Spartan Stores, Inc. (Nasdaq: SPTN), a leading regional grocery
distributor and retailer, today reported financial results for the
fiscal 2014 first quarter ended June 22, 2013.
First Quarter Results
Consolidated net sales for the first quarter increased 1.4 percent to
$612.4 million compared to $603.9 million last year, due to higher sales
in the distribution and retail segments. As anticipated, first quarter
sales were negatively affected by the calendar shift of the Easter
holiday selling week into the fourth quarter of fiscal 2013. First
quarter comparable store sales were also impacted by the cycling of the
launch of the price-freeze campaign and unfavorable weather conditions
as compared to the first quarter of fiscal 2013.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA) for the quarter increased 5.2 percent to $23.8
million, or 3.9 percent of net sales, compared to $22.6 million, or 3.8
percent of net sales last year. (Reference Tables 2 to 5 for a
reconciliation of GAAP and non-GAAP adjusted results.)
Adjusted earnings from continuing operations were $6.5 million, or $0.30
per diluted share, compared to $5.4 million, or $0.25 per diluted share,
last year. For the first quarter of fiscal 2014, adjusted earnings from
continuing operations excludes after-tax professional fees and expenses
related to the previously announced merger agreement of $1.1 million, or
$0.05 per diluted share, and an after-tax asset impairment charge of
$0.6 million, or $0.03 per diluted share. For the first quarter of
fiscal 2013, adjusted earnings from continuing operations excludes a net
after-tax benefit of $0.6 million, or $0.03 per diluted share, as a
result of changes to Michigan tax laws. Reported earnings from
continuing operations for the first quarter of fiscal 2014 were $4.8
million, or $0.22 per diluted share, compared to $6.1 million, or $0.28
per diluted share, in the first quarter of fiscal 2013.
“We are pleased with our ability to generate improved first quarter
financial results despite the negative effect of the Easter calendar
shift and generally unfavorable weather conditions compared to the prior
year,” stated Dennis Eidson, Spartan’s President and Chief Executive
Officer. “Our adjusted earnings from continuing operations exceeded our
guidance and we generated increased cash flow from operations for the
quarter driven by an operating margin improvement in our retail segment.
We benefited from the acquisition of a retail store late in the prior
year third quarter, new customer gains, the growing traction of our Yes
Rewards loyalty program and increased fuel sales, as well as our
continued disciplined expense management. We continue to refine our
promotion and loyalty programs and to introduce new private brand
products to provide even more value to our retail and distribution
customers in today’s economy.”
Gross profit margin for the first quarter of fiscal 2014 was 20.5
percent compared to 20.2 percent in the first quarter of the prior year.
The gross profit margin rate increase reflects an improved performance
in the Company’s retail segment driven primarily by the cycling of the
launch of the price-freeze campaign in the prior year.
First quarter of fiscal 2014 operating expenses would have been $112.5
million, or 18.4 percent of net sales, if the professional fees related
to the previously announced merger agreement and the asset impairment
charge were excluded, compared to $109.9 million, or 18.2 percent of net
sales, excluding $0.1 million in professional fees for tax planning in
the first quarter of the prior year. The increase in the rate to sales
was primarily due to higher depreciation and amortization expense,
incentive compensation and health care costs. First quarter of fiscal
2014 reported operating expenses were $115.3 million, or 18.8 percent of
sales, compared to $110.0 million, or 18.2 percent of sales, in the same
quarter last year.
Distribution Segment
Net sales for the distribution segment increased 0.1 percent to $258.6
million in the first quarter of fiscal 2014 from $258.3 million in the
same period last year. The slight increase in sales was primarily due to
new business gains, partially offset by the elimination of sales related
to the acquisition of a customer’s store in the third quarter of fiscal
2013, the Easter holiday calendar shift, unfavorable weather conditions
and lower pharmacy sales.
First quarter fiscal 2014 operating earnings for the distribution
segment would have been $7.5 million, if $1.8 million in professional
fees related to the merger transaction were excluded, compared to
adjusted operating earnings of $7.9 million in the same period last
year. As reported, operating earnings for the distribution segment were
$5.7 million for the first quarter of fiscal 2014 compared to $7.8
million for the first quarter of fiscal 2013.
