UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
| For the quarterly period ended June 23, 2001. |
OR
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
| For the transition period from ______________ to ______________. |
Commission File Number: 000-31127
SPARTAN STORES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Michigan (State or Other Jurisdiction of Incorporation or Organization) | 38-0593940 (I.R.S. Employer Identification No.) |
| |
850 76th Street, SW P.O. Box 8700 Grand Rapids, Michigan (Address of Principal Executive Offices) |
49518 (Zip Code)
|
| |
(616) 878-2000 (Registrant's Telephone Number, Including Area Code) |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
As of July 14, 2001, the registrant had 19,315,911 outstanding shares of common stock, no par value.
PART I
FINANCIAL INFORMATION
ITEM 1. | Financial Statements |
SPARTAN STORES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands)
|
ASSETS
| | June 23, 2001
| | March 31, 2001
| |
| | (Unaudited) | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | $ | 24,499 | $ | 27,834 | |
Marketable securities | | 14,473 | | 21,978 | |
Accounts receivable, net | | 96,509 | | 86,607 | |
Inventories | | 190,242 | | 179,589 | |
Prepaid expenses | | 9,324 | | 9,092 | |
Deferred income taxes | | 3,911
| | 3,894
| |
Total current assets | | 338,958 | | 328,994 | |
| | | | | |
Other assets: | | | | | |
Goodwill, net | | 157,828 | | 155,737 | |
Other, net | | 36,110
| | 36,139
| |
Total other assets | | 193,938 | | 191,876 | |
| | | | | |
Property and equipment, net | | 282,473
| | 285,988
| |
| | | | | |
Total assets | $ | 815,369
| $ | 806,858
| |
| | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | $ | 123,129 | $ | 121,406 | |
Accrued payroll and benefits | | 28,497 | | 36,458 | |
Insurance reserves | | 22,194 | | 21,301 | |
Other accrued expenses | | 42,109 | | 31,730 | |
Current maturities of long-term debt | | 34,911
| | 38,478
| |
Total current liabilities | | 250,840 | | 249,373 | |
| | | | | |
Deferred income taxes | | 12,240 | | 13,840 | |
Postretirement benefits | | 13,547 | | 12,853 | |
Other long-term liabilities | | 9,215 | | 5,747 | |
Long-term debt | | 307,099 | | 306,632 | |
| | | | | |
Shareholders' equity: | | | | | |
Common stock, voting, no par value; 50,000 shares | | | | | |
authorized; 19,316 and 19,262 shares outstanding | | 110,570 | | 109,868 | |
Preferred stock, non-voting, no par value; | | | | | |
10,000 shares authorized; no shares issued or outstanding | | - | | - | |
Accumulated other comprehensive loss | | (2,290 | ) | - | |
Retained earnings | | 114,148
| | 108,545
| |
Total shareholders' equity | | 222,428
| | 218,413
| |
| | | | | |
Total liabilities and shareholders' equity | $ | 815,369
| $ | 806,858
| |
1
SPARTAN STORES, INC. AND SUBSIDIARIES Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited) |
| | First Quarter (12 Weeks) Ended
| |
| | June 23, 2001
| | June 17, 2000
| |
| | | | | |
Net sales | $ | 832,508 | $ | 722,143 | |
Cost of goods sold | | 688,568
| | 630,796
| |
Gross margin | | 143,940
| | 91,347
| |
| | | | | |
Other costs and expenses | | | | | |
Selling, general and administrative | | 128,827 | | 80,054 | |
Interest expense | | 6,712 | | 6,659 | |
Interest income | | (412 | ) | (1,050 | ) |
Other gains | | (18
| ) | (5
| ) |
Total other costs and expenses | | 135,109
| | 85,658
| |
| | | | | |
Earnings before income taxes and discontinued operations | | 8,831 | | 5,689 | |
| | | | | |
