<PAGE>
===========================================================================
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 20, 1998.
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: 33-41791
SPARTAN STORES, INC.
(Exact Name of Registrant as Specified in Its Charter)
MICHIGAN 38-0593940
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
850 76TH STREET, S.W.
P.O. BOX 8700
GRAND RAPIDS, MICHIGAN 49518
(Address of Principal Executive Offices) (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.
Yes _X_ No ___
As of July 18, 1998, the issuer had 11,505,781 outstanding shares of
Class A Common Stock, $2 par value.
_____________________
===========================================================================
<PAGE>
<TABLE>
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
FIRST QUARTER (12 WEEKS) ENDED
-------------------------------------
JUNE 20, JUNE 21,
1998 1997
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
NET SALES $585,824,005 $565,738,939
COSTS AND EXPENSES
Cost of sales 525,404,090 509,132,523
Operating and administrative 52,307,434 51,695,060
Interest expense 2,049,450 2,306,499
Interest income (558,722) (746,842)
Gain on sale of property and equipment (1,917,610) (941,690)
------------ ------------
TOTAL COSTS AND EXPENSES 577,284,642 561,445,550
------------ ------------
EARNINGS BEFORE INCOME TAXES 8,539,363 4,293,389
INCOME TAXES 3,237,000 1,487,000
------------ ------------
NET EARNINGS $ 5,302,363 $ 2,806,389
============ ============
BASIC AND DILUTED EARNINGS PER CLASS A SHARE $ 0.46 $ 0.23
============ ============
BASIC WEIGHTED AVERAGE CLASS A SHARES 11,459,601 12,049,080
============ ============
DILUTED WEIGHTED AVERAGE CLASS A SHARES 11,463,371 12,056,190
============ ============
DIVIDENDS DECLARED PER CLASS A SHARE $ 0.0125 $ 0.0125
============ ============
</TABLE>
-2-
<PAGE>
<TABLE>
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
JUNE 20,
1998 MARCH 28,
(UNAUDITED) 1998
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 46,288,125 $ 37,026,640
Marketable securities 18,820,739 18,333,323
Accounts receivable 71,593,029 70,083,223
Refundable taxes on income 1,699,210 4,466,297
Inventories 80,368,079 92,706,414
Prepaid expenses 6,471,451 6,885,828
Deferred taxes on income 7,259,000 7,277,000
------------ ------------
TOTAL CURRENT ASSETS 232,499,633 236,778,725
OTHER ASSETS 7,222,637 8,242,522
PROPERTY AND EQUIPMENT
Land and improvements 32,691,626 33,098,220
Buildings 134,746,907 136,496,867
Equipment 138,116,796 138,663,310
------------ ------------
305,555,329 308,258,397
Less accumulated depreciation and amortization 148,061,752 147,146,529
------------ ------------
NET PROPERTY AND EQUIPMENT 157,493,577 161,111,868
------------ ------------
TOTAL ASSETS $397,215,847 $406,133,115
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 21,500,000 $ 38,500,000
Accounts payable 88,946,193 81,690,574
Accrued payroll and benefits 13,145,287 13,447,559
Insurance reserves 15,407,819 15,799,160
Other accrued expenses 22,687,299 19,759,049
Current maturities of long-term debt and capital
lease obligation 6,531,971 6,544,777
------------ ------------
TOTAL CURRENT LIABILITIES 168,218,569 175,741,119
-3-
<PAGE>
DEFERRED TAXES ON INCOME 3,779,500 3,750,000
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 4,859,200 4,784,200
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION 100,781,656 107,665,545
SHAREHOLDERS' EQUITY
Class A common stock, voting, par value
$2 a share; authorized 20,000,000 shares;
outstanding 11,464,143 and 11,443,985 shares 22,928,286 22,887,970
Additional paid-in capital 16,741,485 16,431,937
Retained earnings 79,907,151 74,872,344
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 119,576,922 114,192,251
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $397,215,847 $406,133,115
