##### 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 15, 2005
 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
 þ o
 o þ
 o þ
  Class A Common Stock -
    
    3,734,927
    
    sharesClass B Common Stock -
    
    4,171,798
    
    shares7,906,725
    
    shares




---



TABLE OF CONTENTS  PART I FINANCIAL INFORMATIONItem 1. 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. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSIGNATURESEX-31.1  SECTION 302 CERTIFICATION OF THE CEOEX-31.2  SECTION 302 CERTIFICATION OF THE CFOEX-32.1  SECTION 906 CERTIFICATION OF THE CEOEX-32.2  SECTION 906 CERTIFICATION OF THE CFO    Table of Contents  
 PART I FINANCIAL INFORMATION
 
 Item 1.
Financial Statements
 MARSH SUPERMARKETS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS
 October 15,
    
    
    April 2,
    
    
    October 9,2005
    
    
    2005
    
    
    2004(Unaudited)
    
    
    (Note A)
    
    
    (Unaudited)AssetsCurrent assets:Cash and equivalents
    
    $
    51,038
    
    
    $
    27,364
    
    
    $
    37,188Accounts receivable, net
    
    
    20,984
    
    
    
    22,153
    
    
    
    19,944Inventories
    
    
    133,489
    
    
    
    132,758
    
    
    
    130,059Prepaid expenses
    
    
    5,617
    
    
    
    6,619
    
    
    
    5,232Prepaid income taxes
    
    
    3,572
    
    
    
    841
    
    
    
    4,647Total current assets
    
    
    214,700
    
    
    
    189,735
    
    
    
    197,070Property and equipment, less allowances for depreciation
    
    
    317,575
    
    
    
    307,816
    
    
    
    303,528Other assets
    
    
    47,593
    
    
    
    49,317
    
    
    
    52,526Total Assets
    
    $
    579,868
    
    
    $
    546,868
    
    
    $
    553,124Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    80,095
    
    
    $
    75,786
    
    
    $
    74,981Accrued liabilities
    
    
    58,122
    
    
    
    54,941
    
    
    
    53,826Current maturities of long-term liabilities
    
    
    69,047
    
    
    
    48,444
    
    
    
    5,255Total current liabilities
    
    
    207,264
    
    
    
    179,171
    
    
    
    134,062Long-term liabilities:Long-term debt
    
    
    131,879
    
    
    
    133,268
    
    
    
    179,597Capital lease and financing obligations
    
    
    42,117
    
    
    
    27,212
    
    
    
    27,767Pension and post-retirement benefits
    
    
    50,642
    
    
    
    52,229
    
    
    
    45,176Total long-term liabilities
    
    
    224,638
    
    
    
    212,709
    
    
    
    252,540Deferred items:Income taxes
    
    
    7,961
    
    
    
    8,823
    
    
    
    18,558Gains from sale/leasebacks
    
    
    15,805
    
    
    
    16,487
    
    
    
    14,975Other
    
    
    4,749
    
    
    
    5,363
    
    
    
    4,403Total deferred items
    
    
    28,515
    
    
    
    30,673
    
    
    
    37,936Shareholders Equity:Common stock, Classes A and B
    
    
    26,660
    
    
    
    26,630
    
    
    
    26,615Retained earnings
    
    
    126,079
    
    
    
    130,890
    
    
    
    131,683Cost of common stock in treasury
    
    
    (15,938
    )
    
    
    (15,755
    )
    
    
    (15,656
    )Deferred cost  restricted stock
    
    
    (37
    )
    
    
    (137
    )
    
    
    (170
    )Notes receivable  stock purchases
    
    
    (11
    )
    
    
    (11
    )
    
    
    (11
    )Accumulated other comprehensive loss
    
    
    (17,302
    )
    
    
    (17,302
    )
    
    
    (13,875
    )Total shareholders equity
    
    
    119,451
    
    
    
    124,315
    
    
    
    128,586Total Liabilities and Shareholders Equity
    
    $
    579,868
    
    
    $
    546,868
    
    
    $
    553,124
  2




---



##### Table of Contents



MARSH SUPERMARKETS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 16 Weeks Ended
    
