<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
/x/ EXCHANGE ACT OF 1934
For the forty weeks ended October 8, 1994
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
/ / 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 November 18, 1994:
10,874,180 shares
-----------------
<PAGE>
PART I - FINANCIAL INFORMATION
This report is for the forty week interim period beginning January 2, 1994,
through October 8, 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 LLP,
the Company's independent public accountants.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
October 8, January 1,
ASSETS 1994 1994
----------- ----------
Current assets: (Unaudited)
<S> <C> <C>
Cash on hand $ 993 890
Accounts and notes receivable, net 101,134 95,952
Inventories 203,173 186,637
Prepaid expenses 9,764 7,391
Deferred tax assets 3,748 4,055
--------- ---------
Total current assets 318,812 294,925
Investments at net equity 7,801 7,137
Notes receivable, noncurrent 22,982 20,187
Property, plant and equipment:
Land 25,122 26,652
Buildings and improvements 106,158 105,650
Furniture, fixtures, and equipment 213,527 209,172
Leasehold improvements 24,877 26,016
Construction in progress 8,650 5,914
Assets under capitalized leases 9,958 9,210
--------- ---------
388,292 382,614
Less accumulated depreciation and amortization (203,451) (196,350)
--------- ---------
Net property, plant and equipment 184,841 186,264
--------- ---------
Intangible assets, net 8,316 9,512
Other assets 2,302 3,629
--------- ---------
Total assets $ 545,054 521,654
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Outstanding checks, net of cash in banks $ 18,158 14,301
Short-term debt payable to banks 39,100 38,300
Current maturities of long-term debt and
capitalized lease obligations 5,978 3,980
Accounts payable 136,249 119,970
Accrued expenses 32,388 27,032
Income taxes 4,307 4,315
Other current liabilities -- 7,123
--------- ---------
Total current liabilities 236,180 215,021
Long-term debt 85,491 89,811
Capitalized lease obligations 8,417 8,076
Deferred compensation 8,566 9,065
Other 1,145 417
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 11,974 11,954
Retained earnings 177,631 171,670
--------- ---------
Less cost of 349 and 351 shares of common 208,311 202,330
stock in treasury, respectively (3,056) (3,066)
--------- ---------
Total stockholders' equity 205,255 199,264
--------- ---------
Total liabilities and stockholders' equity $ 545,054 521,654
--------- ---------
--------- ---------
<FN>
- - -------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
16 Weeks Ended 40 Weeks Ended
----------------------- -----------------------
October 8, October 9, October 8, October 9,
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 867,787 840,117 2,134,268 2,055,030
Other revenues 19,169 16,434 41,215 33,853
--------- --------- --------- ---------
Total revenues 886,956 856,551 2,175,483 2,088,883
Cost and Expenses:
Cost of sales 754,113 726,926 1,847,976 1,783,874
Selling, general and
administrative and other
operating expenses 113,143 111,864 275,085 257,645
Depreciation and amortization 9,690 9,377 24,162 22,156
Interest expense 3,204 3,000 8,373 7,585
--------- --------- --------- ---------
Total costs and expenses 880,150 851,167 2,155,596 2,071,260
Earnings before income
taxes 6,806 5,384 19,887 17,623
Income taxes 2,756 2,364 8,054 7,137
--------- --------- --------- ---------
Net earnings $ 4,050 3,020 11,833 10,486
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average number of
common shares outstanding 10,874 10,872 10,873 10,872
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per share $ .37 .27 1.09 .96
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Forty Weeks Ended
--------------------------------
October 8, 1994 October 9, 1994
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 11,833 10,486
Adjustments to reconcile net income to net cash:
provided by operating activies:
Depreciation and amortization 24,162 22,156
Provision for bad debts 825 7,979
Provision for losses on closed lease locations 204 (323)
Deferred income taxes 1,927 (51)
Deferred compensation (499) (279)
Earnings of equity investments (1,270) (1,165)
Other 46 76
Changes in current assets and liabilities:
Accounts and notes receivable (14,603) 1,013
Inventories (11,417) 10,658
Prepaid expenses (2,225) (2,779)
Accounts payable 16,277 23,244
Accrued expenses 5,356 13,379
Income taxes (8) (8,194)
-------- --------
Net cash provided by operating activites 30,608 76,200
-------- --------
Cash flows from investing activities:
Dividends received 617 506
Disposal of property, plant and equipment 7,597 9,014
Additions to property, plant and equipment
excluding capital leases (24,229) (30,392)
Business acquired (8,614) (27,087)
Loans to customers (7,123) (10,387)
Payments from customers on loans 5,482 6,048
Other (34) (224)
-------- --------
Net cash used for investing activities (26,304) (52,522)
-------- --------
Cash flows from financing activities:
Dividends paid (5,872) (5,871)
Proceeds/(Payment) of short-term debt 800 (10,300)
Payments of long-term debt (2,510) (2,902)
Payments of capitalized lease obligations (506) (282)
Other 30 14
-------- --------
Net cash used for
financing activities (8,058) (19,341)
-------- --------
Net (decrease) increase in cash $ (3,754) 4,337
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fiscal period ended October 8, 1994,
January 1, 1994 and January 2, 1993
(In thousands, except per share amounts) Common stock Additional Treasury stock Total
----------------- paid-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 -- -- -- 11,833 -- -- 11,833
Dividend declared of $.54 per share -- -- -- (5,872) -- -- (5,872)
Treasury stock issued upon exercise of
options and other insignificant items -- -- 20 2 10 (7,828) 30
------- ------- ------- ------- ------ ------- -------
Balance at October 8, 1994 11,224 $18,706 11,974 177,631 (349) $(3,056) 205,255
------- ------- ------- ------- ------ ------- -------
------- ------- ------- ------- ------ ------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 8, 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 October 8, 1994 and January 1, 1994, and the
results of operations for the 16-week and 40-week periods ending October 8, 1994
and October 9, 1993, and the changes in cash flows for the 40-week periods
ending October 8, 1994 and October 9, 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 $42.5
million higher at October 8, 1994 and at January 1, 1994.
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,
a former customer with 23 stores located in North Carolina. Under the terms of
the agreement, assets with a fair market value of approximately $12.1 million
were transferred to the Company in exchange for $1.6 million in cash, the
assumption of liabilities of $3.3 million and the forgiveness of $7.2 million in
debt, net of a bad debt reserve established by the Company. This transaction was
accounted for as a troubled debt restructuring.
<PAGE>
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 $3.0 million at
October 8, 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, a former customer (see Note 4). These notes
were charged against a reserve for contingent losses on sold notes which totaled
$7.1 million at January 1, 1994.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues for the third quarter of fiscal 1994 increased 3.5% over the same
period last year. The improvement is primarily due to growth in wholesale sales
to a number of new convenience store accounts in the Southeast, and the
incremental retail sales resulting from the acquisition of the 23-store Food
Folks chain acquired from a former customer in January 1994.
On a year to date basis, the acquisition of Food Folks, as well as the Easter's
store chain in June 1993, contributed to an increase of 4.1% in total revenues
over last year. Consequently, retail segment revenues for the three quarters
represent 33.3% of total revenues compared to 30.5% for the
same period last year.
Gross margins were 15.0% for the third quarter this year compared to 15.1% for
the same 16-week period last year. The lower margin this year reflects price
reductions and changes in promotional allowance practices by the tobacco
industry. For the three quarters to date, gross margins are 15.1% compared to
14.6% in the prior year, continuing to reflect a greater proportion of retail
sales which typically achieve higher margins.
Selling, general and administrative expenses as a percent of total revenues were
12.8% and 12.6% for the quarter and year to date, respectively, compared to
13.1% and 12.3% for the prior year quarter and year to date, respectively. Prior
year's expenses included a bad debt provision of $3.6 and $5.0 million for the
quarter and year to date, respectively, relating to a bankruptcy filing
involving a customer in the Southeast. Excluding this charge, operating expenses
this year have increased for the quarter and year to date largely because of the
greater proportion of retail business, which operates at higher expense levels
as a percent of revenues.