============ ============
</TABLE>
-4-
<PAGE>
<TABLE>
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
FIRST QUARTER (12 WEEKS) ENDED
------------------------------
JUNE 20, JUNE 21,
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 5,302,363 $ 2,806,389
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 4,549,085 4,814,904
Postretirement benefits other than pensions 75,000 55,000
Deferred taxes on income 47,500 93,000
Gain on sale of property and equipment (1,917,610) (941,690)
Change in assets and liabilities:
Marketable securities (487,416) 940,094
Accounts receivable (1,509,806) 729,151
Refundable taxes on income 2,767,087 1,453,207
Inventories 12,338,335 9,029,433
Prepaid expenses 414,377 (1,422,230)
Accounts payable 7,255,619 11,755,514
Accrued payroll and benefits (302,272) (1,834,732)
Insurance reserves (391,341) 316,826
Other accrued expenses 2,928,250 (5,561,003)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 31,069,171 22,233,863
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (2,852,699) (7,169,534)
Proceeds from the sale of property and equipment 3,839,903 3,377,589
Other 1,019,497 (263,578)
----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 2,006,701 (4,055,523)
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in notes payable (17,000,000) (8,500,000)
Proceeds from long-term borrowings 2,602,938 3,625,000
Repayment of long-term debt and capital lease
obligation (9,499,633) (16,579,776)
Proceeds from sale of common stock 589,252 721,665
Common stock purchased (363,559) (458,430)
Dividends paid (143,385) (150,721)
----------- -----------
-5-
<PAGE>
NET CASH USED IN FINANCING ACTIVITIES (23,814,387) (21,342,262)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,261,485 (3,163,922)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 37,026,640 34,198,752
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $46,288,125 $31,034,830
=========== ===========
</TABLE>
-6-
<PAGE>
<TABLE>
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
CLASS A ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS
----------- ----------- -----------
<S> <C> <C> <C>
BALANCE - MARCH 30, 1997 $24,065,700 $18,406,969 $64,784,905
CLASS A COMMON STOCK TRANSACTIONS
895,256 shares purchased (1,790,512) (4,769,484) (3,559,471)
306,391 shares issued 612,782 2,794,452
NET EARNINGS 14,233,981
CASH DIVIDENDS - $.05 PER SHARE (587,071)
----------- ----------- -----------
BALANCE - MARCH 28, 1998 22,887,970 16,431,937 74,872,344
CLASS A COMMON STOCK TRANSACTIONS
32,174 shares purchased (64,348) (175,040) (124,171)
52,332 shares issued 104,664 484,588
NET EARNINGS 5,302,363
CASH DIVIDENDS - $.0125 PER SHARE (143,385)
----------- ----------- -----------
BALANCE - JUNE 20, 1998 $22,928,286 $16,741,485 $79,907,151
=========== =========== ===========
</TABLE>
-7-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES
The 1998 Annual Report on Form 10-K contains a summary of significant
accounting policies in the notes to consolidated financial statements. The
Company follows the same accounting policies in the preparation of interim
financial statements.
RECLASSIFICATIONS
Certain reclassifications have been made to the June 21, 1997 presentation
in order to conform to the June 20, 1998 presentation.
STATEMENT OF REGISTRANT
The data presented herein is unaudited, but in the opinion of management
includes all adjustments (which consist solely of normal recurring
accruals) necessary for a fair presentation of the consolidated financial
position of the Company and its subsidiaries at June 20, 1998 and the
results of their operations and the changes in cash flows for the periods
ended June 20, 1998 and June 21, 1997. These interim results are not
necessarily indicative of the results of the fiscal years as a whole.
