10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the sixteen weeks ended October 8, 2005

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 0-785

NASH-FINCH COMPANY

(Exact Name of Registrant as Specified in its Charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization) 41-0431960
(IRS Employer
Identification No.)

7600 France Avenue South, P.O. Box 355 Minneapolis, Minnesota	55435-0355
(Address of principal executive offices)	(Zip Code)

(952) 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 þ No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of November 4, 2005 13,226,933 shares of Common Stock of the Registrant were outstanding.

Index

		Page No.
Part I — FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements and Notes
	Consolidated Statements of Income		3
	Consolidated Balance Sheets		4
	Consolidated Statements of Cash Flows		5
	Notes to Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		33
Item 4.	Controls and Procedures		33
Part II — OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		33
Item 5.	Other Information		34
Item 6.	Exhibits		34
SIGNATURES			35
Summary Sheet of Salary Actions Affecting Named Executive Officers
Rule 13a-14(a) Certification of CEO
Rule 13a-14(a) Certification of CFO
Section 1350 Certification of CEO and CFO

2

PART 1. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

NASH FINCH COMPANY AND SUBSIDIARIES

Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts)

	Sixteen Weeks Ended				Forty Weeks Ended
	October 8,		October 9,		October 8,			October 9,
	2005		2004		2005			2004
Sales	$	1,464,781		1,191,187		3,432,271			2,977,034
Cost and expenses:
Cost of sales		1,332,836		1,063,911		3,105,580			2,652,446
Selling, general and administrative		91,569		84,612		230,456			229,973
Special charge		—		—		(1,296	)		36,494
Depreciation and amortization		14,357		11,615		33,345			31,571
Interest expense		7,919		8,429		18,684			21,812
Total costs and expenses		1,446,681		1,168,567		3,386,769			2,972,296
Earnings before income taxes		18,100		22,620		45,502			4,738
Income tax expense		7,059		8,022		17,746			1,048
Net earnings	$	11,041		14,598		27,756			3,690
Net earnings per share:
Basic earnings per share	$	0.85		1.17		2.16			0.30
Diluted earnings per share	$	0.83		1.15		2.12			0.29
Cash dividends per common share	$	0.180		0.135		0.495			0.405
Weighted average number of common shares outstanding and common equivalent shares outstanding:
Basic		13,004		12,486		12,836			12,398
Diluted		13,233		12,681		13,117			12,581

See accompanying notes to consolidated financial statements.

3

NASH FINCH COMPANY & SUBSIDIARIES

Consolidated Balance Sheets
(in thousands, except per share amounts)

	October 8,			January 1,			October 9,
	2005			2005			2004
	(unaudited)						(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,064			5,029			1,142
Accounts and notes receivable, net		200,134			157,397			159,709
Inventories		297,664			213,343			223,144
Prepaid expenses		16,110			15,524			13,858
Deferred tax assets		16,171			9,294			8,547
Total current assets		531,143			400,587			406,400
Investments in marketable securities		751			1,661			1,545
Notes receivable, net		22,353			26,554			28,953
Property, plant and equipment:
Land		19,423			21,289			22,146
Buildings and improvements		192,545			155,906			156,675
Furniture, fixtures and equipment		313,828			300,432			312,848
Leasehold improvements		69,698			71,907			71,499
Construction in progress		2,008			1,784			2,269
Assets under capitalized leases		40,171			40,171			41,060
		637,673			591,489			606,497
Less accumulated depreciation and amortization		(391,708	)		(377,820	)		(386,440	)
Net property, plant and equipment		245,965			213,669			220,057
Goodwill		244,582			147,435			147,575
Customer contracts & relationships		36,705			4,059			4,379
Investment in direct financing leases		10,173			10,876			11,093
Deferred tax asset, net		—			2,560			—
Other assets		13,532			8,227			7,403
Total assets	$	1,105,204			815,628			827,405
Liabilities and Stockholders’ Equity
Current liabilities:
Outstanding checks	$	12,390			11,344			9,062
Current maturities of long-term debt and capitalized lease obligations		4,337			5,440			5,208
Accounts payable		246,673			180,359			196,804
Accrued expenses		79,602			72,200			87,883
Income taxes payable		7,601			10,819			8,591
Total current liabilities		350,603			280,162			307,548
Long-term debt		381,617			199,243			198,719
Capitalized lease obligations		38,170			40,360			41,062
Deferred tax liability, net		3,436			—			879
Other liabilities		21,067			21,935			17,527
Commitments and contingencies		—			—			—
Stockholders’ equity:
Preferred stock — no par value. Authorized 500 shares; none issued		—			—			—
Common stock — $1.66 2/3 par value. Authorized 50,000 shares, issued 13,208, 12,657 and 12,419 shares, respectively		22,014			21,096			20,699
Additional paid-in capital		46,891			34,848			32,067
Restricted stock		(109	)		(224	)		(277	)
Common stock held in trust		(1,838	)		(1,652	)		—
Deferred compensation obligations		1,838			1,652			—
Accumulated other comprehensive income		(3,325	)		(5,262	)		(4,745	)
Retained earnings		245,046			223,676			214,123
		310,517			274,134			261,867
Less cost of 11, 11 and 10 shares of common stock in treasury, respectively		(206	)		(206	)		(197	)
Total stockholders’ equity		310,311			273,928			261,670
Total liabilities and stockholders’ equity	$	1,105,204			815,628			827,405

See accompanying notes to consolidated financial statements.

4

NASH FINCH COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)
(In thousands)

	Forty Weeks Ended
	October 8,			October 9,
	2005			2004
Operating activities:
Net earnings	$	27,756			3,690
Adjustments to reconcile net income to net cash provided by operating activities:
Special charge		(1,296	)		36,494
Depreciation and amortization		33,345			31,571
Amortization of deferred financing costs		865			886
Amortization of rebatable loans		2,257			2,275
Provision for bad debts		1,149			2,645
Deferred income tax		(881	)		(8,300	)
Gain on sale of property and equipment		(1,865	)		(3,960	)
LIFO charge		1,176			2,218
Asset impairments		4,319			—
Other		2,980			1,773
Changes in operating assets and liabilities, net of effects of acquisitions
Accounts and notes receivable		(10,035	)		(15,273	)
Inventories		(40,288	)		10,927
Prepaid expenses		(328	)		1,278
Accounts payable		28,525			30,062
Accrued expenses		3,963			(4,241	)
Income taxes payable		(3,218	)		(2,023	)
Other assets and liabilities		(1,629	)		5,293
Net cash provided by operating activities		46,795			95,315
Investing activities:
Disposal of property, plant and equipment		11,033			10,940
Additions to property, plant and equipment		(15,930	)		(14,748	)
Business acquired, net of cash		(226,351	)		—
Loans to customers		(1,570	)		(3,113	)
Payments from customers on loans		3,760			2,504
Purchase of marketable securities		(2,064	)		(2,583	)
Sale of marketable securities		2,827			1,113
Corporate owned life insurance, net		(1,498	)		—
Other		148			(55	)
Net cash used in investing activities		(229,645	)		(5,942	)
Financing activities:
Proceeds (payments) of revolving debt		38,200			(81,100	)
Dividends paid		(6,387	)		(4,985	)
Proceeds from exercise of stock options		9,521			2,888
Proceeds from employee stock purchase plan		567			654
Proceeds from long-term debt		150,087			—
Payments of long-term debt		(7,176	)		(2,220	)
Payments of capitalized lease obligations		(2,031	)		(1,937	)
Decrease in outstanding checks		1,046			(14,288	)
Payments of deferred finance costs		(4,942	)		—
Net cash provided (used) by financing activities		178,885			(100,988	)
Net decrease in cash		(3,965	)		(11,615	)
Cash at beginning of period		5,029			12,757
Cash at end of period	$	1,064			1,142

See accompanying notes to consolidated financial statements.

5

Nash Finch Company and Subsidiaries

Notes to Consolidated Financial Statements

October 8, 2005

Note 1 — Basis of Presentation

     The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended January 1, 2005.

