-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GwrXDWEo9eZIgKMVhrXoS1ZDnKofJ73sdybM9/1OtZzkhLHkNSaBZqZmBJfyGV++ xWkpqdwsnuFA5Vi8SQFZ2A== 0000912057-97-015786.txt : 19970507 0000912057-97-015786.hdr.sgml : 19970507 ACCESSION NUMBER: 0000912057-97-015786 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970322 FILED AS OF DATE: 19970506 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASH FINCH CO CENTRAL INDEX KEY: 0000069671 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 410431960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00785 FILM NUMBER: 97596453 BUSINESS ADDRESS: STREET 1: 7600 FRANCE AVE STREET 2: PO BOX 355 CITY: SOUTH MINNEAPOLIS STATE: MN ZIP: 55435-0355 BUSINESS PHONE: 6128320534 FORMER COMPANY: FORMER CONFORMED NAME: NASH CO DATE OF NAME CHANGE: 19710617 10-Q 1 10-Q 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 twelve weeks ended March 22, 1997 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 April 29, 1997: 11,302,508 shares PART I - FINANCIAL INFORMATION This report is for the twelve week interim period beginning December 29, 1996, through March 22, 1997. 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 auditors 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. NASH FINCH COMPANY AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (Unaudited) (In thousands, except per share amounts) Twelve Weeks Ended ------------------------ March 22, March 23, 1997 1996 --------- ---------- Revenues: Net sales $ 935,997 675,484 Other revenues 11,835 9,010 --------- ---------- Total revenues 947,832 684,494 Cost and expenses: Cost of sales 825,189 593,145 Selling, general and administrative and other operating expenses 99,158 76,480 Depreciation and amortization 10,905 7,247 Interest expense 7,321 2,923 --------- --------- Total costs and expenses 942,573 679,795 Earnings before income taxes 5,259 4,699 Income taxes 2,203 1,903 --------- --------- Net earnings $ 3,056 2,796 --------- --------- --------- --------- Weighted average number of common shares outstanding 11,276 10,890 --------- --------- --------- --------- Earnings per share $ .27 .26 --------- --------- --------- --------- - ------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands)
March 22, December 28, Assets 1997 1996 - ------ ---------- ------------ Current assets: Cash and cash equivalents $ 886 921 Accounts and notes receivable, net 196,955 206,062 Inventories 291,207 293,458 Prepaid expenses 27,050 20,492 Deferred tax assets 6,580 4,663 ----------- ----------- Total current assets 522,678 525,596 Investments in affiliates 9,877 10,300 Notes receivable, noncurrent 20,628 21,652 Property, plant and equipment: Land 33,642 33,753 Buildings and improvements 148,186 148,227 Furniture, fixtures, and equipment 300,032 295,147 Leasehold improvements 55,068 54,925 Construction in progress 6,647 7,543 Assets under capitalized leases 26,105 26,105 ---------- ----------- 569,680 565,700 Less accumulated depreciation and amortization (300,515) (293,845) ---------- ----------- Net property, plant and equipment 269,165 271,855 Intangible assets, net 78,888 80,312 Investment in direct financing leases 21,939 22,011 Deferred tax asset - net 3,777 4,076 Other assets 8,854 9,675 ---------- ----------- Total assets $ 935,806 945,477 ---------- ----------- ---------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Outstanding checks $ 18,541 32,492 Short-term debt payable to banks 9,621 16,171 Current maturities of long-term debt and capitalized lease obligations 7,374 7,795 Accounts payable 168,307 183,501 Accrued expenses 65,131 54,130 Income taxes 6,310 2,999 ---------- ----------- Total current liabilities 275,284 297,088 Long-term debt 374,793 361,819 Capitalized lease obligations 41,739 41,832 Deferred compensation 7,165 7,476 Other 2,259 4,401 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 11,574 shares issued in 1996 and 11,224 in 1995 19,290 19,290 Additional paid-in capital 17,346 16,816 Foreign currency translation adjustment - net of a $633 deferred tax benefit (950) (950) Restricted stock (493) (500) Retained earnings 201,363 200,322 ---------- ----------- Total liabilities and stockholders' equity 236,556 234,978 Less cost of 274 shares and 307 shares of common stock in treasury, respectively. (1,990) (2,117) ---------- ----------- Total stockholders' equity 234,566 232,861 ---------- ----------- Total liabilities and stockholders' equity $ 935,806 945,477 ---------- ----------- ---------- -----------
