<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended: Commission file number:
December 31, 1994 0-785
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NASH-FINCH COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 41-0431960
(State of Incorporation) (I.R.S. Employer
Identification No.)
7600 France Avenue South
P.O. Box 355
Minneapolis, Minnesota
(Address of principal 55440-0355
executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 832-0534
----------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.66-2/3 per share
Common Stock Purchase Rights
----------------
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of March 20, 1995, 10,874,455 shares of Common Stock of the Registrant
were outstanding, and the aggregate market value of the Common Stock of the
Registrant as of that date (based upon the last reported sale price of the
Common Stock at that date by the NASDAQ National Market System), excluding
outstanding shares deemed beneficially owned by directors and officers, was
approximately $169,913,400.
----------------
Parts I, II and IV of this Annual Report on Form 10-K incorporate by
reference information (to the extent specific pages are referred to herein) from
the Registrant's Annual Report to Stockholders for the Year Ended December 31,
1994 (the "1994 Annual Report"). Part III of this Annual Report on Form 10-K
incorporates by reference information (to the extent specific sections are
referred to herein) from the Registrant's Proxy Statement for its Annual Meeting
to be held May 9, 1995 (the "1995 Proxy Statement").
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PART I
ITEM 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS.
Nash Finch Company, a Delaware corporation organized in 1921 as the
successor to a business founded in 1885, has its principal executive offices at
7600 France Avenue South, Edina, Minnesota 55435. Its telephone number is (612)
832-0534. Unless the context otherwise indicates, the term "Company," as used
in this Report, means Nash Finch Company and its consolidated subsidiaries.
The Company is one of the largest food wholesalers in the United States,
serving approximately 700 affiliated and other independent retail supermarkets
as of December 31, 1994. In addition, the Company distributes food and related
products to approximately 5,000 convenience stores and other retail outlets and
institutional accounts, such as military base commissaries, restaurants, schools
and hospitals. No one customer accounts for a significant portion of the
Company's sales. The Company also operates and supplies, as of December 31,
1994, 122 Company-owned supermarkets and warehouse stores. The Company's
affiliated and Company-owned stores operate under a number of tradenames,
including ECONOFOODS[REGISTERED TRADEMARK], FOOD BONANZA[REGISTERED TRADEMARK],
SUN MART-TM-, FAMILY THRIFT CENTER-TM-, EASTER FOODS-TM-, FOOD FOLKS[REGISTERED
TRADEMARK], JACK & JILL[REGISTERED TRADEMARK], ECONOMART[REGISTERED TRADEMARK],
OUR FAMILY FOODS[REGISTERED TRADEMARK] and FOOD PRIDE[REGISTERED TRADEMARK].
The Company's market areas are in 31 states in the Midwest, West, Mid-Atlantic
and Southeast and are serviced through 18 wholesale distribution centers and two
general merchandise warehouses. The Company packages, ships and markets fresh
produce from California and the country of Chile to a variety of buyers across
the United States, Canada and overseas.
In March 1995, the Company announced that one of its 18 wholesale
distribution centers will be closed in May 1995 and converted, by year end, to a
warehouse handling general merchandise and slow-moving items. Operations from
the closed facility will be consolidated into those of four other distribution
centers.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Financial information about the Company's business segments for the most
recent three fiscal years is contained on page 25 of the 1994 Annual Report
(Note 12 to Consolidated Financial Statements). For segment financial reporting
purposes, a portion of the operational profits of wholesale distribution centers
are allocated to retail operations to the extent that merchandise is purchased
by these distribution centers and transferred to retail stores directly operated
by the Company. For fiscal 1994, 44% of such warehouse operational profits were
allocated to retail operations.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
1. PRODUCTS SUPPLIED.
The Company distributes and sells a full line of food products, including
dry groceries, fresh fruits and vegetables, frozen foods, fresh and processed
meat products and dairy products, and a variety of non-food products, including
health and beauty aids, tobacco products, paper products, cleaning supplies and
small household items. The Company primarily distributes and sells nationally
advertised brand products and a number of unbranded products (principally meats
and produce) purchased directly from various manufacturers, processors and
suppliers or through manufacturers'
<PAGE>
representatives and brokers. Many of the major suppliers of the Company are
large companies. The Company has no significant long-term purchase obligations
and believes that adequate and alternative sources of supply are available in
most cases.
The Company also distributes and sells private label products using the
Company's own trademarks. A wide variety of grocery, dairy, package meat,
frozen foods, health and beauty care products, paper and household products,
beverages, and other packaged products are manufactured or processed by others
for the Company and sold under Company brand names.
2. DISTRIBUTION.
The Company distributes products to Company-owned supermarkets and
warehouse stores and to independent customers and military base commissaries
from 18 distribution centers, as of December 31, 1994, located in Minnesota (1),
Iowa (1), Kansas (1), Nebraska (2), Colorado (1), North Dakota (2), South Dakota
(2), Wisconsin (1), North Carolina (3), Virginia (2), Maryland (1) and Georgia
(1). The Company's distribution centers are located at strategic points to
efficiently serve Company-owned stores and independent customers. The
distribution centers are equipped with modern materials handling equipment for
receiving, storing and shipping goods and merchandise and are designed for
high-volume operations at low unit costs. The Company also distributes health
and beauty aids and general merchandise products from two separate warehouse
facilities, one in South Dakota and the other in North Carolina, and distributes
produce from a separate warehouse facility in North Carolina.
The distribution centers serve as central sources of supply for
Company-owned and independent stores and institutional customers within their
operating areas. The distribution centers maintain complete inventories
containing virtually every national brand grocery product sold in supermarkets,
together with a wide variety of high-volume private label items. In addition,
the distribution centers provide full lines of perishables, including fresh
meats and poultry, fresh fruits and vegetables, dairy and delicatessen products
and frozen foods. Retailers order their inventory requirements at regular
intervals through direct linkage with Company computers. Deliveries are made
primarily by the Company's transportation fleet. The frequency of deliveries
varies, depending upon customer needs. The Company currently has a modern fleet
of approximately 365 tractors, 613 semi-trailers and 230 small trucks and vans,
most of which are owned by the Company. In addition, many types of meats, dairy
products, bakery and other products are sold by the Company but are delivered by
the suppliers directly to retail food stores.
Virtually all of the Company's wholesale sales to independent customers are
made on a cost-plus-fee basis, with the fee based on the type of commodity and
quantity purchased. Selling prices are changed promptly, based on the latest
cost information.
3. WHOLESALE OPERATIONS.
As of December 31, 1994, the Company distributed food products and non-food
items, on a wholesale basis, to approximately 700 affiliated and other
independent retail supermarkets and to approximately 5,000 convenience stores,
military base commissaries and other retail outlets and institutional accounts.
The Company's affiliated and other independent retail supermarkets account for
the major portion of the Company's wholesale sales. These are primarily self-
service supermarkets that carry a wide variety of grocery products, health and
beauty aids and general merchandise. Many stores also have one or more
specialty departments such as delicatessens, in-
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store bakeries, restaurants, pharmacies and flower shops. The stores served by
the Company's wholesale operations range in size from small convenience stores
to large supermarkets containing approximately 65,000 square feet.
The Company offers its affiliated independent stores a broad range of
services, most of which are also made available to its other retailers.
Services offered include promotion, advertising and merchandising programs, the
installation of computerized ordering, receiving and scanning systems, the
establishment and supervision of computerized retail accounting, budgeting and
payroll systems, personnel management assistance and employee training, consumer
and market research, store development services and insurance programs. The
Company's retail counselors and other Company personnel advise and counsel the
affiliated independents, and directly provide many of the above services.
Separate charges are made for some of these services. Other independent stores
are charged for services on a negotiated basis. The Company also provides
retailers with marketing and store upgrade services, many of which have been
developed in connection with Company-owned stores. For example, the Company
assists retailers in installing and operating delicatessens and other specialty
food sections. Rather than develop a single pattern for the services it
provides, the Company has developed flexible programs to serve the needs of most
of its affiliated independents, whether rural or urban, large or small.
The Company's assistance to its affiliated independent stores in store
development provides a means of continued growth for the Company through the
development of new retail store locations and the enlargement or remodeling of
existing retail stores. The services provided include site selection, marketing
studies, building design, store layout and equipment planning and procurement.
The Company assists its retail customers in securing existing supermarkets that
are for sale from time to time in market areas serviced by the Company and,
occasionally, acquires existing stores for resale to customers.
The Company also may provide financial assistance to independent retailers
it services, generally in connection with new store development and the
upgrading or expansion of existing stores. The Company makes secured loans to
some of its affiliated independent operators, generally repayable over a period
of five or seven years, for inventories, store fixtures and equipment, working
capital and store improvements. Loans are secured by liens on inventory or
equipment or both, by personal guarantees and by other types of security. As of
December 31, 1994, the Company had outstanding $19,866,974 in such secured loans
to 71 independent operators. In addition, the Company may provide such
assistance to independent retailers by guarantying loans from financial
institutions and leases entered into directly with lessors. The Company also
uses its credit strength to lease supermarket locations and sublease them to
independent operators, at rates that are at least as high as the rent paid by
the Company.
4. RETAIL OPERATIONS.
As of December 31, 1994, the Company owned and operated 122 retail outlets,
including 83 supermarkets, 35 warehouse stores and 4 combination general
merchandise/food stores. The Company has devoted considerable resources in
recent years to acquire, construct, enlarge and modernize Company-owned stores;
and, by constructing new stores or expanding existing stores, seeks to add
either larger conventional supermarkets (at least 30,000 square feet) or
warehouse stores (at least 45,000 square feet), as appropriate. The Company has
implemented a number of automated systems, including scanning and direct store
delivery for its stores. These systems
3
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provide inventory control at delivery and checkout points, reducing shrinkage
and increasing labor efficiency.
The Company operates its 83 supermarkets principally under the names SUN
MART-TM-, EASTER FOODS-TM-, FOOD FOLKS[REGISTERED TRADEMARK] and JACK &
JILL[REGISTERED TRADEMARK]. These stores, of which the Company leases 69 (the
remainder are owned), range in size up to approximately 46,000 square feet.
These stores are primarily self-service supermarkets that carry a wide variety
of grocery products, health and beauty aids and general merchandise. Many
stores also have one or more specialty departments such as delicatessens, in-
store bakeries, restaurants, pharmacies and flower shops.
The Company operates 35 warehouse stores principally under the names
ECONOFOODS[REGISTERED TRADEMARK] and FOOD BONANZA[REGISTERED TRADEMARK].
These stores, 12 of which the Company owns (the remainder are leased), range in
size up to approximately 106,000 square feet. The Company's newer and expanded
warehouse stores offer a wide variety of high quality groceries, fresh fruits
and vegetables, dairy products, frozen foods, fresh fish, fresh and processed
meat and health and beauty aids, all at lower prices, and specialty departments
such as delicatessens, in-store bakeries, pharmacies, banks and floral and video
departments. These stores appeal to quality and price-conscious customers who
want national brands, broad selection, and availability of convenience foods,
but are willing, in some cases, to forgo standard supermarket services. The
stores are able to offer lower prices due to increased business volume as well
as the limited services available.
The Company also operates four combination general merchandise/food stores
under the name FAMILY THRIFT CENTER-TM-. These stores, all of which are owned,
range in size up to approximately 60,000 square feet. In addition to
traditional supermarket food departments, these stores have expanded general
merchandise and health and beauty aid departments and pharmacies, and some also
have sit-down restaurants, full-service floral departments and book departments.
5. PRODUCE MARKETING OPERATIONS.
Through a wholly owned subsidiary, Nash-DeCamp Company, the Company grows,
packs, ships and markets fresh fruits and vegetables from locations in
California and the country of Chile to customers across the United States and
Canada, and also overseas. For regulatory reasons, the amount of business
between Nash-DeCamp Company and the Company is limited. The Company owns and
operates four modern packing, shipping and/or cold storage facilities that ship
fresh grapes, citrus, plums, peaches, nectarines, apricots, pears, persimmons,
kiwi fruit and other products. The Company also acts as marketing agent for
other packers of fresh produce in California and in the country of Chile. For
the above services, the Company receives, in addition to a selling commission, a
fee for packing, handling and shipping produce. The Company also owns vineyards
and orchards for the production of table grapes, tree fruit, kiwi and citrus.