Retail Segment
Net sales for the retail segment increased 2.4 percent to $353.8 million
in the first quarter of fiscal 2014 compared to $345.6 million in the
same period last year. The increase in sales was due to the previously
disclosed acquisition of a grocery store in the third quarter of fiscal
2013, new Valu Land store openings and increased fuel sales, partially
offset by negative comparable store sales.
Comparable store sales, excluding fuel, decreased 2.9 percent due to a
90 basis point negative impact from the Easter holiday calendar shift,
which moved the strong selling week prior to the Easter holiday into the
fourth quarter of fiscal 2013. Comparable store sales in the first
quarter were also impacted by the cycling of the launch of the
price-freeze campaign, unfavorable weather conditions, the cycling of
the grand opening of a new relocated store in the Company’s Grand Rapids
market and the continued shift in the pharmacy sales mix to generic
medications.
First quarter fiscal 2014 operating earnings for the retail segment
would have been $5.2 million, if a non-cash pre-tax asset impairment
charge of $1.0 million is excluded, compared to $3.9 million last year.
The improvement in operating earnings with this exclusion was primarily
due to higher sales and improved margins in supermarkets and fuel
centers, partially offset by depreciation and amortization, higher
incentive compensation and health care costs. First quarter operating
earnings as reported were $4.2 million compared to $3.9 million in the
first quarter of fiscal 2013.
During the first quarter of fiscal 2014, the Company completed two minor
remodels and store re-banners, ending the quarter with 101 corporate
owned stores and 30 fuel centers.
Balance Sheet and Cash Flow
The Company generated cash flow provided by operating activities of $7.4
million for the first quarter ended June 22, 2013 compared to $19.2
million of cash used in operating activities for the comparable period
last year. The increase was primarily due to the timing of working
capital requirements, lower income tax payments and the cycling of $5.0
million in payments for customer supply agreements entered into in the
prior year first quarter.
Net long-term debt (including current maturities, capital lease
obligations, and subtracting cash) for the Company was $147.8 million as
of June 22, 2013 compared to $154.6 million at the end of the first
quarter of fiscal 2013. The Company’s total net long-term
debt-to-capital ratio was 0.30-to-1.0 for the first quarter of fiscal
2014 and the net long-term debt-to-Adjusted EBITDA ratio is 1.37-to-1.0
on an annual Adjusted EBITDA basis.
Outlook
Mr. Eidson continued, “We remain confident in the plans we have in place
to deliver our sales and earnings outlook for fiscal 2014, including
investing in the consumer experience, increasing our remodeling efforts,
introducing new private brand products and improving productivity across
our operations. During the second quarter, we plan to complete four
minor remodels, one major remodel and to open one new Valu Land store in
the Lansing market.”
Mr. Eidson concluded, “Additionally, we continue to focus on our
integration plan for our recently announced merger with Nash Finch. As
you know, we are a very disciplined organization and the integration
will be a critical priority for us. I am confident in the realization of
the $50 million in anticipated cost synergies from this transaction,
which were vetted by both organizations. These synergies, along with the
strategic opportunities provided by the combined organization and the
future flexible financial structure will allow the combined entity to
execute our strategic vision and deliver continued value to associates,
shareholders and other partners.”
The Company expects that second quarter comparable store sales will be
slightly negative to slightly positive as the Company cycles through the
previously mentioned impacts and the weather returns to more seasonal
conditions. Second quarter earnings from continuing operations are
expected to be above the prior year's results when excluding expenses
related to our merger. This expectation reflects benefits from the
retail store acquisition, new customer gains and the Company’s capital
program, as well as the maturation of the Yes Rewards loyalty program.
For fiscal 2014, the Company expects comparable store sales, adjusted
for the Easter calendar shift, to range from slightly negative to
slightly positive. Consolidated net sales and adjusted earnings from
continuing operations for fiscal 2014 are expected to exceed fiscal year
2013; however, adjusted earnings from continuing operations are expected
to flatten out in the second half of the year when compared to the prior
year, due to anticipated higher LIFO expense, lower fuel profit per
gallon than realized in the first half of the year and the cycling of
the retail store acquisition.
The Company continues to expect capital expenditures for fiscal year
2014 to be in the range of $39.0 million to $42.0 million, with
depreciation and amortization in the range of $41.0 million to $43.0
million and total interest expense in the range of $9.5 million to $10.5
million.