    
    28 Weeks EndedOctober 15,
    
    
    October 9,
    
    
    October 15,
    
    
    October 9,2005
    
    
    2004
    
    
    2005
    
    
    2004Sales and other revenues
    
    $
    549,103
    
    
    $
    524,074
    
    
    $
    958,883
    
    
    $
    923,470Gains from sales of property
    
    
    532
    
    
    
    818
    
    
    
    532
    
    
    
    1,274Total revenues
    
    
    549,635
    
    
    
    524,892
    
    
    
    959,415
    
    
    
    924,744Cost of merchandise sold, including warehousing
and transportation, excluding depreciation
    
    
    390,200
    
    
    
    370,200
    
    
    
    677,554
    
    
    
    651,323Gross profit
    
    
    159,435
    
    
    
    154,692
    
    
    
    281,861
    
    
    
    273,421Selling, general and administrative
    
    
    150,259
    
    
    
    139,996
    
    
    
    261,324
    
    
    
    246,035Depreciation
    
    
    8,151
    
    
    
    7,787
    
    
    
    14,123
    
    
    
    13,572Operating income
    
    
    1,025
    
    
    
    6,909
    
    
    
    6,414
    
    
    
    13,814Interest
    
    
    6,254
    
    
    
    5,704
    
    
    
    10,701
    
    
    
    9,987Other non-operating income
    
    
    (264
    )
    
    
    (838
    )
    
    
    (383
    )
    
    
    (838
    )Income (loss) before income taxes
    
    
    (4,965
    )
    
    
    2,043
    
    
    
    (3,904
    )
    
    
    4,665Income taxes (benefit)
    
    
    (1,549
    )
    
    
    739
    
    
    
    (1,162
    )
    
    
    1,743Net income (loss)
    
    $
    (3,416
    )
    
    $
    1,304
    
    
    $
    (2,742
    )
    
    $
    2,922Earnings (loss) per common share:Basic
    
    $
    (.43
    )
    
    $
    .17
    
    
    $
    (.35
    )
    
    $
    .37Diluted
    
    
    (.43
    )
    
    
    .16
    
    
    
    (.35
    )
    
    
    .36Dividends declared per share
    
    
    .13
    
    
    
    .13
    
    
    
    .26
    
    
    
    .26
  3




---



##### Table of Contents



MARSH SUPERMARKETS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 28 Weeks EndedOctober 15,
    
    
    October 9,2005
    
    
    2004Operating activitiesNet income (loss)
    
    $
    (2,742
    )
    
    $
    2,922Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Depreciation
    
    
    14,123
    
    
    
    13,572Changes in operating assets and liabilities
    
    
    2,314
    
    
    
    4,430Net cash provided by operating activities
    
    
    13,695
    
    
    
    20,924Investing activitiesNet acquisition of property, equipment and land
    
    
    (21,646
    )
    
    
    (29,331
    )Other investing activities
    
    
    -0-
    
    
    
    861Net cash used for investing activities
    
    
    (21,646
    )
    
    
    (28,470
    )Financing activitiesProceeds of long-term borrowings
    
    
    100,000
    
    
    
    55,000Proceeds of sale/leasebacks
    
    
    15,595
    
    
    
    11,372Repayments of long-term debt and capital leases
    
    
    (81,476
    )
    
    
    (48,157
    )Debt acquisition costs
    
    
    (275
    )
    
    
    Cash dividends paid
    
    
    (2,066
    )
    
    
    (2,058
    )Purchases of shares for treasury
    
    
    (539
    )
    
    
    (821
    )Other financing activities
    
    
    386
    
    
    
    1,814Net cash provided by financing activities
    
    
    31,625
    
    
    
    17,150Net increase in cash and equivalents
    
    
    23,674
    
    
    
    9,604Cash and equivalents at beginning of period
    
    
    27,364
    
    
    
    27,584Cash and equivalents at end of period
    
    $
    51,038
    
    
    $
    37,188
  4




---



##### Table of Contents



MARSH SUPERMARKETS, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note A  Basis of Presentation
     Note B
 Earnings (Loss) Per Share
  16 Weeks Ended
    
