SpartanNash Announces Third Quarter Fiscal Year 2015 Financial Results

Nov 11th, 2015

Adjusted Third Quarter EPS from Continuing Operations Improved to $0.49 per Diluted Share; Reported EPS from Continuing Operations of $0.40 per Diluted Share

SpartanNash Company (the "Company") (Nasdaq: SPTN) today reported financial results for the 12-week third quarter and 40-week period ended October 10, 2015.

Third Quarter Results

Consolidated net sales for the 12-week third quarter decreased 1.9 percent to $1.78 billion compared to $1.81 billion last year primarily due to lower sales in the Military and Retail segments.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) were $55.2 million compared to $55.9 million for the prior year quarter, representing 3.1 percent of net sales in each 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 were $29.2 million compared to $33.6 million for the prior year quarter. The decrease was primarily due to higher restructuring and asset impairment charges of $2.0 million compared to the prior year quarter, as well as higher merger integration and acquisition expenses of $3.0 million associated with the repositioning of the distribution network and remodeled retail stores in the western division along with retail system conversions.

Adjusted earnings from continuing operations for the third quarter increased to $18.6 million, or $0.49 per diluted share, from $17.2 million, or $0.46 per diluted share in the third quarter last year. For the current year third quarter, adjusted earnings from continuing operations exclude net after-tax charges of $0.09 per diluted share primarily related to merger integration and acquisition expenses and net restructuring and asset impairment charges. For the prior year third quarter, adjusted earnings from continuing operations excluded net after-tax charges of $0.01 per diluted share related to merger integration expenses and net asset impairment and restructuring gains. Adjusted earnings from continuing operations is a non-GAAP operating financial measure. Reported earnings from continuing operations for the third quarter were $15.2 million, or $0.40 per diluted share, compared to $17.2 million, or $0.45 per diluted share, in the prior year quarter, primarily due to the factors previously mentioned.

"We are pleased with our ability to generate improved third quarter adjusted earnings" stated Dennis Eidson, SpartanNash's President and Chief Executive Officer. "While the sales environment remains more challenging than anticipated, our team continues to strengthen SpartanNash's value proposition as well as the quality and service that we offer customers across our Retail, Food Distribution and Military segments. During the quarter, we continued to invest in our western store base with the completion of six store remodels and grand re-openings in Omaha and through the initial rollout of our yes Rewards loyalty program into these remodeled stores. We are encouraged by the initial results at these six stores. In addition, we anticipate further benefits from merger integration and improved operational efficiencies through the optimization of our supply chain."

Gross profit margin for the third quarter was 14.6 percent compared to 14.4 percent in the prior year quarter. The change in gross profit margin rate primarily reflects an increase in fuel margin rates, partially offset by the impact of lower inflation-related gains in the Military segment.

Third quarter operating expenses would have been $224.3 million compared to $227.7 million, representing 12.6 percent of net sales in each year, if net merger integration and acquisition expenses, asset impairment and restructuring charges, and one-time costs related to cost reduction initiatives were excluded from both periods. Reported operating expenses for the third quarter were $229.8 million, or 12.9 percent of sales, compared to $227.8 million, or 12.6 percent of sales, in the same quarter last year.

Food Distribution Segment

Net sales for the Food Distribution segment were $762.3 million in the third quarter compared to $764.3 million in the same quarter last year.

Third quarter adjusted operating earnings for the Food Distribution segment increased to $17.0 million from $15.2 million in the same period last year. In the current year third quarter, adjusted operating earnings exclude $0.5 million of net pre-tax charges consisting primarily of merger integration and acquisition costs and one-time charges related to cost reduction initiatives. The prior year third quarter excludes $1.4 million of pre-tax merger integration expenses. The increase in adjusted operating earnings was due to merger synergies and lower operating costs, including the impact of lower health care costs. Adjusted operating earnings is a non-GAAP operating financial measure. Reported operating earnings for the current year third quarter increased to $16.5 million from $13.8 million in the prior year third quarter.

Retail Segment

Net sales for the Retail segment were $507.2 million in the third quarter compared to $521.7 million in the same quarter last year. The decrease was primarily due to a 3.0 percent decrease in comparable store sales, excluding fuel, $13.2 million in lower sales resulting from the closure of retail stores and fuel centers, and significantly lower retail fuel prices compared to the prior year, partially offset by sales from recently acquired stores. Comparable store sales reflect the low inflationary environment and increased competition in the western markets.

