EX-99.1 4 sptnex991062403.htm SPARTAN STORES EX. 99.1 TO FORM 8-K Spartan Stores, Inc. Exhibit 99.1 to Form 8-K

EXHIBIT 99.1

SPARTAN STORES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AND STATEMENT OF OPERATIONS

The following unaudited pro forma condensed consolidated financial statements as of and for the year ended March 29, 2003 have been derived from the historical financial statements of Spartan Stores, Inc. and subsidiaries ("Spartan Stores") to give effect to the sale of substantially all assets of subsidiaries L&L/Jiroch Distributing Company ("L&L/Jircoch") and J.F. Walker Company, Inc. ("J.F. Walker").

The operations of L&L/Jiroch and J.F. Walker are included in discontinued operations in the historical financial statements. The unaudited pro forma condensed consolidated statement of operations for the year ended March 29, 2003 reflects adjustments as if the transaction had taken place on the first day of fiscal 2003. The unaudited pro forma condensed consolidated balance sheet as of March 29, 2003 gives effect to the transaction as if the transaction had occurred on March 29, 2003.

Certain pro forma adjustments described in the accompanying notes are based on estimates and various assumptions that Spartan Stores believes are reasonable under the circumstances.

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the Spartan Stores financial statements, including the notes thereto, as of and for the year ended March 29, 2003, and the related Management's Discussion & Analysis of Financial Condition and Results of Operations, contained in its Annual Report on Form 10-K for the year ended March 29, 2003.























SPARTAN STORES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

MARCH 29, 2003
(In thousands)


Assets


 



As Reported


 


 


Pro Forma
Adjustments


   


 



Pro Forma


 
                     

Current assets

                   

   Cash and cash equivalents

$

23,306

 

$

-

 

(a) (c)

$

23,306

 

   Marketable securities

 

1,705

   

-

     

1,705

 

   Accounts receivable, net

 

70,747

   

(15,766

)

(a)

 

54,981

 

   Inventories

 

138,095

   

(10,952

)

(a)

 

127,143

 

   Prepaid expenses and other current assets

 

13,141

   

(569

)

(a)

 

12,572

 

   Refundable income taxes

 

9,349

   

-

     

9,349

 

   Deferred taxes on income

 

4,113

   

-

     

4,113

 

   Property and equipment held for sale

 


54,684


 

 


(11,612


)

(a)

 


43,072


 

   Total current assets

 

315,140

   

(38,899)

     

276,241

 
                     

Other assets

                   

   Goodwill, net

 

68,743

   

(43

)

(a)

 

68,700

 

   Deferred taxes on income

 

25,566

   

(855

)

(a) (c)

 

24,711

 

   Other, net

 


26,785


 

 


(446


)

(a)

 


26,339


 

   Total other assets

 

121,094

   

(1,344

)

   

119,750

 
 

 


 


 

 


 


   

 


 


 

Property and equipment, net

 


120,072


 

 


-


   

 


120,072


 
                     

Total assets

$


556,306


 

$


(40,243


)

 

$


516,063


 

See notes to unaudited pro forma condensed consolidated balance sheet and statement of operations.

-2-




SPARTAN STORES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (continued)

MARCH 29, 2003
(In thousands)


Liabilities and Shareholders' Equity


 



As Reported


 


 


Pro Forma
Adjustments


   


 



Pro Forma


 
                     

Current liabilities

                   

   Accounts payable

$

112,181

 

$

(2,449

)

(a)

$

109,732

 

   Accrued payroll and benefits

 

28,533

   

-

     

28,533

 

   Insurance reserves

 

14,783

   

-

     

14,783

 

   Accrued taxes

 

16,735

   

-

     

16,735

 

   Other accrued expenses

 

17,807

   

1,577

 

(b) (c)

 

19,384

 

   Current maturities of long-term debt

 


36,594


 

 


(3,969


)

(c)

 


32,625


 

   Total current liabilities

 

226,633

   

(4,841

)

   

221,792

 
                     

Deferred taxes on income

 

-

   

-

     

-

 

Other long-term liabilities

 

20,202

   

-

     

20,202

 

Postretirement benefits

 

16,022

   

-

     

16,022

 

Long-term debt

 

183,817

   

(36,991

)

(c)

 

146,826

 
                     

Shareholders' equity

                   

   Common stock, voting, no par value; 50,000 shares
     authorized; 19,999 shares outstanding

 


116,388

   


-

     


116,388

 

   Preferred stock, no par value, authorized 10,000
     shares; no shares outstanding

                   

   Accumulated other comprehensive loss

 

(2,816

)

 

-

     

(2,816

)

   Accumulated deficit

 


(3,940


)

 


1,589


 

(a) (b) (c)

 


(2,351


)

   Total shareholders' equity

$


109,632


 

$


1,589


   

$


111,221


 
                     

Total liabilities and shareholders' equity

$


556,306


 

$


(40,243


)

 

$


516,063


 

See notes to unaudited pro forma condensed consolidated balance sheet and statement of operations.