    
    28 Weeks EndedOctober 15,
    
    
    October 9,
    
    
    October 15,
    
    
    October 9,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss)
    
    $
    (3,416
    )
    
    $
    1,304
    
    
    $
    (2,742
    )
    
    $
    2,922Weighted average shares outstanding
    
    
    7,910
    
    
    
    7,913
    
    
    
    7,912
    
    
    
    7,918Non-vested restricted shares
    
    
    (12
    )
    
    
    (16
    )
    
    
    (14
    )
    
    
    (17
    )Denominator for basic earnings (loss) per share
    
    
    7,898
    
    
    
    7,897
    
    
    
    7,898
    
    
    
    7,901Effect of dilutive securities:Non-vested restricted shares
    
    
    
    (a
    )
    
    16
    
    
    
    
    (a
    )
    
    17Stock options
    
    
    
    (a
    )
    
    72
    
    
    
    
    (a
    )

    
    96Denominator for diluted earnings (loss) per share
- adjusted weighted average shares
    
    
    7,898
    
    
    
    7,985
    
    
    
    7,898
    
    
    
    8,014
 
 (a)
    
    Average shares outstanding exclude the anti-dilutive effects
of non-vested restricted shares and stock options totaling
99,000 shares and 113,000 shares for the sixteen and
twenty-eight weeks ended October 15, 2005, respectively. 5




---



##### Table of Contents



Note C  Stock Based Compensation
  16 Weeks Ended
    
    
    28 Weeks EndedOctober 15,
    
    
    October 9,
    
    
    October 15,
    
    
    October 9,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss), as reported
    
    $
    (3,416
    )
    
    $
    1,304
    
    
    $
    (2,742
    )
    
    $
    2,922Compensation expense (benefit) recorded
    
    
    (33
    )
    
    
    14
    
    
    
    (23
    )
    
    
    23Compensation (expense) benefit using
the fair value method, net of tax
    
    
    33
    
    
    
    (212
    )
    
    
    11
    
    
    
    (392
    )Pro-forma net income (loss)
    
    $
    (3,416
    )
    
    $
    1,106
    
    
    $
    (2,754
    )
    
    $
    2,553Earnings (loss) per share, as reported:Basic
    
    $
    (.43
    )
    
    $
    .17
    
    
    $
    (.35
    )
    
    $
    .37Diluted
    
    
    (.43
    )
    
    
    .16
    
    
    
    (.35
    )
    
    
    .36Earnings (loss) per share, pro-forma:Basic
    
    
    (.43
    )
    
    
    .14
    
    
    
    (.35
    )
    
    
    .32Diluted
    
    
    (.43
    )
    
    
    .14
    
    
    
    (.35
    )
    
    
    .32
 Note D  Long-Term Debt and Financing Obligations
   6




---



##### Table of Contents



Note E
 Long-Term Debt and Guarantor Subsidiaries
   GuarantorParent
    
    
    subsidiaries
    
    
    TotalAssetsCurrent assets:Cash and equivalents
    
    $
    
    
    
    $
    51,038
    
    
    $
    51,038Accounts receivable, net
    
    
    
    
    
    
    20,984
    
    
    
    20,984Inventories
    
    
    
    
    
    
    133,489
    
    
    
    133,489Prepaid expenses
    
    
    
    
    
    
    5,617
    
    
    
    5,617Recoverable income taxes
    
    
    3,572
    
    
    
    
    
    
    
    3,572Total current assets
    
    
    3,572
    
    
    
    211,128
    
    
    
    214,700Property and equipment, less allowances for depreciation
    
    
    37,412
    
    
    
    280,163
    
    
    
    317,575Other assets
    
    
    2,633
    
    
    
    44,960
    
    
    
    47,593Total Assets
    
    $
    43,617
    
    
    $
    536,251
    
    
    $
    579,868Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    80,095
    
    
    $
    80,095Accrued liabilities
    
    
    13,391
    
    
    
    44,731
    
    
    
    58,122Current maturities of long-term liabilities
    
    
    1,843
    
    
    
    67,204
    
    
    
    69,047Total current liabilities
    
    
    15,234
    
    
    
    192,030
    
    
    
