<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
/ X / OF THE SECURITIES EXCHANGE ACT OF 1934
For the forty weeks ended October 7, 1995
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
/ / OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File no. 0-785
NASH-FINCH COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 410431960
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7600 France Ave. South, Minneapolis, Minnesota 55435
(Address of principal executive offices) (Zip Code)
(612) 832-0534
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---- ----
Number of shares of common stock outstanding at November 16, 1995:
10,876,185 shares
-----------------
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
This report is for the forty week interim period beginning January 1, 1995,
through October 7, 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 auditors.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Sixteen Weeks Ended Forty Weeks Ended
--------------------------- ---------------------------
October 7, October 8, October 7, October 8,
1995 1994 1995 1994
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 898,104 867,787 2,175,709 2,134,268
Other revenues 20,721 19,169 43,228 41,215
----------- ---------- ---------- -----------
Total revenues 918,825 886,956 2,218,937 2,175,483
Cost and Expenses:
Cost of sales 785,623 754,113 1,895,516 1,847,976
Selling, general and administrative
and other operating expenses 112,558 113,143 269,267 275,085
Depreciation and amortization 9,024 9,690 22,594 24,162
Interest expense 3,129 3,204 8,715 8,373
----------- ---------- ---------- -----------
Total costs and expenses 910,334 880,150 2,196,092 2,155,596
Earnings before income taxes 8,491 6,806 22,845 19,887
Income taxes 3,439 2,756 9,252 8,054
----------- ---------- ---------- -----------
Net earnings $ 5,052 4,050 13,593 11,833
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
Weighted average number of
common shares outstanding 10,875 10,874 10,875 10,873
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
Earnings per share $ 0.46 0.37 1.25 1.09
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
- -------------------------------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
October 7, December 31,
Assets 1995 1994
- ------ ----------- -----------
<S> <C> <C>
Current assets: (Unaudited)
Cash on hand $ 1,071 1,078
Short-term investments 5,969 --
Accounts and notes receivable, net 95,711 98,859
Inventories 207,141 198,637
Prepaid expenses 11,408 8,626
Deferred tax assets 4,204 2,322
----------- -----------
Total current assets 325,504 309,522
Investments at net equity 8,599 7,432
Notes receivable, noncurrent 4,124 16,441
Property, plant and equipment:
Land 28,138 27,556
Buildings and improvements 107,611 107,149
Furniture, fixtures, and equipment 211,926 214,564
Leasehold improvements 27,368 28,205
Construction in progress 5,890 2,039
Assets under capitalized leases 12,901 12,423
----------- -----------
393,834 391,936
Less accumulated depreciation and amortization (210,964) (204,985)
----------- -----------
Net property, plant and equipment 182,870 186,951
----------- -----------
Intangible assets, net 6,664 7,810
Other assets 2,039 3,448
----------- -----------
Total assets $ 529,800 531,604
----------- -----------
----------- -----------
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Outstanding checks, net of cash in banks $ 20,420 18,649
Short-term debt payable to banks 300 41,400
Current maturities of long-term debt and
capitalized lease obligations 13,842 5,685
Accounts payable 148,533 122,602
Accrued expenses 35,885 29,585
Income taxes 5,653 2,144
----------- -----------
Total current liabilities 224,633 220,065
Long-term debt 72,148 85,289
Capitalized lease obligations 10,265 10,671
Deferred compensation 7,719 8,526
Other 1,028 784
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 11,989 11,977
Foreign currency translation adjustment - net of a $381
deferred tax benefit (572) (572)
Retained earnings 186,933 179,212
----------- -----------
217,056 209,323
Less cost of 349 shares of common stock in treasury (3,049) (3,054)
----------- -----------
Total stockholders' equity 214,007 206,269
----------- -----------
Total liabilities and stockholders' equity $ 529,800 531,604
----------- -----------
----------- -----------
</TABLE>
- ------------------------------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Forty Weeks Ended
------------------------------------
October 7, 1995 October 8, 1994
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 13,593 11,833
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 22,594 24,162
Provision for bad debts 2,881 825
Provision for losses on closed lease locations (44) 204
Deferred income taxes (1,882) 1,927
Deferred compensation (806) (499)
Earnings of equity investments (879) (1,270)
Other 208 46
Changes in current assets and liabilities:
Accounts and notes receivable 31 (14,603)
Inventories (8,504) (11,417)
Prepaid expenses (2,782) (2,225)
Accounts payable 25,931 16,277
Accrued expenses 6,300 5,356
Income taxes 3,508 (8)
-------------- --------------
Net cash provided by operating activites 60,149 30,608
-------------- --------------
Cash flows from investing activities:
Dividends received 890 617
Disposal of property, plant and equipment 5,286 7,597
Additions to property, plant and equipment
excluding capital leases (22,211) (24,229)
Business acquired -- (8,614)
Loans sold, including current portion 13,744 --
Short-term investments (5,969) --
Loans to customers (6,883) (7,123)
Payments from customers on loans 6,851 5,482
Investment in an unconsolidated company (1,179) --
Other (112) (34)