Income taxes | | 3,230
| | 2,018
| |
| | | | | |
Earnings before discontinued operations | | 5,601 | | 3,671 | |
| | | | | |
Earnings from discontinued insurance segment (net of taxes) | | 2
| | 74
| |
| | | | | |
Net earnings | $ | 5,603
| $ | 3,745
| |
| | | | | |
Basic and diluted earnings per share: | | | | | |
Earnings from continuing operations | $ | 0.29
| $ | 0.28
| |
Net earnings | $ | 0.29
| $ | 0.28
| |
| | | | | |
Weighted average shares outstanding: | | | | | |
Basic | | 19,283
| | 13,304
| |
Diluted | | 19,471
| | 13,311
| |
2
SPARTAN STORES, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
(In thousands)
| |
Common Stock
| |
Class A Common Stock
| |
Additional Paid-In Capital
| | Accumulated Other Comprehensive Income and Loss
| | |
Retained Earnings
| |
Total
| |
| | | | | | | | | | | | | | |
Balance -- March 26, 2000 | $ | - | $ | 19,838 | $ | 14,240 | $ | - | | $ | 91,929 | $ | 126,007 | |
| | | | | | | | | | | | | | |
Class A common stock transactions: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
53 shares issued | | - | | 105 | | 596 | | - | | | - | | 701 | |
1 shares purchased | | - | | (2 | ) | (11 | ) | - | | | - | | (13 | ) |
| | | | | | | | | | | | | | |
Cash dividends - $0.0125 per share | | - | | - | | - | | - | | | (125 | ) | (125 | ) |
| | | | | | | | | | | | | | |
Stock dividend -- 0.336 per share | | - | | 6,701 | | - | | - | | | (6,701 | ) | - | |
| | | | | | | | | | | | | | |
Conversion to no par common stock | | 41,467 | | (26,642 | ) | (14,825 | ) | - | | | - | | - | |
| | | | | | | | | | | | | | |
Common stock transactions: | | | | | | | | | | | | | | |
6,270 shares issued | | 70,957 | | - | | - | | - | | | - | | 70,957 | |
330 shares purchased | | (2,556 | ) | - | | - | | - | | | - | | (2,556 | ) |
| | | | | | | | | | | | | | |
Net earnings | | -
| | -
| | -
| | -
| | | 23,442
| | 23,442
| |
| | | | | | | | | | | | | | |
Balance -- March 31, 2001 | | 109,868 | | - | | - | | - | | | 108,545 | | 218,413 | |
| | | | | | | | | | | | | | |
Common stock transactions: | | | | | | | | | | | | | | |
56 shares issued | | 735 | | - | | - | | - | | | - | | 735 | |
4 shares purchased | | (33 | ) | - | | - | | - | | | - | | (33 | ) |
| | | | | | | | | | | | | | |
Comprehensive income: | | | | | | | | | | | | | | |
Net earnings | | - | | - | | - | | - | | | 5,603 | | 5,603 | |
Other comprehensive income and loss, net of tax: | | | | | | | | | | | | | | |
Cumulative effect of change in accounting | | - -
| | - -
| | - -
| | (1,588
| )
| | - -
| | (1,588
| )
|
Unrealized gain on securities | | - | | - | | - | | 135 | | | - | | 135 | |
Minimum pension liability adjustment | | - -
| | - -
| | - -
| | (125
| )
| | - -
| | (125
| )
|
Net loss on interest rate swap agreement | | - -
| | - -
| | - -
| | (712
| )
| | - -
| | (712
| )
|
Total other comprehensive loss | | -
| | -
| | -
| | (2,290
| ) | | -
| | (2,290
| ) |
Total comprehensive income | | -
| | -
| | -
| | (2,290
| ) | | 5,603
| | 3,313
| |
| | | | | | | | | | | | | | |
Balance -- June 23, 2001 (unaudited) | $ | 110,570
| $ | -
| $ | -
| $ | (2,290
| ) | $ | 114,148
| $ | 222,428
| |
3
SPARTAN STORES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
| | First Quarter (12 Weeks) Ended
| |
| | June 23, 2001
| | June 17, 2000
| |
Cash flows from operating activities: | | | | | |
Net earnings | $ | 5,603 | $ | 3,745 | |
Adjustments to reconcile net earnings to | | | | | |
net cash provided by operating activities: | | | | | |
