INDIANAPOLIS - Marsh Supermarkets Inc. Tuesday reported its financial results for the second fiscal quarter ended Oct. 15, according to a statement on Marsh's Web site.

The company also announced that it had retained Merrill Lynch & Co. to explore strategic alternatives for the enhancement of shareholder value, including a possible sale of the company.

The company reported a net loss of $3.4 million compared to net income of $1.3 million for the same period last year. Losses per diluted common share were $.43 compared to earnings per diluted common share of $0.16 last year.

The company attributed the losses to lower contribution from comparable stores (stores open during both quarters), startup and operating losses of new stores and higher general and administrative expenses.

Total revenues for the quarter increased to $549.6 million from $524.9 million for the prior year quarter. Sales in comparable supermarkets and convenience stores increased 3.6 percent in the second quarter of 2006 from the same period in 2005, but comparable store merchandise sales, which exclude gasoline sales, declined 0.7 percent. 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.

Marsh has authorized Merrill Lynch to contact a limited number of prospective strategic and financial purchasers and provide necessary information. But there can be no assurance that the company will consummate a sale or other strategic alternative, the statement said.

Marsh stated that it does not expect to update its progress or disclose developments with respect to the exploration of strategic alternatives until the board of directors has approved a definitive transaction.

The company also announced it will suspend the payment of future cash quarterly dividends on company common stock until the company improves its financial performance and its credit ratios on a sustainable basis.

The company also announced that on Nov. 9, the company and its subsidiaries entered into a new five-year $95 million revolving credit facility with a group of lenders led by Bank of America, N.A.

The new credit facility is secured by eligible receivables, inventory, certain real estate and other fixed assets. The company borrowed approximately $51 million to repay the previous credit facility that was scheduled to expire in February.

"We are clearly disappointed with the loss reported for the quarter," stated Don E. Marsh, chairman and chief executive officer.

"The positive developments of recording our sixth consecutive quarter of increases in sales from comparable stores and the new credit facility were outweighed by a number of negative factors.

"During the past several months, management has been working diligently to reduce costs during a time of increasing competition, and while we believe our initiatives will improve profitability, our responsibility is to consider the best interests of our employees, the communities we serve and, above all, our shareholders. One of the strategic alternatives that we believe should be considered would be the possible sale of the company to the right party. For this reason, we have authorized Merrill Lynch to investigate the potential of such a transaction as an integral part of our considerations," Marsh said. [[In-content Ad]]