CONTINGENCIES
On August 21, 1996, the Attorney General for the State of Michigan filed
an action in Michigan circuit court against the leading cigarette
manufacturers operating in the United States, twelve wholesalers and
distributors of tobacco products in Michigan (including three Company
subsidiaries) and others seeking certain injunctive relief, the
reimbursement of $4 billion in Medicaid and other expenditures incurred or
to be incurred by the State of Michigan to treat diseases allegedly caused
by cigarette smoking and punitive damages of $10 billion. During fiscal
year 1998, three actions were filed in state courts in Tennessee and
twenty-two actions were filed in state courts in Pennsylvania against the
leading cigarette manufacturers operating in the United States and certain
wholesalers and distributors, including a subsidiary of the Company. In the
three Tennessee actions, one action was filed as a class action on behalf
of the individual plaintiffs, one action was filed on behalf of the State
of Tennessee and its taxpayers, and one action was filed by an individual
plaintiff. All of the Pennsylvania actions were filed by individual
plaintiffs. In these separate cases, the plaintiffs are seeking
compensatory, punitive and other damages, reimbursement of medical and
other expenditures and equitable relief. The Company believes that its
subsidiaries have valid defenses to these legal actions. These actions are
being vigorously defended. All of the Tennessee actions have been dismissed.
-8-
<PAGE>
All but one of the Pennsylvania actions have been dismissed without
prejudice pursuant to a Dismissal and Tolling Agreement under which
the defendants have agreed not to raise the defense of statute of
limitations or laches if an action is filed by a plaintiff before April 1,
1999. One of the cigarette manufacturers named as a defendant in each
action has agreed to indemnify the Company's subsidiaries from damages
arising out of these actions. Management believes that the ultimate
outcome of these actions should not have a material adverse effect on the
consolidated financial position, results of operations or liquidity of the
Company.
Various other lawsuits and claims, arising in the ordinary course of
business, are pending or have been asserted against the Company. 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, operating results or
liquidity of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth items from the Company's Consolidated
Statements of Earnings as percentages of net sales:
<TABLE>
<CAPTION>
FIRST QUARTER (12 WEEKS ENDED)
------------------------------
JUNE 20, JUNE 21,
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
Net Sales 100.0% 100.0%
Gross profit 10.3 10.0
Less:
Operating and administrative expenses 8.9 9.1
Interest expense .3 .4
Interest income (.1) (.1)
Gain on sale of property and equipment (.3) (.2)
----- -----
TOTAL 8.8 9.2
----- -----
-9-
<PAGE>
EARNINGS BEFORE INCOME TAXES 1.5 .8
Income taxes .6 .3
----- -----
NET EARNINGS .9% .5%
===== =====
</TABLE>
NET SALES
Net sales for the quarter ended June 20, 1998 increased $20.1 million
compared to the quarter ended June 21, 1997. Sales in the Distribution
segment increased approximately $20.3 million, reflecting increases in sales
to convenience store retailers of $21.8 million, offset by a decline in
sales to grocery store retailers of $1.5 million. The decline in sales to
grocery store retailers is primarily the result of a decline in store
equipment sales approximating $4.5 million due to a decline in retail store
development activity, offset to a certain degree by increases in sales of
pharmacy products approximating $2.4 million. The Company continues to
experience extremely competitive market conditions for the sale of grocery
and general merchandise products. The Company's sales of these products
have declined primarily due to the success of competing super center
formats and limited assortment stores that carry these types of products.
Offsetting declines in sales of grocery and general merchandise products
were sales of perishable products due to increased volume, the addition of
new customers and inflation approximating 9% for produce products.
Effective July 27, 1998, the Company changed from the Cost-Plus pricing
policy for General Merchandise products to a variable markup pricing
structure. Management expects the change to result in increased sales
volumes in this price sensitive category.
The increase in sales to convenience store retailers is primarily the
result of increases in the prices of cigarettes approximating 10%, new
customers and general increases in convenience store purchases. These
increases were partially offset by the loss of two customers.
Sales in the Insurance segment for the quarter ended June 20, 1998
increased slightly compared to the quarter ended June 21, 1997. The
Company added accounts to both its third party administrator business and
property and casualty underwriting business. However, increased competitive
pressures have caused the Company to reduce premiums and accept lower
commissions.