Depreciation and amortization | | 10,988 | | 7,339 | |
Postretirement benefits | | 480 | | 511 | |
Deferred taxes on income | | (407 | ) | (307 | ) |
Other gains | | (18 | ) | (6 | ) |
Change in operating assets and liabilities: | | | | | |
Marketable securities | | 7,472 | | (356 | ) |
Accounts receivable | | (9,902 | ) | (612 | ) |
Inventories | | (10,653 | ) | (200 | ) |
Prepaid expenses | | (232 | ) | (1,074 | ) |
Accounts payable | | 1,723 | | 1,526 | |
Accrued payroll and benefits | | (7,961 | ) | (3,030 | ) |
Insurance reserves | | 893 | | 294 | |
Other accrued expenses | | 7,974
| | 7,041
| |
Net cash provided by operating activities | | 5,960
| | 14,871
| |
| | | | | |
Cash flows from investing activities: | | | | | |
Purchases of property and equipment | | (5,877 | ) | (2,666 | ) |
Proceeds from the sale of property and equipment | | 11 | | 6 | |
Other | | (1,032
| ) | (790
| ) |
Net cash used in investing activities | | (6,898
| ) | (3,450
| ) |
| | | | | |
Cash flows from financing activities: | | | | | |
Proceeds from long-term borrowings | | 1,320 | | 332 | |
Repayment of long-term debt | | (4,419 | ) | (667 | ) |
Proceeds from sale of common stock | | 735 | | 701 | |
Common stock purchased | | (33 | ) | (13 | ) |
Dividends paid | | -
| | (125
| ) |
Net cash (used in) provided by financing activities | | (2,397
| ) | 228
| |
| | | | | |
Net (decrease) increase in cash and cash equivalents | | (3,335 | ) | 11,649 | |
| | | | | |
Cash and cash equivalents at beginning of period | | 27,834
| | 36,422
| |
| | | | | |
Cash and cash equivalents at end of period | $ | 24,499
| $ | 48,071
| |
4
SPARTAN STORES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Note 1
Accounting Policies
The consolidated financial statements include the accounts of Spartan Stores, Inc. and its subsidiaries ("Spartan Stores"). All significant intercompany accounts and transactions have been eliminated.
The information contained in the consolidated financial statements is unaudited. The statements reflect all adjustments which, in the opinion of management, are necessary for the fair presentation of the results of the interim periods presented. All such adjustments are of a normal, recurring nature.
The accounting policies followed in the presentation of interim financial results are the same as those followed on an annual basis. These policies are presented in Note 1 to the Consolidated Financial Statements included in Spartan Stores' Annual Report on Form 10-K for the fiscal year ended March 31, 2001, filed with the Securities and Exchange Commission on June 20, 2001.
Comprehensive income is net income adjusted for the net loss on interest rate swap agreements, unrealized gain on securities and minimum pension liability.
Certain prior year amounts have been reclassified to conform to current year classifications.
Note 2
Cumulative Effect of Change in Accounting Principle
Spartan Stores uses interest rate swap agreements that effectively convert a portion of variable rate debt to a fixed rate basis. These agreements are considered to be a hedge against changes in future cash flow. Accordingly, the interest rate swap agreements are reflected in the consolidated balance sheet and the related gain or loss on these contracts are deferred in shareholders' equity as another component of comprehensive income. There was no impact on earnings as all existing cash flow hedges are highly effective and the Company expects no material impact on earnings in the next twelve months.