Conference Call
A telephone conference call to discuss the Company’s first quarter of
fiscal 2014 financial results is scheduled for 9:00 a.m. Eastern Time,
Thursday, August 1, 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 ninth 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 390 independent grocery locations in
Michigan, Indiana and Ohio, and to the Company’s 102 corporate owned
stores located in Michigan, including Family Fare Supermarkets, Glen's
Markets, D&W Fresh Markets, VG's Food and Pharmacy, Forest Hills Foods
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”, “opportunity”,
“vision”, “future”, 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”, “plans” or is “confident” of a particular result, or that a
result will be “realized” or “delivered.” Accounting estimates are
inherently forward-looking. Our restructuring cost provisions are
estimates, 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, our loyalty program, and
store openings, successfully respond to the weak economy 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 proposed merger and
risks associated with that transaction appear in our Form 8-K Current
Report dated July 22, 2013. 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.
Important Information for Investors
Communications in this press release do not constitute an offer to sell
or the solicitation of an offer to buy any securities or a solicitation
of any vote or approval. The issuance of Spartan Stores common stock in
connection with the proposed merger will be submitted to the Spartan
Stores’ shareholders for their consideration, and the proposed merger
will be submitted to Nash Finch’s stockholders for their consideration.
Spartan Stores will file with the Securities and Exchange Commission
(“SEC”) a registration statement on Form S-4 that will include a joint
proxy statement to be used by Spartan Stores and Nash Finch to solicit
the required approval of their respective shareholders in connection
with the proposed merger and will constitute a prospectus of Spartan
Stores. Spartan Stores and Nash Finch may also file other documents with
the SEC concerning the proposed merger. INVESTORS AND SECURITY HOLDERS
OF SPARTAN STORES AND NASH FINCH ARE URGED TO READ THE JOINT PROXY
STATEMENT AND PROSPECTUS REGARDING THE PROPOSED MERGER AND OTHER
RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and security
holders may obtain a free copy of the joint proxy statement and
prospectus and other documents containing important information about
Spartan Stores and Nash Finch, once such documents are filed with the
SEC, through the website maintained by the SEC at www.sec.gov.
Copies of the documents filed with the SEC by Spartan Stores will be
available free of charge on Spartan Stores’ website at www.spartanstores.com
under the tab “Investor Relations” or by contacting Jeanne Norcross,
Vice President Corporate Affairs, (616) 878-2830. Copies of documents
filed with the SEC by Nash Finch will be available free of charge on
Nash Finch’s website at www.nashfinch.com
under the tab “Investors” or by contacting Kathleen Mahoney, Executive
Vice President, General Counsel and Secretary, (952) 844-1262.
Participants in the Transaction
Spartan Stores, Nash Finch and certain of their respective directors and
executive officers may be deemed to be participants in the solicitation
of proxies from the shareholders of Spartan Stores and stockholders of
Nash Finch in connection with the proposed transaction. Information
about the directors and executive officers of Spartan Stores is set
forth in its proxy statement for its 2013 annual meeting of
shareholders, which was filed with the SEC on June 14, 2013. Information
about the directors and executive officers of Nash Finch is set forth in
its proxy statement for its 2013 annual meeting of stockholders, which
was filed with the SEC on March 11, 2013. These documents can be
obtained free of charge from the sources indicated above. Other
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings
or otherwise, will be contained in the joint proxy statement and
prospectus and other relevant materials to be filed with the SEC when
they become available.
