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TheStreet Open House

Spartan Stores Announces Second Quarter Fiscal 2012 Financial Results

Stocks in this article: SPTN

The Company continues to expect capital expenditures for fiscal 2012 in the range of $43.0 million to $45.0 million with depreciation and amortization in the range of $37.0 million to $38.0 million and total interest expense approximating $15.0 million.

Conference Call

A telephone conference call to discuss the Company’s second quarter of fiscal 2012 financial results is scheduled for 9:00 a.m. Eastern Time, Thursday, October 20, 2011. A live webcast of this conference call will be available on the Company’s website, www.spartanstores.com. Simply click on “For Investors” and follow the links to the live webcast. The webcast will remain available for replay on the Company’s website for approximately ten days.

About Spartan Stores

Grand Rapids, Michigan-based Spartan Stores, Inc., (Nasdaq:SPTN) is the nation’s eleventh largest grocery distributor with 1.4 million square feet of warehouse, distribution, and office space located in Grand Rapids, Michigan. The Company distributes more than 40,000 corporate and national brand products to approximately 375 independent grocer locations in Michigan, Indiana and Ohio, and to our 97 corporate owned stores located in Michigan, including D&W Fresh Markets, Family Fare Supermarkets, Glen’s Markets and VG’s Food and Pharmacy.

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements are identifiable by words or phrases such as “priority”, “trend”, “outlook”, “strategy”, or “looking forward”; that an event or trend “will” or “should” occur or “continue” or is “likely” or that Spartan Stores or its management “anticipates”, “believes”, “expects” or “plans” a particular result, “confident” or is “optimistic” that a particular result will occur. Accounting estimates are inherently forward-looking. Our restructuring cost provisions are estimates and actual costs may be more or less than these estimates and differences may be material. These forward-looking statements are subject to a number of factors that could cause actual results to differ materially. Our ability to successfully realize growth opportunities, expand our customer base, effectively implement and achieve the expected benefits of capital investments, warehouse consolidation and store openings, successfully respond to the weak economic environment and changing consumer behavior, anticipate and successfully respond to openings of competitors’ stores, achieve expected sales, cash flows, operating efficiencies and earnings, implement plans, programs and strategies, reduce debt, and continue to pay dividends is not certain and depends on many factors, not all of which are in our control. Additional information about the risk factors to which Spartan Stores is exposed and other factors that may adversely affect these forward-looking statements is contained in Spartan Stores’ reports and filings with the Securities and Exchange Commission. Other risk factors exist and new risk factors may emerge at any time. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictions of future results. Spartan Stores undertakes no obligation to update or revise any forward-looking statements to reflect developments or information obtained after the date of this press release.

 
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

   
12 Weeks Ended 24 Weeks Ended
September 10, 2011   September 11, 2010   September 10, 2011   September 11, 2010
 
Net sales $ 619,647 $ 602,056 $ 1,222,211 $ 1,179,293
Cost of sales   486,910   466,858   964,137   917,406
Gross margin 132,737 135,198 258,074 261,887
 
Operating expenses
Selling, general and administrative 112,891 112,926 224,262 223,686
Restructuring, asset impairment and other   (135 )   183   (135 )   2,765
Total operating expenses 112,756 113,109 224,097 226,451
 
Operating earnings 19,981 22,089 33,977 35,436
 
Other income and expenses
Interest expense 3,412 3,504 6,654 6,933
Other, net   (42 )   (4 )   (112 )   (54 )
Total other income and expenses   3,370   3,500   6,542   6,879
 
Earnings before income taxes and

discontinued operations

16,611 18,589 27,435 28,557
Income taxes   6,341   7,244   11,030   11,137
Earnings from continuing operations 10,270 11,345 16,405 17,420
 
Loss from discontinued operations, net of taxes   (18 )   (106 )   (124 )   (194 )
Net earnings $ 10,252 $ 11,239 $ 16,281 $ 17,226
 
Basic earnings per share:
Earnings from continuing operations $ 0.45 $ 0.50 $ 0.72 $ 0.77
Loss from discontinued operations   -   -   (0.01 )   (0.01 )
Net earnings $ 0.45 $ 0.50 $ 0.71 $ 0.76
 
Diluted earnings per share:
Earnings from continuing operations $ 0.45 $ 0.50 $ 0.72 $ 0.77
Loss from discontinued operations   -   -   (0.01 )   (0.01 )
Net earnings $ 0.45 $ 0.50 $ 0.71 $ 0.76
 
Weighted average shares outstanding:
Basic 22,862 22,627 22,777 22,577
Diluted 22,962 22,692 22,872 22,650
 

SPARTAN STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)
(Unaudited)
   

Assets

September 10, 2011

September 11, 2010
 
Current assets
Cash and cash equivalents $ 62,080 $ 25,124
Accounts receivable, net 60,026 54,848
Inventories, net 121,287 128,623
Prepaid expenses and other current assets 10,000 8,622
Deferred taxes on income 3 1,810
Property held for sale   1,708   -
Total current assets 255,104 219,027
 
