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)
|
|
| 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)
|
|
| 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 |
|
|
|
|
|
|
|
|
|
Preferred stock, no par value, authorized 10,000 |
|
|
|
|
|
|
|
|
|
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)
|
|
| 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, |
|
|
|
|
|
|
|
|
|
Income taxes |
| (18,087 | ) |
| - |
|
| (18,087 | ) |
Loss from continuing operations |
| (33,987 | ) |
| - |
|
| (33,987 | ) |
Loss from discontinued |
|
|
|
|
|
|
|
|
|
Cumulative effect of a change in |
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
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: |
|
|
| Pro Forma |
|
|
| |||
Discontinued retail operations |
|
|
|
|
|
|
|
|
|
Loss from discontinued operations (less applicable |
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued operations (less |
|
|
|
|
|
|
|
|
|
Loss from discontinued retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued convenience distribution operations |
|
|
|
|
|
|
|
|
|
Earnings from discontinued operations (less |
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued operations (less |
|
|
|
|
|
|
|
|
|
Earnings from discontinued convenience |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued grocery distribution operations |
|
|
|
|
|
|
|
|
|
Loss from discontinued operations (less applicable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued real estate operations |
|
|
|
|
|
|
|
|
|
Loss from discontinued operations (less applicable |
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued operations (less |
|
|
|
|
|
|
|
|
|
Earnings from discontinued real estate operations |
| 11,341 |
|
| - |
|
| 11,341 |
|
|
|
|
|
|
|
|
|
|
|
Discontinued insurance operations |
|
|
|
|
|
|
|
|
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Loss from discontinued operations (less applicable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total discontinued operations |
|
|
|
|
|
|
|
|
|
Loss from discontinued operations (less applicable |
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued operations (less |
|
|
|
|
|
|
|
|
|
Total loss from discontinued operations | $ | (52,968 | ) | $ | 1,829 |
| $ | (51,139 | ) |