     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 8, 2005, January 1, 2005 and October 9, 2004, and the results of operations for the sixteen and forty weeks ended October 8, 2005 and October 9, 2004 and changes in cash flows for the forty weeks ended October 8, 2005 and October 9, 2004. All material intercompany accounts and transactions have been eliminated in the unaudited 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.

     The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

     Certain reclassifications between selling, general and administrative and interest expenses have been reflected in the consolidated statements of income for the sixteen and forty weeks ended October 8, 2005 and October 9, 2004. Certain reclassifications were made between customer contracts & relationships and other assets as of October 9, 2004. These reclassifications did not have an impact on operating earnings, earnings before income taxes, net earnings, total cash flows or the financial position for any period.

Note 2 — Acquisition

     On March 31, 2005, Nash Finch completed the purchase of the wholesale food and non-food distribution business conducted by Roundy’s Supermarkets, Inc. (“Roundy’s”) out of two distribution centers located in Lima, Ohio and Westville, Indiana, the retail grocery business conducted by Roundy’s from stores in Ironton, Ohio and Van Wert, Ohio, and Roundy’s general merchandise and health and beauty care products distribution business involving the customers of the two purchased distribution centers (the “Business”). Nash Finch also assumed certain trade payables and accrued expenses associated with the assets being acquired, but did not assume any indebtedness in connection with the acquisition. The aggregate purchase price paid was $225.7 million in cash, and is subject to customary post-closing adjustments based upon changes in the net assets of the Business. Nash Finch financed the acquisition by using cash on hand, $70.0 million of borrowings under its senior secured credit facility, and proceeds from the private placement of $150.1 million in aggregate issue price (or $322 million aggregate principal amount at maturity) of senior subordinated convertible notes due 2035, the borrowings and the sale of notes referred to as the “financing transactions.”

6

     Under business combination accounting, the total purchase price will be allocated to the net tangible assets and identifiable intangible assets of the Business based on their estimated fair values. The excess of the purchase price over the net tangible assets and identifiable intangible assets will be recorded as goodwill. Based upon a preliminary valuation, the total preliminary purchase price was allocated as follows (in thousands):

Total current assets	$	77,529
Notes receivable, net		1,134
Net property, plant & equipment		59,016
Customer contracts & relationships		34,600
Goodwill		98,013
Liabilities		(44,577	)
Total preliminary purchase price allocation	$	225,715

The foregoing allocation of the purchase price is preliminary and is subject to change.

Pro forma financial information

     The unaudited pro forma financial information in the table below combines the historical results for Nash Finch and the historical results for the Business for the sixteen and forty week periods ended October 8, 2005 and October 9, 2004, after giving effect to the acquisition by Nash Finch of the Business and the financing transactions described above as of the beginning of each of the periods presented. This pro forma financial information is provided for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by the combined operations for the periods presented or that will be achieved by the combined operations in the future.

     The following pro forma combined results of operations do not include any cost savings that may result from the combination of the Company and the Business.

	Sixteen Weeks Ended				Forty Weeks Ended
	October 8,		October 9,		October 8,		October 9,
(in thousands, except per share data)	2005		2004		2005		2004
Total revenues	$	1,464,781		1,442,289		3,637,166		3,665,594
Net income		11,041		15,970		29,659		7,586
Basic net income per share		0.85		1.28		2.31		0.61
Diluted net income per share		0.83		1.26		2.26		0.60

Note 3 — Inventories

     The Company uses the LIFO method for valuation of a substantial portion of inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond management’s control, interim results are subject to the final year-end LIFO inventory valuation. If the FIFO method had been used, inventories would have been approximately $49.1 million, $47.9 million and $46.6 million higher at October 8, 2005, January 1, 2005 and October 9, 2004, respectively. For the sixteen and forty weeks ended October 8, 2005 the Company recorded LIFO (credits) charges of $(0.2) million and $1.2 million, respectively, compared to $1.0 million and $2.2 million, respectively, for the sixteen and forty weeks ended October 9, 2004.

7

Note 4 — Stock Option Plans

     As permitted by the provisions of Statement of Financial Accounting Standard (SFAS) No. 123, "Accounting for Stock-Based Compensation”, the Company has chosen to continue to apply Accounting Principles Board Opinion No. 25 (APB 25), “Accounting for Stock Issued to Employees” and related interpretations in accounting for its stock-based compensation. As a result, the Company does not recognize compensation costs if the option price equals or exceeds the market price at the date of grant. The following table illustrates the effect on net income and earnings per share for the sixteen and forty weeks ended October 8, 2005 and October 9, 2004 if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation (in thousands, except per share amounts):

	Sixteen Weeks Ended						Forty Weeks Ended
	October 8,			October 9,			October 8,			October 9,
	2005			2004			2005			2004
Reported net earnings	$	11,041			14,598			27,756			3,690
Add: stock-based compensation expense from restricted stock plan and long term incentive plan included in net earnings		162			70			740			198
Deduct: stock-based compensation expense from restricted stock plan and long term incentive plan under fair value method, net of tax		(151	)		(70	)		(713	)		(198	)
Deduct: total stock-based employee compensation expense determined under fair value method for all option awards, net of tax		(127	)		(364	)		(475	)		(790	)
Adjusted net earnings	$	10,925			14,234			27,308			2,900
Reported basic earnings per share	$	0.85			1.17			2.16			0.30
Adjusted basic earnings per share	$	0.84			1.14			2.13			0.23
Reported diluted earnings per share	$	0.83			1.15			2.12			0.29
Adjusted diluted earnings per share	$	0.83			1.12			2.08			0.23

Note 5 — Other Comprehensive Income

     Comprehensive income is as follows (in thousands):

	Sixteen Weeks Ended					Forty Weeks Ended
	October 8,			October 9,		October 8,			October 9,
	2005			2004		2005			2004
Net earnings	$	11,041			14,598		27,756			3,690
Change in fair value of available-for-sale securities, net of tax		(2	)		33		(89	)		33
Change in fair value of derivative, net of tax		525			450		2,026			1,192
Comprehensive income	$	11,564			15,081		29,693			4,915

8

     During 2005 and 2004, other comprehensive income consisted of market value adjustments to reflect available-for-sale securities and derivative instruments at fair value, pursuant to SFAS Nos. 115 and 133, respectively. As of October 8, 2005 all derivatives are designated as cash flow hedges for interest and fuel rates. All investments in available-for-sale securities held by the Company are amounts held in a rabbi trust in connection with the deferred compensation arrangement described below.

Rabbi Trust

     The Company offers deferred compensation arrangements, which allow certain employees, officers, and directors to defer a portion of their earnings. The deferred compensation funds are invested in a rabbi trust. The rabbi trust is accounted for in accordance with Emerging Issues Task Force Issue No. 97-14, “Accounting for Deferred Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested.” A rabbi trust is a funding vehicle used to protect deferred compensation benefits from events other than bankruptcy, such as a change in control or a shortage of cash flow. The investment in the rabbi trust is classified as an investment in available-for-sale securities included in other assets on the consolidated balance sheet.

Corporate Owned Life Insurance (COLI)

     During the first fiscal quarter of 2005, the Company sold securities held in the rabbi trust and purchased life insurance policies to fund its obligations under deferred compensation arrangements for certain employees, officers and directors. The cash surrender value of these policies is included in other long-term assets on the consolidated balance sheet.

Note 6 — Long-term Debt and Bank Credit Facilities

     On February 22, 2005, the Company entered into a First Amendment to its Credit Agreement, dated as of November 12, 2004, with the lenders party to that Credit Agreement and Deutsche Bank Trust Company Americas, as Administrative Agent. Subject to the terms and conditions therein, the First Amendment generally amended the Credit Agreement so as to permit the Company to enter into an Asset Purchase Agreement to acquire certain distribution centers and other assets from Roundy’s and to close and finance that acquisition, as described in Note 2 above.

     To finance a portion of this acquisition the Company sold $150.1 million in aggregate issue price (or $322 million aggregate principal amount at maturity) of senior subordinated convertible notes due 2035 in a private placement pursuant to Rule 144A under the Securities Act of 1933, as amended. The placement was completed on March 15, 2005.

     The notes are the Company’s unsecured senior subordinated obligations and rank junior to the Company’s existing and future senior indebtedness, including borrowings under its senior secured credit facility.