On April 1, 2001, Spartan Stores recorded a cumulative transition adjustment loss of $1.6 million (net of related income tax of $.8 million) and a current year loss of $.7 million (net of related incomes taxes of $.4 million) pertaining to its interest rate swap agreements upon adoption of Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133, as amended and interpreted, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. All derivatives, whether designated in hedging relationships or not, are required to be reported on the balance sheet at fair value. If the derivative is designated in a cash-flow hedge, changes in fair value of the derivative will be recorded in accumulated other comprehensive income (AOCI) and will be recognized in the statement of earnings as realized. SFAS 133 defines new requirements for designation and documentation of hedging relationships as well as ongoing effectiveness assessments in order to use hedge accounting. For a derivative that does not qualify as a hedge, change in fair value will be recognized in earnings.
5
Note 3
Operating Segment Information
The following tables set forth segment information in thousands.
| | First Quarter (12 Weeks) Ended
| |
| | June 23, 2001 (Unaudited)
| | June 17, 2000 (Unaudited)
| |
Net sales | | | | | |
Retail grocery | $ | 336,311 | $ | 148,037 | |
Grocery store distribution | | 285,138 | | 360,044 | |
Convenience store distribution | | 209,289 | | 211,476 | |
Real estate | | 1,770
| | 2,586
| |
Total | $ | 832,508
| $ | 722,143
| |
| | | | | |
Earnings before income taxes and discontinued operations | | | | | |
Retail grocery | $ | 1,288 | $ | (2 | ) |
Grocery store distribution | | 4,551 | | 3,526 | |
Convenience store distribution | | 2,363 | | 1,791 | |
Real estate | | 629
| | 374
| |
Total | $ | 8,831
| $ | 5,689
| |
| | June 23, 2001 (Unaudited)
| | March 31, 2001
| |
Total assets | | | | | |
Retail grocery | $ | 492,573 | $ | 488,237 | |
Grocery store distribution | | 579,253 | | 560,229 | |
Convenience store distribution | | 85,797 | | 83,312 | |
Real estate | | 57,385 | | 56,951 | |
Discontinued operations -- insurance segment | | 33,882 | | 31,068 | |
Less -- eliminations | | (433,521
| ) | (412,939
| ) |
Total | $ | 815,369
| $ | 806,858
| |
6
Note 4
Contingencies
On June 20, 2000, an amended complaint was refiled in a Tennessee state court by individual plaintiffs on behalf of the state of Tennessee and its taxpayers against the leading cigarette manufacturers operating in the United States and certain wholesalers and distributors, including J.F. Walker Company, Inc., a subsidiary of Spartan Stores. This case was initially filed in May 1997 and was removed to the United States District Court for the Eastern District of Tennessee. On June 16, 1998, J.F. Walker was voluntarily dismissed as a defendant. The federal district court then dismissed the case for lack of standing. The United States Court of Appeals for the Sixth Circuit affirmed the district court decision with instructions to remand the case back to state court. The plaintiffs then filed an amended complaint including J.F. Walker as a defendant. In this case, the plaintiffs are seeking compensatory, punitive and other damages, reimbursement of medical and other expenditures and equitable relief. Spartan S tores believes that J.F. Walker has valid defenses to this legal action, which is being vigorously defended. One of the cigarette manufacturers named as a defendant in this action has agreed to indemnify J.F. Walker from damages arising out of this action. Management believes that the ultimate outcome of this action should not have a material adverse effect on the consolidated financial position, results of operations or liquidity of Spartan Stores.
On August 1, 2000, Spartan Stores consummated a merger with Seaway Food Town, Inc. ("Food Town"). At the date of the merger, approximately 6.7 million shares of outstanding Food Town common stock were converted into the right to receive one share of Spartan Stores common stock and $5.00 in cash for each Food Town share. The holders of 448,835 shares of Food Town common stock provided notice of dissent from the merger. If dissenting shareholders exercise their dissenters' rights in accordance with the requirements of Ohio law, Spartan Stores will pay the fair cash value of their dissenting shares as determined by agreement or, in the absence of agreement, by a court of law.