SPARTAN STORES, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
12 Weeks Ended
|
|
|
12 Weeks Ended
|
|
|
|
June 22, 2013
|
|
|
June 23, 2012
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
612,405
|
|
|
|
$
|
603,912
|
|
|
Cost of sales
|
|
|
487,129
|
|
|
|
|
482,192
|
|
|
Gross profit
|
|
|
125,276
|
|
|
|
|
121,720
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
104,862
|
|
|
|
|
101,337
|
|
|
Depreciation and amortization
|
|
|
9,491
|
|
|
|
|
8,670
|
|
|
Restructuring and asset impairment charges
|
|
|
987
|
|
|
|
|
-
|
|
|
Total operating expenses
|
|
|
115,340
|
|
|
|
|
110,007
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
9,936
|
|
|
|
|
11,713
|
|
|
|
|
|
|
|
|
|
Non-operating expense (income)
|
|
|
|
|
|
|
Interest expense
|
|
|
2,265
|
|
|
|
|
2,266
|
|
|
Non-cash convertible debt interest
|
|
|
-
|
|
|
|
|
890
|
|
|
Other, net
|
|
|
(9
|
)
|
|
|
|
(48
|
)
|
|
Total non-operating expense, net
|
|
|
2,256
|
|
|
|
|
3,108
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes and discontinued operations
|
|
|
7,680
|
|
|
|
|
8,605
|
|
|
Income taxes
|
|
|
2,896
|
|
|
|
|
2,529
|
|
|
Earnings from continuing operations
|
|
|
4,784
|
|
|
|
|
6,076
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of taxes
|
|
|
(101
|
)
|
|
|
|
(73
|
)
|
|
Net earnings
|
|
$
|
4,683
|
|
|
|
$
|
6,003
|
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
Earnings from continuing operations
|
|
$
|
0.22
|
|
|
|
$
|
0.28
|
|
|
Loss from discontinued operations
|
|
|
(0.01
|
)
|
*
|
|
|
(0.01
|
)
|
*
|
Net earnings
|
|
$
|
0.21
|
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
Earnings from continuing operations
|
|
$
|
0.22
|
|
|
|
$
|
0.28
|
|
|
Loss from discontinued operations
|
|
|
(0.01
|
)
|
*
|
|
|
(0.01
|
)
|
*
|
Net earnings
|
|
$
|
0.21
|
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
21,810
|
|
|
|
|
21,853
|
|
|
Diluted
|
|
|
21,892
|
|
|
|
|
21,939
|
|
|
|
*Includes rounding
|
|
SPARTAN STORES, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands)
|
(Unaudited)
|
|
Assets
|
|
June 22, 2013
|
|
June 23, 2012
|
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4,163
|
|
|
$
|
6,093
|
|
Accounts receivable, net
|
|
|
60,087
|
|
|
|
61,253
|
|
Inventories, net
|
|
|
135,126
|
|
|
|
132,435
|
|
Prepaid expenses
|
|
|
10,037
|
|
|
|
10,011
|
|
Other current assets
|
|
|
1,202
|
|
|
|
13,880
|
|
Deferred taxes on income
|
|
|
1,558
|
|
|
|
725
|
|
Property held for sale
|
|
|
-
|
|
|
|
1,708
|
|
Total current assets
|
|
|
212,173
|
|
|
|
226,105
|
|
|
|
|
|
|
Goodwill
|
|
|
246,665
|
|
|
|
240,037
|
|
|
|
|
|
|
Other, net
|
|
|
64,344
|
|
|
|
61,310
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
269,109
|
|
|
|
256,894
|
|
|
|
|
|
|
Total assets
|
|
$
|
792,291
|
|
|
$
|
784,346
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
|
$
|
129,680
|
|
|
$
|
127,873
|
|
Accrued payroll and benefits
|
|
|
32,311
|
|
|
|
32,146
|
|
Accrued income taxes
|
|
|
1,309
|
|
|
|
-
|
|
Other accrued expenses
|
|
|
24,152
|
|
|
|
22,690
|
|
Current maturities of long-term debt and capital lease obligations
|
|
|
3,937
|
|
|
|
4,328
|
|
Total current liabilities
|
|
|
191,389
|
|
|
|
187,037
|
|
|
|
|
|
|
Long-term liabilities
|
|
|
|
|
Deferred taxes on income
|
|
|
81,226
|
|
|
|
86,813
|
|
Postretirement benefits
|
|
|
14,262
|
|
|
|
13,590
|
|
Other long-term liabilities
|
|
|
18,905
|
|
|
|
22,942
|
|
Long-term debt and capital lease obligations
|
|
|
148,031
|
|
|
|
156,397
|
|
Total long-term liabilities
|
|
|
262,424
|
|
|
|
279,742
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
Common stock, voting, no par value; 50,000 shares authorized;
21,896 and 21,774 shares outstanding
|
|
|
146,468
|
|
|
|
