This excerpt taken from the SPTN 8-K filed Feb 1, 2006.
Distribution Segment Sales Increase More Than 8 Percent;
GRAND RAPIDS, MICHIGAN-February 1, 2006-Spartan Stores, Inc., (Nasdaq: SPTN) today reported financial results for its 16-week fiscal 2006 third quarter ended December 31, 2005.
Consolidated net sales for the 16-week third quarter increased 2.8 percent to $642.3 million from $624.5 million in last year's third quarter. The sales increase was due primarily to higher sales in the company's distribution segment as a result of strong holiday sales and new business.
Third-quarter earnings from continuing operations were $4.8 million, or $0.22 per diluted share, compared with $5.8 million, or $0.28 per diluted share in the same period last year. This year's third quarter included net unusual after-tax benefits of approximately $0.5 million compared with net unusual after-tax benefits of $2.4 million in last year's third quarter.
"We are very pleased with our third-quarter results," stated Craig C. Sturken, Spartan Stores' Chairman, President and Chief Executive Officer. "We continue to gain distribution business through incremental product sales to existing customers and by securing new accounts. Excluding the unusual items, third-quarter profitability improved on a year-over-year basis."
Third-quarter gross margin declined 80 basis points to 18.0 percent compared with 18.8 percent in last year's third quarter. The decline was due primarily to a $2.2 million favorable supply contract settlement recorded in last year's third quarter and a greater percentage of consolidated sales being contributed from the lower margin grocery distribution segment and fuel center sales in the current year.
As a percentage of sales, operating expenses decreased 30 basis points to 16.7 percent compared with 17.0 percent in the corresponding quarter last year due to better cost leverage from higher sales volumes and the change in sales mix. Operating expenses increased 1.4 percent to $107.4 million from $105.9 million in last year's third quarter. Contributing to the dollar increase in selling, general and administrative (SG&A)
expenses were higher sales volumes in the distribution segment and approximately
$0.8 million due to a provision for asset impairments
Other expenses improved during the current year by approximately $1.3 million as a result of a gain on the sale of real estate and lower interest expense due to reduced debt levels. In addition, the prior year included a charge of $0.6 million related to debt refinancing and a $1.0 million gain on the sale of assets.
Reported third-quarter net earnings, including the previously mentioned unusual items, were $3.4 million, or $0.16 per diluted share, compared with $4.5 million, or $0.22 per diluted share, in last year's third-quarter. This year's third quarter included a loss from discontinued operations of $1.4 million, or $0.06 per diluted share, compared with a loss from discontinued operations of $1.3 million, or $0.06 per diluted share, in the same period last year. The third-quarter loss from discontinued operations in both years was primarily attributable to non-cash charges for pension withdrawal liabilities arising from previously closed stores. These charges approximated $1.1 million in the third quarter of each year.