6. COMPETITION.
All segments of the Company's business are highly competitive. The Company
competes directly at the wholesale level with a number of wholesalers that
supply independent retailers, including "cooperative" wholesalers that are owned
by their retail customers and "voluntary" wholesalers who, like the Company, are
not owned by their retail customers but sponsor a program under which single-
unit or multi-unit independent retailers may affiliate under a common name. The
Company also competes indirectly with the warehouse and distribution operations
of the large integrated chains, which consist of single entities owning both
wholesale and retail operations. At
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the wholesale level, the principal methods of competition are location of
distribution centers and the services offered to independent retailers, such as
store financing and use of store names. The success of the Company's wholesale
business also depends upon the ability of its retail store customers to compete
successfully with other retail food stores.
The Company competes on the retail level in a fragmented market with many
organizations of various sizes, ranging from national chains and voluntary or
cooperative groups to local chains and privately-owned unaffiliated stores.
Depending on the product and location involved, the principal methods of
competition at the retail level include price, service, quality, display,
selection and store location.
The Company competes directly in its produce marketing operations with a
large number of other firms that pack, ship and market produce, and competes
indirectly with larger, integrated firms that grow, pack, ship and market
produce. The principal methods of competition in this segment are service
provided to growers and the ability to sell produce at the most favorable
prices.
7. EMPLOYEES.
As of December 31, 1994, the Company employed approximately 12,500 persons
(approximately 6,200 full-time and 6,300 part-time).
ITEM 2. PROPERTIES.
The principal executive offices of the Company are located in Edina,
Minnesota, and consist of approximately 68,000 square feet of office space.
The locations and sizes of the Company's distribution centers, as of
December 31, 1994, are as follows (all of which are owned, except as indicated):
<TABLE>
<CAPTION>
Approx. Size
Location (Square Feet)
-------- -------------
<S> <C>
Midwest/West:
*Denver, Colorado........................... 301,800
Cedar Rapids, Iowa......................... 351,900
Liberal, Kansas............................ 177,000
St. Cloud, Minnesota....................... 325,100
Grand Island, Nebraska..................... 177,700
Lincoln, Nebraska.......................... 226,000
Fargo, North Dakota........................ 288,800
Minot, North Dakota........................ 185,200
Rapid City, South Dakota................... 186,600
Sioux Falls, South Dakota.................. 173,100
*Sioux Falls, South Dakota
(general merchandise warehouse).......... 79,300
Appleton, Wisconsin........................ 430,900
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Southeast:
Macon, Georgia............................. 247,700
*Baltimore, Maryland........................ 215,000
(includes 60,000 square feet of
refrigerated warehouse space
located in Jessup, Maryland)
*Hickory, North Carolina.................... 120,500
(general merchandise warehouse)
*Lumberton, North Carolina.................. 256,600
(includes produce warehouse of
16,100 square feet located
in Wilmington, North Carolina)
*Newton, North Carolina..................... 208,900
*Rocky Mount, North Carolina................ 201,800
Bluefield, Virginia........................ 197,700
*Chesapeake, Virginia....................... 233,300
---------
Total square feet.......................... 4,584,900
---------
---------
<FN>
---------------
* Leased facility (excluding produce warehouse in Wilmington, North Carolina,
which is owned).
</TABLE>
The distribution center facilities are leased for varying terms, all with
remaining terms of less than 20 years. Total rent in fiscal 1994 for the leased
facilities was $3,968,000.
The following table shows the number and aggregate size of Company-owned
and operated supermarkets and warehouse stores operated at December 31, 1994:
*Supermarkets:
Number of Stores.................................... 87
Total Square Feet............................ 1,951,000
Warehouse stores:
Number of Stores.................................... 35
Total Square Feet............................ 1,484,000
Totals:
Number of Stores................................... 122
Total Square Feet............................ 3,435,000
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* Includes four combination general merchandise/food stores.
The Company leases 69 of its supermarket and combination general
merchandise/food store buildings (the remainder are owned), which range in size
up to approximately 60,000 square feet. The Company also leases 23 of its
warehouse store buildings, which range in size up to approximately 106,000
square feet. These leases are for varying terms, primarily under 20 years. The
total rent in fiscal 1994 for store buildings was $9,223,000.
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Further information about the lease obligations of the Company is given in
Note 8 to the Consolidated Financial Statements on page 24 of the 1994 Annual
Report, incorporated herein by reference.
Nash-DeCamp Company, a wholly owned subsidiary of the Company, owns and
operates four packing, shipping and/or cold storage facilities in California in
connection with its produce marketing operations, with total space of
approximately 184,500 square feet. Its executive offices, comprising
approximately 8,000 square feet, are in leased premises located in Visalia,
California. In addition, the Company owns approximately 800 acres for the
production of table grapes, 40 acres for the production of kiwi fruit, 820 acres
for the production of peaches, plums, apricots and nectarines, and 255 acres for
the production of citrus. These vineyards and orchards are located in the San
Joaquin Valley of California. The Company, through a wholly owned Chilean
subsidiary, also leases approximately 520 acres in Chile for the production of
table grapes.
The Company makes a continuing effort to keep all of its properties and
facilities modern, efficient and adequate for its operational needs, through the
acquisition, disposition, expansion and improvement of such properties and
facilities. As a result, the Company believes that its properties and
facilities are, on an aggregate basis, fully utilized and adequate for the
conduct of its business.
ITEM 3. LEGAL PROCEEDINGS.
On August 31, 1993 one of the Company's customers, Paintsville Foods, Inc.
(the "Debtor"), filed a Chapter 11 bankruptcy petition in the United States
Bankruptcy Court for the Eastern District of Kentucky (the "Bankruptcy Court").
On November 14, 1994, the Bankruptcy Court confirmed a creditor's plan of
reorganization prepared by Nash Finch which resulted in Nash Finch acquiring
certain operating assets and real estate of six supermarkets from Debtor with a
fair market value of $4.6 million.
In November 1992, Jin Ku Kim, currently an employee of the Company,
commenced an action in U.S. District Court for the Northern District of Iowa
claiming damages as a result of the alleged failure of the Company to promote
Mr. Kim to the position of shipping foreman in November 1990 and April 1992
because of his national origin and race, and the alleged retaliation against him
by the Company in terms and conditions of employment after he filed charges of
employment discrimination with the Cedar Rapids, Iowa, Civil Rights Commission.
On September 16, 1994 a jury verdict in the amount of $8,786,000 was entered
against the Company in this case including $36,000 in back pay, $1,750,000 in
mental anguish and loss of enjoyment of life and $7,000,000 in punitive damages.
The Company continues to deny that Mr. Kim has suffered any discrimination or
retaliation, or any damages as a result thereof. The Company has filed various
post-trial motions, including a motion for judgment notwithstanding the verdict,
on the grounds that there is insufficient evidence to support the plaintiff's
claims or the jury verdict; a motion for a new trial on grounds that the verdict
is outrageous and unconscionable; and a motion for a substantial reduction of
damages on the grounds that the verdict has no reasonable basis given the facts
and evidence in this case, and on the grounds that $8,750,000 of the damages
included in the verdict is subject to a $300,000 limitation on damages contained
in the Civil Rights Act of 1991. A hearing was held on the Company's post-trial
motions on November 14, 1994, and all such motions remain pending as of the date
of this Annual Report. The Company believes that there is substantial basis,
both in the facts of this case and in law, supporting the Company's post-trial
motions. The Company intends to continue to vigorously pursue its post-trial
motions and all other avenues for appealing the verdict of the jury in this
case. Although no assurance can be given that the jury's
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verdict will be substantially reduced or eliminated, the Company believes that
such will be the case and that the reserves it has established are reasonably
adequate to cover its liability.
On March 16, 1995 a group of nine separate entities engaged in growing
citrus crops in Fresno County and Tulare County, California, commenced an action
against Nash-DeCamp Company, a wholly owned subsidiary of the Company, and
others, including two of its officers and directors, in the United States
District Court for the Eastern District of California. Nash-DeCamp Company has
provided services to the plaintiffs relating to the packing, marketing and
distribution of produce grown by the plaintiffs, and has advanced financing to
assist the plaintiffs in growing and harvesting their crops. The plaintiffs'
complaint alleges that the defendants have engaged in various acts of misconduct
relating to the handling, packaging and pricing of such produce, and relating to
financing extended to the plaintiffs, in violation of various federal and state
laws, resulting in unspecified damages to the plaintiffs. The plaintiffs'
complaint seeks unspecified compensatory damages, punitive damages, treble
damages, rescission of the loan documents relating to the financing extended by
Nash-DeCamp Company to the plaintiffs, injunctive relief preventing Nash-DeCamp
from enforcing the loan documents, attorneys' fees and costs. Because this
complaint has only recently been filed, Nash-DeCamp Company has only conducted a
very preliminary investigation of the factual basis alleged to underlie the
plaintiffs' claims, and no meaningful assessment of the potential exposure to
Nash-DeCamp Company can be made at this time. Nash-DeCamp Company intends to
conduct a full investigation into the facts alleged to underlie the plaintiffs'
claims and to vigorously defend the claims in accordance with the results of
such investigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers of the Company, their ages, the year first elected
or appointed as an executive officer and the offices held as of March 1, 1995
are as follows:
<TABLE>
<CAPTION>
Year First Elected
or Appointed as an
Name (Age) Executive Officer Title
---------- ------------------ -----
<S> <C> <C>
Alfred N. Flaten (60) 1991 President and Chief Executive
Officer
David W. Bell (50) 1990 Senior Vice President, Retail
Sales and Operations
William T. Bishop (54) 1994 Senior Vice President, Sales
and Logistics
Robert F. Nash (61) 1974 Vice President and Treasurer
Norman R. Soland (54) 1986 Vice President, Secretary and
General Counsel
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Charles F. Ramsbacher (52) 1991 Vice President, Marketing
Clarence T. Walters (58) 1988 Vice President, Management
Information Systems
Steven L. Lumsden (49) 1992 Vice President, Warehouse and
Transportation
Gerald D. Maurice (61) 1993 Vice President, Store
Development
Charles M. Seiler (47) 1995 Vice President, Corporate
Retail Operations
John R. Scherer (44) 1994 Vice President, Planning and
Financial Services
Lawrence A. Wojtasiak (49) 1990 Controller
</TABLE>
There are no family relationships between or among any of the executive
officers or directors of the Company. Executive officers of the Company are
elected by the Board of Directors for one-year terms, commencing with their
election at the first meeting of the Board of Directors immediately following
the annual meeting of stockholders and continuing until the next such meeting of
the Board of Directors. Except as indicated below, there has been no change in
position of any of the executive officers during the last five years.
Mr. Flaten was elected Chief Executive Officer in November 1994. His
election as President and Chief Operating Officer was effective in November
1991. He had been elected Executive Vice President, Sales and Operations of
Nash Finch in February 1991. He was previously an operating officer, having
served as Vice President, Corporate Retail Operations from January 1989 to
February 1991.
Mr. Bell's election as Senior Vice President, Retail Sales and Operations
was effective in October 1994, having previously served as Vice President,
Corporate Retail Operations from May 1991 to October 1994 and Vice President,
Marketing from May 1990 to May 1991, and Director of Marketing from February
1990 to May 1990.
Mr. Bishop's election as Senior Vice President, Sales and Logistics was
effective in December 1994 after joining the Company in the same month. He was
previously employed by Scrivner, Inc., a wholesale and retail food distribution
company, serving as its President and Chief Operating Officer from 1987 to 1994.
Mr. Ramsbacher was elected Vice President, Marketing in May 1991, having
previously served as operating Vice President, Iowa Division from May 1990 to
May 1991, and Iowa Division Manager from August 1988 to May 1990.
Mr. Lumsden was elected Vice President, Warehouse and Transportation in May
1992, having previously served as Director, Warehouse and Transportation from
May 1990 to May 1992, and Manager, Distribution Center Operations from September
1987 to May 1990.
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<PAGE>
Mr. Maurice was elected Vice President, Store Development in May 1993,
having previously served as operating Vice President, Central Division for more
than five years.
Mr. Seiler's election as Vice President, Corporate Retail Operations was
effective in October 1994, having previously served as Vice President, Iowa
Division from May 1993 to October 1994, Iowa Division Manager from June 1991 to
May 1993, and Corporate Retail Sales and Operations Supervisor (Fargo, ND) from
July 1984 to June 1991.
Mr. Scherer's election as Vice President, Planning and Financial Services
was effective in December 1994, having previously served as Director of
Strategic Planning and Financial Services from April 1994 to December 1994, and
Director of Planning and Budgets from January 1988 through March 1994.
Mr. Wojtasiak was elected Controller in May 1990. He was previously
employed by The Diana Corporation, a diversified holding company, as a special
project coordinator from July 1988 to April 1990.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information under the caption "Price Range of Common Stock and
Dividends" on page 15 of the Company's 1994 Annual Report is incorporated herein
by reference.
