<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
/X/ EXCHANGE ACT OF 1934
For the twelve weeks ended March 25, 1995
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
/ / EXCHANGE ACT OR 1934
Commission File no. 0-785
NASH-FINCH COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 410431960
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7600 FRANCE AVE. SOUTH, MINNEAPOLIS, MINNESOTA 55435
(Address of principal executive offices) (Zip Code)
(612) 832-0534
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---- ----
Number of shares of common stock outstanding at May 1, 1995:
10,874,915 SHARES
<PAGE>
PART I - FINANCIAL INFORMATION
This report is for the twelve week interim period beginning January 1,
1995, through March 25, 1995.
The accompanying financial information has been prepared in conformity with
generally accepted accounting principles and practices, and methods of applying
accounting principles and practices, (including consolidation practices) as
reflected in the financial information included in the Company's Annual Report
on Form 10-K, filed with the Securities and Exchange Commission for the
preceding fiscal year. The financial statements included in this quarterly
report include all adjustments which are, in the opinion of management,
necessary to a fair presentation of the Company's financial position and results
of operations for the interim period.
The information contained herein has not been audited by independent
certified public accountants and is subject to any adjustments which may develop
in connection with the annual audit of its accounts by Ernst & Young LLP, the
Company's independent public accountants.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended
----------------------------------
March 25, 1995 March 26, 1994
-------------- --------------
<S> <C> <C>
Income:
Net sales $ 613,898 610,135
Other revenues 9,700 8,030
-------------- --------------
Total revenues 623,598 618,165
Cost and expenses:
Cost of sales 534,312 527,696
Selling, general and administrative
and other operating expenses 75,038 76,635
Depreciation and amortization 6,790 7,063
Interest expense 2,939 2,451
-------------- --------------
Total costs and expenses 619,079 613,845
Earnings before income taxes 4,519 4,320
Income taxes 1,830 1,749
-------------- --------------
Net earnings $ 2,689 2,571
-------------- --------------
-------------- --------------
Weighted average number of
common shares outstanding 10,874 10,872
-------------- --------------
-------------- --------------
Earnings per share $ .25 .24
-------------- --------------
-------------- --------------
</TABLE>
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See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
March 25, December 31,
Assets 1995 1994
- ------ ----------- ------------
<S> <C> <C>
Current assets: (Unaudited)
Cash on hand $ 908 1,078
Accounts and notes receivable, net 93,592 98,859
Inventories 185,388 198,637
Prepaid expenses 16,439 8,626
Deferred tax assets 2,105 2,322
----------- -----------
Total current assets 298,432 309,522
Investments at net equity 7,709 7,432
Notes receivable, noncurrent 14,882 16,441
Property, plant and equipment:
Land 27,565 27,556
Buildings and improvements 107,197 107,149
Furniture, fixtures, and equipment 211,453 214,564
Leasehold improvements 27,228 28,205
Construction in progress 2,402 2,039
Assets under capitalized leases 11,754 12,423
----------- -----------
387,599 391,936
Less accumulated depreciation and amortization (204,473) (204,985)
----------- -----------
Net property, plant and equipment 183,126 186,951
----------- -----------
Intangible assets, net 7,409 7,810
Other assets 3,341 3,448
----------- -----------
Total assets $ 514,899 531,604
----------- -----------
----------- -----------
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Outstanding checks, net of cash in banks $ 3,021 18,649
Short-term debt payable to banks 37,800 41,400
Current maturities of long-term debt and
capitalized lease obligations 4,053 5,685
Accounts payable 121,335 122,602
Accrued expenses 34,834 29,585
Income taxes 3,702 2,144
----------- -----------
Total current liabilities 204,745 220,065
Long-term debt 83,691 85,289
Capitalized lease obligations 10,546 10,671
Deferred compensation 8,162 8,526
Other 755 784
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 11,977
Foreign curency translation adjustment - net of
a $381 deferred tax benefit (572) (572)
Retained earnings 179,943 179,212
----------- -----------
210,054 209,323
Less cost of 349 shares of common stock in
treasury (3,054) (3,054)
----------- -----------
Total stockholders' equity 207,000 206,269
----------- -----------
Total liabilities and stockholders' equity $ 514,899 531,604
----------- -----------
----------- -----------
</TABLE>
- -------------------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Twelve Weeks Ended
-----------------------------------
March 25, 1995 March 26, 1994
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,689 2,571
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,790 7,063
Provision for bad debts 448 (4)
Provision for losses on closed lease
locations (84) 64
Deferred income taxes 216 2,974
Deferred compensation (363) (192)
Earnings of equity investments (278) (373)
Other 55 9
Changes in current assets and liabilities:
Accounts and notes receivable 5,649 2,538
Inventories 13,249 (1,936)
Prepaid expenses (7,813) (6,371)
Accounts payable (1,267) (2,682)
Accrued expenses 5,249 5,823
Income taxes 1,558 (2,993)
---------------- ----------------
Net cash provided by operating
activities $ 26,098 6,491
---------------- ----------------
Cash flows from investing activities:
Disposal of property, plant and equipment 928 4,894
Additions to property, plant and equipment
excluding capital leases (3,418) (6,477)
Business acquired __ (8,307)
Loans to customers (1,508) (2,028)
Payments from customers on loans 2,271 1,662
Other __ (7)
---------------- ----------------
Net cash used for investing activities $ (1,727) (10,263)
---------------- ----------------
Cash flows from financing activities:
Dividends paid (1,958) (1,958)
(Payments) Proceeds of short-term debt (3,600) 5,200
Payments of long-term debt (3,221) (523)
Payments of capitalized lease obligations (134) (118)
---------------- ----------------
Net cash (used for) provided by
financing activities (8,913) 2,601
---------------- ----------------
Net increase (decrease) in cash $ 15,458 (1,171)
---------------- ----------------
---------------- ----------------
</TABLE>
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See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Fiscal period ended March 25 1995,
December 31, 1994 and January 1, 1994
(In thousands, except per share amounts)
Common Stock Addional
------------------- paid-in Retained
Shares Amount capital earnings
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 2, 1993 11,224 $ 18,706 11,944 163,624
Net earnings -- -- -- 15,874
Dividend declared of $.72 per share -- -- -- (7,828)
Treasury stock issued upon
exercise of options and other
insignificant items -- -- 10 --
-------- -------- -------- --------
Balance at January 1, 1994 11,224 18,706 11,954 171,670
Net earnings -- -- -- 15,480
Dividend declared of $.73 per share -- -- -- (7,938)
Treasury stock issued upon
exercise of options and other
insignificant items -- -- 23 --
Foreign curency translation
adjustment - net of a $381 deferred
tax benefit -- -- -- --
-------- -------- -------- --------
Balance at December 31, 1994 11,224 18,706 11,977 179,212
Net earnings -- -- -- 2,689
Dividend declared of $.18 per share -- -- -- (1,958)
-------- -------- -------- --------
Balance at March 25, 1995 11,224 $ 18,706 11,977 179,943
-------- -------- -------- --------
-------- -------- -------- --------
<CAPTION>
Foreign
currency Treasury stock Total
translation --------------- stockholders'
adjustment Shares Amount equity
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 2, 1993 -- (352) $ (3,070) 191,204
Net earnings -- -- -- 15,874
Dividend declared of $.72 per share -- -- -- (7,828)
Treasury stock issued upon
exercise of options and other
insignificant items -- 1 4 14
-------- -------- -------- --------
Balance at January 1, 1994 -- (351) (3,066) 199,264
Net earnings -- -- -- 15,480
Dividend declared of $.73 per share -- -- -- (7,938)
Treasury stock issued upon
exercise of options and other
insignificant items -- 2 12 35
Foreign curency translation
adjustment - net of a $381 deferred
tax benefit (572) -- (572)
-------- -------- -------- --------
Balance at December 31, 1994 (572) (349) (3,054) 206,269
Net earnings -- -- 2,689
Dividend declared of $.18 per share -- -- (1,958)
-------- -------- -------- --------
Balance at March 25, 1995 (572) (349) $ (3,054) 207,000
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
- ------------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1995
NOTE 1
The accompanying financial statements include all adjustments which are, in
the opinion of management, necessary to present fairly the financial position of
the Company and its subsidiaries at March 25, 1995 and December 31, 1994, and
the results of operations for the 12-week ending March 25, 1995 and March 26,
1994, and the changes in cash flows for the 12-week periods ending March 25,
1995 and March 26, 1994, respectively. All material intercompany accounts and
transactions have been eliminated in the consolidated financial statements.
Results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
NOTE 2
The Company uses the LIFO method for valuation of a substantial portion of
inventories. If the FIFO method had been used, inventories would have been
approximately $43.9 million higher at March 25, 1995 and at December 31, 1994.
NOTE 3
Earnings per share are computed by dividing net earnings by the weighted
average number of common shares outstanding during each period presented.
Options granted under the Company's qualified stock plan are considered common
stock equivalents for the purpose of earnings per share data, but have been
excluded from the computation since the dilutive effect is not material.
NOTE 4
On April 2, 1992, the Company sold customer notes totalling $22.8 million.
The notes having maturities through the year 2000, were sold at face value with
limited recourse as to certain notes. The Company is responsible for collection
of the notes and remits the principal plus a floating rate of interest to the
purchaser on a monthly basis. Proceeds from the sale of the notes receivable
were used to pay off short-term bank debt.
Remaining balances on the notes receivable sold totaled $2.5 million at
March 25, 1995.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues during the first quarter of fiscal 1995 increased .9% over
the same period last year. Improvements in wholesale segment revenues of 5.9%,
resulting from the addition of several new accounts, were offset by a reduction
in retail sales due to the sale or closing of a number of corporate retail
stores since last year. During the quarter the Company sold two stores to an
existing customer, thereby retaining the wholesale business, and closed six
other stores that did not meet the Company's sales and earnings expectations.
Same store sales showed a 3.3% decline compared to last year due to new
competition in certain market areas and unusually low sales in January.
