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Spartan Stores Announces Third Quarter Fiscal 2013 Financial Results

Stocks in this article: SPTN

During the third quarter, the Company remodeled two stores, opened two Valu Land stores and acquired one store and one fuel center, ending the quarter with 100 stores and 30 fuel centers. The Company plans to open one new Valu Land location during the fourth quarter of fiscal 2013.

Balance Sheet and Cash Flow

Cash flow provided by operating activities for the third quarter ended January 5, 2013 was $26.4 million compared to $8.7 million for the comparable quarter last year, primarily due to the timing of working capital requirements.

Net long-term debt (including current maturities and capital lease obligations and subtracting cash) for the Company was $162.0 million as of January 5, 2013 compared to $124.2 million as of December 31, 2011, due primarily to funding share repurchases, tax payments and the acquisition of one retail store and fuel center, including the associated capital leases. The Company’s total net long-term debt-to-capital ratio is 0.33-to-1.0 for the third quarter of fiscal 2013 and the net long-term debt-to-Adjusted EBITDA ratio is 1.58-to-1.0 on an annual Adjusted EBITDA basis.

During the third quarter, as previously announced, the Company completed a private exchange and sale of $50.0 million aggregate principal amount of newly issued, four year unsecured 6.625% Senior Notes due 2016 for $40.3 million aggregate principal amount of the Company's existing Convertible Senior Notes due 2027 ("Convertible Notes") and $9.7 million in cash. Additionally, late in the third quarter, the Company called for the redemption of the remaining outstanding $57.4 million aggregate principal amount of Convertible Notes before March 30, 2013, the end of its current fiscal year. The Company plans to fund this redemption with available borrowings under its revolving credit facility. Pre-tax charges of $2.3 million were recorded in the third quarter of fiscal 2013 for the early retirement of a portion of the Company's Convertible Senior Notes and pre-tax charges of approximately $2.8 million are expected to be recorded in the fourth quarter of fiscal 2013 related to the planned redemption of the remaining Convertible Notes. The Company extended the maturity of its debt and expects to save approximately $3.0 million in annual interest expense as a result of the private exchange of a portion of the Convertible Notes and redemption of the remainder of the Convertible Notes.

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