9

     Cash interest at the rate of 3.50% per year is payable semi-annually on the issue price of the notes until March 15, 2013. After that date, cash interest will not be payable, unless contingent cash interest becomes payable, and original issue discount for non-tax purposes will accrue on the notes at a daily rate of 3.50% per year beginning on March 15, 2013 until the maturity date of the notes. On the maturity date of the notes, a holder will receive $1,000 per note. Contingent cash interest will be paid on the notes during any six-month period, commencing March 16, 2013, if the average market price of a note for a ten trading day measurement period preceding the applicable six-month period equals 130% or more of the accreted principal amount of the note, plus accrued cash interest, if any. The contingent cash interest payable with respect to any six-month period will equal an annual rate of 0.25% of the average market price of the note for the ten trading day measurement period described above.

     The notes will be convertible at the option of the holder, only upon the occurrence of certain events, at an initial conversion rate of 9.312 shares of the Company’s common stock per $1,000 principal amount at maturity of notes (equal to an initial conversion price of approximately $50.05 per share). Upon conversion, the Company will pay the holder the conversion value in cash up to the accreted principal amount of the note and the excess conversion value, if any, in cash, stock or both, at the Company’s option.

     The Company may redeem all or a portion of the notes for cash at any time on or after the eighth anniversary of the issuance of the notes. Holders may require the Company to purchase for cash all or a portion of their notes on the 8^th, 10^th, 15^th, 20^th and 25^th anniversaries of the issuance of the notes. In addition, upon specified change in control events, each holder will have the option, subject to certain limitations, to require the Company to purchase for cash all or any portion of such holder’s notes.

     In connection with the closing of the sale of the notes, the Company entered into a registration rights agreement with the initial purchasers of the notes. In accordance with that agreement, the Company filed with the Securities and Exchange Commission on July 13, 2005 a shelf registration statement covering resales by security holders of the notes and the common stock issuable upon conversion of the notes. The shelf registration statement was declared effective by the Securities and Exchange Commission on October 5, 2005.

Note 7 — Special Charge

     During the second quarter of 2004, the Company completed a strategic review that identified certain retail stores that did not meet return objectives, provide long-term strategic opportunities or justify additional capital investments. Consequently, the Company closed or sold 18 stores and sought purchasers for its three Denver area AVANZA® stores. As a result of these actions, the Company recorded a pre-tax special charge of $36.5 million which was reflected in the “Special charge” line within the consolidated statements of income, and $3.3 million of costs reflected in operating earnings, primarily involving inventory markdowns related to the store closures. During the fourth fiscal quarter of 2004, the Company recorded a net reversal of $1.6 million of the special charge because the Company was able to settle five leases for less than initially estimated and adjusted the estimate needed on four other properties for which more current market information was available.

     During the second fiscal quarter of 2005, the Company decided to continue to operate the three Denver AVANZA stores and therefore recorded a reversal of $1.5 million of the special charge related to the stores, partially offset by a $0.2 million change in estimate for one other property.

10

     Following is a summary of the activity in the 2004 reserve established for store dispositions:

	Write-			Write-
	Down of			Down of									Other
	Tangible			Intangible			Lease						Exit
	Assets			Assets			Commitments			Severance			Costs			Total
Initial accrual	$	20,596			1,072			14,129			109			588			36,494
Change in estimates		889			—			(2,493	)		(23	)		—			(1,627	)
Used in 2004		(21,485	)		(1,072	)		(2,162	)		(86	)		(361	)		(25,166	)
Balance January 1, 2005		—			—			9,474			—			227			9,701
Change in estimates		(1,531	)		—			235			—			—			(1,296	)
Used in 2005		1,531			—			(1,719	)		—			(32	)		(220	)
Balance October 8, 2005	$	—			—			7,990			—			195			8,185

     As of October 8, 2005, the Company believes the remaining reserves are adequate.

Note 8 — Recently Adopted and Issued Accounting Standards

     In December 2004, the FASB issued SFAS No. 123(R) (Revised 2004), “Share-Based Payment.” The revisions to SFAS No 123 require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS 123(R) replaces SFAS No. 123, “Accounting for Stock Based Compensation,” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” For public entities, the provisions of the statement are effective as of the beginning of the first annual reporting period that begins after June 15, 2005, however early adoption is allowed. The Company expects to adopt the provisions of the new statement in the first quarter of fiscal 2006 and does not expect the impact on net income on a full year basis will be significantly different from the historical pro forma impacts as previously disclosed in the “Stock Option Plans” policy description in Part II, Item 8 in the Company’s Form 10-K for the fiscal year ended January 1, 2005 under Note (1) — “Summary of Significant Accounting Policies,” and under Note 4 discussed above.

     On March 29, 2005 the SEC issued Staff Accounting Bulletin (SAB) 107 to provide guidance in applying the provisions of SFAS No. 123(R). The SAB describes SEC expectations in determining assumptions that underlie the fair value estimates. The provisions of the SAB are not expected to result in significant differences between compensation expense recognized upon adoption of SFAS 123(R) and the pro forma impacts as previously disclosed in the “Stock Option Plans” policy description in Part II, Item 8 in the Company’s Form 10-K for the fiscal year ended January 1, 2005 under Note (1) — “Summary of Significant Accounting Policies,” and under Note 4 discussed above.

11

Note 9 — Segment Reporting

A summary of the major segments of the business is as follows:
(In thousands)

Sixteen weeks ended October 8, 2005

	Food
	Distribution		Military		Retail		Totals
Revenue from external customers	$	886,322		353,488		224,971		1,464,781
Inter-segment revenue		114,439		—		—		114,439
Segment profit		29,302		11,644		7,043		47,989

Sixteen weeks ended October 9, 2004

	Food
	Distribution		Military		Retail		Totals
Revenue from external customers	$	610,850		338,495		241,842		1,191,187
Inter-segment revenue		121,995		—		—		121,995
Segment profit		22,666		10,806		10,802		44,274

Forty weeks ended October 8, 2005

	Food
	Distribution		Military		Retail		Totals
Revenue from external customers	$	1,984,425		884,778		563,068		3,432,271
Inter-segment revenue		288,478		—		—		288,478
Segment profit		66,217		30,006		18,683		114,906

Forty weeks ended October 9, 2004

	Food
	Distribution		Military		Retail		Totals
Revenue from external customers	$	1,491,173		847,361		638,500		2,977,034
Inter-segment revenue		319,263		—		—		319,263
Segment profit		54,857		27,628		17,227		99,712

12

Reconciliation to statements of operations:
(In thousands)

Sixteen weeks ended October 8, 2005 and October 9, 2004

	2005			2004
Profit and loss
Total profit for segments	$	47,989			44,274
Unallocated amounts:
Adjustment of inventory to LIFO		229			(1,043	)
Unallocated corporate overhead		(30,118	)		(20,611	)
Special charge		—			—
Earnings before income taxes	$	18,100			22,620

Forty weeks ended October 8, 2005 and October 9, 2004

	2005			2004
Profit and loss
Total profit for segments	$	114,906			99,712
Unallocated amounts:
Adjustment of inventory to LIFO		(1,176	)		(2,218	)
Unallocated corporate overhead		(69,524	)		(56,262	)
Special charge		1,296			(36,494	)
Earnings before income taxes	$	45,502			4,738

Note 10 — Guarantees

     In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” (FIN 45). FIN 45 elaborates on the existing disclosure requirements for most guarantees, including residual value guarantees issued in conjunction with operating lease agreements. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value of the obligation it assumes under that guarantee and must disclose that information in its interim and annual financial statements. The initial recognition and measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002.

     The Company has guaranteed the debt and lease obligations of certain of its food distribution customers. In the event these retailers are unable to meet their debt service payments or otherwise experience an event of default, the Company would be unconditionally liable for the outstanding balance of their debt and lease obligations ($9.4 million as of October 8, 2005), which would be due in accordance with the underlying agreements. All of the guarantees were issued prior to December 31, 2002 and therefore were not subject to the recognition and measurement provisions of FIN 45.