Depreciation and amortization expenses increased 3.3% and 9.1% for the quarter
and year to date, respectively. The additional expense reflects fixed asset
additions and intangible costs resulting from the Easter acquisition which
occurred last year.
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
Interest expense increased 6.8% for the quarter and 10.4% year to date compared
to last year due to higher interest rates and somewhat higher average short-term
borrowings.
Income tax expense increased due to higher pretax earnings for the quarter and
year to date. The effective tax rate for the current year quarter was 40.5%,
compared to 43.9% last year, which reflected the retroactive effect of a higher
tax rate established by new federal tax legislation. On a year to date basis,
the effective rate was 40.5% for both periods.
Net earnings for the quarter were $4.0 million, an increase of 34.1% over last
year. For the year to date, net earnings of $11.8 million represented a 12.8%
increase over last year. However, eliminating the affect of the previously
mentioned bad debt provision from the prior year results, last year's net
earnings would have been $2.1 and $3.0 million higher for the quarter and year
to date, respectively. Conversely, an internally measured food price index for
non-perishable inventories showed inflation for the quarter. The difference
between the resulting LIFO charge this year and the credit taken in 1993
amounted to $1.3 million and $1.5 million for the quarter and year to date,
respectively, on an after tax basis.
Earnings improvements this year have been slowed by a downturn in results from
both the corporate retail segment and certain wholesale distribution centers in
the Southeast.
LIQUIDITY & CAPITAL RESOURCES
Net cash from operations was $30.6 million for the year to date in 1994 compared
with $76.2 million in 1993. The main reason for the difference is that
inventories increased by $11.4 million in 1994 compared with a decrease of $10.7
million in 1993. The decrease in 1993 resulted from a reduction in cigarette
inventories held at the end of the previous year. The increase in inventories in
1994 resulted from seasonal increases of merchandise in the Company's
distribution centers. In addition, the accounts and notes receivable increase
since year-end 1993 was attributable to an increase in notes receivable on loans
to customers and seasonal increases at Nash DeCamp, the Company's produce
subsidiary.
<PAGE>
PART II - OTHER INFORMATION
Items 1, 2, 3, 4 and 5 not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
27. Financial Data Schedule filed on EDGAR in accordance with Article 5 of
Regulation S-X on Form 10-Q for 3rd Quarter of fiscal 1994.
(b) REPORTS ON FORM 8-K:
NOT APPLICABLE
<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.
NASH-FINCH COMPANY
Registrant
Date November 21, 1994 By /s/ Alfred N. Flaten
-------------------------- -------------------------------
Alfred N. Flaten
President and Chief
Executive Officer
Date November 21, 1994 By /s/ Robert F. Nash
------------------------- -------------------------------
Robert F. Nash
Vice President and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-02-1994
<PERIOD-END> OCT-08-1994
<CASH> 993
<SECURITIES> 0
<RECEIVABLES> 101,994
<ALLOWANCES> (860)
<INVENTORY> 203,173
<CURRENT-ASSETS> 318,812
<PP&E> 388,292
<DEPRECIATION> 203,451
<TOTAL-ASSETS> 545,054
<CURRENT-LIABILITIES> 236,180
<BONDS> 85,491
<COMMON> 18,706
0
0
<OTHER-SE> 189,605
<TOTAL-LIABILITY-AND-EQUITY> 545,054
<SALES> 2,134,268
<TOTAL-REVENUES> 2,175,483
<CGS> 1,847,976
<TOTAL-COSTS> 298,421
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 826
<INTEREST-EXPENSE> 8,373
<INCOME-PRETAX> 19,887
<INCOME-TAX> 8,054
<INCOME-CONTINUING> 11,833
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,833
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
</TABLE>