    207,264Long-term liabilities:Long-term debt
    
    
    109,604
    
    
    
    22,275
    
    
    
    131,879Capital lease and financing obligations
    
    
    
    
    
    
    42,117
    
    
    
    42,117Pension and post-retirement benefits
    
    
    46,112
    
    
    
    4,530
    
    
    
    50,642Total long-term liabilities
    
    
    155,716
    
    
    
    68,922
    
    
    
    224,638Deferred items:Income taxes
    
    
    7,961
    
    
    
    
    
    
    
    7,961Gains from sale/leasebacks
    
    
    2,081
    
    
    
    13,724
    
    
    
    15,805Other
    
    
    
    
    
    
    4,749
    
    
    
    4,749Total deferred items
    
    
    10,042
    
    
    
    18,473
    
    
    
    28,515Amounts due parent from subsidiaries
    
    
    (134,671
    )
    
    
    134,671
    
    
    
    Shareholders Equity:Common stock, Classes A and B
    
    
    26,660
    
    
    
    
    
    
    
    26,660Retained earnings
    
    
    3,924
    
    
    
    122,155
    
    
    
    126,079Cost of common stock in treasury
    
    
    (15,938
    )
    
    
    
    
    
    
    (15,938
    )Deferred cost  restricted stock
    
    
    (37
    )
    
    
    
    
    
    
    (37
    )Notes receivable  stock purchase
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )Accumulated other comprehensive loss
    
    
    (17,302
    )
    
    
    
    
    
    
    (17,302
    )Total shareholders equity
    
    
    (2,704
    )
    
    
    122,155
    
    
    
    119,451Total Liabilities and Shareholders equity
    
    $
    43,617
    
    
    $
    536,251
    
    
    $
    579,868
 7




---



##### Table of Contents



GuarantorParent
    
    
    subsidiaries
    
    
    TotalAssetsCurrent assets:Cash and equivalents
    
    $
    
    
    
    $
    27,364
    
    
    $
    27,364Accounts receivable, net
    
    
    
    
    
    
    22,153
    
    
    
    22,153Inventories
    
    
    
    
    
    
    132,758
    
    
    
    132,758Prepaid expenses
    
    
    
    
    
    
    6,619
    
    
    
    6,619Recoverable income taxes
    
    
    841
    
    
    
    
    
    
    
    841Total current assets
    
    
    841
    
    
    
    188,894
    
    
    
    189,735Property and equipment, less allowances for depreciation
    
    
    37,919
    
    
    
    269,897
    
    
    
    307,816Other assets
    
    
    2,841
    
    
    
    46,476
    
    
    
    49,317Total Assets
    
    $
    41,601
    
    
    $
    505,267
    
    
    $
    546,868Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    75,786
    
    
    $
    75,786Accrued liabilities
    
    
    12,581
    
    
    
    42,360
    
    
    
    54,941Current maturities of long-term liabilities
    
    
    1,754
    
    
    
    46,690
    
    
    
    48,444Total current liabilities
    
    
    14,335
    
    
    
    164,836
    
    
    
    179,171Long-term liabilities:Long-term debt
    
    
    110,504
    
    
    
    22,764
    
    
    
    133,268Capital lease obligations
    
    
    
    
    
    
    27,212
    
    
    
    27,212Pension and post-retirement benefits
    
    
    47,994
    
    
    
    4,235
    
    
    
    52,229Total long-term liabilities
    
    
    158,498
    
    
    
    54,211
    
    
    
    212,709Deferred items:Income taxes
    
    
    8,823
    
    
    
    
    
    
    
    8,823Gains from sale/leasebacks
    
    
    2,162
    
    
    
    14,325
    
    
    
    16,487Other
    
    
    
    
    
    
    5,363
    
    
    
    5,363Total deferred items
    
    
    10,985
    
    
    
    19,688
    
    
    
    30,673Amounts due parent from subsidiaries
    
    
    (141,381
    )
    
    
    141,381
    
    
    
    Shareholders Equity:Common stock, Classes A and B
    
    
    26,630
    
    
    
    
    
    
    
    26,630Retained earnings
    
    
    5,739
    
    
    