     The Company has also assigned various leases to other entities. If the assignees were to become unable to continue making payments under the assigned leases, the Company estimates its maximum potential obligation with respect to the assigned leases to be $23.5 million as of October 8, 2005.

13

Note 11 — Pension and Other Post-Retirement Benefits

     The following tables present the components of the Company’s pension and postretirement net periodic benefit cost for the sixteen and forty weeks ended October 8, 2005 and October 9, 2004 (in thousands):

Sixteen Weeks Ended October 8, 2005 and October 9, 2004

	Pension Benefits						Other Benefits
	2005			2004			2005			2004
Service cost	$	—			—			—			—
Interest cost		577			594			49			71
Expected return on plan assets		(528	)		(539	)		—			—
Amortization of prior service cost		(4	)		(4	)		(7	)		(8	)
Recognized actuarial loss		49			41			—			15
Net periodic benefit cost	$	94			92			42			78

Forty Weeks Ended October 8, 2005 and October 9, 2004

	Pension Benefits						Other Benefits
	2005			2004			2005			2004
Service cost	$	—			1			—			4
Interest cost		1,732			1,782			147			223
Expected return on plan assets		(1,583	)		(1,617	)		—			—
Amortization of prior service cost		(11	)		(11	)		(22	)		(23	)
Recognized actuarial loss		149			122			—			55
Net periodic benefit cost	$	287			277			125			259

     Weighted-average assumptions used to determine net periodic benefit cost for the sixteen and forty weeks ending October 8, 2005 and October 9, 2004 were as follows:

	Pension Benefits						Other Benefits
	2005			2004			2005			2004
Weighted-average assumptions
Discount rate		6.00	%		6.25	%		6.00	%		6.25	%
Expected return on plan assets		7.50	%		7.50	%		—			—
Rate of compensation increase		4.00	%		4.00	%		—			—

     Total contributions to the Company’s pension plan in 2005 are expected to be $0.

     In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) became law in the United States. The Act introduces a prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least “actuarially equivalent” to Medicare. The benefit and subsidy introduced by the Act begin in 2006. In May 2004, the FASB issued FASB Staff Position (FSP) No. 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” FSP 106-2 requires an employer to initially account for any subsidy received under the Act as an actuarial experience gain to the accumulated postretirement benefit obligation, which would be amortized over future service periods. Future subsidies would reduce service cost each year. FSP 106-2 was effective for Nash Finch in the third fiscal quarter ended October 9, 2004. Nash Finch believes that its postretirement benefit plan is not actuarially equivalent to Medicare Part D under the Act and consequently will not receive significant subsidies under the Act.

14

Note 12 — Subsidiary Guarantees

     The following table presents summarized combined financial information for certain wholly owned Company subsidiaries which guarantee on a full unconditional and joint and several basis borrowings under the Company’s $300 million senior secured credit facility.

     The guarantor subsidiaries are 100% owned subsidiaries of the Company. Condensed consolidating financial information for the Company and its guarantor subsidiaries is as follows:

NASH FINCH COMPANY AND SUBSIDIARIES
Consolidating Statements of Income
Sixteen Weeks Ended October 8, 2005
(in thousands)

						Non-						Nash Finch
	Nash			Guarantor		Guarantor			Consolidation			Company &
	Finch			Subsidiaries		Subsidiaries			Adjustments			Subsidiaries
Sales	$	967,022			533,353		7,517			(43,111	)		1,464,781
Cost and expenses:
Cost of sales		879,570			490,534		5,843			(43,111	)		1,332,836
Selling, general and administrative		55,827			34,296		1,446			—			91,569
Depreciation and amortization		8,654			5,622		81			—			14,357
Equity in consolidated subsidiaries		(619	)		—		—			619			—
Interest expense		5,886			2,036		(3	)		—			7,919
Total cost and expenses		949,318			532,488		7,367			(42,492	)		1,446,681
Earnings (loss) before income taxes		17,704			865		150			(619	)		18,100
Income tax expense		6,663			396		—			—			7,059
Net earnings	$	11,041			469		150			(619	)		11,041

15

NASH FINCH COMPANY AND SUBSIDIARIES
Consolidating Statements of Income
Forty Weeks Ended October 8, 2005
(in thousands)

						Non-					Nash Finch
	Nash			Guarantor		Guarantor		Consolidation			Company &
	Finch			Subsidiaries		Subsidiaries		Adjustments			Subsidiaries
Sales	$	2,388,003			1,134,798		18,837		(109,367	)		3,432,271
Cost and expenses:
Cost of sales		2,163,252			1,037,263		14,432		(109,367	)		3,105,580
Selling, general and administrative		147,428			79,386		3,642		—			230,456
Special charge		(1,296	)		—		—		—			(1,296	)
Depreciation and amortization		21,291			11,857		197		—			33,345
Equity in consolidated subsidiaries		(1,675	)		—		—		1,675			—
Interest expense		14,572			4,105		7		—			18,684
Total cost and expenses		2,343,572			1,132,611		18,278		(107,692	)		3,386,769
Earnings (loss) before income taxes		44,431			2,187		559		(1,675	)		45,502
Income tax expense		16,675			1,071		—		—			17,746
Net earnings	$	27,756			1,116		559		(1,675	)		27,756

NASH FINCH COMPANY AND SUBSIDIARIES
Consolidating Statements of Income
Sixteen Weeks Ended October 9, 2004
(in thousands)

						Non-					Nash Finch
	Nash		Guarantor			Guarantor		Consolidation			Company &
	Finch		Subsidiaries			Subsidiaries		Adjustments			Subsidiaries
Sales	$	945,974		286,493			7,882		(49,162	)		1,191,187
Cost and expenses:
Cost of sales		856,510		251,909			5,928		(50,436	)		1,063,911
Selling, general and administrative		51,477		30,373			1,488		1,274			84,612
Depreciation and amortization		5,991		5,559			65		—			11,615
Equity in consolidated subsidiaries		769		—			—		(769	)		—
Interest expense		8,046		372			11		—			8,429
Total cost and expenses		922,793		288,213			7,492		(49,931	)		1,168,567
Earnings (loss) before income taxes		23,181		(1,720	)		390		769			22,620
Income tax expense		8,583		(561	)		—		—			8,022
Net earnings	$	14,598		(1,159	)		390		769			14,598

16

NASH FINCH COMPANY AND SUBSIDIARIES
Consolidating Statements of Income
Forty Weeks Ended October 9, 2004
(in thousands)

						Non-					Nash Finch
	Nash		Guarantor			Guarantor		Consolidation			Company &
	Finch		Subsidiaries			Subsidiaries		Adjustments			Subsidiaries
Sales	$	2,360,490		722,611			19,664		(125,731	)		2,977,034
Cost and expenses:
Cost of sales		2,126,700		638,007			14,744		(127,005	)		2,652,446
Selling, general and administrative		148,076		76,852			3,771		1,274			229,973
Special charge		36,494		—			—		—			36,494
Depreciation and amortization		21,252		10,152			167		—			31,571
Equity in consolidated subsidiaries		1,588		—			—		(1,588	)		—
Interest expense		20,734		1,046			32		—			21,812
Total cost and expenses		2,354,844		726,057			18,714		(127,319	)		2,972,296
Earnings before income taxes		5,646		(3,446	)		950		1,588			4,738
Income tax expense		1,956		(908	)		—		—			1,048
Net earnings	$	3,690		(2,538	)		950		1,588			3,690

17

NASH FINCH COMPANY AND SUBSIDIARIES
Condensed Consolidating Balance Sheets
October 8, 2005
(in thousands)

