-----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, BQj0pDoPAW+3sTMHlAaZDtez0/2uwM7/jhfXrquTXp/M/k8/VNqpJPLkBIS9+3YI wqZklqGTM2Mzf1N72DZsOQ== 0000912057-96-026985.txt : 19961121 0000912057-96-026985.hdr.sgml : 19961121 ACCESSION NUMBER: 0000912057-96-026985 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961005 FILED AS OF DATE: 19961119 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: 96668980 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 forty weeks ended October 5, 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 November 18, 1996: 11,265,253 SHARES PART I - FINANCIAL INFORMATION This report is for the forty week interim period beginning December 31, 1995, through October 5, 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)
Sixteen Weeks Ended Forty Weeks Ended ------------------------- ------------------------- October 5, October 7, October 5, October 7, 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Revenues: Net sales $ 984,799 898,104 2,384,089 2,175,709 Other revenues 19,068 20,721 39,514 43,228 ---------- --------- --------- --------- Total revenues 1,003,867 918,825 2,423,603 2,218,937 Cost and Expenses: Cost of sales 869,669 785,623 2,098,129 1,895,516 Selling, general and administrative and other operating expenses 108,738 112,558 264,259 269,267 Depreciation and amortization 10,070 9,024 24,870 22,594 Interest expense 3,969 3,129 9,972 8,715 ---------- --------- --------- --------- Total costs and expenses 992,446 910,334 2,397,230 2,196,092 Earnings before income taxes 11,421 8,491 26,373 22,845 Income taxes 4,625 3,439 10,681 9,252 ---------- --------- --------- --------- Net earnings $ 6,796 5,052 15,692 13,593 ---------- --------- --------- --------- ---------- --------- --------- --------- Weighted average number of common shares outstanding 11,121 10,875 10,992 10,875 ---------- --------- --------- --------- ---------- --------- --------- --------- Earnings per share $ .61 .46 1.43 1.25 ---------- --------- --------- --------- ---------- --------- --------- ---------
- ---------------------------------------------------------------- See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (In thousands)
October 5, December 30, ASSETS 1996 1995 - ------ ----------- ------------ Current assets: (Unaudited) Cash and cash equivalents $ 1,005 26,024 Accounts and notes receivable, net 143,988 85,968 Inventories 226,092 183,957 Prepaid expenses 14,438 12,067 Deferred tax assets 4,768 3,674 --------- --------- Total current assets 390,291 311,690 Investments in affiliates 9,156 8,421 Notes receivable, noncurrent 4,256 5,051 Property, plant and equipment: Land 28,840 28,638 Buildings and improvements 114,458 110,887 Furniture, fixtures, and equipment 224,500 204,054 Leasehold improvements 27,452 25,786 Construction in progress 13,068 6,538 Assets under capitalized leases 12,449 12,923 --------- --------- 420,767 388,826 Less accumulated depreciation and amortization (221,954) (210,787) --------- --------- Net property, plant and equipment 198,813 178,039 Intangible assets, net 47,501 6,282 Deferred tax asset - net 2,973 2,835 Other assets 2,030 1,942 --------- --------- Total assets $ 655,020 514,260 --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Outstanding checks $ 12,965 28,998 Current maturities of long-term debt and capitalized lease obligations 7,304 14,701 Accounts payable 187,031 127,592 Accrued expenses 36,832 31,745 Income taxes 4,288 4,652 --------- --------- Total current liabilities 248,420 207,688 Long-term debt 156,185 71,030 Capitalized lease obligations 9,762 10,158 Deferred compensation 7,320 7,625 Other 2,488 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 11,574 shares in 1996 and 11,224 in 1995 19,290 18,706 Additional paid-in capital 16,802 12,013 Foreign currency translation adjustment - net of a $633 deferred tax benefit (950) (950) Restricted stock (506) - Retained earnings 198,332 188,578 --------- --------- 232,968 218,347 Less cost of 309 and 346 shares of common stock in treasury, respectively. (2,123) (3,034) --------- --------- Total stockholders' equity 230,845 215,313 --------- --------- Total liabilities and stockholders' equity $ 655,020 514,260 --------- --------- --------- ---------
- ------------------------------------------------------------------ See accompanying notes to consolidated financial statements NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Forty Weeks Ended ----------------------- October 5, October 7, 1996 1995 ---------- ---------- Operating activities: Net earnings $ 15,692 13,593 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 24,870 22,594 Provision for bad debts 1,092 2,881 Provision for losses on closed lease locations (284) (44) Deferred income taxes (1,126) (1,882) Deferred compensation (305) (806) Earnings of equity investments (735) (879) Other 306 208 Changes in operating assets and liabilities: Accounts and notes receivable (15,680) 31 Inventories (13,181) (8,504) Prepaid expenses (1,959) (2,782) Accounts payable and outstanding checks 2,593 27,702 Accrued expenses 4,591 6,301 Income taxes (364) 3,508 ---------- ---------- Net cash provided by operating activities 15,510 61,921 ---------- ---------- Investing activities: Dividends received - 890 Disposal of property, plant and equipment 6,853 5,286 Additions to property, plant and equipment excluding capital leases (35,004) (22,211) Businesses acquired (88,562) - Loans sold, including current portion 3,402 13,744 Short-term investments - (5,969) Investment in an affiliate - (1,179) Loans to customers (2,844) (6,883) Payments from customers on loans 5,016 6,851 Other (295) (112) ---------- ---------- Net cash used for investing activities (111,434) (9,583) ---------- ---------- Financing activities: Proceeds from long-term debt 30,000 - Proceeds from revolving debt 60,811 - Dividends paid (5,938) (5,872) Payments of short-term debt - (41,100) Payments of long-term debt (13,653) (4,957) Payments of capitalized lease obligations (406) (433) Other 91 17 ---------- ---------- Net cash provided by (used for) financing activities 70,905 (52,345) ---------- ---------- Net decrease in cash and cash equivalents $ (25,019) (7) ---------- ---------- ---------- ----------
- ----------------------------------------------------------------- See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity
- ----------------------------------------------------------------------------------------------------------------------------------- Fiscal period ended October 5, 1996 December 30, 1995 and December 31, 1994 (In thousands, except per share amounts) Foreign Common stock Additional currency Treasury stock Total ---------------- paid-in Retained translation Restricted --------------- stockholders' 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 - - - 15,692 - - - - 15,692 Dividend declared of $.54 per share - - - (5,938) - - - - (5,938) Shares issued in connection with acquisition of a business 350 584 5,064 - - - - - 5,648 Treasury stock issued upon exercise of options - - 33 - - - 4 36 69 Issuance of restricted stock - - (308) - - (524) 40 995 163 Amortized compensation under restricted stock plan - - - - - 18 - - 18 Treasury stock purchased - - - - - - (7) (120) (120) ------- -------- ------ ------- ------ ------- ------- ------- -------- Balance at October 5, 1996 (unaudited) 11,574 $ 19,290 16,802 198,332 (950) (506) (309) $(2,123) 230,845 ------- -------- ------ ------- ------ ------- ------- ------- -------- ------- -------- ------ ------- ------ ------- ------- ------- --------
- ------------------------------------------------------------------ See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 5, 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 October 5, 1996 and December 30, 1995, and the results of operations for the 16 and 40-weeks ending October 5, 1996 and October 7, 1995, and the changes in cash flows for the 40-week period ending October 5, 1996 and October 7, 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 $41.1 million and $40.0 million higher at October 5, 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. During the quarter, an additional $3.4 million in notes were sold, and at October 5, 1996, remaining balances on all notes receivable sold with recourse was $15.4 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). Forty Weeks Ended ---------------------------- October 5, October 7, 1996 1995 ------------ ----------- Net revenues $ 2,423,603 2,512,612 Earnings before income taxes 26,373 26,010 Net earnings 15,692 15,492 Earnings per share $ 1.43 1.42 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 October 5, 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. NOTE 7 On August 5, 1996 the Company issued 350,261 shares of its common stock in exchange for all of the outstanding stock of T. J. Morris Company ("T.J. Morris") located in Statesboro, Georgia. The excess of purchase price over fair value of the assets acquired resulted in goodwill of approximately $1.4 million. The goodwill is being amortized on a straight-line basis over 15 years. NOTE 8 On October 9,1996 the Company commenced a cash tender offer for all of the outstanding common shares of Super Food Services, Inc. ("Super Food") for $15.50 per share. The tender offer is conditional, among other things upon there being validly tendered and not withdrawn shares representing at least a majority of shares outstanding. As of November 6, 1996, the expiration of the tender period, 10.6 million of the 11.0 million shares outstanding have been tendered. All validly tendered shares have been accepted for payment beginning November 15, 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Total revenues, for the 16-week third quarter and for the 40-weeks to date of fiscal 1996, increased 9.3% and 9.2%, respectively, over the same periods last year. The improvement is largely attributed to growth in wholesale revenues resulting from the acquisitions of MDV and T.J. Morris since the beginning of the year, and the addition of new independent retail accounts. Wholesale segment revenues for the 40 weeks represented approximately 71.2% of total revenues compared to 68.5% last year, reflecting a continued expansion of wholesale business. Overall, retail revenues declined during the quarter primarily as a result of the sale or closing of six retail stores, offset partially by the acquisition of two other stores. On a year to date basis, the Company has sold three stores to an existing customer, closed seven unprofitable stores and acquired four other stores in three separate transactions. Same store sales increased .3% during the third quarter, and were 1.3% higher on a year to date basis, compared to last year. Gross margins were 13.4% for the quarter