SpartanNash Announces Second Quarter Fiscal Year 2015 Financial Results

Aug 19th, 2015

Adjusted EPS from Continuing Operations Improved to $0.53 per Diluted Share; Reported Second Quarter EPS from Continuing Operations of $0.54 per Diluted Share

Year-to-Date Operating Cash Flow Increased 93% to $123.4 Million

SpartanNash Company (the "Company") (Nasdaq: SPTN) today reported financial results for the 12-week second quarter and 28-week period ended July 18, 2015.

Second Quarter Results

Consolidated net sales for the 12-week second quarter approximated $1.8 billion in each year as increases in the food distribution segment were offset by the impact of closed stores, a decrease in comparable store sales, significantly lower retail fuel prices compared to the prior year, and lower sales in the military segment.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) were $58.5 million, or 3.3 percent of net sales, compared to $58.3 million, or 3.2 percent of net sales last year. Adjusted EBITDA is a non-Generally Accepted Accounting Principles (GAAP) financial measure. Please see the financial tables at the end of this press release for a reconciliation of Adjusted EBITDA to operating earnings, and a reconciliation of each non-GAAP financial measure to the most directly comparable measure prepared and presented in accordance with GAAP.

Reported operating earnings increased to $36.8 million from $32.6 million in the prior year quarter. The increase was primarily due to improved operational efficiencies and lower merger and integration expenses.

Adjusted earnings from continuing operations for the second quarter increased to $19.8 million, or $0.53 per diluted share, from $19.1 million, or $0.50 per diluted share in the second quarter last year. For the second quarter of fiscal 2015, adjusted earnings from continuing operations excludes a net after-tax gain of $0.01 per diluted share related to merger integration and acquisition expenses, net gains on the sales of previously closed stores and a benefit related to tax planning initiatives. For the prior year second quarter, adjusted earnings from continuing operations excluded net after-tax charges of $0.04 per diluted share related to merger integration expenses and asset impairment and restructuring costs, partially offset by a tax benefit related to the favorable settlement of an unrecognized tax liability established in a previous year. Adjusted earnings from continuing operations is a non-GAAP operating financial measure. Reported earnings from continuing operations for the second quarter of fiscal 2015 increased to $20.3 million, or $0.54 per diluted share, from $17.4 million, or $0.46 per diluted share, in the prior year quarter, primarily due to the factors previously mentioned.

"We are pleased with our earnings results in the second quarter," stated Dennis Eidson, SpartanNash's President and Chief Executive Officer. "In spite of a challenging sales environment, we grew operating profit and exceeded earnings expectations due to our disciplined cost control, merger synergies and improved operational efficiencies. While we experienced sales growth in our food distribution segment, sales in our retail segment were negatively affected by the closure of stores, lower fuel prices, a continued competitive retail food environment and unfavorable weather conditions in our Michigan markets. As we have previously mentioned, we are very focused on improving the performance of our retail segment's western store base. We continue to make progress on our initiatives, including the rollout of merchandising, pricing, and promotional strategies across this store base, as well as the re-grand opening of our six remodeled stores in Omaha a few weeks ago. In addition, we are pleased to have acquired six stores from Dan's Supermarket, Inc., which was not previously supplied by SpartanNash, in Bismarck, North Dakota, and have been encouraged by the transition to SpartanNash operations."

Gross profit margin was 14.6 percent in the second quarter of each year.

Second quarter operating expenses would have been $224.9 million, or 12.5 percent of net sales, compared to $228.8 million, or 12.6 percent of net sales, in the same quarter last year if this year's net charges related to merger integration and acquisition expenses, net gains on property sales and expenses related to tax planning initiatives, and last year's merger integration expenses, asset impairment and restructuring charges were excluded from both periods. The lower expenses as a rate to sales were primarily due to a higher mix of food distribution sales and expense control initiatives. Reported operating expenses for the second quarter of fiscal 2015 were $225.2 million, or 12.5 percent of sales, compared to $232.5 million, or 12.8 percent of sales, in the same quarter last year.

Food Distribution Segment

Net sales for the food distribution segment increased 1.9 percent to $782.7 million in the second quarter from $767.9 million for the second quarter last year.