							Non-					Nash Finch
	Nash			Guarantor			Guarantor		Consolidation			Company &
	Finch			Subsidiaries			Subsidiaries		Adjustments			Subsidiaries
Assets
Current assets:
Cash and cash equivalents	$	620			404			40		—			1,064
Accounts and notes receivable, net		137,286			64,531			143		(1,826	)		200,134
Accounts receivable (payable) subsidiaries		121,815			(123,159	)		1,344		—			—
Inventories		152,233			143,520			1,911		—			297,664
Prepaid expenses		14,396			1,697			17		—			16,110
Deferred tax assets		20,036			(3,865	)		—		—			16,171
Total current assets		446,386			83,128			3,455		(1,826	)		531,143
Investments in affiliates		200,619			—			—		(200,619	)		—
Investments in marketable securities		751			—			—		—			751
Notes receivable, net		14,591			7,762			—		—			22,353
Net property, plant and equipment		120,862			123,785			1,318		—			245,965
Goodwill		30,642			211,816			2,124		—			244,582
Customer contracts & relationships		4,272			32,433			—		—			36,705
Investment in direct financing leases		2,470			7,703			—		—			10,173
Deferred tax assets, net		—			—			—		—			—
Other assets		13,532			—			—		—			13,532
Total assets	$	834,125			466,627			6,897		(202,445	)		1,105,204
Liabilities and Stockholders’ Equity
Current liabilities:
Outstanding checks	$	12,390			—			—		—			12,390
Current maturities of long-term debt and capitalized lease obligations		1,242			2,781			314		—			4,337
Accounts payable		170,732			77,323			444		(1,826	)		246,673
Accrued expenses		71,237			8,074			291		—			79,602
Income taxes payable		7,611			(10	)		—		—			7,601
Total current liabilities		263,212			88,168			1,049		(1,826	)		350,603
Long-term debt		223,962			157,544			111		—			381,617
Capitalized lease obligations		26,167			12,003			—		—			38,170
Deferred tax liability, net		(7,971	)		11,407			—		—			3,436
Other liabilities		18,444			2,119			504		—			21,067
Stockholders’ equity		310,311			195,386			5,233		(200,619	)		310,311
Total liabilities and stockholders’ equity	$	834,125			466,627			6,897		(202,445	)		1,105,204

18

NASH FINCH COMPANY AND SUBSIDIARIES
Condensed Consolidating Balance Sheets
January 1, 2005
(in thousands)

						Non-					Nash Finch
	Nash		Guarantor			Guarantor		Consolidation			Company &
	Finch		Subsidiaries			Subsidiaries		Adjustments			Subsidiaries
Assets
Current assets:
Cash and cash equivalents	$	4,543		162			324		—			5,029
Accounts and notes receivable, net		123,431		34,354			145		(533	)		157,397
Accounts receivable (payable) subsidiaries		43,688		(45,827	)		2,139		—			—
Inventories		135,661		75,707			1,975		—			213,343
Prepaid expenses		14,061		1,460			3		—			15,524
Deferred tax assets		14,749		(5,455	)		—		—			9,294
Total current assets		336,133		60,401			4,586		(533	)		400,587
Investments in affiliates		200,619		—			—		(200,619	)		—
Investments in marketable securities		1,661		—			—		—			1,661
Notes receivable, net		18,141		8,413			—		—			26,554
Net property, plant and equipment		135,045		77,150			1,474		—			213,669
Goodwill		30,643		114,689			2,103		—			147,435
Customer contracts & relationships		4,045		14			—		—			4,059
Investment in direct financing leases		2,494		8,382			—		—			10,876
Deferred tax asset, net		12,195		(9,635	)		—		—			2,560
Other assets		8,227		—			—		—			8,227
Total assets	$	749,203		259,414			8,163		(201,152	)		815,628
Liabilities and Stockholders’ Equity
Current liabilities:
Outstanding checks	$	11,344		—			—		—			11,344
Current maturities of long-term debt and capitalized lease obligations		1,858		3,113			469		—			5,440
Accounts payable		146,548		33,783			561		(533	)		180,359
Accrued expenses		66,913		5,029			258		—			72,200
Income taxes payable		10,819		—			—		—			10,819
Total current liabilities		237,482		41,925			1,288		(533	)		280,162
Long-term debt		190,902		8,033			308		—			199,243
Capitalized lease obligations		27,092		13,268			—		—			40,360
Other liabilities		19,799		1,495			641		—			21,935
Stockholders’ equity		273,928		194,693			5,926		(200,619	)		273,928
Total liabilities and stockholders’ equity	$	749,203		259,414			8,163		(201,152	)		815,628

19

NASH FINCH COMPANY AND SUBSIDIARIES
Condensed Consolidating Balance Sheets
October 9, 2004
(in thousands)

							Non-					Nash Finch
	Nash			Guarantor			Guarantor		Consolidation			Company &
	Finch			Subsidiaries			Subsidiaries		Adjustments			Subsidiaries
Assets
Current assets:
Cash and cash equivalents	$	680			419			43		—			1,142
Accounts and notes receivable, Net		121,946			38,412			142		(791	)		159,709
Accounts receivable (payable) subsidiaries		46,115			(47,655	)		1,540		—			—
Inventories		145,581			75,707			1,856		—			223,144
Prepaid expenses		12,743			1,108			7		—			13,858
Deferred tax assets		14,538			(5,991	)		—		—			8,547
Total current assets		341,603			62,000			3,588		(791	)		406,400
Investments in affiliates		196,283			—			—		(196,283	)		—
Investments in marketable securities		1,545			—			—		—			1,545
Notes receivable, net		22,432			6,521			—		—			28,953
Net property, plant and equipment		139,262			79,380			1,415		—			220,057
Goodwill		30,643			114,829			2,103		—			147,575
Customer contracts & relationships		4,361			18			—		—			4,379
Investments in direct financing leases		2,501			8,592			—		—			11,093
Deferred tax assets, net		—			—			—		—			—
Other assets		7,253			150			—		—			7,403
Total assets	$	745,883			271,490			7,106		(197,074	)		827,405
Liabilities and Stockholders’ Equity
Current liabilities:
Outstanding checks	$	9,062			—			—		—			9,062
Current maturities of long-term debt and capitalized lease obligations		1,713			3,026			469		—			5,208
Accounts payable		158,277			38,848			470		(791	)		196,804
Accrued expenses		82,640			5,039			204		—			87,883
Income taxes payable		8,591			—			—		—			8,591
Total current liabilities		260,283			46,913			1,143		(791	)		307,548
Long-term debt		189,669			8,625			425		—			198,719
Capitalized lease obligations		27,378			13,684			—		—			41,062
Deferred tax liability, net		(8,694	)		9,573			—		—			879
Other liabilities		15,577			1,486			464		—			17,527
Stockholders’ equity		261,670			191,209			5,074		(196,283	)		261,670
Total liabilities and stockholders’ equity	$	745,883			271,490			7,106		(197,074	)		827,405

20

NASH FINCH COMPANY AND SUBSIDIARIES
Condensed Consolidating Statements of Cash Flows
Forty Weeks Ended October 8, 2005
(in thousands)

							Non-					Nash Finch
	Nash			Guarantor			Guarantor			Consolidation		Company &
	Finch			Subsidiaries			Subsidiaries			Adjustments		Subsidiaries
Operating activities:
Net cash (used in) provided by operating activities	$	(33,217	)		79,874			138			—		46,795
Investing activities:
Disposal of property, plant and equipment		9,526			1,507			—			—		11,033
Additions to property, plant and equipment		(11,918	)		(3,942	)		(70	)		—		(15,930	)
Business acquired, net of cash		(668	)		(225,683	)		—			—		(226,351	)
Loans to customers		(1,570	)		—			—			—		(1,570	)
Payments from customers on loans		3,260			500			—			—		3,760
Purchase of marketable securities		(2,064	)		—			—			—		(2,064	)
Sale of marketable securities		2,827			—			—			—		2,827
Corporate owned life insurance, net		(1,498	)		—			—			—		(1,498	)
Other		148			—			—			—		148
Net cash used in investing activities		(1,957	)		(227,618	)		(70	)		—		(229,645	)
Financing activities:
Proceeds of revolving debt		38,200			—			—			—		38,200
Dividends paid		(6,387	)		—			—			—		(6,387	)
Proceeds from exercise of stock options		9,521			—			—			—		9,521
Proceeds from employee stock purchase plan		567			—			—			—		567
Proceeds of long term debt					150,087			—			—		150,087
Payments of long-term debt		(5,935	)		(889	)		(352	)		—		(7,176	)
Payments of capitalized lease obligations		(819	)		(1,212	)		—			—		(2,031	)
Decrease in outstanding checks		1,046			—			—			—		1,046
Payment of deferred financing costs		(4,942	)		—			—			—		(4,942	)
Net cash provided by (used in) financing activities		31,251			147,986			(352	)		—		178,885
Net (decrease) increase in cash		(3,923	)		242			(284	)		—		(3,965	)
Cash at beginning of year		4,543			162			324			—		5,029
Cash at end of year	$	620			404			40			—		1,064