Goodwill 240,704 247,779
 
Property and equipment, net 243,545 246,391
 
Other, net   56,773   60,773
 
Total assets $ 796,126 $ 773,970
 

Liabilities and Shareholders’ Equity

 
Current liabilities
Accounts payable $ 129,185 $ 131,933
Accrued payroll and benefits 32,384 30,325
Other accrued expenses 14,580 17,866
Current portion of restructuring costs 4,101 7,211
Current maturities of long-term debt and capital lease obligations   4,249   4,167
Total current liabilities 184,499 191,502
 
Long-term liabilities
Deferred taxes on income 76,585 54,463
Postretirement benefits 14,321 22,843
Other long-term liabilities 17,118 19,738
Restructuring costs 8,908 25,873
Long-term debt and capital lease obligations   173,282   170,188
Total long-term liabilities 290,214 293,105
 
Commitments and contingencies
 
Shareholders’ equity
Common stock, voting, no par value; 50,000 sharesauthorized; 22,863 and 22,626 shares outstanding 164,648 159,182
Preferred stock, no par value, 10,000shares authorized; no shares outstanding - -
Accumulated other comprehensive loss (12,981 ) (13,437 )
Retained earnings   169,746   143,618
Total shareholders’ equity   321,413   289,363
 
Total liabilities and shareholders’ equity $ 796,126 $ 773,970

 

SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

           
24 Weeks Ended
September 10, 2011 September 11, 2010
 
Cash flows from operating activities
Net cash provided by operating activities $ 42,463 $ 45,459
 
Net cash used in investing activities (21,439 ) (14,977 )
 
Net cash used in financing activities (2,462 ) (13,733 )
 
Net cash used in discontinued operations   (306 )   (795 )
 
Net increase in cash and cash equivalents 18,256 15,954
Cash and cash equivalents at beginning of period   43,824     9,170  
Cash and cash equivalents at end of period $ 62,080   $ 25,124  
 
 
SPARTAN STORES, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA
(Unaudited)
(In thousands)
 
12 Weeks Ended 24 Weeks Ended
September 10, 2011     September 11, 2010 September 10, 2011     September 11, 2010
 

Retail Segment:

 
Net Sales $ 363,421 $ 353,452 $ 708,856 $ 685,414
Operating Earnings $ 11,217 $ 11,366 $ 17,811 $ 16,728
 
 

Distribution Segment:

 
Net Sales $ 256,226 $ 248,604 $ 513,355 $ 493,879
Operating Earnings $ 8,764 $ 10,723 $ 16,166 $ 18,708
     
SPARTAN STORES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(A NON-GAAP FINANCIAL MEASURE)
(Unaudited)
 
Second Quarter Ended (12 weeks) Year-to-Date

(24 weeks)

(In thousands) Sept. 10, 2011   Sept. 11, 2010 Sept. 10, 2011   Sept. 11, 2010
Net earnings $ 10,252 $ 11,239 $ 16,281 $ 17,226
Add:
Discontinued operations 18 106 124 194
Income taxes 6,341 7,244 11,030 11,137
Interest expense 3,412 3,504 6,654 6,933
Non-operating expense (42 ) (4 ) (112 ) (54 )
Operating earnings 19,981 22,089 33,977 35,436
Add:
Depreciation and amortization 8,408 8,071 16,775 15,906
LIFO (income) expense 869 (1,400 ) 1,527 (3,208 )
Restructuring and asset impairment costs (135 ) 183 (135 ) 2,765
Other unusual items 1,194 - 1,194 -
Non-cash stock compensation and other charges 810 1,045 2,360 2,123
Adjusted EBITDA $ 31,127 $ 29,988 $ 55,698 $ 53,022
 
Reconciliation of operating earnings to adjusted EBITDA by segment:
 
Retail:
Operating earnings $ 11,217 $ 11,366 $ 17,811 $ 16,728
Add:
Depreciation and amortization 6,432 6,128 12,886 12,092
LIFO expense 526 100 964 200
Restructuring and asset impairment costs (98 ) 3 (98 ) 153
Non-cash stock compensation and other charges 365 539 * 1,137 1,135 *
Adjusted EBITDA $ 18,442 $ 18,136 $ 32,700 $ 30,308
 
Distribution:
Operating earnings $ 8,764 $ 10,723 $ 16,166 $ 18,708
Add:
Depreciation and amortization 1,976 1,943 3,889 3,814
LIFO (income) expense 343 (1,500 ) 563 (3,408 )
Restructuring and asset impairment costs (37 ) 180 (37 ) 2,612
Other unusual items 1,194 - 1,194 -
Non-cash stock compensation and other charges 445 506 * 1,223     988 *
Adjusted EBITDA $ 12,685 $ 11,852 $ 22,998 $ 22,714
 

* Prior year stock compensation has been reclassed to conform to the current year to reflect the amount included in the cost allocated to the Retail segment.

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