Various other lawsuits and claims, arising in the ordinary course of business, are pending or have been asserted against Spartan Stores. While the ultimate effect of such actions cannot be predicted with certainty, management believes that their outcome will not result in a material adverse effect on the consolidated financial position, results of operations or liquidity of Spartan Stores.
7
ITEM 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Results of Operations
The following table sets forth Spartan Stores' Consolidated Statements of Earnings as percentages of net sales:
| First Quarter (12 Weeks) Ended
| |
| June 23, 2001 (Unaudited)
| | June 17, 2000 (Unaudited)
| |
| | | | |
Net sales | 100.0
| % | 100.0
| % |
Gross margin | 17.3
| | 12.7
| |
Less: | | | | |
Selling, general and administrative | 15.4 | | 11.1 | |
Interest expense | 0.8 | | 0.9 | |
Interest income | -
| | (.1
| ) |
Total | 16.2
| | 11.9
| |
Earnings before income taxes and discontinued operations | 1.1
| | 0.8
| |
Income taxes | 0.4
| | 0.3
| |
Net earnings | 0.7
| % | 0.5
| % |
Net Sales
Net sales for the quarter ended June 23, 2001 increased 15.3 percent to $832.5 million, a $110.4 million increase from $722.1 million for the quarter ended June 17, 2000.
Net sales for the quarter ended June 23, 2001 in the retail grocery segment increased 127.2 percent or $188.3 million compared to the quarter ended June 17, 2000. The increase reflects additional sales from the merger with Food Town in the second quarter of fiscal year 2001, the acquisition of Prevo's Family Market, Inc. ("Prevo's") during the fourth quarter of fiscal year 2001 and a 1.1 percent increase in same store sales. Same store sales increases are the result of improved promotional programs and expanded hours of operations at some sites, partially offset by increased competition in our Toledo market area. Management continues to evaluate other acquisition opportunities in the retail grocery industry and expects acquisitions to contribute to future sales growth.
Net sales for the quarter ended June 23, 2001 in the grocery store distribution segment declined 20.8 percent or $74.9 million compared to the quarter ended June 17, 2000. The decrease primarily resulted from Spartan Stores' acquisition of grocery distribution segment customers during fiscal 2001 (requiring the elimination of sales to these customers), the loss of D&W Food Centers' business, the sale of three customer stores in the second quarter of fiscal year 2001 and declines in sales of grocery products due to continued competitive market conditions, partially offset by increased sales of perishables.
Net sales for the quarter ended June 23, 2001 in the convenience store distribution segment decreased 1.0 percent or $2.2 million compared to the quarter ended June 17, 2000. The decline was primarily due to decreases in cigarette sales volume to grocery stores as a result of higher cigarette prices and the impact of customers lost in fiscal year 2001, partially offset by the increase in cigarette prices and new business obtained in fiscal year 2002.
8
Gross Margin
Gross margin, as a percentage of net sales, for the quarter ended June 23, 2001 was 17.3 percent compared to 12.7 percent for the same quarter last year. The increase primarily reflects the increased percentage of retail sales in the business mix, improvements in the gross margin of our existing retail and grocery distribution operations and gains realized on cigarette price increases in the convenience store distribution segment.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the quarter ended June 23, 2001 were 15.4 percent of net sales compared to 11.1 percent for the same quarter last year. The increase for the quarter was primarily due to the growth of Spartan Stores' retail grocery segment, which generates a higher selling, general and administrative expense percentage than the distribution segments.
Interest Expense
Interest expense was .8 percent of net sales for the quarter ended June 23, 2001 compared to .9 percent for the same quarter last year. The decrease is primarily the result of lower interest rates in 2001, partially offset by an increase in average borrowings.
Net Earnings
Net earnings for the quarter ended June 23, 2001 were $5.6 million compared with net earnings of $3.7 million for the quarter ended June 17, 2000, an increase of 49.6 percent. Current year net earnings were positively impacted by the sales increases in the retail grocery segment discussed above and margin improvements in all segments.