21

NASH FINCH COMPANY AND SUBSIDIARIES
Condensed Consolidating Statements of Cash Flows
Forty Weeks Ended October 9, 2004
(in thousands)

							Non-					Nash Finch
	Nash			Guarantor			Guarantor			Consolidation		Company &
	Finch			Subsidiaries			Subsidiaries			Adjustments		Subsidiaries
Operating activities:
Net cash provided by operating activities	$	91,489			3,729			97			—		95,315
Investing activities:
Disposal of property, plant and equipment		6,360			4,580			—			—		10,940
Additions to property, plant and equipment		(11,958	)		(2,724	)		(66	)		—		(14,748	)
Loans to customers		(3,113	)		—			—			—		(3,113	)
Payments from customers on loans		2,404			100			—			—		2,504
Purchase of marketable securities		(2,583	)		—			—			—		(2,583	)
Sale of marketable securities		1,113			—			—			—		1,113
Other		(55	)		—			—			—		(55	)
Net cash (used in) provided by investing activities		(7,832	)		1,956			(66	)		—		(5,942	)
Financing activities:
Payments of bank credit facility debt		(81,100	)		—			—			—		(81,100	)
Dividends paid		(4,985	)		—			—			—		(4,985	)
Proceeds from exercise of stock options		2,888			—			—			—		2,888
Proceeds from employee stock purchase plan		654			—			—			—		654
Payments of long-term debt		(969	)		(899	)		(352	)		—		(2,220	)
Payments of capitalized lease obligations		(719	)		(1,218	)		—			—		(1,937	)
Decrease in outstanding checks		(10,928	)		(3,360	)		—			—		(14,288	)
Net cash used in financing activities		(95,159	)		(5,477	)		(352	)		—		(100,988	)
Net (decrease) increase in cash		(11,502	)		208			(321	)		—		(11,615	)
Cash at beginning of year		12,182			211			364			—		12,757
Cash at end of year	$	680			419			43			—		1,142

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

     We are the second largest publicly traded wholesale food distribution company in the United States. Our business consists of three primary operating segments: food distribution, military food distribution and food retailing. The four cornerstones of our strategy are to (i) take advantage of new business opportunities with new and existing food distribution customers to strengthen our position as one of the leading wholesale choices; (ii) increase our market position as a leading military food distributor and extend our customer base and product offerings; (iii) improve returns from our existing retail operations; and (iv) drive shareholder value through debt reduction and return of cash to shareholders through regular dividend payments. In addition, we may from time to time identify and evaluate acquisition opportunities in our food distribution and military food distribution segments to the extent we believe such opportunities present strategic benefits to those segments and can be achieved in a cost-effective manner

     Our food distribution segment sells and distributes a wide variety of nationally branded and private label products to independent grocery stores and other customers primarily in the Midwest and Southeast regions of the United States. On March 31, 2005 we completed the purchase from Roundy’s of the net assets, including customer contracts, of Roundy’s wholesale food distribution divisions in Westville, Indiana and Lima, Ohio and two retail stores in Ironton, Ohio and Van Wert, Ohio for approximately $225.7 million, subject to customary post-closing adjustments. The Westville and Lima divisions represent approximately $1.0 billion in annual food distribution sales, servicing over five hundred customers principally in Indiana, Illinois, Ohio and Michigan. No facility closures are expected given the strategic fit of these distribution centers into the Nash Finch network. To finance this acquisition, we sold $150.1 million in aggregate gross proceeds of senior subordinated convertible notes due 2035, borrowed $70 million under the revolving credit portion of our senior secured credit facility and used cash on hand.

     We believe the acquisition of the Lima and Westville divisions provides a uniquely valuable strategic opportunity for us to further leverage our existing relationships in the regions in which these divisions operate and to grow our food distribution business in a cost-effective manner. The demands of integrating this acquisition have, however, diverted attention and resources from our day-to-day operational execution and made us less aggressive in managing our core business, as discussed below. In addition, some elements of the logistical and technical integration have fallen behind schedule, necessitating the shift of additional resources to those tasks. In combination, these factors have temporarily affected margins and delayed the realization of the financial benefit of the synergies inherent in this acquisition.

     Our military food distribution segment contracts with vendors to distribute a wide variety of grocery products to military commissaries located primarily in the Mid-Atlantic region of the United States, and in Europe, Cuba, Puerto Rico, Iceland and the Azores. We are the largest distributor of grocery products to U.S. military commissaries, with over 30 years of experience acting as a distributor to U.S. military commissaries.

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     Our retail segment operated 80 corporate-owned stores primarily in the Upper Midwest as of October 8, 2005. Predominantly due to intensely competitive conditions, same store sales in our retail business have declined since 2002, although the declines have moderated in more recent periods. We have taken and expect to take initiatives of varying scope and duration to improve our response to and performance under these difficult competitive conditions. To complement these initiatives, we completed during the second quarter of 2004 a strategic review that identified certain retail stores that did not meet return objectives, provide long-term strategic opportunities or justify additional capital investments. Consequently, we closed or sold 18 stores at the end of the second quarter of 2004. We continue to evaluate and assess strategic alternatives for retail stores that do not provide attractive returns. As a result of this process, we closed or sold ten additional stores since the second quarter of 2004. As we continue to assess the impact of performance improvement initiatives and the operating results of individual stores, we may have to recognize additional impairments of long-lived assets and an impairment of goodwill associated with our retail segment. In addition, we may be compelled to close or sell additional retail stores, and may incur restructuring or other charges in connection with such closure or sales activities.

     During the third quarter of 2005, Ron Marshall, our chief executive officer and a member of our Board of Directors, advised us that he will resign as of March 2, 2006 from those positions. The Board has formed a search committee and retained an executive search firm to assist it in identifying suitable candidates for Mr. Marshall’s replacement.

Results of Operations

     The following discussion compares our operating results for the sixteen and forty weeks ended October 8, 2005 and the sixteen and forty weeks ended October 9, 2004.

Sales

     The following tables summarize our sales activity for the sixteen weeks ended October 8, 2005 compared to the sixteen weeks ended October 9, 2004 (dollars in millions):

	2005								2004
			Percent			Percent					Percent
Segment sales:	Sales		of Sales			Change			Sales		of Sales
Food Distribution	$	886.3		60.5	%		45.1	%	$	610.9		51.3	%
Military		353.5		24.1	%		4.4	%		338.5		28.4	%
Retail		225.0		15.4	%		(7.0	)%		241.8		20.3	%
Total Sales	$	1,464.8		100.0	%		23.0	%	$	1,191.2		100.0	%

     The following tables summarize our sales activity for the forty weeks ended October 8, 2005 compared to the forty weeks ended October 9, 2004 (dollars in millions):

	2005								2004
			Percent			Percent					Percent
Segment sales:	Sales		of Sales			Change			Sales		of Sales
Food Distribution	$	1,984.4		57.8	%		33.1	%	$	1,491.2		50.1	%
Military		884.8		25.8	%		4.4	%		847.3		28.5	%
Retail		563.1		16.4	%		(11.8	)%		638.5		21.4	%
Total Sales	$	3,432.3		100.0	%		15.3	%	$	2,977.0		100.0	%

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     The increase in food distribution sales for the sixteen and forty weeks ended October 8, 2005 was primarily due to the acquisition of the Lima and Westville divisions, which added $244.2 million and $429.0 million, or 88.6% and 87.0% of the sales increase, respectively. The remainder of the sales increase was primarily related to new accounts, partially offset by customer attrition.

     The increase in military segment sales for the sixteen and forty weeks ended October 8, 2005 over the comparable 2004 periods, was largely due to increases in domestic commissary customer traffic.

