-----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, JKeEVWfkW50KC9KwJillal/LcwQOJrVj0ktWrdOgla79ujX3U4hDLtuH7RTBAKne V1kLUnrfgz9xxmuuemG+3g== 0000912057-96-008327.txt : 19960508 0000912057-96-008327.hdr.sgml : 19960508 ACCESSION NUMBER: 0000912057-96-008327 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960323 FILED AS OF DATE: 19960507 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: 96557335 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) / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TWELVE WEEKS ENDED MARCH 23, 1996 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 May 3, 1996: 10,921,543 SHARES PART I - FINANCIAL INFORMATION This report is for the twelve week interim period beginning December 31, 1995, through March 23, 1996. 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. NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Earnings (Unaudited) (In thousands, except per share amounts)
Twelve Weeks Ended ------------------------ March 23, March 25, 1996 1995 --------- --------- Revenues: Net sales $ 675,484 613,898 Other revenues 9,010 9,700 --------- --------- Total revenues 684,494 623,598 Cost and Expenses: Cost of sales 593,145 534,312 Selling, general, administrative and other operating expenses 76,480 75,038 Depreciation and amortization 7,247 6,790 Interest expense 2,923 2,939 --------- --------- Total costs and expenses 679,795 619,079 Earnings before income taxes 4,699 4,519 Income taxes 1,903 1,830 --------- --------- Net earnings $ 2,796 2,689 ========= ========= Weighted average number of common shares outstanding 10,890 10,874 ========= ========= Earnings per share $ .26 .25 ========= =========
- ------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (In thousands)
March 23, December 30, ASSETS 1996 1995 ----------- ------------ (Unaudited) Current assets: Cash and cash equivalents $ 1,008 26,024 Accounts and notes receivable, net 122,813 85,968 Inventories 191,117 183,957 Prepaid expenses 17,225 12,067 Deferred tax assets 4,597 3,674 --------- -------- Total current assets 336,760 311,690 Investments in affiliates 8,537 8,421 Notes receivable, noncurrent 5,167 5,051 Property, plant and equipment: Land 29,891 28,638 Buildings and improvements 112,110 110,887 Furniture, fixtures, and equipment 212,368 204,054 Leasehold improvements 26,813 25,786 Construction in progress 5,920 6,538 Assets under capitalized leases 12,449 12,923 --------- -------- 399,551 388,826 Less accumulated depreciation and amortization (214,100) (210,787) --------- -------- Net property, plant and equipment 185,451 178,039 Intangible assets, net 48,016 6,282 Deferred tax asset - net 2,850 2,835 Other assets 2,224 1,942 --------- -------- Total assets $ 589,005 514,260 ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Outstanding checks, net of cash in banks $ 14,041 28,998 Current maturities of long-term debt and capitalized lease obligations 17,325 14,701 Accounts payable 143,509 127,592 Accrued expenses 36,954 31,745 Income taxes 5,134 4,652 --------- --------- Total current liabilities 216,963 207,688 Long-term debt 136,006 71,030 Capitalized lease obligations 10,034 10,158 Deferred compensation 7,438 7,625 Other 2,302 2,446 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 in 1995 and 1994 18,706 18,706 Additional paid-in capital 11,735 12,013 Foreign currency translation adjustment - net of a $633 deferred tax benefit (950) (950) Restricted stock (629) - Retained earnings 189,416 188,578 --------- --------- 218,278 218,347 Less cost of 303 shares of common stock in treasury (2,016) (3,034) --------- --------- Total stockholders' equity 216,262 215,313 --------- --------- Total liabilities and stockholders' equity $ 589,005 514,260 ========= =========
- ------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Twelve Weeks Ended --------------------------------------- March 23, 1996 March 25, 1995 -------------- -------------- Operating activities: Net earnings $ 2,796 2,689 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,247 6,790 Provision for bad debts 389 448 Provision for losses on closed lease locations (151) (84) Deferred income taxes (938) 216 Deferred compensation (187) (363) Earnings of equity investments (120) (278) Other 19 55 Changes in operating assets and liabilities: Accounts and notes receivable 5,570 5,649 Inventories 13,395 13,249 Prepaid expenses (5,001) (7,813) Accounts payable (10,722) (1,267) Accrued expenses 5,071 5,249 Income taxes 482 1,558 --------- ------ Net cash provided by operating activities 17,850 26,098 --------- ------ Investing activities: Disposal of property, plant and equipment 1,065 928 Additions to property, plant and equipment excluding capital leases (6,546) (3,418) Business acquired (87,786) - Loans to customers (1,268) (1,508) Payments from customers on loans 1,737 2,271 Other (116) - --------- ------ Net cash used for investing activities (92,914) (1,727) --------- ------ Financing activities: Proceeds from long-term debt 30,000 - Proceeds from revolving debt 38,600 - Dividends paid (1,958) (1,958) Payments of short-term debt - (3,600) Payments of long-term debt (1,609) (3,221) Payments of capitalized lease obligations (125) (134) Other 97 - --------- ------ Net cash provided by (used for) financing activities 65,005 (8,913) --------- ------ Net (decrease) increase in cash $ (10,059) 15,458 ========= ======
- ------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity
- --------------------------------------------------------------------------------------------- Fiscal period ended March 23, 1996 December 30, 1995 and December 31, 1994 (In thousands, except per share amounts) Common stock Additional -------------------- paid-in Retained Shares Amount capital earnings - --------------------------------------------------------------------------------------------- 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 - - 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 - - - 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 - - - 2,796 Dividend declared of $.18 per share - - - (1,958) Treasury stock issued upon exercise of options - - 30 - Issuance of restricted stock (308) - Amortized compensation under restricted stock - - - - ------ ------- ------ ------- Balance at March 23, 1996 11,224 $18,706 11,735 189,416 ------ ------- ------ ------- ------ ------- ------ -------