Liquidity and Capital Resources
Net cash from operating activities was $6.0 million for the quarter ended June 23, 2001 compared to $14.9 million for the quarter ended June 17, 2000. The decrease in net cash provided by operating activities is primarily the result of changes in working capital related to the timing of payment for point of sale systems acquired in the prior year, the timing of receivable collections for the Company's insurance segment and coupon reimbursements from vendors, partially offset by improved earnings.
Net cash used in investing activities was $6.9 million for the quarter ended June 23, 2001 compared to $3.5 million for the quarter ended June 17, 2000. Cash used in investing activities increased primarily due to capital expenditures for the Company's retail store remodeling campaign during the current year.
Net cash used in financing activities was $2.4 million for the quarter ended June 23, 2001 due primarily to debt repayments, partially offset by proceeds from the sale of common stock and long-term debt borrowings.
Spartan Stores' principal sources of liquidity are cash flows generated from operations and borrowings under a senior secured credit facility. The credit facility dated March 18, 1999, as amended, consists of (1) a $100 million six year Revolving Credit Facility, (2) a $100 million six year Term Loan A, (3) a $75 million seven year Acquisition Facility and (4) a $150 million eight year Term Loan B. At June 23,
9
2001, $304 million was outstanding under this credit facility. Management believes that cash flows generated from operations and available borrowings under the credit facility will be sufficient to support operations in the foreseeable future. Available borrowings under the credit facility are based on stipulated levels of earnings before interest, taxes, depreciation and amortization as defined in the credit agreement.
Spartan Stores is also permitted to sell variable rate promissory notes under a "shelf" registration statement filed with the Securities and Exchange Commission, effective February 26, 2001, which provides for the issuance of up to $100 million of debt securities. Spartan Stores is currently offering its non-subordinated variable rate promissory notes, which are due March 31, 2003. These notes are offered in minimum denominations of $1,000 and may be issued by Spartan Stores at any time, although Spartan Stores' credit facility restricts the total amount of these notes outstanding to approximately $15.3 million. At June 23, 2001, approximately $11.1 million of these notes were outstanding.
Spartan Stores' current ratio at June 23, 2001 increased to 1.35 to 1.00 compared with 1.32 to 1.00 at March 31, 2001. Working capital increased 10.7 percent or $8.5 million.
Spartan Stores' long-term debt to equity ratio at June 23, 2001 decreased to 1.38 to 1.00 compared with 1.40 to 1.00 at March 31, 2001. The decrease was due to scheduled principal payments on outstanding debt and net income generated during the period.
Spartan Stores' total capital structure includes borrowings under the senior secured credit facility, variable rate promissory notes, various other debt instruments, leases, and shareholders' equity. Management continues to evaluate other acquisition opportunities, which could result in additional borrowings and additional leases being entered into if consummated.
10
Cautionary Statements for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
The matters discussed in this Quarterly Report on Form 10-Q include "forward-looking statements" about Spartan Stores' plans, strategies, objectives, goals, expectations or projections. These forward-looking statements are identifiable by words or phrases indicating that Spartan Stores or management "expects," "anticipates," "projects," "plans" or "believes" that a particular occurrence "may result" or "will likely result" or that a particular event "may occur" or "will likely occur" in the future, or similarly stated expectations. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Report. In addition to other risks and uncertainties described in connection with the forward-looking statements contained in this Quarterly Report on Form 10-Q, Spartan Stores' Annual Report on Form 10-K for the year ended March 31, 2001 and other periodic reports filed with the Securities and Exchange Commission, there are many important factors that could cause ac tual results to be materially different from Spartan Stores' current expectations.
Anticipated future sales are subject to competitive pressures from many sources. Spartan Stores' grocery store and convenience store retail and distribution businesses compete with many warehouse discount stores, supermarkets, pharmacies and product manufacturers. Additionally, future sales will be dependent on the number of retail stores owned and operated by Spartan Stores and competitive pressures in the retail industry. Sales volumes in Spartan Stores' convenience store distribution segment may continue to be negatively impacted by increased cigarette prices. Competitive pressures in these and other business segments may result in unexpected reductions in sales volumes, product prices or service fees.
