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Spartan Stores Announces Third Quarter Fiscal 2013 Financial Results

Conference Call

A telephone conference call to discuss the Company’s third quarter of fiscal 2013 financial results is scheduled for 9:00 a.m. Eastern Time, Thursday, February 14, 2013. 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 the Company’s 100 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 “initiatives”, “guidance”, “priority”, “trend”, “outlook”, “position”, “momentum”, 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. 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 store, our loyalty program, 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, successfully integrate acquired store or new distribution customer business, 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
(In thousands, except per share data)
(Unaudited)
   
16 Weeks Ended 40 Weeks Ended
January 5,

2013

  December 31,

2011

January 5,

2013

  December 31,

2011

 
Net sales $ 789,880 $ 797,242 $ 2,015,351 $ 2,019,453
Cost of sales   628,925   634,292   1,602,450   1,598,429
Gross margin 160,955 162,950 412,901 421,024
 
Operating expenses
Selling, general and administrative 137,085 139,089 340,503 346,479
Depreciation and amortization 12,024 11,416 29,499 28,191
Restructuring, asset impairment and other - (2 ) 356 (137 )
(Gain) loss on disposal of assets   299  

(545

)

  335   (478 )
Total operating expenses 149,408 149,958 370,693 374,055
 
Operating earnings 11,547 12,992 42,208 46,969
 
Non-operating expense (income)
Interest expense, net 3,054 4,101 7,432 8,977
Non-cash convertible debt interest 1,109 1,136 2,903 2,794
Debt extinguishment 2,285 2,285 -
Other, net   7   3   (667 )   11
Total non-operating expense, net   6,455   5,240   11,953   11,782
 
Earnings before income taxes and discontinued operations 5,092 7,752 30,255 35,187
Income taxes   1,620   2,764   10,352   13,794
Earnings from continuing operations 3,472 4,988 19,903 21,393
 
Loss from discontinued operations, net of taxes   (72 )   (11 )   (195 )   (135 )
Net earnings $ 3,400 $ 4,977 $ 19,708 $ 21,258
 
Basic earnings per share:
Earnings from continuing operations $ 0.16 $ 0.22 $ 0.91 $ 0.94
Loss from discontinued operations   -   -  

(0.01

)

  (0.01 )
Net earnings $ 0.16 $ 0.22 $ 0.90 $ 0.93
 
Diluted earnings per share:
Earnings from continuing operations $ 0.16 $ 0.22 $ 0.91 $ 0.93
Loss from discontinued operations   -   -  

(0.01

)

  (0.01 )
Net earnings $ 0.16 $ 0.22 $ 0.90 $ 0.92
 
Weighted average shares outstanding:
Basic 21,750 22,866 21,780 22,812
Diluted 21,816 23,080 21,855 22,995
 
SPARTAN STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
   

Assets

January 5, 2013

December 31, 2011

 
Current assets
Cash and cash equivalents $ 8,960 $ 55,059
Accounts receivable, net 50,267 56,764
Inventories, net 133,879 120,908
Prepaid expenses 10,583 10,428
Other current assets 8,334 1,392
Deferred taxes on income 269
Property held for sale   710   1,708
Total current assets 213,002 246,259
 
Goodwill 246,925 240,589
 
Property and equipment, net 272,368 245,265
 
Other, net   62,266   56,375
 
Total assets $ 794,561 $ 788,488
 

Liabilities and Shareholders’ Equity

 
Current liabilities
Accounts payable $ 116,207 $ 111,273
Accrued payroll and benefits 33,782 35,312
Other accrued expenses 19,696 16,377
Current portion of restructuring costs 3,297 3,596
Current maturities of long-term debt and capital lease obligations   4,104   49,313
Total current liabilities 177,086 215,871
 
Long-term liabilities
Deferred taxes on income 86,689 78,739
Postretirement benefits 13,548 12,446
Other long-term liabilities 15,625 16,257
Restructuring costs 5,427 8,359
Long-term debt and capital lease obligations   166,843   129,916
Total long-term liabilities 288,132 245,717
 
Commitments and contingencies
 
Shareholders’ equity
Common stock, voting, no par value; 50,000 sharesauthorized; 21,750 and 22,868 shares outstanding 146,320 166,015
Preferred stock, no par value, 10,000shares authorized; no shares outstanding - -
Accumulated other comprehensive loss (13,793 ) (12,351 )
Retained earnings   196,816   173,236
Total shareholders’ equity   329,343   326,900
 
Total liabilities and shareholders’ equity $ 794,561 $ 788,488
 
SPARTAN STORES, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
   

16 Weeks Ended

 

January 5, 2013

December 31, 2011

Cash flows from operating activities

Net cash provided by operating activities

$

26,401

$

8,718

Net cash used in investing activities (26,519 ) (11,539 )
Net cash provided by (used in) financing activities 1,973 (4,222 )
Net cash (used in) provided by discontinued operations   (386)   22
Net increase (decrease) in cash and cash equivalents 1,469 (7,021)
Cash and cash equivalents at beginning of period   7,491   62,080
Cash and cash equivalents at end of period $ 8,960 $ 55,059
 

SPARTAN STORES, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA

(In thousands)
(Unaudited)
 
16 Weeks Ended 40 Weeks Ended

January 5, 2013

 

December 31, 2011

January 5, 2013

 

December 31, 2011

 

Retail Segment:

Net sales $ 443,752 $ 443,487 $ 1,151,633 $ 1,152,343
Operating Earnings $ 2,054 $ 2,129 $ 14,044 $ 19,940
 

Distribution Segment:

Net sales $ 346,128 $ 353,755 $ 863,718 $ 867,110
Operating Earnings $ 9,493 $ 10,863 $ 28,164 $ 27,029
 
SPARTAN STORES, INC. AND SUBSIDIARIES

RECONCILIATION OF EARNINGS FROM CONTINUING OPERATIONS TO ADJUSTED EARNINGS FROM

CONTINUING OPERATIONS

(Unaudited)
(In thousands, except per share data)
 
Third Quarter
January 5, 2013     December 31, 2011
   

Earnings perdiluted share

   

Earnings perdiluted share

Earnings from continuing operations $ 3,472 $ 0.16 $ 4,988 $ 0.22
Adjustments, net of taxes:
Acquisition related professional fees 250 0.01
Gain on sale of assets (351 ) (0.02 )
Interest rate swap termination 499 0.02
Debt extinguishment 1,443 0.07 -
       
Adjusted earnings from continuing operations $ 5,165 $ 0.24 $ 5,136 $ 0.22  
 
Year-to-date
January 5, 2013 December 31, 2011
 

Earnings perdiluted share

 

Earnings perdiluted share

Earnings from continuing operations $ 19,903 $ 0.91 $ 21,393 $ 0.93
Adjustments, net of taxes:
Acquisition related professional fees 250 0.01
Non-recurring professional fees 744 0.03
Asset impairment and restructuring charge 225 0.01
Gain on sale of assets (422 ) (0.02 ) (351 ) (0.01 )
Interest rate swap termination 499 0.02
Debt extinguishment 1,443 0.07 -
Impact of state tax law changes (623 ) (0.03 ) 518 0.02  
Adjusted earnings from continuing operations $ 20,776 $ 0.95 $ 22,803 $ 0.99  

Notes: Adjusted earnings from continuing operations is a non-GAAP operating financial measure that the Company defines as earnings from continuing operations plus or minus adjustments for items that do not reflect the ongoing operating activities of the Company and costs associated with the closing of operational locations.

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