144,770
|
|
Preferred stock, no par value, 10,000 shares authorized; no shares
outstanding
|
|
|
-
|
|
|
|
-
|
|
Accumulated other comprehensive loss
|
|
|
(13,481
|
)
|
|
|
(13,793
|
)
|
Retained earnings
|
|
|
205,491
|
|
|
|
186,590
|
|
Total shareholders’ equity
|
|
|
338,478
|
|
|
|
317,567
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
792,291
|
|
|
$
|
784,346
|
|
|
SPARTAN STORES, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
(Unaudited)
|
|
|
|
12 Weeks Ended
|
|
12 Weeks Ended
|
|
|
June 22, 2013
|
|
June 23, 2012
|
Cash flows from operating activities
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
7,417
|
|
|
$
|
(19,188
|
)
|
Net cash used in investing activities
|
|
|
(9,252
|
)
|
|
|
(6,596
|
)
|
Net cash provided by financing activities
|
|
|
157
|
|
|
|
5,465
|
|
Net cash used in discontinued operations
|
|
|
(256
|
)
|
|
|
(64
|
)
|
Net decrease in cash and cash equivalents
|
|
|
(1,934
|
)
|
|
|
(20,383
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
6,097
|
|
|
|
26,476
|
|
Cash and cash equivalents at end of period
|
|
$
|
4,163
|
|
|
$
|
6,093
|
|
|
SPARTAN STORES, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA
|
|
Table 1: Sales and Operating Earnings by Segment
|
(In thousands)
|
(Unaudited)
|
|
|
|
12 Weeks Ended
|
|
12 Weeks Ended
|
|
|
June 22, 2013
|
|
June 23, 2012
|
|
|
|
|
|
Retail Segment:
|
|
|
|
|
Net sales
|
|
$
|
353,831
|
|
$
|
345,564
|
Operating earnings
|
|
$
|
4,243
|
|
$
|
3,891
|
|
|
|
|
|
Distribution Segment:
|
|
|
|
|
Net sales
|
|
$
|
258,574
|
|
$
|
258,348
|
Operating earnings
|
|
$
|
5,693
|
|
$
|
7,822
|
|
Table 2: Reconciliation of Net Earnings to Adjusted Earnings
Before Interest, Taxes, Depreciation and
|
Amortization (Adjusted EBITDA)
|
(A Non-GAAP Financial Measure)
|
(Unaudited)
|
(In thousands)
|
|
|
|
12 Weeks Ended
|
|
12 Weeks Ended
|
|
|
June 22, 2013
|
|
June 23, 2012
|
Net earnings
|
|
$
|
4,683
|
|
|
$
|
6,003
|
|
Add:
|
|
|
|
|
Discontinued operations
|
|
|
101
|
|
|
|
73
|
|
Income taxes
|
|
|
2,896
|
|
|
|
2,529
|
|
Interest expense
|
|
|
2,265
|
|
|
|
3,156
|
|
Non-operating income
|
|
|
(9
|
)
|
|
|
(48
|
)
|
Operating earnings
|
|
|
9,936
|
|
|
|
11,713
|
|
Add:
|
|
|
|
|
Depreciation and amortization
|
|
|
9,491
|
|
|
|
8,670
|
|
LIFO expense
|
|
|
764
|
|
|
|
790
|
|
Restructuring and asset impairment charges
|
|
|
987
|
|
|
|
-
|
|
Professional fees related to merger transaction
|
|
|
1,836
|
|
|
|
-
|
|
Non-cash stock compensation and other charges
|
|
|
803
|
|
|
|
1,469
|
|
Adjusted EBITDA
|
|
$
|
23,817
|
|
|
$
|
22,642
|
|
|
|
|
|
|
Reconciliation of operating earnings to adjusted EBITDA by
segment:
|
|
|
|
|
|
|
|
|
|
Retail:
|
|
|
|
|
Operating earnings
|
|
$
|
4,243
|
|
|
$
|
3,891
|
|
Add:
|
|
|
|
|
Depreciation and amortization
|
|
|
7,397
|
|
|
|
6,711
|
|
LIFO expense
|
|
|
425
|
|
|
|
424
|
|
Restructuring and asset impairment charges
|
|
|
987
|
|
|
|
-
|
|
Non-cash stock compensation and other charges
|
|
|
385
|
|
|
|
770
|
|
Adjusted EBITDA
|
|
$
|
13,437
|
|
|
$
|
11,796
|
|
|
|
|
|
|
Distribution:
|
|
|
|
|
Operating earnings
|
|
$
|
5,693
|
|
|
$
|
7,822
|
|
Add:
|
|
|
|
|
Depreciation and amortization
|
|
|
2,094
|
|
|
|
1,959
|
|
LIFO expense
|
|
|
339
|
|
|
|
366
|
|
Professional fees related to merger transaction
|
|
|
1,836
|
|
|
|
-
|
|
Non-cash stock compensation and other charges
|
|
|
418
|
|
|
|
699
|
|
Adjusted EBITDA
|
|
$
|
10,380
|
|
|
$
|
10,846
|
|
Notes: Consolidated Adjusted EBITDA is a non-GAAP operating financial
measure that the Company defines 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 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 to the extent deducted in the computation of Net
Earnings.