     The decrease in retail sales for the sixteen and forty weeks ended October 8, 2005 as compared to the 2004 periods is attributable to the store closures during 2004, seven additional stores closed during first three quarters of 2005 and a decline in same store sales. Same store sales, which compare retail sales for stores which were in operation for the same number of weeks in the comparative periods, decreased 4.9% and 4.5% for the sixteen and forty weeks ended October 8, 2005, respectively. These declines continue to reflect a difficult competitive environment in which supercenters and other alternative formats compete for price conscious consumers.

     During the sixteen and forty weeks ended October 8, 2005 our corporate store count changed as follows:

	Sixteen Weeks			Forty Weeks
Number of stores at beginning of period		84			85
Closed or sold stores		(4	)		(7	)
Number of new stores		—			2
Number of stores at end of period		80			80

Gross Profit

     Gross profit (calculated as sales less cost of sales) for the sixteen weeks ended October 8, 2005 was 9.0% of sales compared to 10.7% of sales for the same sixteen week period last year, and was 9.5% of sales for the forty weeks ended October 8, 2005 compared to 10.9% for the same forty week period last year. The decline in gross profit was primarily due to a higher percentage of 2005 sales in food distribution and military as opposed to retail, which historically has a higher gross profit margin. Our gross profit margins in 2005 were also adversely affected by declines in the food distribution and retail segments, reflecting depressed profit margins principally relating to the management of manufacturer promotional spending and inadequate execution in pricing across our retail operations, as well as an increase in unallocated corporate overhead that was also related to management of manufacturer promotional spending. The gross margins in each of these segments were negatively affected by the increased attention given to the integration of the Lima and Westville divisions, which diverted attention from our core business operations. Gross profit also included a decrease in LIFO expense of $1.3 million and $1.0 million for the sixteen and forty weeks ended October 8, 2005 compared to the same periods last year. In addition, gross profit for the forty weeks ended October 9, 2004 was also adversely affected by additional costs of $3.3 million, primarily resulting from inventory markdowns related to our second quarter 2004 store closures.

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Selling, General and Administrative Expenses

     Selling, general and administrative expenses (SG&A) for the sixteen and forty weeks ended October 8, 2005 were 6.3% and 6.7% of sales compared to 7.1% and 7.7% of sales for the same periods last year. This decrease in SG&A expenses as a percentage of sales primarily reflected the fact that our retail segment, which has higher SG&A expenses than our food distribution and military distribution segments, represented a smaller percentage of our total sales in the 2005 periods.

     The improvement in SG&A expense ratios in the 2005 periods was partially offset by impairment charges of $1.7 million and $4.3 million, increased provision for bad debts of $1.5 million and $1.1 million, and decreased gains on the sale of real estate of $2.7 million and $2.3 million for the sixteen and forty weeks ended October 8, 2005, respectively. The impairment charges relate to stores which were determined to be impaired as a result of increased competition within their market areas. The estimated undiscounted cash flows related to these facilities indicated that the carrying value of the assets may not be recoverable based on current expectations, causing these assets to be written down to their estimated fair value in accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.”

Special Charge

     During the second quarter of 2004, we completed a strategic review that identified certain retail stores that did not meet return objectives, provide long-term strategic opportunities or justify additional capital investments. Consequently, we closed or sold 18 stores and sought purchasers for our three Denver area AVANZA stores. As a result of these actions, we recorded in the second quarter of 2004 a pre-tax special charge of $36.5 million which is reflected in the “Special charge” line within the consolidated statements of income, and $3.3 million of costs reflected in operating earnings, primarily involving inventory markdowns related to the store closures. During the fourth fiscal quarter of 2004, we recorded a net reversal of $1.6 million of the special charge because we were able to settle five leases for less than initially estimated and adjusted the estimate needed on four other properties for which more current market information was available.

     During the second fiscal quarter of 2005, we decided to continue to operate the three Denver AVANZA stores and therefore recorded a reversal of $1.5 million of the special charge related to the stores, partially offset by a $0.2 million change in estimate for one other property.

Depreciation and Amortization Expense

     Depreciation and amortization expense increased by $2.7 million and $1.8 million for the sixteen and forty week periods ended October 8, 2005, respectively, as compared to the same periods last year. The increases were primarily caused by the increased depreciation and amortization expense related to the acquisition of the Lima and Westville divisions. See Note 2 for further information regarding the purchase price allocation of this acquisition.

Interest Expense

     Interest expense decreased $0.5 million to $7.9 million for the sixteen weeks ended October 8, 2005 as compared to $8.4 million for the same period last year. The decrease was largely due to a decrease in our effective interest rate from 8.6% for the sixteen weeks ended October 9, 2004 to 5.5% for the sixteen weeks ended October 8, 2005. The decrease in our effective interest rate was primarily due to the impact of interest rate swaps, fourth quarter 2004 redemption of $165 million in outstanding principal amount of our 8.5% Senior Subordinated Notes due 2008 and the first quarter 2005 issuance

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of $150.1 million aggregate issue price of 3.5% senior subordinated convertible notes due 2035. The effect of the decrease in our effective rate was partially offset by an increase in the average borrowing levels from $293.8 million for the sixteen weeks ended October 9, 2004 to $439.8 million for the sixteen weeks ended October 8, 2005.

     For the forty weeks ended October 8, 2005, interest expense decreased $3.1 million to $18.7 million as compared to $21.8 million for the same period last year. The decrease was largely due to a decrease in the effective interest rate from 8.1% for the forty weeks ended October 9, 2004 to 5.6% for the forty weeks ended October 8, 2005 because of the impact of interest rate swaps and changes in the composition of our debt as discussed above. The effect of the decrease in our effective rate was partially offset by an increase in the average borrowing levels from $330.7 million for the forty weeks ended October 9, 2004 to $394.6 million for the forty weeks ended October 8, 2005 and by the payment of a $0.75 million bridge loan fee during the second quarter of 2005 in connection with arrangement of our financing for the acquisition of the Lima and Westville divisions.

Income Taxes

     Income tax expense is provided on an interim basis using management’s estimate of the annual effective rate. The effective income tax rate was 39.0% for the sixteen and forty weeks ended October 8, 2005, compared to 35.5% and 22.1% for the sixteen and forty weeks ended October 9, 2004, respectively. During the third quarter of 2004, we recognized a reduction in income taxes of $0.8 million as a result of the resolution of various outstanding state and federal tax issues.

Net Earnings

     Net earnings for the sixteen weeks ended October 8, 2005 were $11.0 million, or $0.83 per diluted share, compared to $14.6 million, or $1.15 per diluted share for the sixteen weeks ended October 9, 2004. Net earnings for the forty weeks ended October 8, 2005 were $27.8 million, or $2.12 per diluted share, compared to net earnings of $3.7 million, or $0.29 per diluted share for the forty weeks ended October 9, 2004. Net earnings for the sixteen and forty week periods ending October 8, 2005 and October 9, 2004 were affected by events included in the discussion above that affected the comparability of results. The significant events are summarized as follows:

	Sixteen Weeks Ended				Sixteen Weeks Ended
	October 8, 2005				October 9, 2004
	Amount		Diluted		Amount			Diluted
	(in 000s)		EPS		(in 000s)			EPS
Net earnings as reported	$	11,041		0.83		14,598			1.15
Items affecting earnings
Reduction in income tax expense		—		—		(800	)		(0.06	)

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	Forty Weeks Ended						Forty Weeks Ended
	October 8, 2005						October 9, 2004
	Amount			Diluted			Amount			Diluted
	(in 000s)			EPS			(in 000s)			EPS
Net earnings as reported	$	27,756			2.12			3,690			0.29
Items affecting earnings
Special charge		(791	)		(0.06	)		22,262			1.77
Store closure cost reflected in operations		—			—			2,009			0.16
Bridge loan fee		457			0.03			—			—
Reduction in income tax expense		—			—			(800	)		(0.06	)

Liquidity and Capital Resources

     Historically, we have financed our capital needs through a combination of internal and external sources. For the remainder of fiscal 2005, and after giving effect to the additional borrowings necessary to effect the acquisition of the Business, we expect that cash flow from operations will be sufficient to meet our working capital needs and enable us to reduce our debt, with temporary draws on our revolving credit line needed during the year to build inventories for certain holidays. Longer term, we believe that cash flows from operations, short-term bank borrowings, various types of long-term debt and lease and equity financing will be adequate to meet our working capital needs, planned capital expenditures and debt service obligations.