Sales in the Real Estate and Finance segment during the quarter ended June
20, 1998, which exclude gains on the sales of real property, declined by
approximately $.3 million compared to the quarter ended June 21, 1997. The
decline reflects a reduction in rental income received due to sales of
-10-
<PAGE>
property occurring during the fiscal year ended March 28, 1998. Management
expects rental income to continue to show declines from prior periods due
to these property sales.
GROSS PROFIT
Gross profit as a percentage of net sales for the quarter ended June 20,
1998 increased to 10.3% from 10.0% in the quarter ended June 21, 1997. The
improvement in gross profit can be attributed to several factors, including
enhanced inventory procurement practices as the Company purchases
inventories in excess of current needs to take advantage of promotions
offered by vendors. Also, the Company has experienced improvements in
gross profit from the sale of cigarette inventories purchased prior to
recent price increases. Finally, during the third quarter of the 1998
fiscal year, the Company revised the methodology in which it administers
its Cost-Plus pricing policy to compute amounts billed based on acquisition
cost before considering promotional allowances. Management expects gross
profit to continue to be positively impacted by inventory procurement
practices and the revision to its Cost-Plus pricing policy.
OPERATING AND ADMINISTRATIVE EXPENSES
Operating and administrative expenses as a percentage of net sales for the
quarter ended June 20, 1998 were 8.9%, compared to 9.1% in the quarter
ended June 21, 1997.
The reduction in operating and administrative expenses as a percentage of
net sales is primarily the result of the increase in net sales discussed
above. However, the Company's management incentive plan implemented during
the fiscal year ended March 28, 1998, has had a favorable impact on the
Company's ability to manage overall costs within the organization. Amounts
to be paid under the management incentive plan are determined based on
consolidated earnings, customer satisfaction survey results and individual
performance evaluations. Payments are made on an annual basis and require
the achievement of a targeted level of consolidated earnings. The Company
experienced increases in compensation-related costs associated with
inflation and the accrual of estimated amounts to be paid under the
management incentive plan. Additionally, software amortization expense
increased, primarily due to the capitalization of costs associated with
BASE (Business Automation Support Environment) to increase the overall
efficiency of operations and to enhance the level of service that the
Company provides to its retail customers. However, these increases were
offset by declines in a wide variety of expenses, including contracted
labor expenses and costs associated with transportation equipment that was
sold and leased back during the fiscal year ended March 28, 1998.
Management anticipates that the management incentive plan will continue
to have a favorable impact on operating and administrative expenditures.
-11-
<PAGE>
Expenses associated with the Company's collective bargaining labor force
contributed to the increase in compensation-related costs. The
discontinuance of labor standards in the Company's grocery and related
product distribution warehouses during fiscal 1998 resulted in a decline in
warehouse efficiency. In response, the Company implemented an incentive
program for all collective bargaining associates to improve efficiency.
First quarter improvements in efficiency were seen in all of the Company's
warehouses, with one already resulting in the distribution of incentive
payments. Management expects the incentive program to continue in its early
success, resulting in reduced operating expenses throughout the course of
the fiscal year.
The Company has incurred significant Information Technology costs to
address Year 2000 issues. The Company is upgrading and replacing existing
software. Additionally, the Company is currently communicating with its
customers, suppliers and financial institutions to assess their plans for
Year 2000 and how they may impact the Company. The Company has spent
approximately $3.0 million during the past two fiscal years and expects to
incur an additional $3.0 million to address the Year 2000 issues. The
Company believes that due to its current efforts and future plans to
upgrade and replace existing software, the Year 2000 problem will not pose
significant operational problems for the Company's computer systems. If
such modifications and conversions to software are not completed timely,
however, or if the Company's customers, suppliers or financial institutions
should fail to adequately modify their computer systems, the Year 2000
problem could have a material adverse impact on the Company's ability to
order and distribute product efficiently.