ITEM 6. SELECTED FINANCIAL DATA
The financial information under the caption "Consolidated Summary of
Operations" on pages 26 and 27 of the Company's 1994 Annual Report is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 14 and 15 of the
Company's 1994 Annual Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements and the report of its
independent auditors on pages 16-25 of the Company's 1994 Annual Report are
incorporated herein by reference, as is the unaudited information set forth
under the caption "Quarterly Financial Information" on page 15.
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<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On February 14, 1995, the Board of Directors of the Company decided to
change independent accountants for the fiscal year beginning January 1, 1995 and
thereby dismissed KPMG Peat Marwick LLP effective upon completion of the audit
for the fiscal year ended December 31, 1994. The Board of Directors of the
Company has approved the engagement of Ernst & Young LLP as its new independent
accountants for the fiscal year ending December 30, 1995. A Form 8-K was filed
reporting this event on February 22, 1995. Refer to "Item 14. -- Reports on
Form 8-K."
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
A. DIRECTORS OF THE REGISTRANT.
The information under the captions "Election of Directors--Information
About Directors and Nominees" and "Election of Directors--Other Information
About Directors and Nominees" in the Company's 1995 Proxy Statement is
incorporated herein by reference.
B. EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning Executive Officers of the Company is included in
this Report under Item 4A, "Executive Officers of the Registrant."
C. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT OF 1934.
Information under the caption "Executive Compensation and Other Benefits--
Compliance with Section 16(a) of the Exchange Act" in the Company's 1995 Proxy
Statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information under the captions "Election of Directors--Compensation of
Directors" and "Executive Compensation and Other Benefits" in the Company's 1995
Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Principal Stockholders and Beneficial
Ownership of Management" in the Company's 1995 Proxy Statement is incorporated
herein by reference.
11
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Election of Directors--Other Information
About Directors and Nominees" in the Company's 1995 Proxy Statement is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS:
The following Financial Statements are incorporated herein by
reference from the pages indicated in the Company's 1994 Annual Report:
Independent Auditors' Report -- page 16
Consolidated Statements of Earnings for the years ended December 31,
1994, January 1, 1994 and January 2, 1993 -- page 16
Consolidated Statements of Cash Flows for the years ended December 31,
1994, January 1, 1994 and January 2, 1993 -- page 17
Consolidated Balance Sheets as of December 31, 1994 and January 1,
1994 -- pages 18 and 19
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1994, January 1, 1994 and January 2, 1993 -- page 20
Notes to Consolidated Financial Statements -- pages 20-25
2. FINANCIAL STATEMENT SCHEDULES:
The following financial statement schedules and auditors' report
thereon are included herein and should be read in conjunction with the
consolidated financial statements referred to above (page numbers refer to
pages in this Report):
PAGE
----
Independent Auditors' Report on Consolidated Financial
Statement Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Financial Statement Schedules:
II Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . 16
All other schedules are omitted as the required information is
inapplicable or the information is presented in the consolidated financial
statements or related notes.
12
<PAGE>
3. Exhibits:
The exhibits to this Report are listed in the Exhibit Index on pages E1
to E5 herein.
A copy of any of these exhibits will be furnished at a reasonable cost to
any person who was a stockholder of the Company as of March 20, 1995, upon
receipt from any such person of a written request for any such exhibit. Such
request should be sent to Nash Finch Company, 7600 France Avenue South, P.O.
Box 355, Minneapolis, Minnesota, 55440-0355, Attention: Secretary.
The following is a list of each management contract or compensatory plan
or arrangement required to be filed as an exhibit to this Annual Report on
Form 10-K pursuant to Item 14(c):
A. Nash Finch Profit Sharing Plan -- 1994 Revision and Nash Finch
Profit Sharing Trust Agreement (as restated effective January 1,
1994) (incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the fiscal year ended January 1, 1994
(File No. 0-785)).
B. Nash Finch Profit Sharing Plan -- 1994 Revision -- First Declaration
of Amendment (filed herewith as Exhibit 10.7).
C. Nash Finch Executive Incentive Bonus and Deferred Compensation Plan
(as amended and restated effective December 31, 1993) (incorporated
by reference to Exhibit 10.7 to the Company's Annual Report on Form
10-K for the fiscal year ended January 1, 1994 (File No. 0-785)).
D. Excerpt from minutes of the Board of Directors regarding Nash Finch
Pension Plan, as amended (incorporated by reference to Exhibit 10.9
to the Company's Annual Report on Form 10-K for the fiscal year
ended January 3, 1987 (File No. 0-785)).
E. Letter agreement, dated June 12, 1979, between Nash Finch and Donald
R. Miller (incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1983 (File No. 0-785)).
F. Excerpts from minutes of the Board of Directors regarding director
compensation (filed herewith as Exhibit 10.11).
G. Form of Director Fee Deferral Agreement (incorporated by reference
to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 (File No. 0-785)).
H. Form of letter agreement specifying benefits in the event of
termination of employment following a change in control of Nash
Finch (incorporated by reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 29,
1990 (File No. 0-785)).
13
<PAGE>
I. Nash Finch Company Income Deferral Plan (incorporated by reference
to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994 (File No. 0-785)).
J. Nash Finch Company 1994 Stock Incentive Plan (incorporated by
reference to Exhibit 10.1 to the Registration Statement on Form S-8
filed July 8, 1994 (File No. 33-54487)).
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of the fiscal
year covered by this Report; however, on February 22, 1995, Nash Finch filed a
Form 8-K with the Securities and Exchange Commission to report the dismissal
of KPMG Peat Marwick LLP as Nash Finch's independent accountants upon
completion of the audit for the fiscal year ended December 31, 1994 and the
engagement of Ernst & Young LLP as Nash Finch's independent accountants for
the fiscal year ending December 30, 1995. Amendment Nos. 1 and 2 on Form
8-K/A, amending the February 22, 1995 Form 8-K filing, were filed on March 6,
1995 and March 21, 1995, respectively.
14
<PAGE>
INDEPENDENT AUDITORS' REPORT ON
CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Stockholders
Nash Finch Company:
Under date of March 3, 1995, we reported on the consolidated balance sheets
of Nash Finch Company and subsidiaries as of December 31, 1994 and January
1, 1994 and the related consolidated statements of earnings, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1994, as contained in the 1994 annual report to stockholders.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year
1994. In connection with our audits of the aforementioned consolidated
financial statements, we have also audited the related consolidated
financial statement schedule as listed in the accompanying index. This
financial statement schedule is the responsibility of company management.
Our responsibility is to express an opinion on this financial statement
schedule based on our audits.
In our opinion, the related financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 31, 1995
15
<PAGE>
NASH FINCH COMPANY and SUBSIDIARIES
Valuation and Qualifying Accounts Schedule II
Fiscal years ended December 31, 1994, January 1, 1994, and January 2, 1993
(In thousands)
<TABLE>
<CAPTION>
Additions
------------------------ Charged
Balance at Charged to (credited) Balance
beginning costs and Due to to other at end
Description of year expenses acquisitions accounts Deductions of year
---------------------------------------- ---------- ---------- ------------ ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
53 weeks ended January 2, 1993:
Allowance for doubtful receivables (d) $5,150 3,668 -- (4,000)(e) 1,316 (b) 3,554
52 (a)
Provision for losses relating to
leases on closed locations 1,514 316 -- 178 (c) 1,341 667
------ ------ ---- ------- ------ ------
$6,664 3,984 -- (3,770) 2,657 4,221
------ ------ ---- ------- ------ ------
------ ------ ---- ------- ------ ------
52 weeks ended January 1, 1994:
Allowance for doubtful receivables (d) $3,554 10,146 -- (3,123)(e) 2,146 (b) 8,522
91 (a)
Provision for losses relating to
leases on closed locations 667 583 -- 677 (c) 1,759 168
------ ------ ---- ------- ------ ------
$4,221 10,729 -- (2,355) 3,905 8,690
------ ------ ---- ------- ------ ------
------ ------ ---- ------- ------ ------
52 weeks ended December 31, 1994:
Allowance for doubtful receivables (d) $8,522 2,187 961 7,123 (e) 14,207 (b) 4,620
34 (a)
Provision for losses relating to
leases on closed locations 168 1,451 -- (618)(c) 467 534
------ ------ ---- ------- ------ ------
$8,690 3,638 961 6,539 14,674 5,154
------ ------ ---- ------- ------ ------
------ ------ ---- ------- ------ ------
<FN>
(a) Recoveries on accounts previously charged off.
(b) Accounts charged off.
(c) Change in current portion shown as current liability.
(d) Includes current and non-current receivables.
(e) Reserve for estimated losses on notes previously sold
reclassified from other current liability.
</TABLE>
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 27, 1995 NASH-FINCH COMPANY
By /s/ Alfred N. Flaten
--------------------------------------
Alfred N. Flaten
President, Chief Executive
Officer, and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below on March 27, 1995 by the following persons on
behalf of the Registrant and in the capacities indicated.
/s/ Alfred N. Flaten /s/ Lawrence A. Wojtasiak
----------------------------------- -----------------------------------
Alfred N. Flaten, President, Lawrence A. Wojtasiak, Controller
Chief Executive Officer (Principal (Principal Accounting Officer)
Executive Officer) and Director
/s/ Robert F. Nash /s/ Richard A. Fisher
----------------------------------- -----------------------------------
Robert F. Nash, Vice President and Richard A. Fisher, Director
Treasurer (Principal Financial
Officer) and Director
/s/ Carole F. Bitter /s/ John H. Grunewald
----------------------------------- -----------------------------------
Carole F. Bitter, Director John H. Grunewald, Director
/s/ Allister P. Graham /s/ Russell N. Mammel
----------------------------------- -----------------------------------
Allister P. Graham, Director Russell N. Mammel, Director
/s/ Richard G. Lareau /s/ Jerome O. Rodysill
----------------------------------- -----------------------------------
Richard G. Lareau, Director Jerome O. Rodysill, Director
/s/ Donald R. Miller /s/ Arthur C. Wangaard, Jr.
----------------------------------- -----------------------------------
Donald R. Miller, Director Arthur C. Wangaard, Jr., Director
S-1
<PAGE>
NASH FINCH COMPANY
EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-K
For Fiscal Year Ended December 31, 1994
Item
No. Item Method of Filing
---- ---- ----------------
3.1 Restated Certificate of
Incorporation of Nash
Finch......................... Incorporated by reference to Exhibit 3.1
to the Company's Annual Report on Form
10-K for the fiscal year ended December
28, 1985 (File No. 0-785).
3.2 Amendment to Restated
Certificate of Incorporation
of the Company, effective
May 29, 1986.................. Incorporated by reference to Exhibit
19.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
October 4, 1986 (File No. 0-785).
3.3 Amendment to Restated
Certificate of Incorporation
of the Company, effective
May 15, 1987.................. Incorporated by reference to Exhibit 4.5
to the Company's Registration Statement
on Form S-3 (File No. 33-14871).
3.4 Bylaws of the Company......... Incorporated by reference to Exhibit 3.3
to the Company's Annual Report on Form
10-K for the fiscal year ended December
31, 1983 (File No. 0-785).
3.5 Amendment to Bylaws of
the Company, effective
November 12, 1985............. Incorporated by reference to Exhibit 3.3
to the Company's Annual Report on Form
10-K for the fiscal year ended December
28, 1985 (File No. 0-785).
3.6 Amendment to Bylaws of
the Company, effective
May 13, 1986.................. Incorporated by reference to Exhibit
19.2 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
October 4, 1986 (File No. 0-785).
3.7 Amendment to Bylaws of the
Company, effective
May 12, 1987.................. Incorporated by reference to Exhibit 4.9
to the Company's Registration Statement
on Form S-3 (File No. 33-14871).
E-1
<PAGE>
Item
No. Item Method of Filing
---- ---- ----------------
4.1 Amended and Restated
Stockholder Rights
Agreement, dated
January 18, 1990, between
the Company and Norwest
Bank Minnesota,
National Association.......... Incorporated by reference to Exhibit 1
to the Company's Amendment to
Application or Report on Form 8 dated
January 18, 1990 (File No. 0-785).
10.1 Note Agreement, dated
August 1, 1986, between the
Company and Nationwide Life
Insurance Company............. Incorporated by reference to Exhibit
19.3 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
October 4, 1986 (File No. 0-785).
10.2 Note Agreements, dated
September 15, 1987, between
the Company and IDS Life
Insurance Company, and
between the Company and IDS
Life Insurance Company of
New York...................... Incorporated by reference to Exhibit
19.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
October 10, 1987 (File No. 0-785).