Third quarter adjusted operating earnings for the Retail segment increased to $13.2 million from $12.9 million in the prior year third quarter. In the current year third quarter, adjusted operating earnings exclude $4.0 million of pre-tax merger integration and acquisition costs, and net asset impairment charges. The prior year third quarter excludes $1.2 million of net non-cash pre-tax asset impairment and restructuring gains. The increase in adjusted operating earnings was due to contributions from stores acquired, lower health care costs, improved fuel margins and the impact of store closures in the prior periods, partially offset by the impact of negative comparable store sales, grand re-opening costs, and higher shrink levels in the western stores. Reported operating earnings in the Retail segment were $9.2 million compared to $14.1 million in the prior year quarter.

During the third quarter, the Company completed six major remodels in the Omaha, Nebraska market. The Company ended the quarter with 165 corporate owned stores and 29 fuel centers.

Military Segment

Net sales for the Company's Military segment were $506.0 million compared to $523.6 million in the prior year quarter, primarily due to lower sales at the DeCA-operated commissaries.

Third quarter adjusted operating earnings for the Military segment were $4.5 million compared to $5.7 million in the prior year third quarter. The decrease in adjusted operating earnings was due to lower sales volume and lower inflation-related gains, partially offset by reduced health care costs. In the current year third quarter, adjusted operating earnings exclude $1.1 million of pre-tax restructuring and asset impairment charges related to a facility closure and one-time costs associated with cost reduction initiatives. Reported operating earnings for the Military segment were $3.4 million compared to $5.7 million in the prior year quarter.

Balance Sheet and Cash Flow

Cash flow provided by operating activities for the year-to-date period was $129.9 million, compared to $117.4 million in the comparable period last year. The increase was primarily due to improvements in working capital.

Net long-term debt (including current maturities and capital lease obligations and subtracting cash) for the Company was $539.4 million as of October 10, 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 2.30-to-1.0 as of October 10, 2015. Net long-term debt is a non-GAAP financial measure. Long-term debt and capital lease obligations, including current maturities, were $547.9 million at October 10, 2015 compared to $570.3 million at January 3, 2015.

Outlook

Mr. Eidson continued, "We are committed to focusing our efforts on the initiatives that will help drive sales and margins in a challenging operating environment. In our Retail segment, we will continue to implement our operational improvement strategy in our western store base, including the rollout of our marketing and loyalty programs in connection with store re-bannering activities. On the distribution side of the business, we expect to continue to benefit from the optimization of our supply chain in our food distribution and military channels. We believe our value added approach to distribution is gaining traction in our markets and is also gaining us access to new areas of opportunity. As a result, we believe we are well positioned to generate incremental business in both the Food Distribution and Military segments next year."

For the fourth quarter of fiscal 2015, the Company slightly revised its previously issued guidance for adjusted net earnings from continuing operations to approximate $0.44 per diluted share, excluding merger integration costs and any other one-time expenses. This guidance is based on expectations of the continuation of low inflation levels and the challenging sales environment and is within the Company's previously issued annual range.

The Company expects capital expenditures for fiscal year 2015 to be in the range of $75.0 million to $80.0 million, with depreciation and amortization of approximately $83.0 million to $84.0 million and total interest expense of approximately $21.0 to $22.0 million, excluding one-time charges.

On November 2, 2015, the Company called for redemption all of the outstanding $50.0 million aggregate principal amount of the 6.625% Senior Notes due December 2016 (the "Notes"). The Company will redeem the Notes for cash using borrowings under its revolving credit facility, with the redemption to occur on December 15, 2015. One-time charges of $1.1 million are expected to be incurred in the current year fourth quarter consisting of the redemption premium and the write-off of unamortized issuance costs. As a result of the redemption, the Company expects to reduce ongoing annual interest expense by approximately $2.0 million, partially offset by future interest rate increases.

Conference Call

A telephone conference call to discuss the Company's third quarter of fiscal 2015 financial results is scheduled for 9:00 a.m. Eastern Time, Thursday, November 12, 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 grocery distributor serving U.S. military commissaries and exchanges in the world, in terms of revenue. The Company's core businesses include distributing grocery products 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 164 supermarkets, primarily under the banners of Family Fare Supermarkets, Family Fresh Markets, D&W Fresh Markets, and SunMart.

