Company has gained significant insights into its business. Although this has been a challenging year, we are proud of what we've accomplished in our 75 years. Despite the realities of working in an industry with low margins and high competition, we've grown our business while focusing on bringing the best in service and products to our customers."

At the quarter end, April 1, 2006, the Company had unused borrowing capacity under its revolving credit facility of $49.3 million, net of $11.2 million of outstanding letters of credit. Unused borrowing capacity increased to $59.6 million as of June 23, 2006.

Long-lived Asset Impairment, Restructuring, and Goodwill Impairment Charges

During the fourth quarter of fiscal 2006, the Company recorded impairment charges totaling $2.2 million -- primarily related to abandoned construction in progress assets and to write down real estate held for sale to fair market value based on recent appraisals. These charges were in addition to the $12.8 million impairment charge previously announced and recorded during the third quarter of fiscal 2006 to reduce the carrying costs of buildings and building improvements, and fixtures and equipment for nine supermarkets and ten convenience stores. Total long-lived asset impairment charges for fiscal 2006 were $15.0 million.

During the fourth quarter of fiscal 2006, the Company closed two supermarkets, six convenience stores and a restaurant; abandoned its plans to further develop a new prototype restaurant; and recorded other charges related to the abandonment of certain other leased equipment. Total charges related to these actions were $8.4 million and included $5.3 million related to future lease payments on real estate, net of expected future sublease payments; $2.6 million related to future rentals of equipment; and $0.5 million related to contract termination and other costs.

During the fourth quarter of fiscal 2006, the Company announced a reduction in force of approximately 25 employees at its headquarters, including four officers, and incurred severance and other personnel related costs related to terminating employees at the closed store locations discussed above. The Company recorded a charge for the personnel related costs of $7.0 million related to these reductions in force.

On May 2, 2006, the Company signed a definitive merger agreement to be acquired by MSH Supermarkets Holding Corp., an affiliate of Sun Capital Partners Group IV, Inc., pursuant to which all of the shares of common stock of the Company would be converted to cash at $11.125 per share, or approximately $88.7 million in total. This event established a fair market price for the Company for accounting purposes and resulted in the impairment of $13.1 million of goodwill in the supermarket and McNamara reporting units in the fourth quarter of fiscal 2006.

The total long-lived asset impairment, restructuring, and goodwill impairment charges in the fourth quarter of fiscal 2006 and in the fiscal year 2006 are summarized as follows (in millions):



                                       4th Quarter   Fiscal Year

 Long-lived asset impairment                $2.2         $15.0
 Closed store and abandonment of assets      8.4           8.4
 Reduction in force                          7.0           7.0
                                             ---           ---
 Total long-lived asset impairment and
  restructuring charges                     17.6          30.4
 Goodwill impairment                        13.1          13.1
                                            ----          ----
 Total pre-tax charges                     $30.7         $43.5
                                           =====         =====

2006 Fiscal Year Performance

Total revenues were $1,744.4 million for the 52-week 2006 fiscal year compared to $1,747.4 million for the 53-week 2005 fiscal year. Retail sales in comparable supermarkets and convenience stores in fiscal 2006 were 0.8% above last year. Comparable store merchandise sales in fiscal 2006, which exclude gasoline, declined 1.7% from last year (see the included schedule reconciling comparable store sales and comparable store merchandise sales). Continued high levels of competitive promotional activity and competitors' new store openings continue to adversely affect comparable store sales.

Net loss for fiscal 2006 was $40.2 million, or $5.09 per diluted share, as compared to net income of $4.2 million, or $0.52 per diluted share, last year. Loss before income taxes in fiscal 2006 was $57.9 million, as compared to income before income taxes of $6.5 million last year. The loss before income taxes for the 2006 fiscal year was primarily attributable to charges recorded for long-lived asset impairment, restructuring, and goodwill impairment totaling $43.5 million as discussed above.

About Marsh Supermarkets, Inc.

Marsh is a leading regional supermarket chain with stores primarily in Indiana and western Ohio, operating 69 Marsh(r) supermarkets, 38 LoBill(r) Food stores, 8 O'Malias(r) Food Markets, 154 Village Pantry(r) convenience stores, and 2 Arthur's Fresh Market(r) stores. The Company also operates Crystal Food Services(sm) which provides upscale catering, cafeteria management, office coffee, coffee roasting, vending and concessions, and Primo Banquet Catering and Conference Centers; Floral Fashions(r), McNamara(r) Florist and Enflora(r) -- Flowers for Business.