10.3 Note Agreements, dated
September 29, 1989,
between the Company
and Nationwide Life
Insurance Company, and
between the Company and
West Coast Life
Insurance Company............. Incorporated by reference to Exhibit
19.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
October 7, 1989 (File No. 0-785).
E-2
<PAGE>
Item
No. Item Method of Filing
---- ---- ----------------
10.4 Note Agreements dated
March 22, 1991, between the
Company and The Minnesota
Mutual Life Insurance
Company, and between the
Company and The Minnesota
Mutual Life Insurance
Company - Separate
Account F..................... Incorporated by reference to Exhibit
19.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March
23, 1991 (File No. 0-785).
10.5 Note Agreements, dated as of
February 15, 1993 between
the Company and Principal
Mutual Life Insurance Company,
and between the Company and
Aid Association for
Lutherans..................... Incorporated by reference to Exhibit
19.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
March 27, 1993 (File No. 0-785).
10.6 Nash Finch Profit Sharing
Plan--1994 Revision and
Nash Finch Profit Sharing
Trust Agreement (as
restated effective
January 1, 1994).............. Incorporated by reference to Exhibit
10.6 to the Company's Annual Report on
Form 10-K for the fiscal year ended
January 1, 1994 (File No. 0-785).
10.7 Nash Finch Profit Sharing
Plan--1994 Revision--
First Declaration of
Amendment..................... Filed herewith.
10.8 Nash Finch Company Executive
Incentive Bonus and
Deferred Compensation Plan
(as amended and restated
effective December 31,
1993)......................... Incorporated by reference to Exhibit
10.7 to the Company's Annual Report on
Form 10-K for the fiscal year ended
January 1, 1994 (File No. 0-785).
E-3
<PAGE>
Item
No. Item Method of Filing
---- ---- ----------------
10.9 Excerpts from Minutes of
Board of Directors
regarding Nash Finch
Company Pension Plan,
as amended effective
January 2, 1966............... Incorporated by reference to Exhibit
10.9 to the Company's Annual Report on
Form 10-K for the fiscal year ended
January 3, 1987 (File No. 0-785).
10.10 Letter Agreement, dated
June 12, 1979, between the
Company and Donald R.
Miller........................ Incorporated by reference to Exhibit
10.8 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1983 (File No. 0-785).
10.11 Excerpts from Board minutes
regarding director
compensation.................. Filed herewith.
10.12 Form of Director Fee
Deferral Agreement............ Incorporated by reference to Exhibit
10.19 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 29, 1990 (File No. 0-785).
10.13 Form of Letter Agreement
Specifying Benefits in the
Event of Termination of
Employment Following a
Change in Control of the
Company....................... Incorporated by reference to Exhibit
10.20 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 29, 1990 (File No. 0-785).
10.14 Nash Finch Company
Income Deferral Plan.......... Incorporated by reference to Exhibit
10.17 to the Company's Annual Report on
Form 10-K for the fiscal year ended
January 1, 1994 (File No. 0-785).
10.15 Nash Finch Company 1994
Stock Incentive Plan.......... Incorporated by reference to Exhibit
10.1 to the Company's Registration
Statement on Form S-8 filed July 8, 1994
(File No. 33-54487).
13.1 1994 Annual Report to
Stockholders (selected portions
of pages 14-27)............... Filed herewith.
E-4
<PAGE>
Item
No. Item Method of Filing
---- ---- ----------------
21.1 Subsidiaries of the
Registrant.................... Filed herewith.
23.1 Independent Auditors'
Consent....................... Filed herewith.
E-5
<PAGE>
NASH-FINCH COMPANY
PROFIT SHARING PLAN
1994 REVISION
FIRST DECLARATION OF AMENDMENT
Pursuant to the retained power of amendment contained in Section 11.1 of the
Nash-Finch Company Profit Sharing Plan -- 1994 Revision, the undersigned hereby
amends the Plan in the manner described below.
1. Section 3.2(E) of the Plan is amended to read as follows:
"(E) Notwithstanding any other provision of this section to the
contrary, a Participant covered by a collective bargaining agreement
between his or her bargaining representative and Participating
Employer is not eligible to share in the Participating Employer's
Profit Sharing Contributions unless the collective bargaining
agreement so provides."
2. Section 4.2 of the Plan is amended to read as follows:
"4.2 VALUATION AND ACCOUNT ADJUSTMENT. Participants' Accounts
will be separately adjusted on a daily basis in a uniform and
equitable manner to reflect income, expense, gains and losses of
the Fund and contributions, withdrawals and distributions."
3. Section 4.3 of the Plan is deleted and Section 4.4 is redesignated as
Section 4.3.
4. Section 6.1(A) of the Plan is amended to read as follows:
"6.1 HARDSHIP WITHDRAWALS FROM PRE-TAX CONTRIBUTION ACCOUNT. (A)
Subject to the provisions of Section 6.3, a Participant may
withdraw from his or her Pre-Tax Contribution Account an amount
not in excess of the lesser of (1) the balance of the Account or
(2) the balance of the Account on December 31, 1988 increased by
the amount of Pre-Tax Contributions added to the Account after
December 31, 1988 and reduced by the amount of any withdrawals
from the Account after December 31, 1988 on account of hardship.
Such withdrawal will be made only if the Administrator determines
that the distribution is made on account of an immediate and
heavy financial need of the Participant and is necessary to
satisfy such financial need."
5. Section 6.2 of the Plan is amended to read as follows:
"6.2 WITHDRAWALS FROM PRE-TAX CONTRIBUTION ACCOUNT AFTER
AGE 59-1/2. Subject to the provisions of Section 6.3, a
Participant who has attained age 59-1/2 may withdraw all or any
portion of his or her Pre-Tax Contribution Account balance."
<PAGE>
6. Section 6.3 of the Plan is amended by adding a new Subsection (E) which
reads as follows:
"(E) Withdrawal distributions will be made as soon as
administratively practicable after the Administrator's
determination that a Participant is entitled to a withdrawal
based on the balance of the Participant's Pre-Tax Contribution
Account as of the close of business on the day before the day on
which the distribution is made."
7. Section 8.1(A) of the Plan is amended to read as follows:
"8.1 FORM AND TIME OF DISTRIBUTION. (A) Following a
Participant's termination of employment or earlier attainment of
age 70-1/2, the Trustee will distribute to the Participant or, if
the Participant has died, to his or her Beneficiary, the balance
of the Participant's Accounts. The amount of any distribution
made in the form of a lump sum payment will be equal to the
aggregate balance of the Participant's Accounts on the day before
the distribution date. Subject to the remaining subsections of
this Section 8.1 and Sections 8.7 and 8.8, distributions will be
made in accordance with the following provisions.
(1) If the aggregate balance of the Participant's
Accounts at the time of the distribution is not more than
$3500, distribution to the Participant will be made, in the
form of a lump sum cash payment, as soon as administratively
practicable following the Participant's termination of
employment. This clause will not apply, however, if the
Participant's Account balance exceeded $3500 at the time of
any previous distribution.
(2) If clause (1) does not apply, distribution to the
Participant will be made or commence, in the form of a lump
sum cash payment or installment cash payments, according to
the Participant's election, on or as soon as
administratively practicable after a date specified by the
Participant. If the Participant terminates employment
before attaining age 62, distribution to the Participant
must be made or commence not later than the date on which
the Participant attains age 65. If the Participant had
attained age 62 when he or she terminated employment,
distribution to the Participant must be made or commence not
later than the date determined under Subsection (C)(1)
unless the Participant elects to defer the distribution in
the manner described in Subsection (B).
(3) If the aggregate balance of a Participant's
Accounts at the time of his or her death is not more than
$3500, distribution to the Participant's Beneficiary will be
made, in the form of a lump sum cash payment, as soon as
administratively practicable following the Administrator's
receipt of notice of the Participant's death. If the
foregoing sentence does not apply, distribution to the
Participant's Beneficiary will be made at such time or times
and in
2
<PAGE>
such manner as the Beneficiary elects in accordance with
Subsection (E)."
8. Section 8.1(D) of the Plan is amended to read as follows:
"(D) If a distribution is to be made in installments, such
installments will be substantially equal in amount and paid on a
quarterly, semi-annual or annual basis, for a period not
extending beyond either the Participant's life expectancy or the
life expectancy of the Participant and the Participant's
Beneficiary; and, if the Participant's Beneficiary is not the
Participant's spouse, the period over which such payments are to
be made will be determined by reference to the applicable table
of joint life expectancies set forth in Treasury Regulation
section 1.401(a)(9)-2. Notwithstanding the foregoing, not more
than once each Plan Year, a Participant who is receiving
installment payments may elect, in accordance with Plan Rules, to
either increase the amount of the installment payments or to
receive a lump sum payment of all or a portion of his or her
remaining Account balances. Prior to April 1 of the calendar
year following the calendar year during which the Participant
attains age 70-1/2, the Participant may elect, in writing to the
Administrator, whether the life expectancies for the Participant
and the Participant's spouse are to be recalculated on an annual
basis for purposes of determining the amount of each installment
payment. Any such election will become irrevocable as of the
date specified above. If no such election is made, the life
expectancies of the Participant and the Participant's spouse will
not be recalculated on an annual basis."
9. Section 9.2 of the Plan is amended by adding a new Subsection (F) which
reads as follows:
"(F) To the extent required or permitted by Treasury
Regulations, the Administrator will or may, as the case may be,
apply the limitations described in this section separately to
each group of eligible Employees who are included in a unit of
Employees covered by a collective bargaining agreement and those
who are not included or are included in a different unit."
10. Section 12.35 of the Plan is deleted.
11. Section 13.1(D) of the Plan is amended to read as follows:
"(D) The Committee may delegate to each or any one of its
members or to its Secretary authority to sign any documents on
its behalf and may delegate to any person authority to perform
ministerial acts, but no person to whom authority is delegated
may perform any act involving the exercise of any discretion
other than pursuant to a written delegation in accordance with
Subsection (E)."
12. Section 13.3 of the Plan is amended to read as follows:
3
<PAGE>
"13.3 ADOPTION OF PLAN RULES. The Administrator has the
discretionary power and authority to make such Plan Rules as the
Administrator deems necessary and to modify or rescind such Plan
Rules at any time."
13. Section (2)(c) of Exhibit B, Special Provisions Applicable to Former
Participants in the Timberlake Grocery Company of Macon Profit Sharing Plan
and Trust, is amended to read as follows:
"(c) In the case of a former Timberlake Plan participant
whose unvested benefits are transferred to the Plan and who
thereafter receives, not later than the last day of the second
Plan Year following the Plan Year during which he or she
terminates employment, a distribution of his or her entire vested
account balance under the Plan, the unvested portion of the
participant's separate account will, as of the last day of the
Plan Year during which such distribution occurs, be forfeited and
be used to reduce the amount of the Profit Sharing Contributions
for such Plan Year of the Participating Employer with whom he or
she was last employed and, to the extent not so used, for
subsequent Plan Years; provided, that, if such participant (i)
received a distribution of less than the entire balance of his or
her separate account, (ii) resumes employment with a
Participating Employer as a Qualified Employee, and (iii) repays
to the Trustee the full amount distributed from his or her
separate account before the earlier of five years following the
date of his or her reemployment with the Participating Employer
as a Qualified Employee, or the date on which he or she incurs
five consecutive One-Year Breaks in Service, then the amount of
any forfeitures will be restored by the Participating Employer to
his or her separate account, unadjusted for any change in value
occurring after the distribution. Such restoration will be made
from forfeitures that arise for the Plan Year for which such
restoration is to be made. To the extent such forfeitures are
insufficient for such purpose, the Participating Employer will
contribute an amount sufficient to restore such separate
accounts.
The amendments set forth at items 9, 11 and 12 above are effective as of January
1, 1994; the amendments set forth at items 1-8, 10 and 13 above are effective as
of January 1, 1995.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by
its duly authorized officers this 15th day of December, 1994 and its corporate
seal to be affixed hereto.
NASH FINCH COMPANY
Attest: [SIGNATURE] By [SIGNATURE]
---------------- ------------------------------------------
Secretary President
4
<PAGE>
EXCERPTS FROM MINUTES OF
BOARD OF DIRECTORS MEETING OF
NASH-FINCH COMPANY ON
FEBRUARY 14, 1995
The Chairman then announced that the next item of business concerned
compensation paid to outside directors, and called upon Mr. Miller to report the
recommendation of the Nominating Committee. Mr. Miller offered the following
resolution and moved its adoption:
RESOLVED, that effective as of March 1, 1995, outside members of the Board
of Directors of the Company be compensated at the rate of $1,000 plus
reasonable expenses incurred for each meeting of the Board of Directors of
the Company attended, $1,100 per month retainer and $750 plus reasonable
expenses incurred for attendance at meetings of committees of the Board
unless the committee meeting is held on the same day as a Board meeting or
is held by telephone conference, in which cases the fee shall be $500. For
the purposes of this resolution, an outside director is defined as any
director who is not a present full time employee of Nash Finch Company or
its subsidiaries.