-------------------------------------------------------------- See accompanying notes to consolidated financial statements NASH FINCH COMPANY AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Twelve Weeks Ended ------------------------------------ March 22, 1997 March 23, 1996 -------------- -------------- Operating activities: Net earnings $ 3,056 2,796 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 10,905 7,247 Provision for bad debts 1,293 389 Provision for (recovery from) losses on closed lease locations on closed lease locations (153) (151) Deferred income taxes (1,618) (938) Deferred compensation (311) (187) Earnings of equity investments (377) (120) Other 773 19 Changes in operating assets and liabilities: Accounts and notes receivable 12,056 5,570 Inventories 2,251 13,395 Prepaid expenses (5,908) (5,001) Accounts payable and outstanding checks (29,145) (10,722) Accrued expenses 8,849 5,071 Income taxes 3,311 482 ------------- ------------- Net cash provided by operating activities 4,982 17,850 ------------- ------------- Investing activities: Dividends received 800 - Disposals of property, plant and equipment, net 1,292 1,065 Additions to property, plant and equipment - - excluding capital leases (7,939) (6,546) Businesses acquired, net of cash acquired (87,786) Loans to customers (4,632) (1,268) Payments from customers on loans 1,485 1,737 Loans sold including current portion - - Other 28 (116) ------------- ------------- Net cash used in investing activities (8,966) (92,914) ------------- ------------- Financing activities: Proceeds from long-term debt - 30,000 Proceeds from revolving debt 15,000 38,600 Dividends paid (2,015) (1,958) Payments of short-term debt (6,550) - Payments of long-term debt (2,264) (1,609) Payments of capitalized lease obligations (275) (125) Other 53 97 ------------- ------------- Net cash used in financing activities 3,949 65,005 ------------- ------------- Net (decrease) increase in cash $ (35) (10,059) ------------- ------------- ------------- -------------
- -------------------------------------------------------------------- See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Condensed Consolidated Statements of Stockholders' Equity
Fiscal period ended March 22, 1997, December 28, 1996 and December 30, 1995 (In thousands, except per share amounts) Common Stock Additional --------------------------- paid-in Retained Shares Amount capital earnings --------- --------- ----------- ---------- Balance at December 31, 1994 11,224 $ 18,706 11,977 179,212 Net earnings - - - 17,414 Dividend declared of $.74 per share - - - (8,048) Treasury stock issued upon exercise of options - - 36 - Foreign currency translation adjustment - net of a $252 deferred tax benefit - - - - --------- --------- ----------- ---------- Balance at December 30, 1995 11,224 18,706 12,013 188,578 Net earnings - - - 20,032 Dividend declared of $.75 per share - - - (8,288) Shares issued in connection with acquisition of a business 350 584 5,064 - Treasury stock issued upon exercise of options - - 47 - Issuance of restricted stock - - (308) - Amortized compensation under restricted stock plan - - - - Treasury stock purchased - - - - --------- --------- ----------- ---------- Balance at December 28, 1996 11,574 19,290 16,816 200,322 Net earnings - - - 3,056 Dividend declared of $.18 per share - - - (2,015) Treasury stock issued upon exercise of options - - 74 - Amortized compensation under restricted stock plan Distribution of stock pursuant to performance awards - - 456 - Treasury stock purchased - - - - --------- --------- ----------- ---------- Balance at March 22, 1997 11,574 $ 19,290 17,346 201,363 --------- --------- ----------- ---------- --------- --------- ----------- ----------
NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity
Fiscal period ended March 22, 1997, December 28, 1996 and December 30, 1995 (In thousands, except per share amounts) Foreign currency Treasury stock Total translation Restricted ---------------------- stockholders adjustment Stock Shares Amount equity Balance at December 31, 1994 (572) - (349) $ (3,054) 206,269 Net earnings - - - 17,414 Dividend declared of $.74 per share - - - (8,048) Treasury stock issued upon exercise of options - - 3 20 56 Foreign currency translation adjustment - net of a $252 deferred tax benefit (378) - - - (378) --------- ------- ------- ------- ------- Balance at December 30, 1995 (950) - (346) (3,034) 215,313 Net earnings - - - - 20,032 Dividend declared of $.75 per share - - - - (8,288) Shares issued in connection with acquisition of a business - - - - 5,648 Treasury stock issued upon exercise of options - - 6 42 89 Issuance of restricted stock - (524) 40 995 163 Amortized compensation under restricted stock plan - 24 - - 24 Treasury stock purchased - - (7) (120) (120) --------- ------- ------- ------- ------- Balance at December 28, 1996 (950) (500) (307) (2,117) 232,861 Net earnings - - - - 3,056 Dividend declared of $.18 per share - - - - (2,015) Treasury stock issued upon exercise of options - - 6 30 104 Amortized compensation under restricted stock plan 7 7 Distribution of stock pursuant to performance awards - - 30 147 603 Treasury stock purchased - - (3) (50) (50) --------- ------- ------- ------- ------- Balance at March 22, 1997 (950) (493) (274) $(1,990) 234,566 --------- ------- ------- ------- ------- --------- ------- ------- ------- -------