Where to Find Additional Information

The Company has filed with the Securities and Exchange Commission (the "SEC") a preliminary proxy statement and will file with the SEC and mail to its shareholders a definitive proxy statement in connection with the proposed merger with MSH Supermarkets. Investors are urged to carefully read the preliminary proxy statement, the definitive proxy statement, and any other relevant documents filed with the SEC when they become available, because they will contain important information about the Company and the proposed merger. The definitive proxy statement will be mailed to the shareholders of the Company prior to the shareholder meeting. In addition, investors and security holders may obtain free copies of the preliminary proxy statement, and will be able to obtain free copies of the definitive proxy statement, when it becomes available, and other documents filed by the Company with the SEC, at the Web site maintained by the SEC at www.sec.gov. These documents may also be accessed and downloaded for free from the Company's Web site at www.marsh.net, or copies may be obtained, without charge, by directing a request to Secretary, Marsh Supermarkets, Inc., 9800 Crosspoint Boulevard, Indianapolis, Indiana 46256, (317) 594-2100.

Participants in the Solicitation

The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in connection with the proposed transaction. Information regarding the Company's directors and executive officers is contained in the Company's proxy statement relating to its 2005 annual meeting of shareholders, which was filed with the SEC on June 23, 2005. Additional information regarding the interests of participants in the solicitation is contained in the preliminary proxy statement on file with the SEC and will be set forth in the definitive proxy statement filed with the SEC in connection with the proposed transaction.

Cautionary Note Regarding Forward-Looking Statements

This document 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: uncertainty regarding the outcome of the litigation concerning the Company's obligations under the MSH Supermarkets merger agreement; uncertainty regarding closing of the proposed transaction with MSH Supermarkets and the effect of the unsolicited communications from Cardinal and Drawbridge on the vote of the Company's shareholders on the MSH Supermarkets merger agreement; the entry of new or remodeled competitive stores into the Company's market areas; the level of discounting and promotional spending by competitors; the Company's ability to improve comparable store sales; the level of margins achievable in the Company's operating divisions; the stability and timing of distribution incentives from suppliers; changes in the terms on which suppliers require the Company to pay for store merchandise; softness in the local economy; the Company's ability to control expenses including employee medical costs, labor, credit card fees, and workers compensation and general liability expense; uncertainties regarding gasoline prices and margins; the success of the Company's new and remodeled stores; uncertainties regarding the cost savings of store closings and other restructuring efforts; uncertainties regarding future real estate gains due to limited real estate holdings available for sale; potential interest rate increases on variable rate debt, as well as terms, costs and the availability of capital; the Company's ability to collect outstanding notes and accounts receivable; uncertainties related to state and federal taxation and tobacco and environmental legislation; uncertainties associated with pension and other retirement obligations; uncertainties related to the outcome of pending litigation; the timely and on budget completion of store construction, 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.



                                    MARSH SUPERMARKETS, INC.
                             CONDENSED CONSOLIDATED BALANCE SHEETS
                             -------------------------------------
                                        (In thousands)
                                          (Unaudited)

                                         
                                         April 1,     April 2,
                                           2006         2005
                                           ----         ----
 Assets
 Current assets:

  Cash and equivalents                  $  28,997    $  27,364
  Accounts receivable, net                 18,808       22,153
  Inventories                             127,970      132,758
  Prepaid expenses                          5,421        6,619
  Assets held for sale                      3,957           --
  Prepaid income taxes                      2,846          841
                                        ---------    ---------
   Total current assets                   187,999      189,735
 Property and equipment, less
  allowances for depreciation             298,625      307,816
 Other assets                              33,347       49,317
                                        ---------    ---------
   Total Assets                         $ 519,971    $ 546,868
                                        =========    =========

 Liabilities and Shareholders' Equity
 Current liabilities:

  Accounts payable                      $  68,601    $  75,786
  Accrued liabilities                      70,753       54,941
  Current maturities of long-term 
   liabilities                              4,626       48,444
                                        ---------    ---------
   Total current liabilities              143,980      179,171

 Long-term liabilities:
  Long-term debt                          189,930      133,268
  Capital lease and financing
   obligations                             43,704       27,212
  Pension and post-retirement benefits     26,088       52,229
  Other long-term liabilities              11,317           --
                                        ---------    ---------
   Total long-term liabilities            271,039      212,709

 Deferred items:
  Income taxes                                 --        8,823
  Gains from sale/leasebacks               15,173       16,487
  Other                                     4,360        5,363
                                        ---------    ---------
   Total deferred items                    19,533       30,673