We believe that Adjusted EBITDA provides a meaningful representation of
our operating performance for Spartan Stores as a whole and for our
operating segments. We consider Adjusted EBITDA as an additional way to
measure operating performance on an ongoing basis. Adjusted EBITDA is
meant to reflect the ongoing operating performance of all of our retail
stores and wholesale operations; consequently, it excludes the impact of
items that could be considered “non-operating” or “non-core” in nature,
and also excludes the contributions of activities classified as
discontinued operations. Because Adjusted EBITDA is a performance
measure that management uses to allocate resources, assess performance
against its peers, and evaluate overall performance, we believe it
provides useful information for our investors. In addition, securities
analysts, fund managers and other shareholders and stakeholders that
communicate with us request our operating financial results in Adjusted
EBITDA format.
Adjusted EBITDA is not a measure of performance under accounting
principles generally accepted in the United States of America, and
should not be considered as a substitute for net earnings, cash flows
from operating activities and other income or cash flow statement data.
Our definition of Adjusted EBITDA may not be identical to similarly
titled measures reported by other companies.
Table 3: Reconciliation of Operating Earnings to Adjusted
Operating Earnings
|
(A Non-GAAP Financial Measure)
|
(Unaudited)
|
(In thousands, except per share data)
|
|
|
|
12 Weeks Ended
|
|
12 Weeks Ended
|
|
|
June 22, 2013
|
|
June 23, 2012
|
Operating earnings
|
|
$
|
9,936
|
|
$
|
11,713
|
Add:
|
|
|
|
|
Asset impairment and restructuring charges
|
|
|
987
|
|
|
-
|
Professional fees related to merger transaction
|
|
|
1,836
|
|
|
-
|
Professional fees related to tax planning
|
|
|
-
|
|
|
108
|
Adjusted operating earnings
|
|
$
|
12,759
|
|
$
|
11,821
|
|
|
|
|
|
Reconciliation of operating earnings to adjusted operating
earnings by segment:
|
|
|
|
|
|
|
|
|
|
Retail:
|
|
|
|
|
Operating earnings
|
|
$
|
4,243
|
|
$
|
3,891
|
Add:
|
|
|
|
|
Asset impairment and restructuring charges
|
|
|
987
|
|
|
-
|
Adjusted operating earnings
|
|
$
|
5,230
|
|
$
|
3,891
|
|
|
|
|
|
Distribution:
|
|
|
|
|
Operating earnings
|
|
$
|
5,693
|
|
$
|
7,822
|
Add:
|
|
|
|
|
Professional fees related to merger transaction
|
|
|
1,836
|
|
|
-
|
Professional fees related to tax planning
|
|
|
-
|
|
|
108
|
Adjusted operating earnings
|
|
$
|
7,529
|
|
$
|
7,930
|
Notes: Adjusted operating earnings is a non-GAAP operating financial
measure that the Company defines as operating earnings 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.
The Company believes that Adjusted operating earnings provide a
meaningful representation of its operating performance for the Company.
The Company considers adjusted operating earnings as an additional way
to measure operating performance on an ongoing basis. Adjusted operating
earnings is meant to reflect the ongoing operating performance of all of
its retail stores and wholesale operations; consequently, it excludes
the impact of items that could be considered “non-operating” or
“non-core” in nature, and also excludes the contributions of activities
classified as discontinued operations. Because adjusted operating
earnings is a performance measure that management uses to allocate
resources, assess performance against its peers and evaluate overall
performance, the Company believes it provides useful information for
investors. In addition, securities analysts, fund managers and other
shareholders and stakeholders that communicate with the Company request
its operating financial results in adjusted operating earnings format.