See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 22, 1997 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 22, 1997 and December 28, 1996, and the results of operations for the 12-weeks ending March 22, 1997 and March 23, 1996, and the changes in cash flows for the 12-week periods ending March 22, 1997 and March 23, 1996, 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 $41.3 million and $40.0 million higher at March 22, 1997 and at December 28, 1996, respectively. NOTE 3 Companies will be required to present earnings per share data, in accordance with Statement of Financial Accounting Standards (SFAS) NO. 128, Earnings per Share, commencing with fiscal 1997. Currently earnings per share calculations are performed pursuant to Accounting Principles Board Opinion No. 15. The computation of earnings per share for both first quarter of fiscal 1997 and 1996 would be the same under either method. NOTE 4 On September 8, 1995, the Company entered into an agreement with a financial institution which allowed the Company to sell on a revolving basis customer notes receivable. Although the agreement lapsed on December 28, 1996, the notes, which have maturities through the year 2002, were sold at face value with recourse. As a result, the Company is contingently liable should these notes become uncollectible. The remaining balances of such sold notes receivable totaled $12.9 million and $14.0 million at March 22, 1997 and December 28, 1996, respectively. NOTE 5 Since the first quarter of fiscal 1996, the Company completed two acquisitions which were accounted for under the purchase method of accounting. On November 7, 1996 the Company completed a tender offer to purchase the outstanding shares of common stock of Super Food Services, Inc. ("Super Food"), a wholesale grocery distributor based in Dayton, Ohio, for $15.50 per share in cash. The purchase price exceeded the fair value of the assets acquired resulting in goodwill of $29.8 million which is being amortized on a straight line basis over 25 years. On August 5, 1996, the Company acquired all of the outstanding stock of T. J. Morris Company ("T. J. Morris"), a full line food wholesaler located in Statesboro, Georgia. The excess of purchase price over fair value of the assets acquired resulted in goodwill of approximately $3.1 million which is being amortized on a straight line basis over a 15-year period. The following summary, prepared on a pro forma basis, combines the consolidated results of operations as if Super Food and T. J. Morris had been acquired as of the beginning of 1996, after including the impact of certain adjustments such as amortization of intangibles, increased interest expense on acquisition debt and related income tax effects: Twelve Weeks Ended PRO FORMA INFORMATION (Unaudited) March 23, 1996 ---------- Net revenues 986,436 Earnings before income taxes 5,450 Net income 3,270 Earnings per share .29 --- The pro forma information is provided for informational purposes only. It is based on historical information and does not necessarily reflect results that would have occurred had the acquisitions been made as of those dates or results which may occur in the future. NOTE 6 On April 8, 1997, the Company announced it had entered into a definitive agreement to acquire the business and assets of United-A.G. Cooperative, Inc. ("United-A.G."), a cooperative wholesale grocery distributor located in Omaha. United-A.G., with revenues of approximately $200 million, serves stores in Nebraska, Kansas, Iowa, Colorado and South Dakota. The acquisition is expected to be completed in June 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Total revenues for the first quarter of fiscal 1997 increased 38.5% over the same period last year. The improvement is primarily attributed to the acquisition of Super Food and T. J. Morris which occurred in the second half of fiscal 1996. Revenues of the military division as well as those from new independent wholesale accounts also contributed to increases over the prior year quarter. Retail revenues