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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
/x/ OF THE SECURITIES EXCHANGE ACT OF 1934
For the twenty-four weeks ended June 18, 1994
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
/ / OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File no. 0-785
NASH-FINCH COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 410431960
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7600 FRANCE AVE. SOUTH, MINNEAPOLIS, MINNESOTA 55435
(Address of principal executive offices) (Zip Code)
(612) 832-0534
(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
---- ----
Number of shares of common stock outstanding at July 27, 1994:
10,872,794 shares
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PART I - FINANCIAL INFORMATION
This report is for the twenty-four week interim period beginning January 1,
1994, through June 18, 1994.
The accompanying financial information has been prepared in conformity with
generally accepted accounting principles and practices, and methods of applying
accounting principles and practices, (including consolidation practices) as
reflected in the financial information included in the Company's Annual Report
on Form 10-K, filed with the Securities and Exchange Commission for the
preceding fiscal year. The financial statements included in this quarterly
report include all adjustments which are, in the opinion of management,
necessary to a fair presentation of the Company's financial position and results
of operations for the interim period.
The information contained herein has not been audited by independent
certified public accountants and is subject to any adjustments which may develop
in connection with the annual audit of its accounts by KPMG Peat Marwick, the
Company's independent public accountants.
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NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
June 18, January 1,
Assets 1994 1994
- - ------ ---------- ----------
<S> <C> <C>
Current assets: (Unaudited)
Cash on hand $ 960 890
Accounts and notes receivable, net 107,797 95,952
Inventories 186,878 186,637
Prepaid expenses 12,995 7,391
Deferred tax assets 3,914 4,055
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Total current assets 312,544 294,925
Investments at net equity 7,285 7,137
Notes receivable, noncurrent 18,677 20,187
Property, plant and equipment:
Land 25,147 26,652
Buildings and improvements 106,220 105,650
Furniture, fixtures, and equipment 216,728 209,172
Leasehold improvements 25,802 26,016
Construction in progress 7,090 5,914
Assets under capitalized leases 9,931 9,210
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390,918 382,614
Less accumulated depreciation and amortization (201,285) (196,350)
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Net property, plant and equipment 189,633 186,264
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Intangible assets, net 8,730 9,512
Other assets 2,374 3,629
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Total assets $ 539,243 521,654
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Liabilities and Stockholders' Equity
- - ------------------------------------
Current liabilities:
Outstanding checks, net of cash in banks $ 13,760 14,301
Short-term debt payable to banks 45,900 38,300
Current maturities of long-term debt and
capitalized lease obligations 6,168 3,980
Accounts payable 126,702 119,970
Accrued expenses 32,158 27,032
Income taxes 4,959 4,315
Other current liabilities -- 7,123
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Total current liabilities 229,647 215,021
Long-term debt 86,593 89,811
Capitalized lease obligations 8,924 8,076
Deferred compensation 8,786 9,065
Other 2,154 417
Stockholders' equity:
Preferred stock - no par value
Authorized 500 shares;none issued -- --
Common stock of $1.66 2/3 par value
Authorized 25,000 shares, issued 11,224 shares 18,706 18,706
Additional paid-in capital 11,958 11,954
Retained earnings 175,539 171,670
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Less cost of 351 shares of common 206,203 202,330
stock in treasury (3,064) (3,066)
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Total stockholders' equity 203,139 199,264
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Total liabilities and stockholders' equity $539,243 521,654
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</TABLE>
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See accompanying notes to consolidated financial statements.
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NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-four Weeks Ended
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June 18, 1994 June 19, 1993 June 18, 1994 June 19, 1993
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Income:
Net sales $ 656,346 621,940 1,266,481 1,214,913
Other revenues 14,016 9,326 22,046 17,419
------------ ----------- ----------- ------------
Total revenues 670,362 631,266 1,288,527 1,232,332
Cost and Expenses:
Cost of sales 566,167 540,365 1,093,863 1,056,948
Selling, general and administrative
and other operating expenses 85,307 73,868 161,942 145,781
Depreciation and amortization 7,409 6,356 14,472 12,779
Interest expense 2,718 2,459 5,169 4,585
------------ ----------- ----------- ------------
Total costs and expenses 661,601 623,048 1,275,446 1,220,093
Earnings before income taxes 8,761 8,218 13,081 12,239
Income taxes 3,549 3,205 5,298 4,773
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Net earnings $ 5,212 5,013 7,783 7,466
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------------ ----------- ----------- ------------
Weighted average number of
common shares outstanding 10,872 10,872 10,872 10,872
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
Earnings per share $ .48 .46 .72 .69
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</TABLE>
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See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands) Twenty-four Weeks Ended
---------------------------------
June 18, 1994 June 19, 1993
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 7,783 7,466
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 14,472 12,779