INTEREST EXPENSE AND INCOME
Interest expense for the quarter ended June 20, 1998 declined by
approximately $.3 million compared to the quarter ended June 21, 1997. The
decline was primarily attributable to lower average borrowings during the
period due to the sale of retail properties and strong earnings
performance. The Company has been successful in lowering its debt to equity
ratio to .84:1.
Interest income for the quarter ended June 20, 1998 declined by
approximately $.2 million compared to the quarter ended June 21, 1997. The
reduction in interest income was due primarily to a decrease in notes
receivable. In addition, finance fees earned on past due accounts
decreased as a result of a reduction in past due accounts.
GAIN ON SALE OF PROPERTY AND EQUIPMENT
The gain on sale of property and equipment of $1.9 million for the quarter
ended June 20, 1998 was due primarily to the sale of two retail properties.
Management does not anticipate significant real estate transactions to
occur during the remainder of the fiscal year.
-12-
<PAGE>
NET EARNINGS
Net earnings for the quarter ended June 20, 1998 were $5.3 million,
increasing by approximately $2.5 million over the quarter ended June 21,
1997. This increase resulted in a 4.54% quarterly return on average
shareholders' equity, compared to 2.58% for the quarter ended June 21,
1997. Additionally, net earnings per Class A share improved from $.23 for
the quarter ended June 21, 1997 to $.46 for the quarter ended June 20,
1998.
Distribution segment net earnings for the quarter ended June 20, 1998 were
$3.2 million, increasing by 115.5% over the quarter ended June 21, 1997,
due primarily to improvements in gross profit.
Insurance segment net earnings for the quarter ended June 20, 1998 were $.6
million, increasing by 44.5% over the quarter ended June 21, 1997. The
increase in net earnings was primarily the result of a reduction in loss
reserves due to the successful implementation of safety initiatives. Over
the past five years, the Company has taken significant steps to reduce the
number of claims incurred, including developing safety committees,
increasing visits to retail locations and reducing insurance premiums if
the Company's recommendations are implemented.
Real Estate and Finance segment net earnings for the quarter ended June 20,
1998 were $1.5 million, increasing by 63.8% over the quarter ended June 21,
1997, due primarily to gains from the sales of real estate holdings.
Management does not anticipate significant real estate transactions to
occur during the remainder of the fiscal year. Accordingly, it is expected
that Real Estate and Finance segment net earnings will return to historical
levels for the remainder of fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity are cash flows from operating
activities and borrowings under a bank credit agreement. At June 20, 1998,
the Company had approximately $54.0 million in additional bank borrowings
available. Also, the Company is permitted to sell unsecured notes under a
note offering with a total principal amount of $100,000,000. As of June
20, 1998, approximately $14.2 million of these notes were outstanding and
the Company had approximately $49.1 million in availability under this
offering. Management believes that cash flows from operating activities
and the Company's ability to issue notes and to borrow under the bank
credit agreement will be adequate for the Company's operating, investing
and financing activities.
Net cash provided by operating activities of approximately $31.1 million
was generated by strong earnings, a reduction in cigarette inventories held
and an increase in accounts payable and other accrued expenses. The
-13-
<PAGE>
Company's current ratio improved from 1.35:1 at March 28, 1998 to 1.38:1 at
June 20, 1998.
Net cash provided by investing activities of approximately $2.0 million was
generated primarily through the sales of retail properties and collections
of amounts owing from notes receivable, offset by capital expenditures.
Total purchases of property and equipment have declined due to the
completion of many of the BASE projects commenced in prior years.
Management expects that total capital expenditures in the fiscal year
ended March 27, 1999 will be approximately $21.0 million.