RESOLVED FURTHER, that upon becoming effective, the foregoing resolution
shall supersede any resolution heretofore adopted by this Board of
Directors pertaining to compensation of outside directors.
The above resolution was seconded by Mr. Fisher and, upon vote being taken, all
present voted unanimously in favor thereof and the same was declared duly
adopted.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total sales and revenues increased 4.0% during fiscal 1994 to $2.832
billion compared to $2.724 billion in 1993 and $2.515 billion in 1992.
Fiscal years 1994 and 1993 were 52-week years while 1992 contained 53
weeks. The increase in 1994 is largely attributed to the growth of
wholesale sales to a number of new convenience store accounts in the
Southeast, and full year sales volume of the Easter store chain that was
acquired at mid-year of fiscal 1993. In addition, the incremental retail
sales resulting from the acquisition of the 23-store Food Folks chain in
January 1994 from a former customer, also contributed to the increase in
total revenues in fiscal 1994.
In 1994, wholesale revenues were $1.855 billion, an increase of 1.0%
over $1.836 billion in 1993. Wholesale gains were offset by the transfer
of the Food Folks volume which, due to acquisition, is reported under the
retail segment of the business in 1994. If reported on the same basis as
fiscal 1993, wholesale sales, including the Food Folks volume, would
reflect an increase of 3.4% compared to 9.7% in 1993. The 1993 increase
was primarily due to the acquisition of the military wholesale business of
B. Green & Company, Inc. which occurred at the end of fiscal 1992.
In 1994, retail segment revenues increased 10% to $926 million from
$842 million in 1993, because of the supermarket acquisitions mentioned
above. However, due to continued strong competitive pressures in certain
retail market areas, same store sales were essentially flat in 1994.
Retail revenues for 1993 increased 5.1% over 1992 due to acquisitions and
the opening of new and expanded stores.
Gross margins were 14.9% in 1994 compared to 14.6% in 1993 and 1992.
The increase reflects a greater proportion of retail sales which typically
achieve higher margins. Margins at the wholesale level have been
negatively affected by price reductions and changes in promotional
allowance practices that were initiated by the tobacco industry in the
second half of fiscal 1993. Retail margins showed improvement over fiscal
1993 due to an increase of specialty department sales for which gross
margins are higher. Also, store acquisitions consisted of smaller
conventional supermarkets which operate at higher margins than the larger
warehouse-type stores. Gross margins for fiscal 1993 compared to 1992
showed improvements in both wholesale and retail segments. However, since
there was a greater proportion of lower margin wholesale sales, no overall
improvement was shown in 1993.
<PAGE>
The Company's internally measured food price index showed inflation of
.70% in fiscal 1994 compared to deflation of .75% in 1993. This resulted
in a LIFO charge in fiscal 1994 of $1.4 million compared to a credit of
$2.0 million last year.
Selling, general and administrative expenses as a percent of total
revenues were 12.5%, 12.2% and 11.9% in 1994, 1993 and 1992, respectively.
The increase in 1994 reflects the growth in the retail segment of the
business which operates at higher expense levels. In addition, the Company
recognized greater employee health care claims costs in 1994, as well as
costs associated with upgrading management information systems in certain
distribution centers in the Southeast. In 1993, selling, general and
administrative expenses were increased by a provision for bad debts of $8.1
million related to two customer accounts. This provision represented a
substantial portion of the increase in expense over fiscal 1992.
Depreciation and amortization expense increased 9.2% and 7.8% for 1994
and 1993 compared to their respective prior years. The additional expense
reflects increases in property, plant and equipment and intangible assets.
Amortization of intangibles increased $.9 million, primarily due to the
full year's amortization of intangibles recognized from the Easter stores
acquisition, compared to a partial year's expense in 1993.
Interest expense increased $1.3 million or 12.6% over 1993 because of
higher borrowing rates which were slightly offset by lower average daily
short-term borrowing. Short-term borrowing averaged $41.6 million during
1994 compared to $43.2 million during 1993 and $27.7 million in 1992. As a
percent of revenues, interest expense was .40%, .37% and .36% for 1994,
1993 and 1992, respectively.
Due to a number of factors, earnings before income taxes decreased
3.2% compared to fiscal 1993 and have not returned to levels realized in
1992. Retail operations continue to show sluggish results because of
strong competition in some areas. Earnings from wholesale operations were
negatively affected by the substantially lower margins on tobacco products
realized by warehouse distribution centers servicing convenience store
customers. Also, the operating results of the Company's produce marketing
operation, Nash DeCamp, were negatively affected by poor domestic market
conditions which resulted from excess supplies of quality product which
depressed product prices.
The effective tax rates are 40.0%, 40.5% and 38.4% for 1994, 1993 and
1992, respectively. The rate reduction for 1994 reflects lower effective
state tax rates and an increase in the federal targeted jobs credit earned.
The 1993 rate was higher than the previous year because of legislation
passed in 1993 which increased the federal tax rate by 1%.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its capital needs through a
combination of internal and external sources. These sources include cash
flow from operations, short-term bank borrowings, various types of
long-term debt, leasing and equity financing. As external financing is
required in the future, the Company believes that its debt structure and
financial position will continue to support its ability to obtain the
required funds.
Cash provided from operations in 1994 was $36.4 million compared to
$83.0 million last year. The 1993 amount included a $26.5 million dollar
reduction in inventory, while the 1994 amount included an increase of $6.9
million. This increase is attributed primarily to a larger number of
corporate-owned stores in 1994, increasing the Company's inventory
investment not only at retail, but also at wholesale level. The remaining
reduction in operating cash flows is attributed to net changes in elements
of working capital and non-cash related adjustments to net earnings.
Short-term bank borrowings amounted to $41.4 million at year-end 1994,
compared to $38.3 million and $47.5 million at the end of 1993 and 1992,
respectively. The Company had committed lines of credit totaling $30
million with additional uncommitted lines of $90 million from a total of
eight banks.
During 1994, the Company paid a total of $8.6 million in cash, $7.0
million of which was used to repurchase notes previously sold, all related
to a troubled debt restructure agreement whereby it acquired twenty-three
Food Folks stores. In 1993, the Easter group of stores was acquired for
cash totaling $27.0 million. Businesses were acquired during 1992 for cash
totaling $40.0 million. These included Tidewater Wholesale Grocery, the
military wholesale business of B. Green & Company, Inc. and five
supermarkets in Wisconsin.
Working capital was $89.5 million at year-end 1994 compared with $79.9
million at year-end 1993, an increase of $9.2 million. The ratio of
current assets to current liabilities at the close of 1994, 1993 and 1992
was 1.41%, 1.37% and 1.45%, respectively. The Company's short-term
liquidity is, however, stronger than its current ratio would indicate
because, as shown in the notes to the December 31, 1994 consolidated
financial statements, the replacement value of inventories is $43.9 million
more than the reported LIFO inventory values.
Excluding acquisitions and capital leases, capital expenditures were
$35.0 million in 1994, a decrease of $1.4 million from $36.4 million in
1993. Capital expenditures include improvements to distribution centers
and existing retail stores and new store construction. Truck and trailer
replacement
<PAGE>
continued in accordance with pre-established schedules to maintain an
up-to-date delivery fleet. Capital expenditures for 1995 are estimated at
$31.3 million, exclusive of acquisitions.
Dividend payments in 1994 were $.73 per share, up from $.72 per share
in 1993. These amounts represented 51% and 49% of net earnings in 1994 and
1993, respectively.
The Company provided financial assistance in the form of secured loans
totalling $8.0 million during 1994 compared with $15.9 million in 1993.
The proceeds of these loans are generally used to finance the acquisition
of fixtures and inventories by new and existing customers.
Long-term debt decreased from $89.8 million at the end of 1993 to
$85.3 million at the end of 1994. Long-term debt and capitalized leases as
a percentage of total capital decreased from 32.9% at the end of 1993 to
31.8% at the end of 1994. Return on average stockholders' equity was 7.6%
in 1994, down from 8.1% in 1993.
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
----------------------------------------------------------------------
Nash Finch Company Common Stock is traded in the national
over-the-counter market under the symbol NAFC. The following table sets
forth, for each of the calendar periods indicated, the range of high and
low closing sales prices for the Common Stock as reported by the NASDAQ
National Market System, and the cash dividends paid per share of Common
Stock. Prices do not include adjustments for retail mark-ups, mark-downs
or commissions. At December 31, 1994 there were 2,074 stockholders of
record.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Dividends
1994 1993 Per Share
---------- ---------- ----------
High Low High Low 1994 1993
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $ 18 1/4 16 23 1/4 18 1/4 .18 .18
Second Quarter 18 16 21 3/4 19 1/4 .18 .18
Third Quarter 18 16 1/4 22 1/2 19 3/8 .18 .18
Fourth Quarter 17 15 3/8 20 1/2 17 .19 .18
-----------------------------------------------------------------------
</TABLE>
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Quarterly Financial Information (Unaudited)
<TABLE>
---------------------------------------------------------------------------------------------------------------------------------
A summary of quarterly financial information
is presented.