Second quarter adjusted operating earnings for the food distribution segment increased to $18.5 million from adjusted operating earnings of $13.5 million in the same period last year. In the current year second quarter, adjusted operating earnings exclude $0.9 million of net pre-tax gains related to a litigation settlement that resulted in the reduction of previously accrued or paid compensation, net of ongoing merger integration costs, and professional fees associated with tax planning initiatives. The prior year second quarter excludes $2.9 million of pre-tax merger integration expenses and restructuring charges. The increase in adjusted operating earnings was due to merger synergies, lower operating costs, including healthcare expenses, and increased inventory procurement gains. Adjusted operating earnings is a non-GAAP operating financial measure. Reported operating earnings for the second quarter of fiscal year 2015 increased to $19.4 million from $10.7 million in the prior year second quarter.

Retail Segment

Net sales for the retail segment were $516.1 million in the second quarter of fiscal 2015 compared to $539.8 million for the second quarter last year, primarily due to $17.1 million in lower sales due to the closure of retail stores and fuel centers, a 3.2 percent decrease in comparable store sales, excluding fuel, and $10.6 million due to significantly lower retail fuel prices compared to the prior year, partially offset by sales of $9.2 million from the recently acquired stores. Comparable store sales reflect increased competition, unseasonably cool weather in the Michigan market compared to the prior year, and the continued impact of a low inflationary environment.

Second quarter adjusted operating earnings for the retail segment were $14.7 million, compared to adjusted operating earnings of $16.9 million in the prior year second quarter. In the current year second quarter, adjusted operating earnings exclude $1.2 million of pre-tax merger integration and acquisition costs and net gains on the sales of previously closed sites. The prior year second quarter excludes $0.8 million of net non-cash pre-tax restructuring charges related to closed stores. The decrease in adjusted operating earnings was due primarily to the increased competitive environment, impact of remodeling activities, low inflation levels and reduced pharmacy margins, partially offset by favorable health care expenses and the impact of store closures. Reported operating earnings in the retail segment were $13.5 million compared to operating earnings of $16.1 million in the prior year quarter.

During the second quarter, the Company acquired six stores from Dan's Supermarket, Inc. in Bismarck, North Dakota, and ended the quarter with 165 corporate owned stores and 29 fuel centers.

Military Segment

Net sales for the Company's military segment were $497.0 million in the second quarter compared to $502.4 million in the prior year period due to lower sales at the DeCA-operated commissaries. Reported operating earnings for the military segment were $3.9 million, compared to $5.9 million in the prior year quarter primarily due to the cycling of a purchase accounting related adjustment for depreciation expense.

Balance Sheet and Cash Flow

Cash flow provided by operating activities for the year-to-date period was $123.4 million, compared to $64.0 million in the comparable period last year. The increase was primarily due to improvements in working capital.

The Company repurchased 202,963 shares of its common stock during the second quarter of fiscal 2015 and has repurchased 282,363 shares for the year-to-date period through July 18, 2015. As of July 18, 2015, the Company had $12.3 million available for future share repurchases under its $50.0 million repurchase program which expires May 17, 2016.

Net long-term debt (including current maturities and capital lease obligations and subtracting cash) for the Company was $524.6 million as of July 18, 2015, compared to $563.8 million at January 3, 2015. The Company's total net long-term debt-to-capital ratio is 0.41-to-1.0 and net long-term debt to Adjusted EBITDA is 2.23-to-1.0 as of July 18, 2015. Net long-term debt is a non-GAAP financial measure. Long-term debt and capital lease obligations, including current maturities, were $537.7 million at July 18, 2015 compared to $570.3 million at January 3, 2015.

Outlook

Mr. Eidson continued, "As we begin the second half of 2015, we are pleased with our solid execution and the progress we have made operationally and strategically. Although the retail environment in our markets remains challenging, we continue to work on improving our offerings in the Western Division and recently completed six remodels and re-banners to Family Fare in the Nebraska market. In conjunction with the re-banners, we launched our new Things Are Good HereTM advertising campaign, which is focused on our differentiated shopping experience and our commitment to convenience, quality and overall value. We are in the process of rolling out our yes Rewards loyalty program to our western markets and are highly encouraged by the initial acceptance rates and preliminary success of this venture. In addition, we remain optimistic about our prospects in our Food Distribution segment and continue to expect further benefits from the merger integration and improved operational efficiencies, including the optimization of our supply chain. Additionally, we will continue to proactively pursue financially and strategically attractive acquisition opportunities."

