EX-99.1 3 sptnex99_072203.htm Spartan Stores Exhibit 99.1 to Form 8-K 07-22-03

EXHIBIT 99.1

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

The unaudited pro forma condensed consolidated balance sheet and statement of operations 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 the inventory, real property and equipment of 18 Food Town stores ("Food Town").

The operations of Food Town 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 transactions 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 transactions as if the transactions 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 balance sheet and statement of operations 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 and 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) (d)

$

23,306

     Marketable securities

 

1,705

 

 

-

 

 

1,705

     Accounts receivable, net

 

70,747

 

 

931

 

 

71,678

     Inventories

 

138,095

 

 

(13,515

) (a)

 

124,580

     Prepaid expenses and other current assets

 

13,141

 

 

-

 

 

13,141

     Refundable income taxes

 

9,349

 

 

-

 

 

9,349

     Deferred taxes on income

 

4,113

 

 

-

 

 

4,113

     Property and equipment held for sale

 


54,684


 

 


(28,343


) (a)

 


26,341


     Total current assets

 

315,140

 

 

(40,927

)

 

274,213

 

 

 

 

 

 

 

 

 

Other assets

 

 

 

 

 

 

 

 

     Goodwill, net

 

68,743

 

 

-

 

 

68,743

     Deferred taxes on income

 

25,566

 

 

(985

) (a) (b) (c)

 

24,581

     Other, net

 


26,785


 

 


-


 

 


26,785


     Total other assets

 

121,094

 

 

(985

)

 

120,109

 

 


 


 

 


 


 

 


 


 Property and equipment, net

 


120,072


 

 


-


 

 


120,072


 

 

 

 

 

 

 

 

 

Total assets

$


556,306


 

$


(41,912


)

$


514,394


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











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

 

$

(4,203

) (d)

$

107,978

 

     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

 

 

169

  (b) (c)

 

17,976

 

     Current maturities of long-term debt

 


36,594


 

 


(3,980


) (c)

 


32,614


 

     Total current liabilities

 

226,633

 

 

(8,014

)

 

218,619

 

 

 

 

 

 

 

 

 

 

 

Other long-term liabilities

 

20,202

 

 

-

 

 

20,202

 

Postretirement benefits

 

16,022

 

 

-

 

 

16,022

 

Long-term debt

 

183,817

 

 

(35,727

) (c)

 

148,090

 

 

 

 

 

 

 

 

 

 

 

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


)

 


1,829


  (a) (b) (c)

 


(2,111


)

     Total shareholders' equity

 


109,632


 

 


1,829


 

 


111,461


 

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

$


556,306


 

$


(41,912


)

$


514,394


 

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











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,
    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


)

 


1,829


(a) (b) (c)

 


(51,139


)

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


 



(35,377



)


 



-


 


 



(35,377



)

Net loss

$


(122,332


)

$


1,829


 

$


(120,503


)

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share:

 

 

 

 

 

 

 

 

 

Loss from continuing operations

$

(1.71

)

 

-

 

$

(1.71

)

Loss from discontinued operations

 

(2.66

)

$

0.09

 

 

(2.57

)

Cumulative effect of a change in accounting
   principle


 



(1.78



)


 



-


 


 



(1.78



)

Net loss

$


(6.15


)

$


0.09


 

$


(6.06


)

 

 

 

 

 

 

 

 

 

 

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.





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, gain on net assets sold and related tax effect.

 

 

(b)

To reflect estimated transaction costs including financial advisory, legal and accounting fees, net of tax effect.

 

 

(c)

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

 

 

(d)

To record reduction of accounts payable made with the proceeds received from the transactions.

 

 

(e)

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), $911 and ($29,799))


$


(56,104


)


$


1,692

 


$


(54,412


)

Gain on disposal of discontinued operations (less
   applicable taxes of $73)


 



-


 


 



137


 


 



137


 

Loss from discontinued retail
   operations

 


(56,104


)

 


1,829

 

 


(54,275


)

 

 

 

 

 

 

 

 

 

 

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)


 



59


 


 



-


 


 



59


 

Earnings from discontinued convenience
   distribution operations

 


1,982

 

 


-

 

 


1,982

 

 

 

 

 

 

 

 

 

 

 

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), $911 and ($34,754))

 


(65,104


)

 


1,692

 

 


(63,412


)

Gain on disposal of discontinued operations (less
   applicable taxes of $6,541, $73 and $6,614)


 



12,136


 


 



137


 


 



12,273


 

Total loss from discontinued operations

$


(52,968


)

$


1,829


 

$


(51,139


)