First Quarter Second Quarter Third Quarter Fourth Quarter
12 Weeks 12 Weeks 16 Weeks 12 Weeks
-------------------- ------------------ ----------------- -----------------
(In thousands, except per share amounts) 1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales and other income $ 618,165 601,066 670,362 631,266 886,956 856,551 656,517 634,652
Cost of sales 527,696 516,583 566,167 540,365 754,113 726,926 562,316 541,375
Earnings before income taxes 4,320 4,021 8,761 8,218 6,806 5,384 5,923 9,055
Income taxes 1,749 1,568 3,549 3,205 2,756 2,364 2,276 3,667
Net earnings 2,571 2,453 5,212 5,013 4,050 3,020 3,647 5,388
Percent to sales and revenues .41 .41 .78 .79 .46 .36 .56 .84
Net earnings per share $ .24 .23 .48 .46 .37 .27 .33 .50
Average number of shares outstanding 10,872 10,872 10,872 10,872 10,872 10,872 10,874 10,872
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings
<TABLE>
------------------------------------------------------------------------------------------------
Fiscal years ended December 31, 1994,
January 1, 1994, and January 2, 1993 1994 1993 1992
(In thousands, except per share amounts) (52 weeks) (52 weeks) (53 weeks)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Net sales $ 2,779,330 2,679,410 2,474,013
Other revenues 52,670 44,125 41,425
--------------- --------- ---------
Total revenues 2,832,000 2,723,535 2,515,438
Cost and expenses:
Cost of sales 2,410,292 2,325,249 2,147,845
Selling, general and
administrative, and other
operating expenses 352,683 332,349 298,663
Depreciation and amortization 31,831 29,145 27,038
Interest expense 11,384 10,114 9,294
--------------- --------- ---------
Total costs and expenses 2,806,190 2,696,857 2,482,840
Earnings before income taxes 25,810 26,678 32,598
Income taxes 10,330 10,804 12,530
--------------- --------- ---------
Net earnings $ 15,480 15,874 20,068
--------------- --------- ---------
--------------- --------- ---------
Weighted average number of
common shares outstanding 10,873 10,872 10,872
--------------- --------- ---------
--------------- --------- ---------
Earnings per share $ 1.42 1.46 1.85
--------------- --------- ---------
--------------- --------- ---------
-------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
[KPMG Peat Marwick LLP Letterhead]
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Nash Finch Company:
We have audited the accompanying consolidated balance sheets of Nash Finch
Company and subsidiaries as of December 31, 1994 and January 1, 1994 and the
related consolidated statements of earnings, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1994.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Nash
Finch Company and subsidiaries at December 31, 1994 and January 1, 1994, and
the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1994 in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
March 3, 1995
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Fiscal years ended December 31, 1994,
January 1, 1994, and January 2, 1993 1994 1993 1992
(In thousands) (52 weeks) (52 weeks) (53 weeks)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 15,480 15,874 20,068
Adjustments to reconcile net earnings to net cash
provided by operating activites:
Depreciation and amortization 31,831 29,145 27,038
Provision for bad debts 2,187 10,146 3,668
Recovery from losses on closed lease locations 366 (499) (847)
Deferred income taxes 2,874 (4,395) (2,835)
Deferred compensation (539) (573) 129
Earnings of equity investments (902) (1,534) (965)
Other (545) 65 137
Changes in current assets and liabilities:
Accounts and notes receivable (9,418) (161) (5,676)
Inventories (6,880) 26,464 (22,242)
Prepaid expenses (1,087) (411) (1,474)
Accounts payable 2,631 6,238 6,755
Accrued expenses 2,553 5,385 2,631
Income taxes (2,172) (2,785) 4,429
---------- --------- ---------
Net cash provided by operating activities 36,379 82,959 30,816
---------- --------- ---------
Cash flows from investing activities:
Dividends received 618 506 435
Disposals of property, plant and equipment 12,501 13,435 8,091
Additions to property, plant and equipment
excluding capital leases (34,965) (36,382) (42,991)
Businesses acquired (8,614) (27,087) (40,041)
Investment in an unconsolidated company -- -- (3,000)
Loans to customers (7,958) (15,942) (22,977)
Payments from customers on loans 8,093 8,286 7,500
Loans sold including current portion -- -- 22,847
Other (902) (261) (37)
---------- --------- ---------
Net cash used for investing activities (31,227) (57,445) (70,173)
---------- --------- ---------
Cash flows from financing activities:
Dividends paid (7,938) (7,828) (7,718)
Proceeds (payments) of short-term debt 3,100 (9,200) 39,900
Proceeds from long-term debt -- -- 25,000
Payments of long-term debt (2,933) (2,352) (15,895)
Payments of capitalized lease obligations (1,576) (458) (174)
Other 35 14 8
---------- --------- ---------
Net cash (used for) provided by
financing activities (9,312) (19,824) 41,121
---------- --------- ---------
Net (decrease) increase in cash $ (4,160) 5,690 1,764
---------- --------- ---------
---------- --------- ---------
-----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
December 31, 1994 and January 1, 1994
(In thousands, except per share amounts)
Assets 1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash on hand $ 1,078 890
Accounts and notes receivable, net 98,859 95,952
Inventories 198,637 186,637
Prepaid expenses 8,626 7,391
Deferred tax assets 2,322 4,055
--------- ---------
Total current assets 309,522 294,925
Investments at net equity 7,432 7,137
Notes receivable, noncurrent 16,441 20,187
Property, plant and equipment:
Land 27,556 26,652
Buildings and improvements 107,149 105,650
Furniture, fixtures, and equipment 214,564 209,172
Leasehold improvements 28,205 26,016
Construction in progress 2,039 5,914
Assets under capitalized leases 12,423 9,210
--------- ---------
391,936 382,614
Less accumulated depreciation and amortization (204,985) (196,350)
--------- ---------
Net property, plant and equipment 186,951 186,264
--------- ---------
Intangible assets, net 7,810 9,512
Other assets 3,448 3,629
--------- ---------
Total assets $ 531,604 521,654
--------- ---------
--------- ---------
------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Liabilities and Stockholders' Equity 1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Outstanding checks, net of cash in banks $ 18,649 14,301
Short-term debt payable to banks 41,400 38,300
Current maturities of long-term debt and
capitalized lease obligations 5,685 3,980
Accounts payable 122,602 119,970
Accrued expenses 29,585 27,032
Income taxes 2,144 4,315
Other current liabilities -- 7,123
-------- --------
Total current liabilities 220,065 215,021
Long-term debt 85,289 89,811
Capitalized lease obligations 10,671 8,076
Deferred compensation 8,526 9,065
Other 784 417
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 11,977 11,954
Foreign currency translation adjustment -
net of a $381 deferred tax benefit (572) --
Retained earnings 179,212 171,670
-------- --------
209,323 202,330
Less cost of 349 shares and 351 shares of
common stock in treasury, respectively (3,054) (3,066)
-------- --------
Total stockholders' equity 206,269 199,264
Commitments (Notes 5, 8 and 9) -- --
-------- --------
Total liabilities and stockholders' equity $531,604 521,654
-------- --------
-------- --------
------------------------------------------------------------------------------
</TABLE>
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Fiscal years ended December 31, 1994,
January 1, 1994 and January 2, 1993 Foreign
(In thousands, except per share amounts) Common stock Additional currency Treasury stock Total
----------------- paid-in Retained translation ----------------- stockholders'
Shares Amount capital earnings adjustment Shares Amount equity
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 -- -- -- 15,480 -- -- -- 15,480
Dividend declared of $.73 per share -- -- -- (7,938) -- -- -- (7,938)
Treasury stock issued upon exercise of
options and other insignificant items -- -- 23 -- -- 2 12 35
Foreign currency translation adjustment
- net of a $381 deferred tax benefit -- -- -- -- (572) -- -- (572)
------ ------- ------ ------- ---- ---- ------- -------
Balance at December 31, 1994 11,224 $18,706 11,977 179,212 (572) (349) $(3,054) 206,269
------ ------- ------ ------- ---- ---- ------- -------
------ ------- ------ ------- ---- ---- ------- -------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Notes to Consolidated
Financial Statements
(1) ACCOUNTING POLICIES
Fiscal Year
Nash Finch Company's fiscal year ends on the Saturday nearest to
December 31. Fiscal years 1994 and 1993 were 52-week years, and fiscal year
1992 was a 53-week year.
Principles of Consolidation
The accompanying financial statements include the accounts of Nash Finch
Company (the Company), its majority-owned subsidiaries and the Company's share
of net earnings or losses of 50%-owned companies. All material intercompany
accounts and transactions have been eliminated in the consolidated financial
statements.
Cash and Cash Equivalents
In the accompanying financial statements, freely transferable cash in
banks has been netted for presentation purposes against checks outstanding that
have been drawn on other bank accounts. For purposes of the statements of cash
flows, cash and cash equivalents include cash on hand, short-term investments
with original maturities of three months or less, and outstanding checks, net of
cash in banks.
Inventories
Inventories are stated at the lower of cost or market. At December 31,
1994 and January 1, 1994, approximately 89% and 91%, respectively, of the
Company's inventories are valued on the last-in, first-out (LIFO) method.
During fiscal 1994 the Company recorded a LIFO charge of $1.4 million compared
to credit of $2.0 million in 1993. The remaining inventories are valued on the
first-in, first-out (FIFO) method. If the FIFO method of accounting for
inventories had been used, inventories would have been $43.9 million and $42.5
million higher at December 31, 1994 and January 1, 1994, respectively.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Assets under capitalized
leases are recorded at the present value of future lease payments or fair market
value, whichever is lower. Expenditures which improve or extend the life of the
respective assets are capitalized while maintenance and repairs are expensed as
incurred.
<PAGE>
(1) ACCOUNTING POLICIES (CONTINUED)
Intangible Assets
Intangible assets consist primarily of covenants not to compete and
goodwill, and are carried at cost less accumulated amortization. Costs are
amortized over the estimated useful lives of the related assets ranging from 2-
20 years. Amortization expense charged to operations for fiscal years ended
December 31, 1994, January 1, 1994 and January 2, 1993 was $2.2 million, $1.3
million and $.2 million, respectively. The accumulated amortization of
intangible assets was $3.7 million and $2.8 million at December 31, 1994 and
January 1, 1994, respectively.
Depreciation and Amortization
Property, plant and equipment are depreciated on a straight-line basis over
the estimated useful lives of the assets. Leasehold improvements and
capitalized leases are amortized to expense on a straight-line basis over the
term of the lease.
Income Taxes
Deferred income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.
Earnings per Share
Earnings per share are computed by dividing net earnings by the weighted
average number of common shares outstanding during each year. Options granted
under the Company's stock option plans are considered common stock equivalents
but have been excluded from the computation since the effect is not material.
Foreign Currency Translation
Adjustments resulting from the translation of assets and liabilities of a
foreign investment are included in stockholders' equity.
(2) TROUBLED DEBT RESTRUCTURE
On January 31, 1994, the Company acquired the assets of Food Folks, Inc., a
former customer with twenty-three stores located primarily in North Carolina, as
part of a troubled debt restructuring agreement. 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
<PAGE>
(2) TROUBLED DEBT RESTRUCTURE (CONTINUED)
forgiveness of $7.2 million in debt, net of a bad debt reserve established by
the Company. The notes representing this debt were included in those sold with
limited recourse on April 2, 1992 (see Note 3).
On December 1, 1994, the Company acquired certain operating assets and real
estate of six supermarkets with a fair market value of $4.6 million. The
supermarkets, located in eastern Kentucky, were acquired from the bankrupt
estates of Paintsville Foods, Inc., a former customer, and Wal-Lyn Management,
Inc., one of its affiliates. The settlement, net of the fair market value of
the assets transferred, resulted in a bad debt write-off of $5.5 million,
substantially all of which was provided for as of January 1, 1994.
(3) ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable at the end of fiscal years 1994 and 1993 are
comprised of the following components (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Customer notes receivable - current portion $ 2,861 4,301
Customer accounts receivable 82,394 80,370
Other receivables 15,173 12,983
Allowance for doubtful accounts (1,569) (1,702)
------- -------
Net current accounts and notes receivable $98,859 95,952
------- -------
------- -------
Noncurrent customer notes receivable $19,492 27,007
Allowance for doubtful accounts (3,051) (6,820)
------- -------
Net noncurrent notes receivable $16,441 20,187
------- -------
------- -------
</TABLE>
Operating results include bad debt expense totaling $2.2 million, $10.1
million, and $3.7 million during fiscal years 1994, 1993 and 1992, respectively.
On April 2, 1992, the Company sold customer notes totaling $22.8 million.
The notes, which have 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.
The remaining balances of such sold notes receivable totaled $2.7 million
and $11.8 million at December 31, 1994 and January 1, 1994, respectively. The
Company is contingently liable should these notes become uncollectible. A
reserve for contingent
<PAGE>
(3) ACCOUNTS AND NOTES RECEIVABLE (CONTINUED)
losses on sold notes of $7.1 million was fully utilized as of December 31, 1994.
At January 1, 1994 this reserve was classified as an other current liability
since it relates entirely to the Food Folks transaction described in Note 2.
Substantially all notes receivable are based on floating interest rates
which adjust to changes in market rates. As a result, the carrying value of
notes receivable approximates market value.
(4) LINES OF CREDIT AND OUTSTANDING CHECKS
Formal and informal lines of credit are maintained at various banks.
Generally, banks are compensated through fees on used and unused lines of
credit. At December 31, 1994 unused formal lines of credit amount to $25
million.
(5) LONG-TERM DEBT
Long-term debt at the end of the fiscal years 1994 and 1993 is summarized
as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Industrial development bonds,
5.9% to 7.8% due in annual
installments through 2008 $ 5,875 7,175
Term loans, 7.5% to 9.9%
due in semi-annual
installments through 2008 75,000 76,000
Notes payable and mortgage notes,
9.3% to 12.0% due in various
installments through 2004 9,559 10,154
-------- --------
90,434 93,329
Less current maturities 5,145 3,518
-------- --------
$ 85,289 89,811
-------- --------
-------- --------
</TABLE>
At December 31, 1994, land, buildings, and other assets pledged to secure
outstanding mortgage notes and obligations under issues of industrial
development bonds have a depreciated cost of approximately $6.8 million and $5.1
million, respectively.
During the first quarter of fiscal 1993, the Company finalized a $25
million long-term credit facility with two insurance companies. The proceeds of
this long-term loan were used to replace $25 million outstanding on the short-
term lines of credit with banks. Under the new loan, interest is fixed at 7.5%.
<PAGE>
(5) LONG-TERM DEBT (CONTINUED)
Aggregate annual maturities of long-term debt for the five fiscal years
after December 31, 1994 are as follows (in thousands):
<TABLE>
<S> <C>
1995 $ 5,145
1996 14,101
1997 6,124
1998 6,678
1999 and thereafter 58,386
</TABLE>
Interest paid was $11.4 million, $10.1 million and $9.3 million, for the
fiscal years 1994, 1993 and 1992, respectively.
The Company entered into a three-year swap agreement with a major financial
institution as a means of managing its interest expense. The agreement which is
based on a notional amount of $25 million, calls for an exchange of interest
payments with the Company receiving payments based on fixed rate and making
payments based on a LIBOR floating rate. The amounts to be paid or received
under the interest rate swap agreement are accrued consistent with terms of the
agreement and market interest rates. The agreement expires in December 1996.
Based on borrowing rates currently available to the Company for long-term
financing with similar terms and average maturities, the fair value of long-term
debt utilizing discounted cash flows is $89.5 million.
(6) INCOME TAXES
As discussed in Note 1, the Company adopted Statement 109 as of January 3,
1993. The effect of this change in accounting for income taxes was not
material. Prior years' financial statements have not been restated to apply the
provisions of Statement 109.
