-----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, S3iR9keYlAxuwgH14zIVbhoZbqUjD+xrjVXn/HpAuLthq02ravXZu+ETQEeghIiQ Sv3KGK2Elc+9Tunzsj+TRQ== 0000912057-96-015794.txt : 19960731 0000912057-96-015794.hdr.sgml : 19960731 ACCESSION NUMBER: 0000912057-96-015794 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960615 FILED AS OF DATE: 19960730 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: 96600999 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 FORM 10Q 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 twenty-four weeks ended June 15, 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, P.O. Box 355, Minneapolis Minnesota 55440-0355 (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 July 25, 1996: 10,914,657 shares ----------------- PART I - FINANCIAL INFORMATION This report is for the twenty-four week interim period beginning December 31, 1995, through June 15, 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 Twenty-four Weeks Ended -------------------------- -------------------------- June 15, June 17, June 15, June 17, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Revenues: Net sales $ 723,806 663,708 1,399,290 1,277,606 Other revenues 11,436 12,806 20,446 22,506 ----------- ----------- ----------- ----------- Total revenues 735,242 676,514 1,419,736 1,300,112 Cost and Expenses: Cost of sales 635,315 575,582 1,228,460 1,109,894 Selling, general and administrative 79,041 81,671 155,521 156,709 and other operating expenses Depreciation and amortization 7,553 6,780 14,800 13,570 Interest expense 3,080 2,646 6,003 5,585 ----------- ----------- ----------- ----------- Total costs and expenses 724,989 666,679 1,404,784 1,285,758 Earnings before income taxes 10,253 9,835 14,952 14,354 Income taxes 4,153 3,983 6,056 5,813 ----------- ----------- ----------- ----------- Net earnings $ 6,100 5,852 8,896 8,541 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Weighted average number of common shares outstanding 10,921 10,875 10,905 10,875 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Earnings per share $ 0.56 0.54 0.82 0.79 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
___________________________________________________________________ See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (In thousands)
June 15, December 30, ASSETS 1996 1995 --------- ------------ Current assets: (Unaudited) Cash and cash equivalents $ 1,456 26,024 Accounts and notes receivable, net 142,333 85,968 Inventories 196,042 183,957 Prepaid expenses 15,760 12,067 Deferred tax assets 4,536 3,674 --------- --------- Total current assets 360,127 311,690 Investments in affiliates 8,772 8,421 Notes receivable, noncurrent 4,726 5,051 Property, plant and equipment: Land 29,169 28,638 Buildings and improvements 113,517 110,887 Furniture, fixtures, and equipment 217,015 204,054 Leasehold improvements 26,995 25,786 Construction in progress 5,808 6,538 Assets under capitalized leases 12,449 12,923 --------- --------- 404,953 388,826 Less accumulated depreciation and amortization (214,327) (210,787) --------- --------- Net property, plant and equipment 190,626 178,039 Intangible assets, net 47,207 6,282 Deferred tax asset - net 2,930 2,835 Other assets 2,121 1,942 --------- --------- Total assets $ 616,509 514,260 --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Outstanding checks, net of cash in banks $ 16,700 28,998 Current maturities of long-term debt and capitalized lease obligations 17,314 14,701 Accounts payable 156,188 127,592 Accrued expenses 37,819 31,745 Income taxes 6,977 4,652 --------- --------- Total current liabilities 234,998 207,688 Long-term debt 141,378 71,030 Capitalized lease obligations 9,911 10,158 Deferred compensation 7,445 7,625 Other 2,374 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 1996 and 1995 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 (515) - Retained earnings 193,551 188,578 --------- --------- 222,527 218,347 Less cost of 309 and 346 shares of common stock in treasury, respectively. (2,124) (3,034) --------- --------- Total stockholders' equity 220,403 215,313 --------- --------- Total liabilities and stockholders' equity $ 616,509 514,260 --------- --------- --------- ---------