    125,151
    
    
    
    130,890Cost of common stock in treasury
    
    
    (15,755
    )
    
    
    
    
    
    
    (15,755
    )Deferred cost  restricted stock
    
    
    (137
    )
    
    
    
    
    
    
    (137
    )Notes receivable  stock purchases
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )Accumulated other comprehensive loss
    
    
    (17,302
    )
    
    
    
    
    
    
    (17,302
    )Total shareholders equity
    
    
    (836
    )
    
    
    125,151
    
    
    
    124,315Total Liabilities and Shareholders Equity
    
    $
    41,601
    
    
    $
    505,267
    
    
    $
    546,868
 8




---



##### Table of Contents



Guarantor
    
    
    ConsolidatingParent
    
    
    subsidiaries
    
    
    entries
    
    
    TotalSales and other revenues
    
    $
    1,738
    
    
    $
    549,105
    
    
    $
    (1,740
    )
    
    $
    549,103Gains from sales of property
    
    
    
    
    
    
    532
    
    
    
    
    
    
    
    532Total revenues
    
    
    1,738
    
    
    
    549,637
    
    
    
    (1,740
    )
    
    
    549,635Cost of merchandise sold, including warehousing
and transportation, excluding depreciation
    
    
    
    
    
    
    390,200
    
    
    
    
    
    
    
    390,200Gross profit
    
    
    1,738
    
    
    
    159,437
    
    
    
    (1,740
    )
    
    
    159,435Selling, general and administrative
    
    
    1,125
    
    
    
    150,874
    
    
    
    (1,740
    )
    
    
    150,259Depreciation
    
    
    505
    
    
    
    7,646
    
    
    
    
    
    
    
    8,151Operating income
    
    
    108
    
    
    
    917
    
    
    
    
    
    
    
    1,025Interest
    
    
    637
    
    
    
    5,617
    
    
    
    
    
    
    
    6,254Other non-operating (income) loss
    
    
    (1,062
    )
    
    
    798
    
    
    
    
    
    
    
    (264
    )Income (loss) before income taxes
    
    
    533
    
    
    
    (5,498
    )
    
    
    
    
    
    
    (4,965
    )Income taxes (benefit)
    
    
    169
    
    
    
    (1,718
    )
    
    
    
    
    
    
    (1,549
    )Net income (loss)
    
    $
    364
    
    
    $
    (3,780
    )
    
    $
    
    
    
    $
    (3,416
    )
  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
 9




---



##### Table of Contents



Guarantor
    
    
    ConsolidatingParent
    
    
    subsidiaries
    
    
    entries
    
    
    TotalSales and other revenues
    
    $
    3,043
    
    
    $
    958,885
    
    
    $
    (3,045
    )
    
    $
    958,883Gains from sales of property
    
    
    
    
    
    
    532
    
    
    
    
    
    
    
    532Total revenues
    
    
    3,043
    
    
    
    959,417
    
    
    
    (3,045
    )
    
    
    959,415Cost of merchandise sold, including warehousing
and transportation, excluding depreciation
    
    
    
    
    
    
    677,554
    
    
    
    
    
    
    
    677,554Gross profit
    
    
    3,043
    
    
    
    281,863
    
    
    
    (3,045
    )
    
    
    281,861Selling, general and administrative
    
    
    1,896
    
    
    
    262,473
    
    
    
    (3,045
    )
    
    
    261,324Depreciation
    
    
    883
    
    
    
    13,240
    
    
    
    
    
    
    
    14,123Operating income
    
    
    264
    
    
    
    6,150
    
    
    
    
    
    
    
    6,414Interest
    
    
    1,086
    
    
    
    9,615
    
    
    
    
    
    
    
    10,701Other non-operating (income) loss
    
    
    (1,181
    )
    
    
    798
    
    
    
    
    
    
    
    (383
    )Income (loss) before income taxes
    
    
    359
    
    
    
    (4,263
    )
    
    
    
    
    
    
    (3,904
    )Income taxes (benefit)
    
    
    107
    
    
    
    (1,269
    )
    
    
    
    
    
    
    (1,162
    )Net income (loss)
    