Income tax expense for fiscal years 1994, 1993 and 1992 is made up of the
following components (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Current:
U.S. federal $ 5,779 12,334 12,500
State and local 1,296 2,865 2,796
Deferred:
U.S. federal 2,691 (3,558) (2,324)
State and local 564 (837) (442)
------- ------- -------
Total $10,330 10,804 12,530
------- ------- -------
------- ------- -------
</TABLE>
<PAGE>
(6) INCOME TAXES (CONTINUED)
Deferred income tax expense (benefit) results from timing differences in
the recognition of revenue and expense for tax and financial statement purposes.
The source of these differences and the tax effect for fiscal year 1992 is as
follows (in thousands):
<TABLE>
<CAPTION>
1992
--------
<S> <C>
Excess of tax over
financial statement
depreciation $ (795)
Provision for deferred
compensation (50)
Provision for losses at
closed locations 398
Provision for bad debts (1,122)
Provision for health
care claims (582)
Inventory capitalization (348)
Other, net (267)
-------
$(2,766)
-------
-------
</TABLE>
Total income tax expense represents effective tax rates of
40.0%, 40.5% and 38.4%, for the fiscal years 1994, 1993 and 1992, respectively.
The reasons for differences compared with the U.S. federal statutory tax rate
(expressed as a percentage of pretax income) are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory
tax rate 35.0% 35.0% 34.0%
Items affecting federal
income tax rate:
State and local taxes,
net of federal income
tax benefit 4.7 4.9 4.8
Other, net .3 .6 (.4)
---- ---- ----
Effective tax rate 40.0% 40.5% 38.4%
---- ---- ----
---- ---- ----
</TABLE>
Income taxes paid were $9.2 million, $18.0 million and $11.1 million during
fiscal years 1994, 1993 and 1992, respectively.
<PAGE>
(6) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1994 and January 1, 1994 are presented below (in thousands):
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Deferred tax assets:
Accounts and notes receivable,
principally due to allowance for
doubtful accounts $1,412 6,235
Inventories, principally due to
additional costs inventoried for
tax purposes pursuant to the
Tax Reform Act of 1986 1,745 1,653
Health care claims, principally due
to accrual for financial
reporting purposes 684 345
Deferred compensation, principally due
to accrual for financial reporting purposes 3,329 3,608
Compensated absences, principally due
to accrual for financial reporting purposes 1,263 1,124
Compensation and casualty loss, principally
due to accrual for financial reporting
purposes 1,842 1,407
Purchased intangibles 846 424
Closed locations 500 589
Other 757 359
------ ------
Total gross deferred tax assets 12,378 15,744
Less valuation allowance -- --
------ ------
Net deferred tax assets 12,378 15,744
------ ------
<CAPTION>
Deferred tax liabilities:
<S> <C> <C>
Plant and equipment, principally due
to differences in depreciation 6,402 7,255
Inventories, principally due to
differences in LIFO basis 2,661 2,724
Other 993 569
------ ------
Total gross deferred tax liabilities 10,056 10,548
------ ------
Net deferred tax asset $2,322 5,196
------ ------
------ ------
</TABLE>
<PAGE>
(6) INCOME TAXES (CONTINUED)
Since it is more likely than not that the deferred tax asset of $12,378 and
$15,744 at December 31, 1994 and January 1, 1994, respectively, will be
principally realized through carry back to taxable income in prior years, in
future reversals of existing taxable temporary differences, and, to a lesser
extent, future taxable income and tax planning strategies, the Company has
determined that there is no need to establish a valuation allowance for the
deferred tax asset at December 31, 1994 and January 1, 1994 as required by
Statement 109.
(7) STOCK RIGHTS AND OPTIONS
Under the Company's 1986 Stockholder Rights Plan, as amended January 18,
1990, one right is attached to each outstanding share of common stock. Each
right entitles the holder to purchase, under certain conditions, one-half share
of common stock at a price of $28.75 ($57.50 per full share). The rights are
not yet exercisable and no separate rights certificates have been distributed.
All rights expire on March 31, 1996.
The rights become exercisable 20 days after a "flip-in event" has occurred
or 10 business days (subject to extension) after a person or group makes a
tender offer for 15% or more of the Company's outstanding common stock. A flip-
in event would occur if a person or group acquires (1) 15% of the Company's
outstanding common stock, or (2) an ownership level set by the Board of
Directors at less than 15% if the person or group is deemed by the Board of
Directors to have interests adverse to those of the Company and its
stockholders. The rights may be redeemed by the Company at any time prior to
the occurrence of a flip-in event at $.01 per right. The power to redeem may be
reinstated within 20 days after a flip-in event occurs if the cause of the
occurrence is removed.
Upon the rights becoming exercisable, subject to certain adjustments or
alternatives, each right would entitle the holder (other than the acquiring
person or group, whose rights become void) to purchase a number of shares of the
Company's common stock having a market value of twice the exercise price of the
right. If the Company is involved in a merger or other business combination, or
certain other events occur, each right would entitle the holder to purchase
common shares of the acquiring company having a market value of twice the
exercise price of the right. Within 30 days after the rights become exercisable
following a flip-in event, the Board of Directors may exchange shares of Company
common stock or cash or other property for exercisable rights.
On May 10, 1994, the stockholders approved a new stock incentive plan for
officers and key employees. As a result of this action, a previous plan was
terminated. For purposes of the new plan, a total of 645,296 shares (including
245,296 shares remaining from the previous plan) were reserved for the granting
<PAGE>
(7) STOCK RIGHTS AND OPTIONS (CONTINUED)
of stock options, restricted stock awards and performance unit awards. Stock
options are granted at 100% of fair market value at date of grant and are
exercisable over a term which may not exceed 10 years from date of grant.
Restricted stock awards are subject to restrictions on transferability and such
conditions for vesting, including continuous employment for specified periods of
time, as may be determined at the date of grant. Performance unit awards are
grants of rights to receive shares of stock if certain performance goals or
criteria, determined at the time of grant, are achieved in accordance with the
terms of the grants.
All stock options granted under the former plan expired August 15, 1994.
These options were also granted at 100% of fair market value at date of grant
and were exercisable over a term of five years. No restricted stock awards were
granted under the previous plan.
At December 31, 1994 options to purchase 291,469 shares of common stock of
the Company, at an average price of $16.86 per share and exercisable over a term
of five years from the dates of grant, have been granted under the new plan and
are outstanding. No restricted stock awards have been granted. Performance unit
awards having a maximum potential payout of 76,389 shares have also been granted
and are outstanding. Reserved for the granting of future stock options,
restricted stock awards and performance unit awards are 277,438 shares.
<PAGE>
(7) STOCK RIGHTS AND OPTIONS (CONTINUED)
Changes in outstanding options during the three fiscal years ended December
31, 1994 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Average
Shares Option Price
(in thousands) Per Share ($)
------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding December 28, 1991 139 25.34
Exercised --
Surrendered (29) 25.35
Granted --
------------------------------------------------------------------------------
Options outstanding January 2, 1993 110 25.34
Exercised --
Surrendered (109) 25.37
Granted --
------------------------------------------------------------------------------
Options outstanding January 1, 1994 1 23.00
Exercised (1) 16.88
Surrendered (7) 18.19
Granted 298 16.86
------------------------------------------------------------------------------
Options outstanding December 31, 1994 291 16.86
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Options exercisable at:
December 31, 1994 65 16.86
January 1, 1994 1 23.00
</TABLE>
<PAGE>
(8) LEASE AND OTHER COMMITMENTS
A substantial portion of the store and warehouse properties of the Company
are leased. The following table summarizes assets under capitalized leases (in
thousands):
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Buildings and improvements $12,423 9,210
Less accumulated amortization (4,103) (3,537)
------- ------
Net assets under capitalized
leases $ 8,320 5,673
------- ------
------- ------
</TABLE>
At December 31, 1994, future minimum rental payments under noncancelable
leases and subleases are as follows (in thousands):
<TABLE>
<CAPTION>
Operating Capital
leases leases
--------- -------
<S> <C> <C>
1995 $ 17,757 1,586
1996 15,684 1,494
1997 13,475 1,454
1998 12,097 1,407
1999 - later years 64,190 16,487
-------- --------
Total minimum lease payments (a) $123,203 22,428
--------
--------
Less imputed interest
(rates ranging from 7.9% to 11.5%) (11,217)
--------
Present value of net
minimum lease payments 11,211
Less current maturities (540)
--------
Capitalized lease obligations $ 10,671
--------
--------
<FN>
(a) Future minimum payments for operating and capital leases have not been
reduced by minimum sublease rentals receivable under noncancelable
subleases. Total future minimum sublease rentals related to operating and
capital lease obligations as of December 31, 1994 are $48 million and $4
million, respectively.
</TABLE>
<PAGE>
(8) LEASE AND OTHER COMMITMENTS (CONTINUED)
Total rental expense under operating leases for fiscal years 1994, 1993 and
1992 is as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ ------
<S> <C> <C> <C>
Total rentals $28,978 27,706 25,384
Less real
estate taxes,
insurance and
other occupancy
costs (2,429) (2,312) (2,236)
------ ------ ------
Minimum rentals 26,549 25,394 23,148
Contingent rentals 148 248 394
Sublease rentals (7,716) (7,060) (7,107)
------ ------ ------
$18,981 18,582 16,435
------ ------ ------
------ ------ ------
</TABLE>
Most of the Company's leases provide that the Company pay real estate
taxes, insurance and other occupancy costs applicable to the leased premises.
Contingent rentals are determined on the basis of a percentage of sales in
excess of stipulated minimums for certain store facilities. Operating leases
often contain renewal options. Management expects that, in the normal course of
business, leases that expire will be renewed or replaced by other leases.
The Company has guaranteed certain lease and promissory note obligations of
customers aggregating approximately $15.7 million.
(9) CONCENTRATION OF CREDIT RISK
The Company provides financial assistance in the form of secured loans to
some of its affiliated independent retailers for inventories, store fixtures and
equipment, working capital and store improvements. Loans are secured by liens
on inventory or equipment or both, by personal guarantees and by other types of
collateral. In addition, the Company guarantees lease and promissory note
obligations of customers.
As of December 31, 1994, the Company has guaranteed outstanding promissory
note obligations of one customer in the amount of $7.8 million and of another
customer in the amount of $4.0 million.
<PAGE>
(9) CONCENTRATION OF CREDIT RISK (CONTINUED)
In the normal course of business, the Company's produce marketing operation
in California makes cash advances to produce growers during various product
growing seasons, to fund production costs. Such advances are repayable at the
end of the respective growing seasons. Unpaid advances are generally secured by
liens on real estate. At December 31, 1994, $9.1 million in notes and growers
advances were outstanding.
The Company establishes allowances for doubtful accounts based upon the
credit risk of specific customers, historical trends and other information.
Management believes that adequate provisions have been made for any doubtful
accounts.
(10) EMPLOYEE BENEFIT PLANS
The Company has a profit sharing plan covering substantially all employees
meeting specified requirements. Contributions, determined by the Board of
Directors, are made to a noncontributory profit sharing trust based on profit
performances. Profit sharing expense for 1994, 1993 and 1992 was $3.5 million,
$3.6 million and $4.0 million, respectively.
Certain officers and key employees are participants in a deferred
compensation plan providing fixed benefits payable in equal monthly installments
upon retirement. Annual increments to the deferred compensation plan are
charged to earnings.
(11) POSTRETIREMENT HEALTH CARE BENEFITS
The Company provides certain health care benefits for retired employees.
Substantially all of the Company's employees become eligible for those benefits
when they reach normal retirement age and have a minimum of 15 years of service
with the Company. Prior to 1993, the cost of retiree health care benefits was
recognized as expense as claims were paid. Claims paid were $68,000 in fiscal
1992.
During the fourth quarter of 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, EMPLOYER'S ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS. The Company has adopted SFAS 106 on a prospective
basis, electing to amortize the liability of $4.9 million over the next twenty
years.
<PAGE>
(11) POSTRETIREMENT HEALTH CARE BENEFITS (CONTINUED)
The periodic postretirement benefit costs under Statement 106 were as follows
(in thousands):
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Service costs $ 235 250
Interest costs 361 381
Amortization of unrecognized
transition obligation 248 248
------ -----
Net postretirement costs $ 844 879
------ -----
------ -----
</TABLE>
The actuarial present value of benefit obligations at December 31, 1994 and
January 1, 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Retirees eligible for benefits $1,612 1,743
Active employees fully eligible 466 470
Active employees not fully eligible 3,191 2,491
------ ------
$5,269 4,704
------ ------
------ ------
</TABLE>
The assumed annual rate of future increases in per capita cost of health care
benefits was 12.0% in fiscal 1994 declining at a rate of .5% per year to 6.5%
in 2005 and thereafter. Increasing the health care cost trend by 1% in each
year would increase the accumulated benefit obligation by $267,000 at December
31, 1994 and the service and interest costs by $40,000 for fiscal 1994. The
discount rate used in determining the accumulated benefit obligation was 7.5%.