-------------- --------------
Net cash used for investing activities (9,583) (26,304)
-------------- --------------
Cash flows from financing activities:
Dividends paid (5,872) (5,872)
Proceeds(Payments) of short-term debt (41,100) 800
Payments of long-term debt (4,957) (2,510)
Payments of capitalized lease obligations (433) (506)
Other 17 30
-------------- --------------
Net cash used for financing activities (52,345) (8,058)
-------------- --------------
Net decrease in cash $ (1,779) (3,754)
-------------- --------------
-------------- --------------
</TABLE>
- ------------------------------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
(Unaudited)
- -----------------------------------------------------------------------------------------------------
FISCAL PERIOD ENDED OCTOBER 7, 1995,
DECEMBER 31, 1994 AND JANUARY 1, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
COMMON STOCK ADDITIONAL
-------------------------- 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 currency translation adjustment
- net of a $381 deferred tax benefit -- -- -- --
------- ------- ------- ---------
Balance at December 31, 1994 11,224 18,706 11,977 179,212
Net earnings -- -- -- 13,593
Dividend declared of $.54 per share -- -- -- (5,872)
Treasury stock issued upon exercise of
options and other insignificant items -- -- 12 --
------- ------- ------- ---------
Balance at October 7, 1995 11,224 $ 18,706 11,989 186,933
------- ------- ------- ---------
------- ------- ------- ---------
FOREIGN
CURRENCY TREASURY STOCK TOTAL
TRANSLATION -------------------------- STOCKHOLDERS'
ADJUSTMENT SHARES AMOUNT EQUITY
- --------------------------------------------------------------------------------------------------------------------------------
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 currency translation adjustment
- net of a $381 deferred tax benefit (572) -- -- (572)
------- ------- ------- ---------
Balance at December 31, 1994 (572) (349) (3,054) 206,269
Net earnings -- -- 13,593
Dividend declared of $.54 per share -- -- (5,872)
Treasury stock issued upon exercise of
options and other insignificant items -- -- 5 17
------- ------- ------- ---------
Balance at October 7, 1995 (572) (349) $ (3,049) 214,007
------- ------- ------- ---------
------- ------- ------- ---------
</TABLE>
- -------------------------------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 7, 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 October 7, 1995 and December 31, 1994, and
the results of operations for the 40-weeks ending October 7, 1995 and October 8,
1994, and the changes in cash flows for the 40 week periods ending October 7,
1995 and October 8, 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 $44.3 million and $43.9 million higher at October 7, 1995 and at
December 31, 1994, respectively.
NOTE 3
Earnings per share are computed by dividing net earnings by the weighted
average number of common shares outstanding during each period presented.
Options granted under the Company's qualified stock plan are considered common
stock equivalents for the purpose of earnings per share data, but have been
excluded from the computation since the dilutive effect is not material.
NOTE 4
On September 8, 1995 the Company entered into an agreement with a financial
institution whereby the Company sold $13.7 million in customer notes, and can
continue to sell on an ongoing basis additional customer notes receivable. 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.
At October 7, 1995, remaining balances on all notes receivable sold with
recourse during fiscal 1992 and 1995 were $1.5 million and $13.5 million,
respectively.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues for the third quarter of 1995 increased 3.6% over the same
period last year. The improvement is primarily due to growth in wholesale
revenues, particularly from increased military sales and business from new
retail customers added since last year. During the quarter, wholesale revenues
represented 68.2% of total revenues compared to 65.3% last year.
Revenue gains at wholesale were partially offset by a decrease in retail
sales due to a net reduction of nine stores, since the prior year quarter.
Since the third quarter of 1994, the Company sold six stores to existing
customers, closed thirteen under-performing stores and acquired ten from
existing or former customers. Same store sales declined .8% during the third
quarter and 2.0% on a year to date basis compared to last year. Although
growing competition in certain market areas continues to negatively impact
sales, the rate of decline in same store sales has narrowed during the third
quarter.
Gross Margins were 14.5% for the third quarter this year compared to 15.0%
for the same period last year. On a year to date basis, margins were 14.6%
compared to 15.1% last year. The decrease for both periods resulted from a
greater proportion of wholesale sales which typically achieve lower gross
margins. Although consolidated gross margins are lower because of the changing
mix of sales between wholesale and retail, margins of each respective segment
have actually improved compared to last year. Centralization of buying
functions for several warehouses and better margins on perishable products
contributed to the improvement during the quarter for the wholesale segment. On
the retail side, margin improvements resulted from a greater distribution of
sales from higher margin specialty departments of the stores. The Company
reflected a LIFO charge of $545,000 and $425,000 for the quarter and year to
date, respectively, compared to a charge of $620,000 and $50,000 for the prior
year quarter and year to date, respectively.