    $
    252
    
    
    $
    (2,994
    )
    
    $
    
    
    
    $
    (2,742
    )
  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
 10




---



##### Table of Contents



GuarantorParent
    
    
    subsidiaries
    
    
    TotalNet cash provided by operating activities
    
    $
    3,404
    
    
    $
    10,291
    
    
    $
    13,695Net cash used for investing activities
    
    
    (376
    )
    
    
    (21,270
    )
    
    
    (21,646
    )Financing activitiesProceeds of long-term borrowings
    
    
    
    
    
    
    100,000
    
    
    
    100,000Proceeds of sale/leasebacks
    
    
    
    
    
    
    15,595
    
    
    
    15,595Repayments of long-term debt and capital leases
    
    
    (811
    )
    
    
    (80,665
    )
    
    
    (81,476
    )Cash dividends paid
    
    
    (2,066
    )
    
    
    
    
    
    
    (2,066
    )Other financing activities
    
    
    (151
    )
    
    
    (277
    )
    
    
    (428
    )Net cash provided by (used for) financing activities
    
    
    (3,028
    )
    
    
    34,653
    
    
    
    31,625Net increase in cash and equivalents
    
    
    
    
    
    
    23,674
    
    
    
    23,674Cash and equivalents at beginning of period
    
    
    
    
    
    
    27,364
    
    
    
    27,364Cash and equivalents at end of period
    
    $
    
    
    
    $
    51,038
    
    
    $
    51,038
  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/leasebacks
    
    
    
    
    
    
    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
 11




---



##### Table of Contents



Note F
 Employee Benefit Plans
  Pension
    
    
    Post-retirementOctober 15,
    
    
    October 9,
    
    
    October 15,
    
    
    October 9,2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    386
    
    
    $
    297
    
    
    $
    164
    
    
    $
    162Interest cost
    
    
    1,413
    
    
    
    1,385
    
    
    
    79
    
    
    
    84Expected return on plan assets
    
    
    (938
    )
    
    
    (1,017
    )
    
    
    
    
    
    
    Recognized actuarial loss
    
    
    438
    
    
    
    486
    
    
    
    17
    
    
    
    11Amortization of prior service cost
    
    
    114
    
    
    
    114
    
    
    
    (14
    )
    
    
    (6
    )Benefit cost
    
    $
    1,413
    
    
    $
    1,265
    
    
    $
    246
    
    
    $
    251
  Pension
    
    
    Post-retirementOctober 15,
    
    
    October 9,
    
    
    October 15,
    
    
    October 9,2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    666
    
    
    $
    520
    
    
    $
    287
    
    
    $
    282Interest cost
    
    
    2,490
    
    
    
    2,424
    
    
    
    139
    
    
    
    147Expected return on plan assets
    
    
    (1,656
    )
    
    
    (1,780
    )
    
    
    
    
    
    
    Recognized actuarial loss
    
    
    837
    
    
    
    851
    
    
    
    30
    
    
    
    20Amortization of prior service cost
    
    
    199
    
    
    
    199
    
    
    
    (25
    )
    
    
    (11
    )Benefit cost
    
    $
    2,536
    
    
    $
    2,214
    
    
    $
    431
    
    
    $
    438
 Note G
 Stock Repurchase Program
  Note H
 Contingencies
    12




---



##### Table of Contents



Note I
 Recent Accounting Pronouncements
     13




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 General
 SM SM
  Business Overview
  Market Trends
   Management Focus
   14




---



##### Table of Contents



Results of Operations
   Second Quarter
    
    Year - to - DatePercent of Revenues
    
    Percent
    
    Percent of Revenues
    
    Percent2006
    
    2005
    
    Change
    
    2006
    
    2005
    
    ChangeTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    4.7
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    3.7
    %Gross profit
    
    
    29.0
    %
    
    
    29.5
    %
    
    
    3.1
    %
    
    
    29.4
    %
    
    
    29.6
    %
    
    
    3.1
    %Selling, general and administrative
    
    
    27.3
    %
    
    
    26.7
    %
    
    
    7.3
    %
    
    
    27.2
    %
    
    
    26.6
    %
    
    
    6.2
    %Depreciation
    
    
    1.5
    %
    
    
    1.5
    %
    
    
    4.7
    %
    
    
    1.5
    %
    
    
    1.5
    %
    
    
    4.1
    %Operating income
    
    
    0.2
    %
    
    
    1.3
    %
    
    
    (85.2
    %)
    