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," "opportunities," "design," "focus," "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, 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

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 
12 Weeks Ended40 Weeks Ended
October 10,October 4,October 10,   October 4,
2015201420152014
Net sales $ 1,775,401 $ 1,809,571 $ 5,883,948 $ 5,953,473
Cost of sales   1,516,352   1,548,162   5,026,611   5,079,612
Gross profit 259,049 261,409 857,337 873,861
 
Operating expenses
Selling, general and administrative 224,648 227,690 752,452 771,961
Merger integration and acquisition 4,417 1,379 7,252 8,128
Restructuring charges (gains) and asset impairment   760   (1,272 )   7,762   (67 )
Total operating expenses   229,825   227,797   767,466   780,022
 
Operating earnings 29,224 33,612 89,871 93,839
 
Other (income) and expenses
Interest expense 4,983 5,467 16,627 18,416
Other, net   (148 )   (1 )   (202 )   4
Total other expenses, net   4,835   5,466   16,425   18,420
 
Earnings before income taxes and discontinued operations 24,389 28,146 73,446 75,419
Income taxes   9,141   10,977   27,444   28,336
Earnings from continuing operations 15,248 17,169 46,002 47,083
 
Earnings (loss) from discontinued operations, net of taxes   145   (73 )   (21 )   (358 )
Net earnings $ 15,393 $ 17,096 $ 45,981 $ 46,725
 
Basic earnings per share:
Earnings from continuing operations $ 0.41 $ 0.46 $ 1.22 $ 1.25
Earnings (loss) from discontinued operations   -   (0.01 ) *   -   (0.01 )
Net earnings $ 0.41 $ 0.45 $ 1.22 $ 1.24
 
Diluted earnings per share:
Earnings from continuing operations $ 0.40 $ 0.45 $ 1.22 $ 1.25
Earnings (loss) from discontinued operations   0.01 *   -   -   (0.01 )
Net earnings $ 0.41 $ 0.45 $ 1.22 $ 1.24
 
Weighted average shares outstanding:
Basic 37,553 37,717 37,617 37,678
Diluted 37,653 37,778 37,735 37,749

*Includes rounding

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 
October 10, 2015October 4, 2014

Assets

Current assets
Cash and cash equivalents $ 8,510 $ 8,048
Accounts and notes receivable, net 320,019 305,433
Inventories, net 573,320 612,901
Prepaid expenses and other current assets 24,494 34,093
Property and equipment held for sale   4,002   11,013
Total current assets 930,345 971,488
 
Property and equipment, net 586,361 596,294
Goodwill 331,612 297,352
Other assets, net   118,035   126,135
 
Total assets $ 1,966,353 $ 1,991,269
 

Liabilities and Shareholders' Equity

Current liabilities
Accounts payable $ 365,818 $ 411,279
Accrued payroll and benefits 63,693 64,307
Other accrued expenses 36,824 43,851
Deferred income taxes 29,453 22,987
Current maturities of long-term debt and capital lease obligations   21,993   7,349
Total current liabilities 517,781 549,773
 
Long-term liabilities
Deferred income taxes 89,148 91,602
Postretirement benefits 17,070 18,855
Other long-term liabilities 37,870 37,261
Long-term debt and capital lease obligations   525,889   549,530
Total long-term liabilities 669,977 697,248
 
Shareholders' equity
Common stock, voting, no par value; 100,000 shares

authorized; 37,596 and 37,625 shares outstanding

520,953 521,875
Preferred stock, no par value, 10,000 shares

authorized; no shares outstanding

- -
Accumulated other comprehensive loss (11,233 ) (8,375 )
Retained earnings   268,875   230,748
Total shareholders' equity   778,595   744,248
 
Total liabilities and shareholders' equity $ 1,966,353 $ 1,991,269
 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
(Unaudited)40 Weeks Ended

(In thousands)

October 10, 2015   October 4, 2014
Cash flows from operating activities
Net cash provided by operating activities $ 129,869 $ 117,385
Net cash used in investing activities (71,497 ) (54,362 )
Net cash used in financing activities (47,486 ) (63,912 )
Net cash used in discontinued operations   (8,819 )   (279 )
Net increase (decrease) in cash and cash equivalents 2,067 (1,168 )
Cash and cash equivalents at beginning of period   6,443   9,216
Cash and cash equivalents at end of period $ 8,510 $ 8,048
 

SPARTANNASH COMPANY AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA

Table 1: Sales and Operating Earnings by Segment

(In thousands)

(Unaudited)

   
12 Weeks Ended40 Weeks Ended
October 10, 2015         October 4, 2014       October 10, 2015         October 4, 2014      

Military Segment:

Net sales $ 505,971 28.5 % $ 523,553 28.9 % $ 1,702,412 29.0 % $ 1,710,122 28.7 %
Operating earnings $ 3,438 $ 5,651 $ 13,491 $ 15,956

Food Distribution Segment:

Net sales $ 762,250 42.9 % $ 764,288 42.3 % $ 2,531,428 43.0 % $ 2,503,216 42.1 %
Operating earnings $ 16,540 $ 13,834 $ 56,195 $ 38,713

Retail Segment:

Net sales $ 507,180 28.6 % $ 521,730 28.8 % $ 1,650,108 28.0 % $ 1,740,135 29.2 %
Operating earnings $ 9,246 $ 14,127 $ 20,185 $ 39,170

Total:

Net sales $ 1,775,401 100.0 % $ 1,809,571 100.0 % $ 5,883,948 100.0 % $ 5,953,473 100.0 %
Operating earnings $ 29,224 $ 33,612 $ 89,871 $ 93,839
 

Table 2: Reconciliation of Operating Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization

(Adjusted EBITDA)

(A Non-GAAP Financial Measure)

(In thousands)

(Unaudited)

   
(Unaudited)12 Weeks Ended40 Weeks Ended

(In thousands)

October 10, 2015   October 4, 2014October 10, 2015   October 4, 2014
Operating earnings $ 29,224 $ 33,612 $ 89,871 $ 93,839
Adjustments:
LIFO expense 178 1,550 3,195 5,077
Depreciation and amortization 19,722 19,951 64,960 66,921
Restructuring charges (gains) and asset impairment 760 (1,272 ) 7,762 (67 )
Merger integration and acquisition 4,417 1,379 7,252 8,128
Fees and expenses related to tax planning strategies - - 569 -
Stock based compensation 808 953 6,470 6,017
Other non-cash charges (gains)   123   (262 )   (409 )   (812 )
Adjusted EBITDA $ 55,232 $ 55,911 $ 179,670 $ 179,103
Reconciliation of operating earnings to adjusted EBITDA by segment:
Military:
Operating earnings $ 3,438 $ 5,651 $ 13,491 $ 15,956
Adjustments:
LIFO (income) expense (59 ) 359 620 1,192
Depreciation and amortization 2,838 2,751 9,381 8,580
Restructuring charges and asset impairment 984 - 984 -
Merger integration and acquisition - 3 - 27
Fees and expenses related to tax planning strategies - - 75 -
Stock based compensation 144 86 998 502
Other non-cash charges (gains)   101   4   204   (55 )
Adjusted EBITDA $ 7,446 $ 8,854 $ 25,753 $ 26,202
Food Distribution:
Operating earnings $ 16,540 $ 13,834 $ 56,195 $ 38,713
Adjustments:
LIFO expense 16 794 1,575 2,551
Depreciation and amortization 6,131 6,931 20,836 23,105
Restructuring charges (gains) and asset impairment 41 - (237 ) 1,029
Merger integration and acquisition 323 1,375 1,359 8,097
Fees and expenses related to tax planning strategies - - 282 -
Stock based compensation 363 440 2,992 2,839
Other non-cash charges (gains)   123   (96 )   164   (16 )
Adjusted EBITDA $ 23,537 $ 23,278 $ 83,166 $ 76,318
Retail:
Operating earnings $ 9,246 $ 14,127 $ 20,185 $ 39,170
Adjustments:
LIFO expense 221 397 1,000 1,334
Depreciation and amortization 10,753 10,269 34,743 35,236
Restructuring (gains) charges and asset impairment (265 ) (1,272 ) 7,015 (1,096 )
Merger integration and acquisition 4,094 1 5,893 4
Fees and expenses related to tax planning strategies - - 212 -
Stock based compensation 301 427 2,480 2,676
Other non-cash gains   (101 )   (170 )   (777 )   (741 )
Adjusted EBITDA $ 24,249 $ 23,779 $ 70,751 $ 76,583

Notes: Adjusted EBITDA is a non-GAAP operating financial measure that the Company defines as operating earnings plus depreciation and amortization, and other non-cash items including deferred (stock) compensation, the LIFO provision, as well as 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 EBITDA provides a meaningful representation of its operating performance for the Company as a whole and for its operating segments. The Company considers 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 all of its 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, 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 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. The Company's 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)

(In thousands)

(Unaudited)

   
(Unaudited)12 Weeks Ended40 Weeks Ended

(In thousands)