- -------------------------------------------------------------------------------------------------------------------- Fiscal period ended March 23, 1996 December 30, 1995 and December 31, 1994 (In thousands, except per share amounts) Foreign currency Treasury stock Total translation Restricted ---------------- stockholders' adjustment stock Shares Amount equity - -------------------------------------------------------------------------------------------------------------------- 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 - - 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 - - - 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 - - - 2,796 Dividend declared of $.18 per share - - - (1,958) Treasury stock issued upon exercise of options - - 3 23 53 Issuance of restricted stock - (636) 40 995 51 Amortized compensation under restricted stock - 7 - - 7 ------- --------- ------- -------- -------- Balance at March 23, 1996 (950) (629) (303) $(2,016) 216,262 ------- --------- ------- -------- -------- ------- --------- ------- -------- --------
- ------------------------------------------------------------ See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements MARCH 23, 1996 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 23, 1996 and December 30, 1995, and the results of operations for the 12-weeks ending March 23, 1996 and March 25, 1995, and the changes in cash flows for the 12-week period ending March 23, 1996 and March 25, 1995, 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 $39.7 million and $40.0 million higher at March 23, 1996 and at December 30, 1995, 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. 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 March 23, 1996, remaining balances on all notes receivable sold with recourse was $14.2 million. NOTE 5 On January 2, 1996, the Company acquired substantially all of the business and assets of Military Distributors of Virginia, Inc., ("MDV") located in Norfolk, Virginia for approximately $56.0 million in cash and the assumption of certain liabilities totaling approximately $54.0 million. MDV is a major distributor of grocery products to military commissaries in the eastern United States and Europe. The purchase price exceeded the fair value of the net assets acquired by approximately $43 million. The resulting goodwill is being amortized on a straight line basis over 15 years. The following unaudited pro forma summary presents information as if the acquisition had occurred at the beginning of fiscal 1995. It is based on historical information and does not necessarily reflect results that would have occurred had the acquisition been made as of that date or results which may occur in the future (in thousands except per share amounts).
Twelve Weeks Ended ------------------- March 23, March 25, 1996 1995 ---------- --------- Net revenues $684,494 711,192 Earnings before income taxes 4,699 5,574 Net earnings 2,796 3,322 Earnings per share $ .26 .31
NOTE 6 On February 29, 1996, certain members of management exercised rights to purchase restricted stock from the Company at a 25% discount to fair market value pursuant to grants awarded January 31, 1996 under the terms of a 1994 Stock Incentive Plan. The purchase required a minimum of 10% payment in cash with the remaining balance evidenced by a 5-year promissory note to the Company. At March 23, 1996, unearned compensation equivalent to the excess of market value of the shares purchased over the price paid by the recipient at the date of grant, and the unpaid balance of the promissory note have been charged to stockholders' equity. Amortization of compensation expense for the quarter was not significant. 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 1996 increased 9.8% over the same period last year. The improvement is primarily due to growth in wholesale revenues resulting from the acquisition of MDV at the beginning of the year. During the quarter, wholesale segment revenues represented 71.1% of total revenues compared to 68.5% last year. The retail segment also realized revenue gains during the quarter with same store sales increasing 2.1% over the comparable period last year. Increased advertising and promotional activities geared to offset strong price competition in certain market areas contributed to the increased retail volume, as did the acquisition of two retail locations from an existing customer. Gross margins were 13.3% for the first quarter compared to 14.3% last year. The decrease resulted from a greater proportion of wholesale sales which achieve lower gross margins than retail. Wholesale margins were also negatively impacted by the change in sale mix brought about by the disposition of a subsidiary, Thomas and Howard of Hickory, Inc. ("T&H"), a higher margin general merchandise and convenience store distributor, and the acquisition of the lower margin military distribution volume of MDV. The Company is continuing to centralize buying functions among warehouse groups to provide greater operating efficiency and lower product costs. Retail margins improved as a result of a greater distribution of sales to higher margin perishable and specialty departments within the retail stores. Operating expenses as a percent of total revenues were 11.2% for the quarter compared to 12.0% for the same period last year. Expense levels declined as a percent of revenues as a result of the growing proportion of wholesale revenues which typically