Provision for bad debts 283 3,247
Provision for losses on closed lease locations 250 (305)
Deferred income taxes 2,649 (51)
Deferred compensation (279) (129)
Earnings of equity investments (754) (852)
Other 23 41
Changes in current assets and liabilities:
Accounts and notes receivable (15,742) (5,234)
Inventories 4,864 29,214
Prepaid expenses (5,383) (5,426)
Accounts payable 4,774 1,511
Accrued expenses 5,126 8,522
Income taxes 644 (3,566)
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Net cash provided by operating activites 18,710 47,217
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Cash flows from investing activities:
Dividends received 618 506
Disposal of property, plant and equipment 6,207 5,934
Additions to property, plant and equipment
excluding capital leases (17,607) (24,102)
Business acquired (8,307) --
Loans to customers (4,908) (5,930)
Payments from customers on loans 3,560 3,704
Other (34) (115)
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Net cash used for investing activities (20,471) (20,003)
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Cash flows from financing activities:
Dividends paid (3,914) (3,914)
Proceeds (Payments) of short-term debt 7,600 (11,700)
Payments of long-term debt (1,260) (818)
Payments of capitalized lease obligations (60) (158)
Other 6 9
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Net cash provided by (used for)
financing activities 2,372 (16,581)
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Net increase in cash $ 611 10,633
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</TABLE>
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See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
- - -----------------------------------------------------------------------------------------------------------------------------------
Fiscal period ended June 18,
January 1, 1994 and January 2, 1993
(In thousands, except per share amounts)
Common stock Additional Treasury stock Total
------------------- pain-in Retained ----------------- stockholders'
Shares Amount capital earnings Shares Amount equity
<S> <C> <C> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 28, 1991 11,224 $ 18,706 11,938 151,274 (353) $ (3,072) 178,846
Net earnings -- -- -- 20,068 -- -- 20,068
Dividend declared of $.71 per share -- -- -- (7,718) -- -- (7,718)
Treasury stock issued upon exercise of
options and other insignificant items -- -- 6 -- 1 2 8
--------- --------- ------- -------- ----- -------- --------
Balance at January 2, 1993 11,224 18,706 11,944 163,624 (352) (3,070) 191,204
Net earnings -- -- -- 15,874 -- -- 15,874
Dividend declared of $.72 per share -- -- -- (7,828) -- -- (7,828)
Treasury stock issued upon exercise of
options and other insignificant items -- -- 10 -- 1 4 14
--------- --------- ------- -------- ----- -------- --------
Balance at January 1, 1994 11,224 18,706 11,954 171,670 (351) (3,066) 199,264
Net earnings -- -- -- 7,783 -- -- 7,783
Dividend declared of $.36 per share -- -- -- (3,914) -- -- (3,914)
Treasury stock issued upon exercise of
options and other insignificant items -- -- 4 -- 2 6
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Balance at June 18, 1994 11,224 $ 18,706 11,958 175,539 (351) $ (3,064) 203,139
--------- --------- ------- -------- ----- -------- --------
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</TABLE>
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See accompanying notes to consolidated financial statements.
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NASH FINCH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 18, 1994
NOTE 1
The accompanying financial statements include all adjustments which are, in
the opinion of management, necessary to present fairly the financial position of
the Company and its subsidiaries at June 18, 1994 and January 1, 1994, and the
results of operations for the 12-week and 24- week periods ending June 18, 1994,
June 19, 1993 and the changes in cash flows for the 24-week periods ending June
18, 1994 and June 19, 1993. All material intercompany accounts and transactions
have been eliminated in the consolidated financial statements. Results of
operations for the interim periods presented are not necessarily indicative of
the results to be expected for the full year.
NOTE 2
The Company uses the LIFO method for valuation of a substantial portion of
inventories. If the FIFO method had been used, inventories would have been
$ 41.9 million and $ 42.5 million higher at June 18, 1994 and at
January 1, 1994, respectively.
NOTE 3
Earnings per share are computed by dividing net earnings by the weighted
average number of common shares outstanding during each period presented.
Options granted under the Company's qualified stock plan are considered common
stock equivalents for the purpose of earnings per share data, but have been
excluded from the computation since the dilutive effect is not material.
NOTE 4
Effective January 31, 1994, the Company acquired the assets of Food Folks,
Inc., a former customer with 23 stores located in the Carolina's. Under the
terms of the agreement, assets with a fair market value of approximately $12.4
million were to be transferred to the Company in exchange for a maximum $1.8
million in cash, of which $1.3 million was paid at closing, the assumption of
liabilities of $3.2 million and the forgiveness of $7.4 million in debt, net of
a bad debt reserve established by the Company. This transaction was accounted
for as a troubled debt restructuring and is subject to final purchase price
adjustments.
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NOTE 5
On April 2, 1992, the Company sold customer notes totalling $22.8 million.
The notes having maturities through the year 2000, were sold at face value
with limited recourse as to certain notes. The Company is responsible for
collection of the notes and remits the principal plus a floating rate of
interest to the purchaser on a monthly basis. Proceeds from the sale of the
notes receivable were used to pay off short-term bank debt.
Remaining balances on the notes receivable sold totaled $3.2 million at
June 18, 1994.
The Company is contingently liable should these notes become uncollectible.