    
    0.7
    %
    
    
    1.5
    %
    
    
    (53.6
    %)Interest
    
    
    1.1
    %
    
    
    1.1
    %
    
    
    9.6
    %
    
    
    1.1
    %
    
    
    1.1
    %
    
    
    7.1
    %Other non-operating income
    
    
    
    
    
    
    (0.2
    %)
    
    
    (68.5
    %)
    
    
    
    
    
    
    (0.1
    %)
    
    
    (54.3
    %)Income taxes (benefit)
    
    
    (0.3
    %)
    
    
    0.1
    %
    
    
    n/m
    
    
    
    (0.1
    %)
    
    
    0.2
    %
    
    
    n/mNet income (loss)
    
    
    (0.6
    %)
    
    
    0.2
    %
    
    
    n/m
    
    
    
    (0.3
    %)
    
    
    0.3
    %
    
    
    n/m
 
 n/m = not meaningful Total Revenues
    16 weeks ended
    
    
    28 weeks endedOctober 15,
    
    
    October 9,
    
    
    October 15,
    
    
    October 9,2005
    
    
    2004
    
    
    2005
    
    
    2004Total revenues
    
    $
    549.6
    
    
    $
    524.9
    
    
    $
    959.4
    
    
    $
    924.7Less non-comparable supermarket and c-store sales
    
    
    42.3
    
    
    
    35.1
    
    
    
    73.1
    
    
    
    61.9Comparable supermarket and convenience store sales
    
    
    507.3
    
    
    
    489.8
    
    
    
    886.3
    
    
    
    862.8Less comparable stores gasoline sales
    
    
    68.5
    
    
    
    48.0
    
    
    
    109.5
    
    
    
    85.0Comparable supermarket and convenience store
sales excluding gasoline
    
    $
    438.8
    
    
    $
    441.8
    
    
    $
    776.8
    
    
    $
    777.8
 15




---



##### Table of Contents



Gross Profit
   Selling, General and Administrative
   Depreciation
   Interest
   16




---



##### Table of Contents



Other Non-operating Income
   Deferred Pension and Post-retirement Benefits
  Capital Expenditures
   17




---



##### Table of Contents



Liquidity and Capital Resources
     Critical Accounting Policies
    18




---



##### Table of Contents



Cautionary Note Regarding Forward-Looking Statements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 19




---



##### Table of Contents



Evaluation of Disclosure Controls and Procedures
  Internal Control over Financial Reporting
  20




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Class A shares
    
    
    Class B shares
    
    
    RemainingAverage
    
    
    
    
    
    
    Average
    
    
    Amount AuthorizedBegin
    
    End
    
    
    Number
    
    
    price
    
    
    Number
    
    
    price06/26/05
    
    
    07/25/05
    
    
    
    2,283
    
    
    
    15.31
    
    
    
    1,983
    
    
    
    15.5407/26/05
    
    
    08/25/05
    
    
    
    265
    
    
    
    13.71
    
    
    
    241
    
    
    
    15.0008/26/05
    
    
    09/25/05
    
    
    
    200
    
    
    
    11.70
    
    
    
    12
    
    
    
    12.00Total
    
    
    
    
    
    
    2,748
    
    
    
    14.89
    
    
    
    2,236
    
    
    
    15.46
    
    
    $3.3 million
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  VotesWithheldNominee
    
    For
    
    
    AuthorityJ. Michael Blakley
    
    
    3,465,157
    
    
    
    25,483P. Lawrence Butt
    
    
    3,460,488
    
    
    
    30,152Charles R. Clark
    
    
    3,463,364
    
    
    
    27,276James K. Risk, III
    
    
    3,465,766
    
    
    