For the third quarter and remainder of fiscal 2015, the Company anticipates that net earnings from continuing operations per diluted share will slightly exceed last year's adjusted comparable third and fourth quarter results of $0.46 and $0.44 per diluted share, respectively, excluding merger integration costs and any other one-time expenses.

Based on the first half results and outlook for the remainder of the year, the Company is maintaining its previously issued fiscal 2015 guidance of adjusted earnings per share from continuing operations of approximately $1.89 to $1.98, excluding merger integration costs and other one-time expenses and gains. For purposes of comparison, the Company's similarly adjusted earnings per share were $1.80 in fiscal 2014 when adjusted to a 52-week basis. This guidance is based on expectations of the continuation of low inflation levels and the challenging sales environment.

The Company expects capital expenditures for fiscal year 2015 to be in the range of $70.0 million to $75.0 million, with depreciation and amortization of approximately $83.0 million to $85.0 million and total interest expense of approximately $21.0 to $23.0 million.

Conference Call

A telephone conference call to discuss the Company's second quarter of fiscal 2015 financial results is scheduled for 9:00 a.m. Eastern Time, Thursday, August 20, 2015. A live webcast of this conference call will be available on the Company's website, www.spartannash.com/webcasts. 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 SpartanNash

SpartanNash (SPTN) is a Fortune 400 company and the largest food distributor serving U.S. military commissaries and exchanges in the world, in terms of revenue. The Company's core businesses include distributing food to military commissaries and exchanges and independent and corporate-owned retail stores located in 46 states and the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain and Egypt. SpartanNash currently operates 165 supermarkets, primarily under the banners of Family Fare Supermarkets, Family Fresh Markets, D&W Fresh Markets, and Econofoods.

Forward-Looking Statements

This press release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These include statements regarding the expected benefits of the merger and statements preceded by, followed by or that otherwise include the words "outlook," "optimistic," "committed," "anticipates," "appears," "believe," "continue," "expects," "look forward," "guidance," "target," "trend," "opportunities," "design," "focus," "look forward," "confident" "position," "taking steps," "intend," "seek," or "plan," or similar expressions or that an event or trend "may," "will" or is "likely to" occur, or is "beginning." Forward-looking statements relating to expectations about future results or events are based upon information available to SpartanNash as of today's date, and are not guarantees of the future performance of the combined company, and actual results may vary materially from the results and expectations discussed. Additional risks and uncertainties related to the merger include, but are not limited to, the successful integration of Spartan Stores' and Nash Finch's business and the combined company's ability to compete in the highly competitive grocery distribution and retail grocery industry. Additional information concerning these and other risks is contained in SpartanNash's most recently filed Annual Report on Form 10-K, Quarterly Report on Form 10-Q, recent Current Reports on Form 8-K and other SEC filings. All subsequent written and oral forward-looking statements concerning SpartanNash, the merger, or other matters and attributable to SpartanNash or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SpartanNash does not undertake any obligation to publicly update any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.

   
SPARTANNASH COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 
12 Weeks Ended28 Weeks Ended
July 18,   July 12,July 18,July 12,
2015201420152014
Net sales $ 1,795,864 $ 1,810,175 $ 4,108,547 $ 4,143,902
Cost of sales   1,533,822   1,545,061   3,510,259   3,531,450
Gross profit 262,042 265,114 598,288 612,452
 
Operating expenses
Selling, general and administrative 225,433 228,806 527,804 544,271
Merger integration and acquisition 151 2,581 2,835 6,749
Restructuring (gains) charges and asset impairment   (336 )   1,078   7,002   1,205
Total operating expenses   225,248   232,465   537,641   552,225
 
Operating earnings 36,794 32,649 60,647 60,227
 
Non-operating expense (income)
Interest expense 4,894 5,475 11,644 12,949
Other, net   (26 )   -   (54 )   5
Total non-operating expense, net   4,868   5,475   11,590   12,954
 
Earnings before income taxes and discontinued operations 31,926 27,174 49,057 47,273
Income taxes   11,619   9,779   18,303   17,359
Earnings from continuing operations 20,307 17,395 30,754 29,914
 
Loss from discontinued operations, net of taxes   (46 )   (76 )   (166 )   (285 )
Net earnings $ 20,261 $ 17,319 $ 30,588 $ 29,629
 