Spartan Stores' operating and administrative expenses may be adversely affected by unexpected costs associated with, among other factors: the integration of the business operations of the retail stores and other businesses acquired by Spartan Stores; future business acquisitions, including additional retail stores; unanticipated difficulties in the operation of the current business segments; difficulties in assimilation of acquired personnel, operations, systems or procedures; inability to realize synergies in the amounts or within the time frame expected by management; adverse effects on existing business relationships with independent retail grocery store customers; unexpected difficulties in the retention or hiring of employees for the acquired businesses; unanticipated labor shortages, stoppages or disputes; business divestitures; increased transportation or fuel costs; and current or future lawsuits and administrative proceedings.
Spartan Stores' future interest expense and income also may differ from current expectations, depending upon, among other factors: the amount of additional borrowings necessary for retail store acquisitions; interest rate changes; cigarette inventory levels; retail property sales; the volume of notes receivable; and the amount of fees received on delinquent accounts.
This section is intended to provide meaningful cautionary statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This should not be construed as a complete list of all economic, competitive, governmental, technological and other factors that could adversely affect Spartan Stores' expected consolidated financial position, results of operations or liquidity. Spartan Stores disclaims any obligation or intention to update its forward-looking statements to reflect events or circumstances that occur after the date of this Report.
11
ITEM 3. | Quantitative and Qualitative Disclosure About Market Risk |
There were no material changes in market risk of the Company in the period covered by this Report.
PART II
OTHER INFORMATION
For a discussion of certain litigation, see Note 4 ("Contingencies") to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
ITEM 4. | Submission of Matters to a Vote of Security Holders |
On July 11, 2001, at the 2001 annual meeting of shareholders of Spartan Stores, the shareholders voted to elect three persons to the board of directors. The following directors were duly elected:
| | Term Expiring
| | Votes For
| | Votes Withheld
|
Alex J. DeYonker | | 2004 | | 14,348,921 | | 605,970 |
Joel A. Levine | | 2004 | | 14,566,500 | | 388,391 |
Gregory P. Josefowicz | | 2004 | | 14,673,593 | | 281,298 |
In addition, the following five persons continue to serve as directors of Spartan Stores: Elizabeth A. Nickels and Russell H. VanGilder, Jr. are currently serving terms that will expire at Spartan Stores' 2002 annual meeting of shareholders, and Elson S. Floyd, Ph.D., Richard B. Iott and James B. Meyer are currently serving terms that will expire at Spartan Stores' 2003 annual meeting of shareholders.
At the same meeting, the shareholders also approved the 2001 Stock Incentive Plan, 2001 Stock Bonus Plan, 2001 Associate Stock Purchase Plan, and Directors' Stock Purchase Plan. The voting results were as follows:
| | Votes For
| | Votes Against
| | Votes Withheld
|
2001 Stock Incentive Plan | | 8,031,650 | | 1,601,840 | | | 1,147,888 | |
2001 Stock Bonus Plan | | 9,159,852 | | 1,479,362 | | | 142,164 | |
2001 Associate Stock Purchase Plan | | 9,807,791 | | 839,197 | | | 134,390 | |
Directors Stock Purchase Plan | | 9,954,571 | | 688,907 | | | 137,900 | |
There were 4,173,513 broker non-votes on each of the stock plans.