Adjusted operating earnings is not a measure of performance under
accounting principles generally accepted in the United States of
America, and should not be considered as a substitute for operating
earnings, cash flows from operating activities and other income or cash
flow statement data. The Company’s definition of adjusted operating
earnings may not be identical to similarly titled measures reported by
other companies.
|
Table 4: Reconciliation of Earnings from Continuing Operations to
|
Adjusted Earnings from Continuing Operations
|
(A Non-GAAP Financial Measure)
|
(Unaudited)
|
(In thousands, except per share data)
|
|
|
|
12 Weeks Ended
|
|
12 Weeks Ended
|
|
|
June 22, 2013
|
|
June 23, 2012
|
|
|
Earnings
|
|
|
|
Earnings
|
|
|
|
|
from
|
|
Earnings
|
|
from
|
|
Earnings
|
|
|
continuing
|
|
per diluted
|
|
continuing
|
|
per diluted
|
|
|
operations
|
|
share
|
|
operations
|
|
share
|
Earnings from continuing operations
|
|
$
|
4,784
|
|
$
|
0.22
|
|
$
|
6,076
|
|
|
$
|
0.28
|
|
Adjustments, net of taxes:
|
|
|
|
|
|
|
|
|
Asset impairment and restructuring charges
|
|
|
615
|
|
|
0.03
|
|
|
-
|
|
|
|
-
|
|
Professional fees related to merger transaction
|
|
|
1,144
|
|
|
0.05
|
|
|
-
|
|
|
|
-
|
|
Impact of state tax law changes
|
|
|
-
|
|
|
-
|
|
|
(642
|
)
|
|
|
(0.03
|
)
|
Adjusted earnings from continuing operations
|
|
$
|
6,543
|
|
$
|
0.30
|
|
$
|
5,434
|
|
|
$
|
0.25
|
|
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.
The Company believes that Adjusted earnings from continuing operations
provide a meaningful representation of its operating performance for the
Company. The Company considers adjusted earnings from continuing
operations as an additional way to measure operating performance on an
ongoing basis. Adjusted earnings from continuing operations is meant to
reflect the ongoing operating performance of all of its retail stores
and wholesale operations; consequently, it excludes the impact of items
that could be considered “non-operating” or “non-core” in nature, and
also excludes the contributions of activities classified as discontinued
operations. Because adjusted earnings from continuing operations is a
performance measure that management uses to allocate resources, assess
performance against its peers and evaluate overall performance, the
Company believes it provides useful information for investors. In
addition, securities analysts, fund managers and other shareholders and
stakeholders that communicate with the Company request its operating
financial results in adjusted earnings from continuing operations format.
Adjusted earnings from continuing operations is not a measure of
performance under accounting principles generally accepted in the United
States of America, and should not be considered as a substitute for net
earnings, cash flows from operating activities and other income or cash
flow statement data. The Company’s definition of adjusted earnings from
continuing operations may not be identical to similarly titled measures
reported by other companies.
|
Table 5: Reconciliation of Long-Term Debt and Capital Lease
Obligations to Total Net Long-Term Debt
|
and Capital Lease Obligations
|
(A Non-GAAP Financial Measure)
|
(In thousands)
|
(Unaudited)
|
|
|
|
June 22, 2013
|
|
June 23, 2012
|
|
|
|
|
|
Current maturities of long-term debt and capital lease obligations
|
|
$
|
3,937
|
|
|
$
|
4,328
|
|
Long-term debt and capital lease obligations
|
|
|
148,031
|
|
|
|
156,397
|
|
Total debt
|
|
|
151,968
|
|
|
|
160,725
|
|
Cash and cash equivalents
|
|
|
(4,163
|
)
|
|
|
(6,093
|
)
|
Total net long-term debt
|
|
$
|
147,805
|
|
|
$
|
154,632
|
|
Notes: Total net long-term debt is a non-GAAP financial measure that is
defined as long-term debt and capital lease obligations plus current
maturities of long-term debt and capital lease obligations less cash and
cash equivalents. The Company believes investors find the information
useful because it reflects the amount of long-term debt obligations that
are not covered by available cash and cash equivalents.
Copyright Business Wire 2013