decreased 1.6% reflecting a net reduction of seven stores which were either closed or sold since last year. Same stores sales decreased .8% compared to the same period last year. Gross margins were 12.9% for the first quarter compared to 13.3% last year. The decrease resulted from a greater proportion of wholesale sales which achieve lower gross margins than retail. Margins at wholesale were favorably impacted by the Company's implementation of regionalized buying offices. Centralization of buying activities has resulted in operating efficiencies and lower product costs. Retail margins continued to improve compared to last year due to greater marketing and merchandising emphasis on higher margin perishables and specialty departments. This resulted in a greater distribution of overall store sales to these departments. Operating expenses as a percent of total revenues were 10.5% for the quarter compared to 11.2% for the same period last year. The significant increase in wholesale business, which operates at lower expense levels, contributed to the reduction in expenses as a percent of revenues. Also, incremental wholesale volume from new independent wholesale accounts continues to positively affect operating efficiency at the wholesale level. During the quarter the Company incurred approximately $1.0 million of additional expense associated with the upgrading of its computer systems and software to client/server technology. The upward trend in expenses related to this project is expected to continue. Depreciation and amortization expense increased 50.5% compared to last year primarily due to the acquisition of Super Food and T. J. Morris. Amortization expense related to goodwill and other intangibles for the quarter was $1.6 million compared to $1.1 million last year. In addition, capital expenditures related to the project to redesign the computer systems, increased depreciation by $.5 million. Interest expense increased $4.4 million compared to the same period last year largely due to the debt incurred to finance the acquisition of Super Food. Average short-term borrowings, used to fund working capital needs, were higher during the quarter compared to last year. Outstanding short-term borrowings at March 22, 1997 were $9.6 million compared to no outstanding amounts at the same time last year. Income tax expense increased due to higher pretax earnings. The effective tax rate increased to 41.9%, due to non-tax deductible expenses resulting from the Super Food and T. J. Morris acquisitions. Net earnings for the quarter were $3.1 million compared to $2.8 million last year, an increase of 9.3%. The earnings improvement is attributed to retail operations, the Company's East Coast military division and the two most recent acquisitions, partially offset by additional amortization and interest costs. LIQUIDITY AND CAPITAL RESOURCES Working capital requirements and certain capital expenditures continue to be funded principally from internally generated funds. However, the Company uses short and long-term debt to supplement the financing of major capital projects and acquisitions. Cash provided from operations was $5.0 million compared to $17.9 million last year. The change was due to a reduction in payables associated with seasonal fluctuations in inventory and suppliers' terms. Working capital at the end of the quarter was $247.4 million, an increase of $18.9 million during the quarter. The current ratio was 1.90 compared to 1.77 at the end of last year. The Company believes it will continue to have adequate access to short-term and long-term credit necessary to meet its needs for growth and expansion in the foreseeable future. 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: 27.1 Financial Data Schedule. (b) REPORTS ON FORM 8-K Not applicable. 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 6, 1997 By /s/ Alfred N. Flaten ------------------------ ----------------------------------- Alfred N. Flaten President and Chief Executive Officer By /s/ John R. Scherer ----------------------------------- John R. Scherer Chief Financial Officer NASH FINCH COMPANY EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q For the Twelve Weeks Ending March 22, 1997 Item No. Item Method of Filing - -------- ---- ---------------- 27.1 Financial Data Schedule Filed herewith. EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JAN-03-1998 DEC-29-1996 MAR-22-1997 886 0 216,610 19,655 291,207 522,678 569,680 (300,515) 935,806 275,284 374,793 0 0 19,290 215,276 935,806 935,997 947,832 825,189 933,959 0 1,293 7,321 5,259 2,203 3,056 0 0 0 3,056 .27 .27
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