October 10, 2015   October 4, 2014October 10, 2015  

October 4, 2014

Operating earnings $ 29,224 $ 33,612 $ 89,871 $ 93,839
Adjustments:
Merger integration and acquisition 4,417 1,379 7,252 8,128
Restructuring charges (gains) and asset impairment 760 (1,272 ) 7,762 (67 )
One-time charges related to cost reduction initiatives 371 - 371 -
Fees and expenses related to tax planning strategies   -   -   569   -
Adjusted operating earnings $ 34,772 $ 33,719 $ 105,825 $ 101,900
Reconciliation of operating earnings to adjusted operating earnings by segment:
Military:
Operating earnings $ 3,438 $ 5,651 $ 13,491 $ 15,956
Adjustments:
Merger integration and acquisition - 3 - 27
Restructuring charges and asset impairment 984 - 984 -
One-time charges related to cost reduction initiatives 95 - 95 -
Fees and expenses related to tax planning strategies   -   -   75   -
Adjusted operating earnings $ 4,517 $ 5,654 $ 14,645 $ 15,983
Food Distribution:
Operating earnings $ 16,540 $ 13,834 $ 56,195 $ 38,713
Adjustments:
Merger integration and acquisition 323 1,375 1,359 8,097
Restructuring charges (gains) and asset impairment 41 - (237 ) 1,029
One-time charges related to cost reduction initiatives 116 - 116 -
Fees and expenses related to tax planning strategies   -   -   282   -
Adjusted operating earnings $ 17,020 $ 15,209 $ 57,715 $ 47,839
Retail:
Operating earnings $ 9,246 $ 14,127 $ 20,185 $ 39,170
Adjustments:
Merger integration and acquisition 4,094 1 5,893 4
Restructuring (gains) charges and asset impairment (265 ) (1,272 ) 7,015 (1,096 )
One-time charges related to cost reduction initiatives 160 - 160 -
Fees and expenses related to tax planning strategies   -   -   212   -
Adjusted operating earnings $ 13,235 $ 12,856 $ 33,465 $ 38,078

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 as a whole and for its operating segments. 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 all of its 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 and adjusted operating earnings by segment are performance measures 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)

(In thousands, except per share data)

(Unaudited)

 
12 Weeks Ended
October 10, 2015October 4, 2014
  Earnings from   Earnings from
EarningscontinuingEarningscontinuing
fromoperationsfromoperations
(Unaudited)continuingper dilutedcontinuingper diluted

(In thousands, except per share data)

operationsshareoperationsshare
Earnings from continuing operations $ 15,248 $ 0.40 $ 17,169 $ 0.45
Adjustments, net of taxes:
Merger integration and acquisition 2,778 0.07 807 0.03 *
Restructuring charges (gains) and asset impairment 469 0.01 (782 ) (0.02 )
One-time charges related to cost reduction initiatives 229 0.01 - -
Favorable settlement of unrecognized tax liability   (94 )   -   -   -
Adjusted earnings from continuing operations $ 18,630 $ 0.49 $ 17,194 $ 0.46
* Includes rounding
40 Weeks Ended
October 10, 2015October 4, 2014
Earnings fromEarnings from
EarningscontinuingEarningscontinuing
fromoperationsfromoperations
(Unaudited)continuingper dilutedcontinuingper diluted

(In thousands, except per share data)

operationsshareoperationsshare
Earnings from continuing operations $ 46,002 $ 1.22 $ 47,083 $ 1.25
Adjustments, net of taxes:
Merger integration and acquisition 4,474 0.12 4,999 0.13
Restructuring charges (gains) and asset impairment 4,793 0.12 * (41 ) -
One-time charges related to cost reduction initiatives 229 0.01 - -
Tax planning strategies, net of fees and expenses (382 ) (0.01 ) - -
Favorable settlement of unrecognized tax liability   (94 )   -   (595 )   (0.02 )
Adjusted earnings from continuing operations $ 55,022 $ 1.46 $ 51,446 $ 1.36
* Includes rounding

Notes: Adjusted earnings from continuing operations is a non-GAAP operating financial measure that the Company defines 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.

The Company believes that adjusted earnings from continuing operations provide a meaningful representation of its operating performance for the Company. The Company considers 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 all of its 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 earnings from continuing operations 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 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, cash flows from operating activities and other income or cash flow statement data. The Company's 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)

   
(Unaudited)

(In thousands)

October 10, 2015January 3, 2015
Current maturities of long-term debt and capital lease obligations $ 21,993 $ 19,758
Long-term debt and capital lease obligations   525,889   550,510
Total debt 547,882 570,268
Cash and cash equivalents (8,510 ) (6,443 )
Total net long-term debt $ 539,372 $ 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)

 
12 Weeks Ending

January 2, 2016

Earnings from continuing operations $ 0.41
Adjustments, net of taxes:
Restructuring and asset impairment 0.01
Merger integration and acquisition -
One-time charges related to redemption of 2016 Senior Notes   0.02
Adjusted earnings from continuing operations $ 0.44

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