On March 4, 1994, $7.0 million in notes were repurchased as a part of a
troubled debt restructuring of Food Folks Inc., a former customer. These notes
were charged against a reserve for contingent losses on sold notes which totaled
$7.1 million at January 1, 1994.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
This will change as Larry writes the new narrative. Total revenues for the
second quarter of fiscal 1994 increased 6.2% over the same period last year. The
improvement is primarily due to growth in retail sales resulting from the
acquisition of the Easter's store chain which occurred in June 1993 and the
23-store Food Folks chain acquired from a former customer in January 1994. These
acquisitions raised retail segment sales to 33.8% of total sales during the
quarter, compared to 29.0% for the corresponding quarter last year.
Wholesale revenues continue to be negatively impacted by food price deflation,
as measured internally, especially in non-perishable product categories.
Gross margins were 15.5% for the second quarter this year compared to 14.4% for
the same 12-week period last year. On a year basis, margins were 15.1% compared
to 14.2% last year. The increases for both periods resulted from a greater
proportion of retail sales which typically achieve higher gross margins. In
addition, a change in retail sales mix to higher margin speciality departments
also contributed to the overall improvements in gross margins.
Selling, general and administrative expenses as a percent of total revenues,
were 12.7% and 12.6% for the quarter and year to date, respectively, compared to
11.7% and 11.8% for the prior year quarter and year to date, respectively. The
increase resulted from a greater proportion of retail business which operates at
higher expense levels as a percent of revenues. Prior year quarter and year to
date expenses included bad debt provisions for certain troubled accounts. In
fiscal 1994, the elimination of these non- recurring charges was partially
offset by higher computer system development costs and advertising and
promotional expenses.
Depreciation and amortization expenses increased 16.6% and 13.2% for the quarter
and year to date, respectively, compared to the same periods last year. The
additional expense reflects the increases in net capital expenditures and
intangible costs which resulted from acquisitions since the prior year periods.
Interest expense increased 10.5% for the quarter and 12.7% year to date
compared to last year due to higher average short-term borrowings and higher
interest rates.
<PAGE>
Income tax expense increased due to higher pretax earnings for the quarter and
year to date. Also, the effective tax rate this year was 40.5% compared to 39.0%
in the prior year. The rate increase primarily reflects new federal tax
legislation enacted during the third quarter of 1993.
Net earnings for the quarter were $5.2 million, an increase of 4.0% over last
year. On a year to date basis, earnings of $7.8 million represented a 4.2%
increase over the same period last year. The earnings increase is attributed to
improved performance at the retail level.
LIQUIDITY & CAPITAL RESOURCES
Net cash from operations was $18.7 million for the year to date in 1994 compared
with $47.2 million for a similar period in 1993. The main reason for the
difference is that inventories decreased in 1993 by $29.2 million compared with
a decrease of $4.9 million in 1994. The 1993 reduction resulted from a sell off
of large cigarette inventories on hand at the end of 1992. The increase in
accounts receivable since year end represents seasonal fluctuations primarily at
Nash DeCamp, the Company's produce marketing subsidiary.
Lines of credit with commercial banks were renewed during the second quarter on
terms substantially similar to the previous year. The Company's committed lines
total $30 million and an additional $80 million is available in uncommitted
lines. Fees are generally paid to secure the committed lines. It is anticipated
that the lines in place will be sufficient to finance short term needs for the
current year. The Company believes that additional credit would be available
should the need arise.
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PART II - OTHER INFORMATION
Items 1, 2, 3, 5 and 6 are not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
(a) The annual meeting of stockholders was held May 10, 1994.
(b) Not required. (Proxies were solicited pursuant to Regulation 14, there was
no solicitation in opposition to management's nominees, and all such
nominees were elected.)
(c) (i) ELECTION OF DIRECTORS. Five incumbent directors were nominated for
election, four to serve for three-year terms, and one to serve for a
two-year term. (The terms of the other seven directors do not expire until
1995 and 1996.)
The director nominees and voting results are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Votes Broker
Nominee Vote For Withheld Non-votes
Carole F. Bitter 9,311,531.061 296,054.408 -0-
Harold B. Finch, Jr. 9,119,606.980 487,978.489 -0-
Russell N. Mammel 9,192,033.478 415,551.991 -0-
Donald R. Miller 9,104,677.087 502,908.382 -0-
Robert F. Nash 9,254,771.868 352,813.601 -0-
</TABLE>
(ii) APPROVAL OF 1994 STOCK INCENTIVE PLAN. Stock-
holders approved the adoption of the Nash Finch Company
1994 Stock Incentive Plan. Voting results are as
follows: votes for - 8,714,800.515; votes against -
686,444.351; abstentions - 206,340.603. There were no
broker non-votes.
iii) APPROVAL OF AUDITORS. Stockholders approved the
selection of KPMG Peat Marwick to serve as independent
auditors for the fiscal year ending December 31, 1994.
Voting results are as follows: Votes for -
9,545,290.831; votes against - 33,487.173; abstentions -
28,807.465. There were no broker non-votes.
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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.
NASH-FINCH COMPANY
Registrant
Date July 29, 1994 By /s/ Harold B. Finch, Jr.
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Harold B. Finch, Jr.
Chairman of the Board and
Chief Executive Officer
Date July 29, 1994 By /s/ Robert F. Nash
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Robert F. Nash
Vice President and Treasurer