Basic earnings per share:
Earnings from continuing operations $ 0.54 $ 0.46 $ 0.82 $ 0.79
Loss from discontinued operations   -   -   (0.01 ) *   - *
Net earnings $ 0.54 $ 0.46 $ 0.81 $ 0.79
 
Diluted earnings per share:
Earnings from continuing operations $ 0.54 $ 0.46 $ 0.81 $ 0.79
Loss from discontinued operations   -   -   -   - *
Net earnings $ 0.54 $ 0.46 $ 0.81 $ 0.79
 
Weighted average shares outstanding:
Basic 37,584 37,744 37,644 37,662
Diluted 37,710 37,810 37,770 37,738
 

*Includes rounding

 
 
SPARTANNASH COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

   
July 18, 2015July 12, 2014

Assets

Current assets
Cash and cash equivalents $ 13,085 $ 6,420
Accounts and notes receivable, net 298,034 334,440
Inventories, net 552,327 564,628
Prepaid expenses and other current assets 21,678 35,675
Property and equipment held for sale   5,996   -
Total current assets 891,120 941,163
 
Property and equipment, net 587,871 606,969
Goodwill 331,523 312,252
Other assets, net   122,478   128,850
 
Total assets $ 1,932,992 $ 1,989,234
 

Liabilities and Shareholders' Equity

 
Current liabilities
Accounts payable $ 350,719 $ 375,592
Accrued payroll and benefits 60,541 68,893
Other accrued expenses 45,705 45,815
Deferred income taxes 28,819 26,816
Current maturities of long-term debt and capital lease obligations   21,669   7,189
Total current liabilities 507,453 524,305
 
Long-term liabilities
Deferred income taxes 87,316 97,538
Postretirement benefits 17,022 19,884
Other long-term liabilities 39,379 38,204
Long-term debt and capital lease obligations   516,012   576,474
Total long-term liabilities 659,729 732,100
 
Commitments and contingencies
 

Shareholders' equity

Common stock, voting, no par value; 100,000 shares authorized; 37,517 and 37,725 shares outstanding

518,615 523,148

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

- -
Accumulated other comprehensive loss (11,359 ) (8,500 )
Retained earnings   258,554   218,181
Total shareholders' equity   765,810   732,829
 
Total liabilities and shareholders' equity $ 1,932,992 $ 1,989,234
 
 
SPARTANNASH COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
28 Weeks Ended
July 18, 2015   July 12, 2014
Cash flows from operating activities
Net cash provided by operating activities $ 123,355 $ 63,973
Net cash used in investing activities (54,606 ) (36,447 )
Net cash used in financing activities (52,725 ) (30,136 )
Net cash used in discontinued operations   (9,382 )   (186 )
Net increase (decrease) in cash and cash equivalents 6,642 (2,796 )
Cash and cash equivalents at beginning of period   6,443   9,216
Cash and cash equivalents at end of period $ 13,085 $ 6,420
 
 
SPARTANNASH COMPANY AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
 
Table 1: Sales and Operating Earnings by Segment

(In thousands)

(Unaudited)

   
12 Weeks Ended28 Weeks Ended
July 18, 2015         July 12, 2014       July 18, 2015         July 12, 2014      

Military Segment:

Net sales $ 497,047 27.7 % $ 502,402 27.8 % $ 1,196,441 29.1 % $ 1,186,569 28.6 %
Operating earnings $ 3,895 $ 5,884 $ 10,053 $ 10,305

Food Distribution Segment:

Net sales $ 782,743 43.6 % $ 767,926 42.4 % $ 1,769,178 43.1 % $ 1,738,928 42.0 %
Operating earnings $ 19,406 $ 10,670 $ 39,655 $ 24,879

Retail Segment:

Net sales $ 516,074 28.7 % $ 539,847 29.8 % $ 1,142,928 27.8 % $ 1,218,405 29.4 %
Operating earnings $ 13,493 $ 16,095 $ 10,939 $ 25,043

Total:

Net sales $ 1,795,864 100.0 % $ 1,810,175 100.0 % $ 4,108,547 100.0 % $ 4,143,902 100.0 %
Operating earnings $ 36,794 $ 32,649 $ 60,647 $ 60,227
 
 
Table 2: Reconciliation of Operating Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA)
(A Non-GAAP Financial Measure)