Gross margins were 14.3% for the first quarter compared to 14.6% for the
same twelve week period last year. The overall decrease resulted from a greater
proportion of wholesale sales which contribute lower gross margins. In spite of
this overall decline, margins improved at retail level in the non-perishable
grocery and specialty departments. In addition, Midwest wholesale operations
showed higher margins, which we believe resulted from programs currently being
implemented to improve product procurement processes. However, margins of
distribution centers servicing convenience store customers in the Southeast
continue to be negatively affected by lower margins on tobacco products. The
Company's internally measured inflation index measured slight deflation for the
quarter. This resulted in a LIFO credit of $135,000 this year compared to a
$500,000 credit in the prior year.
Selling, general and administrative expenses as a percent of total revenues
were 12.0% compared to 12.4% last year. Again, the change in the mix of
business from retail to wholesale, which operates at lower expense levels, was
the principal reason for the percentage decline.
Depreciation and amortization expenses for the quarter were down 3.8% from
the prior year. The decrease reflects the reduction in retail property, plant
and equipment resulting from the sale and closing of retail stores since last
year.
Interest expense increased 19.9% compared to last year because of higher
interest rates partially offset by lower average short-term borrowings during
the quarter.
The effective tax rate for both the first quarter this year and last year
was 40.5%. Income tax expense increased over last year because of higher pretax
earnings.
Net earnings in the first quarter were $2.7 million, an increase of 4.6%
over last year. The earnings increase is attributed to better operating results
of corporate retail stores during the quarter despite lower sales.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operations was $26.1 million in the first quarter of
1995 compared with $6.5 million in the first quarter in 1994. The primary
reason for this increase was a reduction in distribution center inventories of
approximately $11 million and retail inventories of $2.5 million in the quarter
compared to an inventory increase of $1.9 million during the same period of
1994.
Outstanding checks net of cash in banks decreased from $18.6 at year end to
$3.0 million at the end of the first quarter of 1995. This decrease was an
anomaly related to the timing of the Easter holiday in 1995 compared with 1994
and is reflected in the net increase in cash in 1995.
Capital expenditures totaled $3.4 million for the quarter down from $6.5
million in the similar period in 1994. The capital budget for 1995 is $31.3
million down from actual expenditures of $35.0 million in 1994.
There were no other significant factors affecting liquidity and capital
resources in the first quarter of 1995.
<PAGE>
PART II - OTHER INFORMATION
Items 2, 3, 4 and 5 are not applicable.
ITEM 1, LEGAL PROCEEDINGS.
In November 1992, Jin Ku Kim, currently an employee of the Company,
commenced an action against the Company in U.S. District Court for the Northern
District of Iowa claiming damages as a result of the alleged failure 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
in terms and conditions of employment after he filed charges of employment
discrimination. On September 16, 1994, a jury verdict in the amount of
$8,786,000 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, was entered in favor of
the plaintiff. On April 13, 1995, the U.S. District Court reduced the amount of
damages to $421,000 plus attorneys' fees and expenses. The plaintiff and the
Company have each filed a notice of appeal of the Court's decision. The Company
will continue to vigorously pursue all avenues for eliminating or further
reducing the damages and other relief awarded to the plaintiff. Although no
assurance can be given that the Company will be successful in its defense
against the plaintiff's appeal or in pursuing the Company's appeal, the Company
believes that the reserves it has established are reasonably adequate to cover
its liability in this case.
ITEM 6, EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS:
27. Financial Data Schedule.
(b) REPORTS ON FORM 8-K:
A Form 8-K, dated February 14, 1995, was filed February 22, 1995 by
the registrant with the Securities and Exchange Commission to report
the dismissal of KPMG Peat Marwick LLP as the registrant's independent
accountants upon completion of the audit for the fiscal year ended
December 31, 1994 and the engagement of Ernst & Young LLP as the
registrant's independent accountants for the fiscal year ending
December 30, 1995. Amendments No. 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NASH-FINCH COMPANY
Registrant
Date May 5, 1995 BY /s/ Alfred N. Flaten
------------- ------------------------
Alfred N. Flaten
President and Chief
Executive Officer
Date May 5, 1995 BY /s/ Robert F. Nash
------------- ------------------------
Robert F. Nash
Vice President and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-25-1995
<CASH> 908
<SECURITIES> 0
<RECEIVABLES> 94,613
<ALLOWANCES> (1,021)
<INVENTORY> 185,388
<CURRENT-ASSETS> 298,432
<PP&E> 387,599
<DEPRECIATION> 204,473
<TOTAL-ASSETS> 514,899
<CURRENT-LIABILITIES> 204,745
<BONDS> 83,691
<COMMON> 18,706
0
0
<OTHER-SE> 188,294
<TOTAL-LIABILITY-AND-EQUITY> 514,899
<SALES> 613,898
<TOTAL-REVENUES> 623,598
<CGS> 534,312
<TOTAL-COSTS> 81,380
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 448
<INTEREST-EXPENSE> 2,939
<INCOME-PRETAX> 4,519
<INCOME-TAX> 1,830
<INCOME-CONTINUING> 2,689
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,689
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