Selling, general and administrative expenses as a percent of total revenues
were 12.3% for the quarter compared to 12.8% for the same period last year. On
a year to date basis, operating expenses were 12.1% this year compared to 12.6%
in 1994. Expense levels this year were favorably impacted by an increasing
proportion of wholesale business which typically operates at lower expense
levels. Incremental sales resulted in improved productivity at the wholesale
level and a decrease in expenses as a percent of revenues for both the quarter
and year to date. Partially offsetting these gains were costs associated with
increased promotional and advertising activities in market areas where the
Company is experiencing growing competition.
<PAGE>
Depreciation and amortization expenses decreased 6.8% and 6.5% for the
quarter and year to date, respectively, compared to last year. The decrease
reflects the reduction in property, plant and equipment resulting from the sale
or closing of several corporate owned retail stores.
Interest expense for the third quarter decreased 2.3% compared to last year
due to a reduction in average outstanding short-term debt during the quarter.
On a year to date basis, interest costs were 4.1% higher this year because of
greater average short-term borrowings and higher interest rates.
The effective tax rate for all periods was 40.5%. Income tax expense
increased this year because of higher pretax earnings.
Net earnings for the quarter were $5.1 million, an increase of 24.7% over
last year. The earnings improvement is attributed to strong operating results
at the wholesale level due to increased military business and sales to new
independent accounts. Partially offsetting the wholesale gains were lower than
expected earnings at retail largely due to competitive pressures in certain
markets.
LIQUIDITY AND CAPITAL RESOURCES
On September 8, 1995, notes receivable from retail customers totaling $13.7
million were sold to a bank for cash. The proceeds from this sale were used to
pay off short-term bank debt, with the balance invested in short-term
securities.
Merchandise inventory increased $18.1 million during the third quarter,
largely the result of seasonally higher inventories at the distribution centers.
Accounts payable increased $22.8 million during the quarter. This increase
was related to seasonal increases in inventories and extended payment terms on
certain seasonal products.
Subsequent to the end of the third quarter, the Company entered into a
purchase agreement to acquire the assets of Military Distributors of
Virginia, Inc. for cash plus the assumption of certain liabilities. The
Company is planning to finance the acquisition through a combination of the
sale of notes to insurance companies and through a revolving loan facility
with several banks. It is the opinion of the Company that funds will be
available from these sources on a competitive basis.
In addition, subsequent to the end of the quarter, the Company entered into
an agreement to sell Thomas & Howard of Hickory, Inc., and its subsidiary, T & H
Service Merchandisers, to H. T. Hackney. Proceeds will be used to pay off
short-term bank debt.
<PAGE>
PART II - OTHER INFORMATION
Items 1, 2, 3, 4 and 5 are not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS:
10.1 Excerpt from Board minutes relating to compensation of outside
directors.
27. Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
Not applicable
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NASH-FINCH COMPANY
Registrant
Date: November 21, 1995 By /s/ Alfred N. Flaten
----------------------------
Alfred N. Flaten
President and Chief
Executive Officer
Date: November 21, 1995 By /s/ Robert F. Nash
----------------------------
Robert F. Nash
Vice President and Treasurer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
10.1 Excerpt from Board minutes relating to
compensation of outside directors.
27 Financial Data Schedule.
<PAGE>
EXHIBIT 10.1
EXCERPTS FROM MINUTES OF
BOARD OF DIRECTORS MEETING OF
NASH-FINCH COMPANY ON
SEPTEMBER 19, 1995
RESOLVED, that effective as of October 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 $500 plus reasonable expenses incurred
for attendance at meetings of committees of the Board. 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.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> OCT-07-1995
<CASH> 1,071
<SECURITIES> 5,969
<RECEIVABLES> 96,625
<ALLOWANCES> 914
<INVENTORY> 207,141
<CURRENT-ASSETS> 325,504
<PP&E> 393,834
<DEPRECIATION> (210,964)
<TOTAL-ASSETS> 529,800
<CURRENT-LIABILITIES> 224,633
<BONDS> 72,148
<COMMON> 18,706
0
0
<OTHER-SE> 198,350
<TOTAL-LIABILITY-AND-EQUITY> 529,800
<SALES> 2,175,709
<TOTAL-REVENUES> 2,218,937
<CGS> 1,895,516
<TOTAL-COSTS> 288,980
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,881
<INTEREST-EXPENSE> 8,715
<INCOME-PRETAX> 22,845
<INCOME-TAX> 9,252
<INCOME-CONTINUING> 13,593
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,593
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
</TABLE>