(12) SEGMENT INFORMATION
The Company and its subsidiaries sell and distribute food and nonfood
products that are typically found in supermarkets.
The Company's wholesale distribution segment sells to independently owned
retail food stores and institutional customers while the retail distribution
segment sells directly to the consumer. Produce marketing includes farming,
packing and marketing operations.
Operating profit is net sales and revenues, less operating expenses. In
computing operating profit, none of the following items have been added or
deducted: general corporate expenses, interest expense, interest income, income
taxes and equity in income from equity-owned companies. Wholesale distribution
operating profits on sales through Company-owned stores have been allocated to
the retail segment.
Identifiable assets are those used exclusively by that industry segment or
an allocated portion of assets used jointly by two industry segments. Corporate
assets are principally cash and cash equivalents, notes receivable, corporate
office facilities and equipment.
<PAGE>
(12) SEGMENT INFORMATION (CONTINUED)
Major segments of business
(in thousands)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
1994 1993 1992
------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales and other operating
revenues:
Wholesale distribution $1,854,629 1,836,405 1,673,955
Retail distribution 925,772 841,664 801,101
Produce marketing and other 41,861 37,718 34,408
---------- ---------- ----------
Total net sales and other
operating revenues $2,822,262 2,715,787 2,509,464
---------- ---------- ----------
---------- ---------- ----------
Operating profit:
Wholesale distribution $ 24,593 23,697 28,730
Retail distribution 8,804 7,704 9,302
Produce marketing and other 1,122 2,786 1,386
---------- ---------- ----------
Total operating profit 34,519 34,187 39,418
---------- ---------- ----------
Interest income 2,675 2,604 2,474
Interest expense (11,384) (10,113) (9,294)
---------- ---------- ----------
Earnings before income taxes $ 25,810 26,678 32,598
---------- ---------- ----------
---------- ---------- ----------
Identifiable assets:
Wholesale distribution $ 201,404 237,554 245,520
Retail distribution 242,328 195,454 177,764
Produce marketing and other 42,597 37,394 36,475
Corporate 45,275 51,252 53,856
---------- ---------- ----------
$ 531,604 521,654 513,615
---------- ---------- ----------
---------- ---------- ----------
Capital expenditures:
Wholesale distribution $ 8,372 9,199 10,585
Retail distribution 25,821 18,947 22,224
Produce marketing and other 2,072 5,564 2,101
Corporate 1,913 2,672 8,081
---------- ---------- ----------
$ 38,178 36,382 42,991
---------- ---------- ----------
---------- ---------- ----------
Depreciation and amortization:
Wholesale distribution $ 11,660 11,641 11,281
Retail distribution 16,600 14,093 12,675
Produce marketing and other 1,513 1,396 1,230
Corporate 2,058 2,015 1,852
---------- ---------- ----------
$ 31,831 29,145 27,038
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
<PAGE>
NASH FINCH COMPANY
Consolidated Summary of Operations
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Eleven years ended December 31, 1994 (not covered by Independent Auditors' Report)
(Dollar amounts in thousands except
per share amounts) 1994 1993 1992 1991 1990 1989
(52 weeks) (52 weeks) (53 weeks) (52 weeks) (52 weeks) (52 weeks)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales and revenues $2,822,262 2,715,787 2,509,464 2,337,560 2,369,054 2,219,451
Other income 9,738 7,748 5,974 5,718 5,799 4,312
---------- --------- --------- --------- --------- ---------
Total sales, revenues and other income 2,832,000 2,723,535 2,515,438 2,343,278 2,374,853 2,223,763
Cost of sales 2,410,292 2,325,249 2,147,845 1,997,462 2,036,335 1,904,041
Selling, general, administrative,
and other operating expenses,
including warehousing and
transportation expenses 349,190 328,703 294,700 276,144 271,735 264,024
Interest expense 11,384 10,114 9,294 8,966 8,670 8,277
Depreciation and amortization 31,831 29,145 27,038 26,124 25,551 23,170
Profit sharing contribution 3,493 3,646 3,963 3,789 3,603 3,089
Provision for income taxes 10,330 10,804 12,530 11,738 11,129 8,010
---------- --------- --------- --------- --------- ---------
Net earnings $ 15,480 15,874 20,068 19,055 17,830 13,152
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
Earnings per share $ 1.42 1.46 1.85 1.75 1.64 1.21
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
Cash dividends declared per common share (2) $ .73 .72 .71 .70 .69 .67
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
Average number of common shares outstanding
during period (in thousands) (2) 10,873 10,872 10,872 10,871 10,870 10,868
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
Pre-tax earnings as a percent of sales and revenues .91 .98 1.30 1.31 1.22 .95
Net earnings as a percent of sales and revenues .54 .58 .80 .81 .75 .59
Effective income tax rate 40.0 40.5 38.4 38.1 38.4 37.9
Current assets $ 309,522 294,925 310,170 239,850 234,121 212,264
Current liabilities $ 220,065 215,021 213,691 154,993 159,439 128,159
Net working capital $ 89,457 79,904 96,479 84,857 74,682 84,105
Ratio of current assets to current liabilities 1.41 1.37 1.45 1.55 1.47 1.66
Total assets $ 531,604 521,654 513,615 429,648 416,233 380,771
Capital expenditures $ 34,965 36,382 42,991 36,836 36,129 34,635
Long-term obilgations (long-term debt and
capitalized lease obligations) $ 95,960 97,887 94,145 82,532 74,333 77,950
Stockholders' equity $ 206,269 199,264 191,204 178,846 167,388 157,024
Stockholders' equity per share (1), (2) $ 18.97 18.33 17.59 16.45 15.40 14.45
Return on average stockholders' equity $ 7.63 8.13 10.85 11.01 10.99 8.54
Number of common stockholders of record at year-end 2,074 2,074 2,087 2,122 2,138 2,146
Common stock high price (2), (3) 18 1/4 23 1/4 19 3/4 20 1/4 25 1/4 25 3/4
Common stock low price (2), (3) 15 3/8 17 16 1/4 16 1/2 16 1/4 21 1/4
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Eleven years ended December 31, 1994 (not covered by Independent Auditors' Report)
(Dollar amounts in thousands except
per share amounts) 1988 1987 1986 1985 1984
(52 weeks) (52 weeks) (53 weeks) (52 weeks) (52 weeks)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales and revenues $2,091,822 1,938,758 1,573,717 1,323,294 1,235,327
Other income 6,012 4,590 3,640 4,106 2,992
---------- --------- --------- --------- ---------
Total sales, revenues and other income 2,097,834 1,943,348 1,577,357 1,327,400 1,238,319
Cost of sales 1,807,448 1,682,667 1,360,537 1,142,464 1,070,226
Selling, general, administrative,
and other operating expenses,
including warehousing and
transportation expenses 230,221 198,553 165,713 140,798 128,653
Interest expense 8,106 8,087 6,497 5,732 4,199
Depreciation and amortization 20,193 18,389 16,249 14,279 12,034
Profit sharing contribution 2,832 2,734 2,349 2,101 2,038
Provision for income taxes 10,859 14,416 12,178 10,020 9,483
---------- --------- --------- --------- ---------
Net earnings $ 18,175 18,502 13,834 12,006 11,686
---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------
Earnings per share $ 1.67 1.75 1.35 1.18 1.15
---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------
Cash dividends declared per common share (2) $ .65 .57 .52 .50 .49
---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------
Average number of common shares outstanding
during period (in thousands) (2) 10,881 10,576 10,244 10,196 10,179
---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------
Pre-tax earnings as a percent of sales and revenues 1.38 1.69 1.65 1.66 1.71
Net earnings as a percent of sales and revenues .87 .95 .88 .90 .94
Effective income tax rate 37.4 43.8 46.8 45.5 44.8
Current assets $ 219,956 209,305 182,676 125,051 117,772
Current liabilities $ 153,068 127,608 120,687 77,867 71,465
Net working capital $ 66,888 81,697 61,989 47,183 46,306
Ratio of current assets to current liabilities 1.44 1.64 1.51 1.61 1.65
Total assets $ 388,269 352,187 313,908 239,767 223,024
Capital expenditures $ 52,019 29,680 26,969 25,438 26,954
Long-term obilgations (long-term debt and
capitalized lease obligations) $ 66,216 66,988 61,588 42,250 42,639
Stockholders' equity $ 151,043 140,850 116,416 107,384 100,094
Stockholders' equity per share (1), (2) $ 13.90 12.97 11.34 10.51 9.84
Return on average stockholders'equity $ 12.45 14.38 12.36 11.57 12.08
Number of common stockholders of record at year-end 2,227 2,234 1,829 1,868 1,881
Common stock high price (2), (3) 27 1/2 26 1/2 19 1/8 15 5/8 9 1/4
Common stock low price (2), (3) 18 14 3/4 14 3/4 9 1/4 6 3/4
<FN>
(1) Based on outstanding shares at year-end.
(2) Adjusted to reflect 2-for-1 stock split 1987.
(3) High and low closing sale price. Prior to February 1985 high and low bid
quotation.
</TABLE>
<PAGE>
SUBSIDIARIES OF NASH FINCH COMPANY
(which subsidiaries are included in the
Consolidated Financial Statements of Nash Finch Company)
A. Direct subsidiaries of Nash Finch Company (the voting stock of which is
owned, with respect to each subsidiary, 100 percent by Nash Finch Company):
Subsidiary State of
Corporation Incorporation
----------------------- -------------
Nash-DeCamp Company California
Visalia, California
Piggly Wiggly Northland Corporation Minnesota
Edina, Minnesota
GTL Truck Lines, Inc. Nebraska
Norfolk, Nebraska
Thomas & Howard Company of Hickory, Inc. North Carolina
Newton, North Carolina
B. Direct subsidiaries of Nash Finch Company (the voting stock of which is
owned, with respect to each subsidiary, 66.6 percent by Nash Finch Company):
Subsidiary State of
Corporation Incorporation
----------------------- -------------
Gillette Dairy of the Black Hills, Inc. South Dakota
Rapid City, South Dakota
Nebraska Dairies, Inc. Nebraska
Norfolk, Nebraska
C. Subsidiaries of Nash-DeCamp Company (the voting stock of which is owned,
with respect to each subsidiary other than Agricola Nadco Limitada, 100 percent
by Nash-Decamp Company):
Subsidiary State/Country of
Corporation Incorporation
----------------------- -------------
Forrest Transportation Service, Inc. California
Visalia, California
Agricola Nadco Limitada* Chile
---------------------
*Ninety-nine percent (99%) of Agricola Nadco Limitada
is owned by Nash-DeCamp Company.
D. Subsidiary of Thomas & Howard Company of Hickory, Inc. (the voting stock of
which is owned 100 percent by Thomas & Howard Company of Hickory, Inc.):
Subsidiary State of
Corporation Incorporation
----------------------- -------------
T & H Service Merchandisers, Inc. North Carolina
Hickory, North Carolina
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Nash Finch Company:
We consent to incorporation by reference in the Registration Statement (no.
33-54487) on Form S-8 of Nash Finch Company of our reports dated March 3,
1995, relating to the consolidated balance sheets of Nash Finch Company and
subsidiaries as of December 31, 1994 and January 1, 1994 and the related
consolidated statements of earnings, stockholders' equity, and cash flows
and related consolidated financial statement schedule for each of the years
in the three-year period ended December 31, 1994, which reports are
included or incorporated by reference in the December 31, 1994 annual
report on Form 10-K of Nash Finch Company.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 31, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-02-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,078
<SECURITIES> 0
<RECEIVABLES> 100,428
<ALLOWANCES> (1,569)
<INVENTORY> 198,637
<CURRENT-ASSETS> 309,522
<PP&E> 391,936
<DEPRECIATION> (204,985)
<TOTAL-ASSETS> 531,604
<CURRENT-LIABILITIES> 220,065
<BONDS> 85,289
<COMMON> 18,706
0
0
<OTHER-SE> 190,617
<TOTAL-LIABILITY-AND-EQUITY> 531,604
<SALES> 2,779,330
<TOTAL-REVENUES> 2,832,000
<CGS> 2,410,292
<TOTAL-COSTS> 382,327
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,187
<INTEREST-EXPENSE> 11,384
<INCOME-PRETAX> 25,810
<INCOME-TAX> 10,330
<INCOME-CONTINUING> 15,480
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,480
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.42
</TABLE>