____________________________________________________________________ See accompanying notes to consolidated financial statements NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Twenty-four Weeks Ended ----------------------------------- June 15, June 17, 1996 1995 ---------- ---------- Operating activities: Net earnings $ 8,896 8,541 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,800 13,570 Provision for bad debts 702 1,429 Provision for losses on closed lease locations (172) 31 Deferred income taxes (957) (286) Deferred compensation (180) (552) Earnings of equity investments (356) (463) Other 128 151 Changes in operating assets and liabilities: Accounts and notes receivable (14,150) (2,071) Inventories 8,469 9,601 Prepaid expenses (3,537) (7,000) Accounts payable 1,958 3,125 Accrued expenses 5,936 5,887 Income taxes 2,325 3,704 ---------- ---------- Net cash provided by operating activities 23,862 35,667 ---------- ---------- Investing activities: Dividends received - 890 Disposal of property, plant and equipment 3,680 1,980 Additions to property, plant and equipment excluding capital leases (20,782) (8,560) Business acquired (87,823) - Investment in an affiliate - (1,179) Loans to customers (1,766) (4,765) Payments from customers on loans 2,563 3,961 Other (274) (72) ---------- ---------- Net cash used for investing activities (104,402) (7,745) ---------- ---------- Financing activities: Proceeds from long-term debt 30,000 - Proceeds from revolving debt 44,700 - Dividends paid (3,923) (3,915) Payments of short-term debt - (5,700) Payments of long-term debt (2,345) (3,389) Payments of capitalized lease obligations (252) (270) Other 87 7 ---------- ---------- Net cash provided by (used for) financing activities 68,267 (13,267) ---------- ---------- Net (decrease) increase in cash $ (12,273) 14,655 ---------- ---------- ---------- ----------
- --------------------------------------------------------------- See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity
Fiscal period ended June 15, 1996 December 30, 1995 and December 31, 1994 Foreign Total (In thousands, except per share amounts) Additional currency Treasury stock stock- Common stock paid-in Retained translation Restricted ------------------ holders' Shares Amount capital earnings adjustment stock Shares Amount equity - ----------------------------------------------------------------------------------------------------------------------------------- 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 - - 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 Net earnings - - - 17,414 - - - - 17,414 Dividend declared of $.74 per share - - - (8,048) - - - - (8,048) Treasury stock issued upon exercise of options - - 36 - - - 3 20 56 Foreign currency translation adjustment - net of a $252 deferred tax benefit - - - - (378) - - - (378) ------ ------ ------ ------ ------- ------ ----- ------ ------ Balance at December 30, 1995 11,224 18,706 12,013 188,578 (950) - (346) (3,034) 215,313 Net earnings - - - 8,896 - - - - 8,896 Dividend declared of $.36 per share - - - (3,923) - - - - (3,923) Treasury stock issued upon exercise of options - - 30 - - - 4 35 65 Issuance of restricted stock (308) - - (524) 40 995 163 Amortized compensation under restricted stock plan - - - - - 9 - - 9 Treasury stock purchased - - - - - - (7) (120) (120) ------ ------ ------ ------ ------- ------ ----- ------ ------ Balance at June 15, 1996 11,224 $18,706 11,735 193,551 (950) (515) (309) $(2,124) 220,403 ------ ------ ------ ------ ------- ------ ----- ------ ------ ------ ------ ------ ------ ------- ------ ----- ------ ------
____________________________________________________________________ See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 15, 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 June 15, 1996 and December 30, 1995, and the results of operations for the 12 and 24-weeks ending June 15, 1996 and June 17, 1995, and the changes in cash flows for the 24-week period ending June 15, 1996 and June 17, 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 $40.3 million and $40.0 million higher at June 15, 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 June 15, 1996, remaining balances on all notes receivable sold with recourse was $13.2 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). Twenty-four Weeks Ended -------------------------- June 15, June 17, 1996 1995 ---------- ---------- Net revenues $1,419,736 1,485,506 Earnings before income taxes 14,952 16,464 Net earnings 8,896 9,807 Earnings per share $ .82 .91 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 June 15, 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 second quarter and year to date of fiscal 1996 increased 8.7% and 9.2%, respectively, over the same periods last year. The improvement is largely attributed to growth in wholesale revenues resulting from the acquisition of MDV at the beginning of the year and the addition of new independent retail accounts. During the quarter and for the year to date, wholesale segment revenues represented approximately 71% of total revenues compared to 69% last year, reflecting a growing proportion of wholesale business. Overall, retail revenues increased for the quarter and year to date resulting from the acquisition, in the first quarter of 1996, of two warehouse type stores from an existing customer. Same store sales, however, declined 1.3% during the second quarter, but were .3% higher on a year to date basis, compared to last year. Gross margins were 13.6% and 13.5% for the quarter and year