Net cash used in financing activities of approximately $23.8 million is
primarily attributable to reductions in amounts borrowed under the
Company's bank credit agreement.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The SOP is
effective for the Company on March 28, 1999, however, early adoption is
permitted. The SOP will require the capitalization of certain costs
incurred after the date of adoption in connection with developing or
obtaining software for internal use. This SOP will be adopted on a
prospective basis and its effect on future operations has not been
determined.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The matters discussed in this report include forward-looking statements
that describe the Company's plans, strategies, objectives, goals,
expectations or projections. These forward-looking statements are
identifiable by words or phrases indicating that the Company 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. In addition to other risks and
uncertainties described in connection with the forward-looking statements
contained in this Report on Form 10-Q, there are many important factors
that could cause actual results to be materially different from the
Company's current expectations.
Anticipated future sales are subject to competitive pressures from many
sources. The Company's Distribution segment competes with numerous
warehouse discount stores, supermarkets, pharmacies and product
manufacturers. The Company's Insurance segment is subject to intense
competition from numerous insurance agents and insurance companies,
-14-
<PAGE>
especially in the property and casualty insurance markets. Competitive
pressures in these and other business segments may result in unexpected
reductions in sales volumes, product prices or service fees.
Operating and administrative expenses may be adversely affected by
unexpected costs associated with, among other factors: costs associated
with BASE (Business Automation Support Environment); software modifications
and upgrades to address Year 2000 issues; unanticipated labor shortages,
stoppages or disputes; business acquisitions or divestitures; the defense,
settlement or adverse judgments in connection with current or future legal
or administrative proceedings; and the adoption of SOP 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use."
The Company's future interest expense and income also may differ from
current expectations, depending upon: cigarette inventory levels; retail
property sales; the volume of notes receivable; and the amount of fees
received on delinquent accounts, among other factors.
The foregoing is intended to provide meaningful cautionary statements for
purposes of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The foregoing should not be construed as an exhaustive
list of all economic, competitive, governmental and technological factors
that could adversely affect the Company's expected consolidated financial
position, results of operations or liquidity. The Company disclaims any
obligation to update its forward-looking statements to reflect subsequent
events or circumstances.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a discussion of certain litigation, reference is made to
"Contingencies" in the Notes to Consolidated Financial Statements included
in Part I, Item 1, of this report, which is incorporated herein by
reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS: The following documents are filed as exhibits to
this report on Form 10-Q:
EXHIBIT NUMBER DOCUMENT
-------------- --------
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K. No reports on Form 8-K have been filed
during the period for which this report is filed.
-15-
<PAGE>
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 4, 1998 SPARTAN STORES, INC.
(Registrant)
By /S/CHARLES B. FOSNAUGH
Charles B. Fosnaugh
Vice President Development
(Principal Financial Officer
and duly authorized signatory for
Registrant)
-16-
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DOCUMENT
- -------------- --------
27 Financial Data Schedule
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF SPARTAN
STORES, INC. AND SUBSIDIARIES FOR THE PERIOD ENDED JUNE 20,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER<F1>
<FISCAL-YEAR-END> MAR-27-1999
<PERIOD-START> MAR-29-1998
<PERIOD-END> JUN-20-1998
<CASH> 46,288
<SECURITIES> 18,821
<RECEIVABLES> 74,983
<ALLOWANCES> (1,690)
<INVENTORY> 80,368
<CURRENT-ASSETS> 232,500
<PP&E> 305,555
<DEPRECIATION> (148,062)
<TOTAL-ASSETS> 397,216
<CURRENT-LIABILITIES> 168,219
<BONDS> 100,782
<COMMON> 22,928
0
0
<OTHER-SE> 96,649
<TOTAL-LIABILITY-AND-EQUITY> 397,216
<SALES> 585,824
<TOTAL-REVENUES> 585,824
<CGS> 525,404
<TOTAL-COSTS> 525,404
<OTHER-EXPENSES> 49,612
<LOSS-PROVISION> 220
<INTEREST-EXPENSE> 2,049
<INCOME-PRETAX> 8,539
<INCOME-TAX> 3,237
<INCOME-CONTINUING> 5,302
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,302
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
<FN>
<F1>12-Week Period
</FN>
</TABLE>