operate at lower expense levels than retail. Also, operating expenses of newly acquired MDV are lower, as a percent of sales, than those of the divested T&H operations. Incremental wholesale volume from new independent retail accounts continues to result in improved productivity at the wholesale level. Partially offsetting these gains were increased promotional and advertising costs incurred in retail markets where the Company is experiencing intense competition. Also, the Company is incurring additional costs associated with the development of client/server based computer systems and software. These costs are expected to continue throughout fiscal 1996 and 1997. Depreciation and amortization expense increased 6.7% compared to last year primarily due to the $.7 million in amortization of goodwill associated with the MDV acquisition. Partially offsetting these costs were lower depreciation expenses resulting from the sale or closing of several retail stores and T&H since the prior year quarter. Interest expense declined from last year, despite higher borrowing levels, due to more favorable borrowing rates. Interest expense as a percent of revenues was .42% compared to .47% in 1995. Income tax expense increased due to higher pretax earnings. The effective tax rate was 40.5%, unchanged from the first quarter last year. Net earnings for the quarter were $2.8 million compared to $2.7 million last year, an increase of 4.0%. The earnings improvement is attributed to the wholesale segment, in particular, the acquisition of MDV which complimented the two existing east coast military operations and the additional independent retail volume the company has been servicing since last year. LIQUIDITY AND CAPITAL RESOURCES Working capital requirements and certain capital expenditures continue to be funded principally from internally generated funds. However, the Company may use short and long-term debt to supplement the financing of major capital projects and acquisitions. During the quarter, the Company financed an $87.8 million cash outlay related to the acquisition of MDV and the purchase of two retail stores. Sources of funding were cash and cash equivalents generated from the sale of T&H in December 1995, supplemented by borrowings under a $100.0 million revolving credit facility. Cash provided from operations was $17.9 million compared to $26.1 million last year. The change was due to a reduction in payables associated with seasonal fluctuations in inventory and the acquisition of MDV since the end of the year. On March 22, 1996, the Company finalized an agreement to authorize the issue and sale of 7.13% Senior Notes due October 1, 2011, to several insurance companies, in an aggregate principal amount of $30.0 million. Proceeds from the issue were used to pay down a portion of a variable rate revolving credit facility. The Company believes it will continue to have adequate access of short-term and long-term credit necessary to meet its needs for growth and expansion in the foreseeable future. PART II - OTHER INFORMATION Items 2, 3, 4 and 5 are not applicable. ITEM 1. LEGAL PROCEEDINGS. On April 2, 1996, an individual engaged in growing citrus crops in Fresno County commenced an action against Nash-DeCamp Company, a wholly-owned subsidiary of the Company, and others, including three of its officers and directors, in the United States District Court for the Eastern District of California. Nash-DeCamp Company has provided various services to the plaintiff relating to the packing, marketing, and distribution of produce grown by plaintiff, and has advanced financing to assist plaintiff in growing and harvesting his crops. Plaintiff's complaint alleges that the defendants have engaged in various acts of misconduct relating to the handling, packaging and pricing of such produce in violation of various state and federal laws, resulting in unspecified damages to plaintiff. In his complaint, plaintiff is seeking to recover unspecified compensatory damages, punitive and exemplary damages, treble damages, costs of suit, and attorneys' fees, as well as be granted injunctive relief. Nash-DeCamp Company has filed an answer raising various defenses to and denying the allegations set forth in plaintiff's complaint. In addition, Nash- DeCamp Company has filed a counterclaim to recover monies owed to it by plaintiff. In the counterclaim, Nash-DeCamp Company is seeking to recover the outstanding balance of plaintiff's indebtedness to Nash-DeCamp Company as of April 20, 1996 (together with interest accruing thereafter), costs of suit, reasonable attorneys' fees, all proceeds from any disposition of the 1995-1996 citrus crops, and other damages and interest. Because plaintiff's complaint has only recently been filed, Nash-DeCamp Company has only conducted a preliminary investigation of the factual basis alleged to underlie plaintiff's claims; as a result, 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 plaintiff's claims and to vigorously defend the claims in accordance with the results of such investigation. Nash-DeCamp Company also intends to vigorously pursue the recovery of the monies owed to it by plaintiff. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS: 27.1 Financial Data Schedule. (b) REPORTS ON FORM 8-K: Not Applicable INDEX TO EXHIBITS EXHIBIT PAGE - ------- ---- 27.1 Financial Data Schedule. 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 7, 1996 By /s/ Alfred N. Flaten ------------------------------ Alfred N. Flaten Chief Executive Officer By /s/ John R. Scherer ------------------------------- John R. Scherer Chief Financial Officer EX-27 2 EXHIBIT 27 FDS
5 1,000 3-MOS DEC-28-1996 DEC-31-1995 MAR-23-1996 1,008 0 123,539 726 191,117 336,760 399,551 214,100 589,005 216,963 136,006 0 0 18,706 197,556 589,005 675,484 684,494 593,145 83,338 0 389 2,923 4,699 1,903 2,796 0 0 0 2,796 .26 .26
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