to date, respectively, compared to 14.9% and 14.6%, respectively, for the corresponding period last year. The decreases this year resulted from a greater proportion of wholesale revenues which achieve lower gross margins than retail. Overall margins were also negatively impacted by the sale of a subsidiary, Thomas & 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 regionalize buying functions among warehouse groups to enhance operating efficiency and lower product costs which may improve margins. Retail segment margins improved during the quarter and year to date as a result of an increased distribution of sales from higher margin perishable and specialty departments and the availability of greater vendor allowances at store level. Margins were also affected by a LIFO charge of $510,000 for the quarter, compared to credit of $15,000 in the same period last year. Operating expenses as a percent of total revenues were 10.8% for the quarter compared to 12.1% for the same period last year. On a year to date basis, operating expenses were 11.0% this year compared to 12.1% in 1995. Expense levels declined as a percent of total revenues due to the growing proportion of wholesale revenues which typically operate at lower expense levels than retail. In addition, operating expenses of the newly acquired military distribution business are lower, as a percent of revenues, than those of the divested T&H operations. Incremental wholesale volume from new independent retail accounts continues to result in productivity gains at certain distribution facilities. Also, a reduction in retail related advertising and promotional activities contributed to lower expense levels for the quarter. Partially offsetting these gains were increased costs associated with the design and development of client/server based computer systems and software. These costs are expected to continue for the remainder of fiscal 1996 and into 1997. Depreciation and amortization expense increased 11.4% and 9.1% for the quarter and year to date, respectively, compared to last year. The increase was primarily due to the $.7 million for the quarter and $1.4 million for the year to date 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 increased 16.4% and 7.5% for the second quarter and year to date, respectively, compared to the same periods last year. The increase is attributed to higher average borrowing levels, due to the acquisition of MDV, and less favorable borrowing rates than were available last year. Interest expense as a percent of revenues for both the quarter and year to date was .42%, compared to .39% and .43%, respectively, last year. Income tax expense increased due to higher pretax earnings. The effective tax rate was 40.5%, unchanged from the comparable periods last year. Net earnings for the second quarter and year to date increased 4.2% compared to last year. The earnings improvement is attributed to wholesale operations, in particular, the acquisition of MDV and new independent retail volume the Company has been servicing since last year. Retail operations also showed improvement for the quarter while Nash DeCamp, the Company's produce marketing subsidiary, was adversely affected by poor overseas market conditions for Chilean-grown products. 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 first half of fiscal 1996, 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 for the twenty-four week period was $23.9 million compared to $35.7 million last year. The decrease was due primarily to changes in the composition of working capital, particularly accounts receivables which relate to the addition of new independent accounts and the additional volume generated by MDV. During the second quarter, the Company finalized an agreement to authorize the issuance 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. On June 5,1996, the Company entered into an agreement to acquire T. J. Morris Company, located in Statesboro, Georgia. Under the agreement, the Company will acquire all of the outstanding stock of Morris in exchange for its common stock. The number of shares to be issued by the Company will not materially increase the number of shares outstanding. The acquisition is expected to be completed in the third quarter. 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: July 30, 1996 By /s/ Alfred N. Flaten ----------------------------- ------------------------------------ Alfred N. Flaten President and Chief Executive Officer By /s/ Lawrence A. Wojtasiak ------------------------------------ Lawrence A. Wojtasiak Chief Accounting Officer EX-27 2 EXHIBIT 27 (FDS)
5 1,000 6-MOS DEC-28-1996 DEC-31-1995 JUN-15-1996 1,456 0 143,079 746 196,042 360,127 404,953 (214,327) 616,509 234,998 141,378 0 0 18,706 201,697 616,509 1,399,290 1,419,736 1,228,460 169,619 0 702 6,003 14,952 6,056 8,896 0 0 0 8,896 .82 .82
-----END PRIVACY-ENHANCED MESSAGE-----