(Unaudited)

(In thousands)

   
(Unaudited)12 Weeks Ended28 Weeks Ended

(In thousands)

July 18, 2015   July 12, 2014July 18, 2015   July 12, 2014
Operating earnings $ 36,794 $ 32,649 $ 60,647 $ 60,227
Adjustments:
LIFO expense 1,294 1,555 3,017 3,527
Depreciation and amortization 19,453 19,417 45,238 46,970
Restructuring (gains) charges and asset impairment (336 ) 1,078 7,002 1,205
Merger integration and acquisition 151 2,581 2,835 6,749
Fees and expenses related to tax planning strategies 569 - 569 -
Stock based compensation 909 1,135 5,662 5,064
Other non-cash gains   (285 )   (135 )   (532 )   (550 )
Adjusted EBITDA $ 58,549 $ 58,280 $ 124,438 $ 123,192
Reconciliation of operating earnings to adjusted EBITDA by segment:
Military:
Operating earnings $ 3,895 $ 5,884 $ 10,053 $ 10,305
Adjustments:
LIFO expense 291 362 679 833
Depreciation and amortization 2,810 1,552 6,543 5,829
Merger integration and acquisition - 24 - 24
Fees and expenses related to tax planning strategies 75 - 75 -
Stock based compensation 150 106 854 416
Other non-cash charges (gains)   6   (64 )   103   (59 )
Adjusted EBITDA $ 7,227 $ 7,864 $ 18,307 $ 17,348
Food Distribution:
Operating earnings $ 19,406 $ 10,670 $ 39,655 $ 24,879
Adjustments:
LIFO expense 669 795 1,559 1,757
Depreciation and amortization 6,169 7,155 14,705 16,174
Restructuring charges (gains) and asset impairment 3 307 (278 ) 1,029
Merger integration and acquisition (1,151 ) 2,554 1,036 6,722
Fees and expenses related to tax planning strategies 282 - 282 -
Stock based compensation 399 488 2,629 2,399
Other non-cash charges   6   158   41   80
Adjusted EBITDA $ 25,783 $ 22,127 $ 59,629 $ 53,040
Retail:
Operating earnings $ 13,493 $ 16,095 $ 10,939 $ 25,043
Adjustments:
LIFO expense 334 398 779 937
Depreciation and amortization 10,474 10,710 23,990 24,967
Restructuring (gains) charges and asset impairment (339 ) 771 7,280 176
Merger integration and acquisition 1,302 3 1,799 3
Fees and expenses related to tax planning strategies 212 - 212 -
Stock based compensation 360 541 2,179 2,249
Other non-cash gains   (297 )   (229 )   (676 )   (571 )
Adjusted EBITDA $ 25,539 $ 28,289 $ 46,502 $ 52,804
 

Notes: Consolidated adjusted EBITDA is a non-GAAP operating financial measure that we define as operating earnings plus depreciation and amortization, and other non-cash items including deferred (stock) compensation, the LIFO provision, as well as adjustments for unusual items that do not reflect the ongoing operating activities of SpartanNash and costs associated with the closing of operational locations.

We believe that adjusted EBITDA provides a meaningful representation of our operating performance for SpartanNash 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 our military, food distribution and retail 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 and adjusted EBITDA by segment are performance measures 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)

     
(Unaudited)12 Weeks Ended28 Weeks Ended

(In thousands)

July 18, 2015   July 12, 2014July 18, 2015   July 12, 2014
Operating earnings $ 36,794 $ 32,649 $ 60,647 $ 60,227
Adjustments:
Merger integration and acquisition 151 2,581 2,835 6,749
Restructuring (gains) charges and asset impairment (336 ) 1,078 7,002 1,205
Fees and expenses related to tax planning strategies   569   -   569   -
Adjusted operating earnings $ 37,178 $ 36,308 $ 71,053 $ 68,181

Reconciliation of operating earnings to adjusted operating earnings by segment:

Military:
Operating earnings $ 3,895 $ 5,884 $ 10,053 $ 10,305
Adjustments:
Merger integration and acquisition - 24 - 24
Fees and expenses related to tax planning strategies   75   -   75   -
Adjusted operating earnings $ 3,970 $ 5,908 $ 10,128 $ 10,329
Food Distribution:
Operating earnings $ 19,406 $ 10,670 $ 39,655 $ 24,879
Adjustments:
Merger integration and acquisition (1,151 ) 2,554 1,036 6,722
Restructuring charges (gains) and asset impairment 3 307 (278 ) 1,029
Fees and expenses related to tax planning strategies   282   -   282   -
Adjusted operating earnings $ 18,540 $ 13,531 $ 40,695 $ 32,630
Retail:
Operating earnings $ 13,493 $ 16,095 $ 10,939 $ 25,043
Adjustments:
Merger integration and acquisition 1,302 3 1,799 3
Restructuring (gains) charges and asset impairment (339 ) 771 7,280 176
Fees and expenses related to tax planning strategies   212   -   212   -
Adjusted operating earnings $ 14,668 $ 16,869 $ 20,230 $ 25,222
 

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 its military, food distribution and retail 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)
 
12 Weeks Ended
July 18, 2015July 12, 2014
  Earnings from   Earnings from
EarningscontinuingEarningscontinuing
fromoperationsfromoperations
(Unaudited)continuingper dilutedcontinuingper diluted

(In thousands, except per share data)

operationsshareoperationsshare
Earnings from continuing operations $ 20,307 $ 0.54 $ 17,395 $ 0.46
Adjustments, net of taxes:
Merger integration and acquisition 96 0.00 1,593 0.04
Restructuring (gains) charges and asset impairment (192 ) 0.00 * 665 0.02
Tax planning strategies, net of fees and expenses (382 ) (0.01 ) - -
Favorable settlement of unrecognized tax liability   -   -   (595 )   (0.02 )
Adjusted earnings from continuing operations $ 19,829 $ 0.53 $ 19,058 $ 0.50
* Includes rounding
28 Weeks Ended
July 18, 2015July 12, 2014
Earnings fromEarnings from
EarningscontinuingEarningscontinuing
fromoperationsfromoperations
(Unaudited)continuingper dilutedcontinuingper diluted

(In thousands, except per share data)

operationsshareoperationsshare
Earnings from continuing operations $ 30,754 $ 0.81 $ 29,914 $ 0.79
Adjustments, net of taxes:
Merger integration and acquisition 1,735 0.05 4,186 0.11
Restructuring and asset impairment charges 4,285 0.11 747 0.02
Tax planning strategies, net of fees and expenses (382 ) (0.01 ) - -
Favorable settlement of unrecognized tax liability   -   -   (595 )   (0.01 ) *
Adjusted earnings from continuing operations $ 36,392 $ 0.96 $ 34,252 $ 0.91
* Includes rounding
 

Notes: Adjusted earnings from continuing operations is a non-GAAP operating financial measure that we define 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.

We believe that adjusted earnings from continuing operations provide a meaningful representation of our operating performance for the Company. We consider 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 our military, food distribution and retail 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. We believe that adjusted earnings from continuing operations provides useful information for our investors because it is a performance measure that management uses to allocate resources, assess performance against its peers and evaluate overall performance. In addition, securities analysts, fund managers and other shareholders and stakeholders that communicate with us request our 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 (loss), cash flows from operating activities and other income or cash flow statement data. Our 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)

   
July 18, 2015January 3, 2015
Current maturities of long-term debt and capital lease obligations $ 21,669 $ 19,758
Long-term debt and capital lease obligations   516,012   550,510
Total debt 537,681 570,268
Cash and cash equivalents   (13,085 )   (6,443 )
Total net long-term debt $ 524,596 $ 563,825
 

Notes: Total net 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 temporary investments.

 
Table 6: Reconciliation of Projected Earnings per Diluted Share from Continuing Operations to
Projected Adjusted Earnings per Diluted Share from Continuing Operations
(A Non-GAAP Financial Measure)

(Unaudited)

   
52 Weeks Ending January 2, 2016
Low   High
Earnings from continuing operations $ 1.71 $ 1.80
Adjustments, net of taxes:
Restructuring and asset impairment 0.12 0.12
Merger integration and acquisition 0.07 0.07
Tax planning strategies, net of fees and expenses (0.01) (0.01)
Adjusted earnings from continuing operations $ 1.89 $ 1.98

SpartanNash Company
Investor Contact:
Dave Staples
Executive Vice President & COO
(616) 878-8793
or
Media Contact:
Meredith Gremel
Vice President Corporate Affairs and Communications
(616) 878-2830