 Shareholders' Equity:
   Common stock, Classes A and B           26,661       26,630
   Retained earnings                       88,596      130,890
   Cost of common stock in treasury       (15,915)     (15,755)
   Deferred cost restricted stock             (26)        (137)
   Notes receivable stock
    purchase                                  (11)         (11)
   Accumulated other comprehensive 
    loss                                  (13,886)     (17,302)
                                        ---------    ---------
    Total shareholders' equity             85,419      124,315
                                        ---------    ---------
     Total Liabilities and
      Shareholders' Equity              $ 519,971    $ 546,868
                                        =========    =========


                        MARSH SUPERMARKETS, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              (In thousands, except per share amounts)
                             (Unaudited)

                         Fourth Quarter Ended    Fiscal Year Ended
                         --------------------    -----------------
                          April 1,    April 2,   April 1,    April 2,
                           2006        2005       2006        2005
                           ----        ----       ----        ----
                        (12 weeks)  (13 weeks) (52 weeks)  (53 weeks)

 Sales and other
  revenues             $  377,616  $  418,387  $1,743,791  $1,743,609
 Gains (losses) from
  sales of property           (99)        663         650       3,827
                       ----------  ----------  ----------  ----------
 Total revenues           377,517     419,050   1,744,441   1,747,436
 Cost of merchandise
  sold, including
  warehousing and
  transportation,
  excluding
  depreciation            267,499     296,482   1,232,366   1,231,840
                       ----------  ----------  ----------  ----------
 Gross profit             110,018     122,568     512,075     515,596
 Selling, general
  and administrative      107,108     115,045     478,098     466,179
 Depreciation               6,017       6,563      26,418      25,950
 Restructuring costs
  and impairment of
  long-lived assets        17,648          --      30,423          --
 Impairment of
  goodwill                 13,122          --      13,122          --
                       ----------  ----------  ----------  ----------
 Operating income
  (loss)                  (33,877)        960     (35,986)     23,467
 Interest                   5,467       4,751      21,390      19,213
 Other non-operating
  expense (income)            834      (1,453)        484      (2,291)
                       ----------  ----------  ----------  ----------
 Income (loss)
  before income
  taxes                   (40,178)     (2,338)    (57,860)      6,545
 Income taxes
  (benefit)               (12,317)       (905)    (17,625)      2,383
                       ----------  ----------  ----------  ----------
 Net income (loss)     $  (27,861) $   (1,443) $  (40,235) $    4,162
                       ==========  ==========  ==========  ==========

 Earnings (loss) per
  common share:

 Basic                     $(3.53)      $(.18)     $(5.09)       $.53
 Diluted                   $(3.53)      $(.18)     $(5.09)       $.52

 Dividends declared
  per share                $   --       $ .13      $  .26        $.52
                           ======       =====      ======        ====


                          MARSH SUPERMARKETS, INC.
           RECONCILIATION OF SALES AND OTHER COMPARABLE REVENUES
           -----------------------------------------------------
                             (In thousands)
                               (Unaudited)

                                        April 1, 2006  April 2, 2005
                                        -------------  -------------
 Fiscal Year                              
 -----------

 Total revenues                           $1,744,441    $1,747,436
 Less:  other revenues,
  non-comparable sales, gains from
  sales of property including 53rd
  week (a)                                   140,695       155,800
                                          ----------    ----------
 Comparable supermarket and
  convenience store sales                  1,603,746     1,591,636
 Less: comparable gasoline sales (b)         179,365       143,120
                                          ----------    ----------
 Comparable supermarket and
  convenience store merchandise
  sales (c)                               $1,424,381    $1,448,516
                                          ==========    ==========


 4th Quarter
 ----------
 Total revenues                           $  377,517    $  419,050
 Less:  other revenues,
  non-comparable sales, gains from
  sales of property including 13th
  week (a)                                    38,129        66,171
                                          ----------    ----------
 Comparable supermarket and
  convenience store sales                    339,388       352,879
 Less: comparable gasoline sales (b)          27,377        22,410
                                          ----------    ----------
 Comparable supermarket and
  convenience store merchandise
  sales (c)                               $  312,011    $  330,469
                                          ==========    ==========


 (a)   Other revenues and non-comparable sales include sales and
       revenues of both Crystal Foodservice and McNamara, as
       well as supermarket and convenience store revenues from video
       rental, lottery tickets, check cashing fees and other sources.

 (b)   The Company excludes gasoline sales from its analysis of
       comparable store sales because retail gasoline prices 
       fluctuate widely and frequently, making analytical 
       comparisons difficult.

 (c)   Comparable stores include stores open at least one full year,
       replacement stores and format conversions.


        

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