and year to date, compared to 14.5% and 14.6%, respectively, for the corresponding periods 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 and conventional wholesale volume of MDV and T.J. Morris. The Company has continued to regionalize buying functions among warehouse groups to improve operating efficiency and lower product costs which may favorably impact 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 $615,000 for the quarter, compared to $545,000 in the same period last year. On a year to date basis, the LIFO charge is $865,000 compared to $425,000 last year. Operating expenses as a percent of total revenues were 10.8% for the quarter compared to 12.3% for the same period last year. On a year to date basis, operating expenses were 10.9% 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 MDV and T.J. Morris wholesale 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 expense reductions 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 as development continues and an implementation process begins. Depreciation and amortization expense increased 11.6% and 10.1% for the quarter and year to date, respectively, compared to last year. The increase was primarily due to the amortization of goodwill associated with the MDV acquisition of $1.0 million for the quarter and $2.4 million for the year to date. Partially offsetting these costs were lower depreciation expenses resulting from the divestiture of several retail stores and T&H since the prior year quarter. Interest expense increased 26.8% and 14.4% for the third 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 the quarter and year to date was .40% and .41%, respectively, compared to .34% and .39%, respectively, last year. Income tax expense increased due to higher pretax earnings. The effective tax rate was 40.5%, unchanged from the comparable quarter and year to date last year. Net earnings for the third quarter and year to date increased 32.6% and 15.4%, respectively, compared to last year. The earnings improvement is attributed to each segment of the company's operations; in particular, the wholesale which benefited from the acquisitions of MDV and T.J. Morris, and new independent retail volume the Company has been servicing since last year. Retail operations also showed improvement for the quarter as did Nash DeCamp, the Company's produce marketing subsidiary, which was favorably affected by strong market conditions for its domestically 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 fiscal 1996, the Company financed an $87.8 million cash outlay related to the acquisition of MDV and the purchase of three 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 forty-week period was $15.5 million compared to $61.9 million last year. The decrease was due primarily to changes in the composition of working capital, particularly accounts receivables and inventories which relate to the addition of new independent accounts and the additional volume generated by MDV. Also, 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 August 5, 1996, the Company completed the acquisition of T. J. Morris Company, located in Statesboro, Georgia. Under terms of the transaction, the Company acquired all of the outstanding stock of Morris in exchange for approximately 350,000 shares of its common stock. On October 9,1996, under terms of a merger agreement, the Company commenced a cash tender offer for all of the outstanding shares, approximately 11.0 million, of Super Food common stock for $15.50 per share. The company has negotiated a $500 million senior unsecured revolving credit facility, with a scheduled partial reduction in two years, and the remaining balance maturing five years from closing, to finance the tender offer as well as to refinance its current credit facilities. 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: 10.1 Agreement and Plan of Merger dated as of October 8, 1996 among the Company, NFC Acquisition Corporation, and Super Food Services, Inc. 10.2 Form of Credit Agreement among the Company, NFC Acquisition Corporation, Harris Trust and Savings Bank as the Administrative Agent, and Bank of Montreal and PNC Bank, N.A. as Co-Syndication Agents. 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:November 19, 1996 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 FORTY WEEKS ENDING OCTOBER 5, 1996 ITEM NO. ITEM METHOD OF FILING - -------- ---- ---------------- 10.1 Agreement and Plan of Merger Incorporated by Reference to dated as of October 8, 1996 Exhibit (c)(1) to the Company's among the Company, NFC Schedule 14D-1 and Schedule 13D Acquisition Corporation, and dated October 8, 1996 (File Super Food Services, Inc. No. 005-13346). 10.2 Form of Credit Agreement among Incorporated by Reference to the Company, NFC Acquisition Exhibit (b)(1) to the Company's Corporation, Harris Trust and Schedule 14D-1 and Schedule 13D Savings as the Administrative dated October 8, 1996 (File Agent, and Bank of Montreal No. 005-13346). and PNC Bank, N.A. as Co-Syndication Agents. 27.1 Financial Data Schedule Filed herewith. EX-27 2 EXHIBIT 27
5 1,000 9-MOS DEC-28-1996 DEC-31-1995 OCT-5-1996 1,005 0 144,804 816 226,092 390,291 420,767 221,954 655,020 248,420 156,185 0 0 19,290 211,555 655,020 2,384,089 2,423,603 2,098,129 288,037 0 1,092 9,972 26,373 10,681 15,692 0 0 0 15,692 1.43 1.43
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