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ITEM 6. | Exhibits and Reports on Form 8-K |
| (a) | Exhibits: The following documents are filed as exhibits to this Quarterly Report on Form 10-Q: |
| Exhibit Number | Document |
| 3.1 | Amended and Restated Articles of Incorporation of Spartan Stores, Inc. Previously filed as Annex B to the prospectus and joint proxy statement contained in Spartan Stores' Pre-Effective Amendment No. 1 to Registration Statement on Form S-4, filed on June 5, 2000. Here incorporated by reference. |
| 3.2 | Amended and Restated Bylaws of Spartan Stores, Inc. Previously filed as Annex B to the prospectus and joint proxy statement contained in Spartan Stores' Pre-Effective Amendment No. 1 to Registration Statement of Form S-4, filed on June 5, 2000. Here incorporated by reference. |
| 10.1 | Spartan Stores, Inc. 2001 Stock Incentive Plan. Previously filed as Appendix B to Spartan Stores' Definitive Proxy Statement for its 2001 Annual Meeting of Shareholders, filed on June 8, 2001. Here incorporated by reference. |
| 10.2 | Spartan Stores, Inc. 2001 Stock Bonus Plan. Previously filed as Appendix C to Spartan Stores' Definitive Proxy Statement for its 2001 Annual Meeting of Shareholders, filed on June 8, 2001. Here incorporated by reference. |
| 10.3 | Spartan Stores, Inc. 2001 Associate Stock Purchase Plan. Previously filed as Appendix D to Spartan Stores' Definitive Proxy Statement for its 2001 Annual Meeting of Shareholders, filed on June 8, 2001. Here incorporated by reference. |
| (b) | Reports on Form 8-K:Spartan Stores filed the following Current Reports on Form 8-K during the 12 weeks ended June 23, 2001. |
| Date of Report
| | Filing Date
| | Item(s) Reported
|
| May 4, 2001 | | May 4, 2001 | | This Form 8-K included a statement that Spartan Stores will publicly webcast its quarterly analyst conference call regarding its 2001 fourth quarter financial results on May 10, 2001. It noted that a live webcast would be available on the company's website. |
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| May 10, 2001 | | May 10, 2001 | | This Form 8-K included a press release announcing Spartan Stores' 2001 fourth quarter financial results. It included a summary statement of earnings for that period and a summary balance sheet as of the end of that period. |
| | | | | |
| May 24, 2001 | | May 24, 2001 | | This Form 8-K included the Spartan Stores, Inc. investors presentation and fact sheet entitled "Building a New Spartan." |
All of the foregoing Forms 8-K were furnished pursuant to Regulation FD and are considered to have been "furnished" but not "filed" with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 6, 2001 | SPARTAN STORES, INC. (Registrant)
By /s/David M. Staples
|
| David M. Staples Executive Vice President and Chief Financial Officer (Principal Financial Officer and duly authorized signatory for Registrant) |
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EXHIBIT INDEX
Exhibit Number | Document |
| |
3.1 | Amended and Restated Articles of Incorporation of Spartan Stores, Inc. Previously filed as Annex B to the prospectus and joint proxy statement contained in Spartan Stores' Pre-Effective Amendment No. 1 to Registration Statement on Form S-4, filed on June 5, 2000. Here incorporated by reference. |
| |
3.2 | Amended and Restated Bylaws of Spartan Stores, Inc. Previously filed as Annex B to the prospectus and joint proxy statement contained in Spartan Stores' Pre-Effective Amendment No. 1 to Registration Statement of Form S-4, filed on June 5, 2000. Here incorporated by reference. |
| |
10.1 | Spartan Stores, Inc. 2001 Stock Incentive Plan. Previously filed as Appendix B to Spartan Stores' Definitive Proxy Statement for its 2001 Annual Meeting of Shareholders, filed on June 8, 2001. Here incorporated by reference. |
| |
10.2 | Spartan Stores, Inc. 2001 Stock Bonus Plan. Previously filed as Appendix C to Spartan Stores' Definitive Proxy Statement for its 2001 Annual Meeting of Shareholders, filed on June 8, 2001. Here incorporated by reference. |
| |
10.3 | Spartan Stores, Inc. 2001 Associate Stock Purchase Plan. Previously filed as Appendix D to Spartan Stores' Definitive Proxy Statement for its 2001 Annual Meeting of Shareholders, filed on June 8, 2001. Here incorporated by reference. |