-3-




SPARTAN STORES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED MARCH 29, 2003
(In thousands, except per share data)

 


 



As Reported


 


 


Pro Forma
Adjustments


 


 



Pro Forma


 
                   

Net sales

$

2,148,067

 

$

-

 

$

2,148,067

 

Cost of goods sold

 


1,774,350


 

 


-


 

 


1,774,350


 

Gross margin

 

373,717

   

-

   

373,717

 
                   

Operating expenses

                 

   Selling, general and administrative

 

360,786

   

-

   

360,786

 

   Provision for asset impairments and exit costs

 


47,711


 

 


-


 

 


47,711


 

Total operating expenses

 

408,497

   

-

   

408,497

 
                   

Operating loss

 

(34,780

)

 

-

   

(34,780

)

                   

Other income and expenses

                 

   Interest expense

 

18,125

   

-

   

18,125

 

   Interest income

 

(696

)

 

-

   

(696

)

   Other gains, net

 


(135


)

 


-


 

 


(135


)

Total other income and expenses

 


17,294


 

 


-


 

 


17,294


 

Loss before income taxes and
    discontinued operations and cumulative
    effect of a change in accounting principle

 



(52,074



)

 



-

   



(52,074



)

    Income taxes

 


(18,087


)

 


-


 

 


(18,087


)

Loss from continuing operations

 

(33,987

)

 

-

   

(33,987

)

Loss from discontinued
    operations, net of taxes

 


(52,968


)

 


1,589


(a) (b) (c) (d)

 


(51,379


)

Cumulative effect of a change in
    accounting principle, net of taxes


 



(35,377



)


 



-


 


 



(35,377



)

Net loss

$


(122,332


)

$


1,589


 

$


(120,743


)

                   

Basic and diluted loss per share:

                 

Loss from continuing operations

$

(1.71

)

 

-

 

$

(1.71

)

Loss from discontinued operations

 

(2.66

)

$

.08

   

(2.58

)

Cumulative effect of a change in accounting
   principle


 



(1.78



)


 



-


 


 



(1.78



)

Net loss

$


(6.15


)

$


.08


 

$


(6.07


)

 

 

 

 

 

 

 

 

 

 

Weighted average shares:
      Basic


 



19,896


       


 



19,896


 

      Diluted

 


19,896


       

 


19,896


 

See notes to unaudited pro forma condensed consolidated balance sheet and statement of operations.

-4-




SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AND STATEMENT OF OPERATIONS
FOR THE YEAR ENDED March 29, 2003

(In thousands)

(a)

To record disposition of assets sold, liabilities assumed by buyer, gain on net assets sold and related tax effect.

 

 

(b)

To reflect estimated transaction costs including financial advisory, legal and accounting fees.

 

 

(c)

To record reduction of borrowings made with proceeds received from transaction and related interest expense effects, net of tax effect.

 

 

(d)

The following table details the results of discontinued operations reported on the unaudited pro forma condensed consolidated Statements of Operations by operating segment:


 


 



As Reported


 


 


Pro Forma
Adjustments


 


 


Pro
Forma


 

Discontinued retail operations

                 

Loss from discontinued operations (less applicable taxes
   of ($30,710))


$


(56,104


)


$


-

 


$


(56,104


)

                   

Discontinued convenience distribution operations

                 

Earnings from discontinued operations (less applicable
   taxes of $896)

 


1,923

   


-

   


1,923

 

Gain on disposal of discontinued operations (less
   applicable taxes of $32, $855 and $887)


 



59


 


 



1,589



(a) (b)


 



1,648


 

Earnings from discontinued convenience distribution
   operations

 


1,982

 



1,589

   


3,571

 
                   

Discontinued grocery distribution operations

                 

Loss from discontinued operations (less applicable taxes
   of ($4,670))

 


(8,727


)

 


-

   


(8,727


)

                   

Discontinued real estate operations

                 

Loss from discontinued operations (less applicable taxes
   of $(397)

 


(736


)

 


-

   


(736


)

Gain on disposal of discontinued operations (less
   applicable taxes of $6,509)


 



12,077


 


 



-


 


 



12,077


 

Earnings from discontinued real estate operations

 

11,341

   

-

   

11,341

 
                   

Discontinued insurance operations

                 

Loss from discontinued operations (less applicable taxes
   of ($784))


 



(1,460



)


 



-


 


 



(1,460



)

Total discontinued operations

                 

Loss from discontinued operations (less applicable taxes
   of ($35,665))

 


(65,104


)

 


-

   


(65,104


)

Earnings on disposal of discontinued operations (less
   applicable taxes of $6,541, $855 and $7,396)


 



12,136


 


 



1,589


 


 



13,725



Total loss from discontinued operations

$


(52,968


)

$


1,589


 

$


(51,379


)

-5-