    24,874
  Don E. Marsh
    
    
    2006William L. Marsh
    
    
    2006Stephen M. Huse
    
    
    2006John J. Heidt
    
    
    2007Catherine A. Langham
    
    
    2007K. Clay Smith
    
    
    2007
 21




---



##### Table of Contents



Item 5. Other
Information
  
 Item 6. Exhibits
 (a)
    
    The following exhibits are incorporated by reference herein: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 November 26, 1997 -
Incorporated by reference to Form 10-Q for the quarter ended January 3, 1998.(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)
    
    Amended and Restated Rights Agreement, dated as of December 24,
1998, between Marsh Supermarkets, Inc. and National City Bank  Incorporated
by reference to Form 8-K, dated December 21, 1998.(e)
    
    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).(f)
    
    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 Form 10-K for the year ended March 28, 1998.(g)
    
    Second Supplemental Indenture between Marsh Supermarkets, Inc. and
certain of its subsidiaries and State Street Bank and Trust Company, as
trustee, dated January 28, 2000  Incorporated by reference to Form 10-K for
the year ended April 1, 2000.(h)
    
    Third Supplemental Indenture between Marsh Supermarkets, Inc. and certain of
its subsidiaries and State Street Bank and Trust Company, as trustee, dated June 22,
2000  Incorporated by reference to From 10-K for the year ended April 1, 2000.(i)
    
    Fourth Supplemental Indenture between Marsh Supermarkets, Inc. and
certain of its subsidiaries and State Street Bank and Trust Company, as trustee,
dated October 15, 2001  Incorporated by reference to Registration Statement on
Form S-8 (File No. 333-82908).(j)
    
    Amended and Restated Credit Agreement between Marsh Supermarkets,
Inc. and certain of its subsidiaries and The Provident Bank, as Agent and
Arranger, dated February 19, 2002  Incorporated by reference to Form 10-Q for
the quarter ended January 5, 2002.(l)
    
    First Amendment to Amended and Restated Credit Agreement between
Marsh Supermarkets, Inc. and certain of its subsidiaries and The Provident
Bank, as Agent and Arranger, dated as of December 27, 2002  Incorporated by
reference to Form 10-Q for the quarter ended January 4, 2003.(l)
    
    Second Amended and Restated Credit Agreement between Marsh
Supermarkets, Inc. and certain of its subsidiaries and the Provident Bank, as
Agent and Arranger, dated as of March 21, 2003  Incorporated by reference to
Form 10-K for the year ended March 29, 2003.(m)
    
    First Amendment to Second Amended and Restated Credit Agreement
between Marsh Supermarkets, Inc. and certain of its subsidiaries and The
Provident Bank, as Agent and Arranger, dated as of May 23, 2003  Incorporated
by reference to Form 10-K for the year ended March 29, 2003.(n)
    
    Second Amendment to Second Amended and Restated Credit Agreement,
dated as October 3, 2003  Incorporated by reference to Form 10-Q for the
quarter ended October 11, 2003.(o)
    
    Credit Agreement between Marsh Supermarkets, Inc and its subsidiaries
and Bank of America, N.A., as Issuing Agent, Administrative Agent and
Collateral Agent, dated as of November 9, 2005  Incorporated by reference to
Form 8-K filed November 16, 2005.
 22




---



##### Table of Contents



(p)
    
    Agreements between Marsh Supermarekts, Inc. and each of John C.
Elbin and Mark A. Varner, dated October 24, 2005  Incorporated by reference
to Form 8-K filed October 28, 2005.
  31.1
    
    Rule 13(a)-14(a)/15(d)-14(a) Certification of Don E. Marsh.31.2
    
    Rule 13(a)-14(a)/15(d)-14(a) Certification of John C. Elbin.32.1
    
    Section 1350 Certification of Don E. Marsh.32.2
    
    Section 1350 Certification of John C. Elbin.
 23




---



##### Table of Contents



SIGNATURES
  MARSH SUPERMARKETS, INC.November 29, 2005
    
    By:
    
    /s/ John C. ElbinJohn C. ElbinSenior Vice President, Chief Financial Officerand TreasurerNovember 29, 2005
    
    By:
    
    /s/ Mark A. VarnerMark A. VarnerChief Accounting OfficerVice President  Corporate Controller
 24