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Spartan Stores Announces First Quarter Fiscal Year 2013 Financial Results

Conference Call

A telephone conference call to discuss the Company’s first quarter of fiscal 2013 financial results is scheduled for 9:00 a.m. Eastern Time, Thursday, August 2, 2012. 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 tenth 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 private and national brand products to approximately 375 independent grocery locations in Michigan, Indiana and Ohio, and to our 97 corporate owned stores located in Michigan, including Family Fare Supermarkets, Glen's Markets, D&W Fresh Markets, VG's Food and Pharmacy, and Valu Land.

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements are identifiable by words or phrases such as “priority”, “trend”, “outlook”, “position”, ”opportunity”, “momentum”, “potential” or “strategy” ; that an event or trend “could”, “will” or “should” occur “begin” “remain” or “continue” or is “likely” or that Spartan Stores or its management “anticipates”, “believes”, “expects” or “plans” a particular result, or is “confident” or “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 achieve the results stated in our “Outlook” discussion, successfully realize growth opportunities, expand our customer base, effectively implement and achieve the expected benefits of capital investments, our new retail banner and model, 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 and repurchase shares 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
(Unaudited)
(In thousands, except per share amounts)
     
12 Weeks (Year-to-Date) Ended
June 23, 2012 June 18, 2011
 
 
Net sales $ 603,912 $ 602,564
Cost of sales   482,192     477,227  
Gross margin 121,720 125,337
 
Operating expenses
Selling, general and administrative 101,337 102,974
Depreciation and amortization   8,670     8,367  
Total operating expenses 110,007 111,341
 
Operating earnings 11,713 13,996
 
Non-operating expense (income)
Interest expense 2,266 2,419
Non-cash convertible debt interest 890 823
Other, net   (48 )   (70 )
Total non-operating expense, net   3,108     3,172  
 
Earnings before income taxes and discontinued operations 8,605 10,824
Income taxes   2,529     4,689  
 
Earnings from continuing operations 6,076 6,135
 
Income/(Loss) from discontinued operations, net of taxes   (73 )   (106 )
 
Net earnings $ 6,003   $ 6,029  
 
Basic earnings per share:
Earnings from continuing operations $ 0.28 $ 0.27
Loss from discontinued operations   (0.01 )   -  
Net earnings $ 0.27   $ 0.27  
 
Diluted earnings per share:
Earnings from continuing operations $ 0.28 $ 0.27
Loss from discontinued operations   (0.01 )   (0.01 )
Net earnings $ 0.27   $ 0.26  
 
Weighted average shares outstanding:
Basic   21,853     22,691  
Diluted   21,939     22,777  
 
SPARTAN STORES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
   
June 23, 2012 June 18, 2011
ASSETS
 
Current assets
Cash and cash equivalents $ 6,093 $ 37,713
Accounts receivable, net 61,253 62,228
Inventories 132,435 132,476
Prepaid expenses 10,011 7,927
Other current assets 13,880 1,289
Deferred taxes on income 725 2,041
Property and equipment held for sale   1,708     1,708  
Total current assets 226,105 245,382
 
Other assets
Goodwill, net 240,037 241,132
Other, net   61,310     56,781  
Total other assets 301,347 297,913
 
Property and equipment
Land and improvements 22,087 21,569
Buildings and improvements 242,506 221,937
Equipment   288,820     308,908  
Total property and equipment 553,413 552,414
Less accumulated depreciation and amortization   296,519     312,615  
Net property and equipment   256,894     239,799  
 
Total assets $ 784,346   $ 783,094  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities
Accounts payable $ 127,873 $ 129,737
Accrued payroll and benefits 32,146 30,035
Other accrued expenses 19,350 19,411
Current portion of restructuring costs 3,340 4,330
Current maturities of long-term debt   4,328     4,235  
Total current liabilities 187,037 187,748
 
Other long-term liabilities 15,627 17,765
Restructuring costs 7,315 10,158
Deferred taxes 86,813 71,324
Postretirement benefits 13,590 14,635
Long-term debt   156,397     170,489  
Total long-term liabilities 279,742 284,371
 
Shareholders' equity
Common stock, voting, no par value; authorized 50,000
shares; outstanding 21,774 and 22,837 shares 153,848 172,672
Preferred stock, no par value, authorized 10,000 shares;
no shares outstanding - -
Deferred stock-based compensation (9,078 ) (9,593 )
Accumulated other comprehensive loss (13,793 ) (13,084 )
Retained earnings   186,590     160,980  
Total shareholders' equity   317,567     310,975  
 
Total liabilities and shareholders' equity $ 784,346   $ 783,094  
 
SPARTAN STORES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
       
Year-to-Date
(12 weeks)

June 23, 2012

(12 weeks)

June 18, 2011

Net cash (used in), provided by operating activitites (19,188 ) $ 6,722
Net cash (used in) investing activities (6,596 ) (10,384 )
Net cash provided by, (used in) financing activities 5,465 (2,251 )
Net cash (used in) discontinued operations   (64 )   (198 )
Net decrease in cash and cash equivalents (20,383 ) (6,111 )
Cash and cash equivalents at beginning of period   26,476     43,824  
Cash and cash equivalents at end of period $ 6,093   $ 37,713  
 
SPARTAN STORES, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA
(Unaudited)
(In thousands)
 
Year-to-Date Ended
June 23, 2012   June 18, 2011
(12 weeks)   (12 weeks)
Retail Segment:
 
Net Sales $ 345,564 $ 345,435
Operating Earnings $ 3,891 $ 6,594
 
Distribution Segment:
 
Net Sales $ 258,348 $ 257,129
Operating Earnings $ 7,822 $ 7,402
 
SPARTAN STORES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO ADJUSTED EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION AND AMORTIZATION
(Unaudited)
(In thousands)
   
Year-to-Date
June 23, 2012

(12 Weeks)

  June 18, 2011

(12 Weeks)

Consolidated:
Net earnings $ 6,003 $ 6,029
Plus:
Discontinued operations 73 106
Income taxes 2,529 4,689
Non-operating expense   3,108     3,172
Operating earnings $ 11,713   $ 13,996
Plus:
Depreciation and amortization 8,670 8,367
LIFO (income) expense 790 658
Non-cash stock compensation & other charges   1,469     1,550
Adjusted EBITDA $ 22,642   $ 24,571
 
Retail Segment:
Operating Earnings $ 3,891 $ 6,594
Plus:
Depreciation and amortization 6,711 6,454
LIFO expense 424 438
Non-cash stock compensation & other charges   770     772
Adjusted EBITDA $ 11,796   $ 14,258
 
Distribution Segment:
Operating Earnings $ 7,822 $ 7,402
Plus:
Depreciation and amortization 1,959 1,913
LIFO (income) expense 366 220
Non-cash stock compensation & other charges   699     778
Adjusted EBITDA $ 10,846   $ 10,313
 

Notes: Consolidated Adjusted EBITDA is a non-GAAP operating financial measure that we define as net earnings from continuing operations plus depreciation and amortization, and other non-cash items including imputed interest, deferred (stock) compensation, the LIFO provision, as well as adjustments for unusual items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations, interest expense and the provision for income taxes.

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