     Operating cash flows were $46.8 million for the forty weeks ended October 8, 2005, a decrease of $48.5 million from $95.3 million the forty weeks ended October 9, 2004. The primary reasons for the decrease in operating cash flows for the forty weeks ended October 8, 2005 as compared to the same period last year were a decrease in net earnings, net of the impact of the special charge, and an increase of $40.3 million in inventory primarily because of new business and the integration of the Lima and Westville divisions. Net earnings and special charges were $27.7 million and $(1.3) million, respectively for the forty weeks ended October 8, 2005 compared to $3.7 million and $36.5 million for the forty weeks ended October 9, 2004.

     Cash used for investing activities increased by $223.7 million to $229.6 million for the forty weeks ended October 8, 2005 as compared to $5.9 million for the same period last year, primarily because of the acquisition of the Lima and Westville divisions.

     Cash provided by financing activities was $178.9 million for the forty weeks ended October 8, 2005 as compared to cash used for financing activities of $101.0 million during the same period last year. Financing activities for the forty weeks ended October 8, 2005 primarily included proceeds from the previously described private placement of $150.1 million in aggregate issue price of senior subordinated convertible notes and net receipts from revolving debt of $38.2 million to finance the acquisition. Net payments of $81.1 million were made on the senior secured credit facility for the forty weeks ended October 9, 2004. At October 8, 2005, credit availability under the senior secured credit facility was $57.2 million.

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Senior Secured Credit Facility

     Our senior secured bank credit facility consists of $125 million in revolving credit, all of which may be used for loans and up to $40 million of which may be used for letters of credit, and a $175 million Term Loan B. Borrowings under the facility bear interest at either the Eurodollar rate or the prime rate, plus in either case a margin spread that is dependent on our total leverage ratio. The revolving credit portion of the facility has a five year term and the Term Loan B has a six year term. We pay a commitment commission on the unused portion of the revolver. On February 22, 2005, we entered into a First Amendment to our credit facility permitting us to enter into the asset purchase agreement with Roundy’s and to close and finance the acquisition of the Lima and Westville divisions.

     Our senior secured credit facility represents one of our primary sources of liquidity, both short-term and long-term, and the continued availability of credit under that facility is of material importance to our ability to fund our capital and working capital needs. The credit agreement governing the credit facility contains various restrictive covenants, compliance with which is essential to continued credit availability. Among the most significant of these restrictive covenants are financial covenants which require us to maintain predetermined ratio levels related to interest coverage and leverage. These ratios are based on EBITDA, on a rolling four quarter basis, with some adjustments (“Consolidated EBITDA”). Consolidated EBITDA is a non-GAAP financial measure that is defined in our bank credit agreement as earnings before interest, income taxes, depreciation and amortization, adjusted to exclude extraordinary gains or losses, gains or losses from sales of assets other than inventory in the ordinary course of business, upfront fees and expenses incurred in connection with the execution and delivery of the credit agreement, and non-cash charges (such as LIFO charges, closed store lease costs and asset impairments), less cash payments made during the current period on non-cash charges recorded in prior periods. In addition, for purposes of determining compliance with prescribed leverage ratios and adjustments in the credit facility’s margin spread and commitment commission, Consolidated EBITDA is calculated on a pro forma basis that takes into account all permitted acquisitions, such as the acquisition of the Lima and Westville divisions that have occurred since the beginning of the relevant four quarter computation period. Consolidated EBITDA should not be considered an alternative measure of our net income, operating performance, cash flow or liquidity. It is provided as additional information relative to compliance with our debt covenants.

     As of October 8, 2005, we were in compliance with all financial covenants as defined in our credit agreement which are summarized as follows:

Financial Covenant	Required Ratio	Actual Ratio
Interest Coverage Ratio (1)	3.50:1.00 (minimum)	5.74:1.00
Leverage Ratio (2)	3.50:1.00 (maximum)	2.81:1.00
Senior Secured Leverage Ratio (3)	2.75:1.00 (maximum)	1.48:1.00
Working Capital Ratio (4)	1.50:1.00 (minimum)	2.25:1.00

(1)	Ratio of Consolidated EBITDA for the trailing four quarters to interest expense for such period.
(2)	Total outstanding debt to Consolidated EBITDA for the trailing four quarters.
(3)	Total outstanding senior secured debt to Consolidated EBITDA for the trailing four quarters.
(4)	Ratio of net trade accounts receivable plus inventory to the sum of loans and letters of credit outstanding under the new credit agreement plus certain additional secured debt.

     Any failure to comply with any of these financial covenants would constitute an event of default under the bank credit agreement, entitling a majority of the bank lenders to, among other things, terminate future credit availability under the agreement and accelerate the maturity of outstanding obligations under that agreement.

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     The following is a summary of the calculation of Consolidated EBITDA (in thousands) for the trailing four quarters ended October 8, 2005 and October 9, 2004:

	2004			2005			2005			2005			Rolling 4
	Qtr 4			Qtr 1			Qtr 2			Qtr 3			Qtr.
Earnings before income taxes	$	14,461			11,361			16,041			18,100			59,963
Interest expense		5,369			4,187			6,578			7,919			24,053
Depreciation and amortization		8,670			8,374			10,614			14,357			42,015
LIFO		1,307			577			828			(229	)		2,483
Closed store lease costs		3,211			178			—			216			3,605
Asset impairments		853			458			2,089			1,772			5,172
Gains on sale of real estate		(2,173	)		—			(541	)		(556	)		(3,270	)
Subsequent cash payments on non-cash charges		(693	)		(1,375	)		(652	)		(752	)		(3,472	)
Extinguishment of debt		7,204			—			—			—			7,204
Special charge		(1,715	)		—			(1,296	)		—			(3,011	)
Total Consolidated EBITDA	$	36,494			23,760			33,661			40,827			134,742

	2003			2004			2004			2004			Rolling 4
	Qtr 4			Qtr 1			Qtr 2			Qtr 3			Qtr
Earnings (loss) before income taxes	$	20,572			7,757			(25,639	)		22,620			25,310
Interest expense		7,226			6,706			6,677			8,429			29,038
Depreciation and amortization		10,232			10,156			9,800			11,615			41,803
LIFO		(1,961	)		392			783			1,043			257
Closed store lease costs		187			(129	)		1,146			643			1,847
Asset impairments		591			—			—			—			591
Gains on sale of real estate		(338	)		(82	)		(14	)		(3,317	)		(3,751	)
Subsequent cash payments on non-cash charges		(598	)		(565	)		(625	)		(1,633	)		(3,421	)
Special charge		—			—			36,494			—			36,494
Curtailment of post retirement plan		(4,004	)		—			—			—			(4,004	)
Total Consolidated EBITDA	$	31,907			24,235			28,622			39,400			124,164

     The credit agreement also contains covenants that limit our ability to incur debt (including guaranteeing the debt of others) and liens, acquire or dispose of assets, pay dividends on and repurchase our stock, make capital expenditures and make loans or advances to others, including customers.

Derivative Instruments

     We have market risk exposure to changing interest rates primarily as a result of our borrowing activities. Our objective in managing our exposure to changes in interest rates is to reduce fluctuations in earnings and cash flows. To achieve these objectives, we use derivative instruments, primarily interest rate swap agreements, to manage risk exposures when appropriate, based on market conditions. We do not enter into derivative agreements for trading or other speculative purposes, nor are we a party to any leveraged derivative instrument.

     The interest rate swap agreements are designated as cash flow hedges and are reflected at fair value in our consolidated balance sheet and the related gains or losses on these contracts are deferred in stockholders’ equity as a component of other comprehensive income. Deferred gains and losses are amortized as an adjustment to expense over the same period in which the related items being hedged are recognized in income. However, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the items being hedged, any changes in fair value relating to the ineffective portion of these contracts are immediately recognized in income.

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     Interest rate swap agreements are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. At October 8, 2005, we had seven outstanding interest rate swap agreements which call for an exchange of interest payments with us making payments based on fixed rates for the respective time intervals and receiving payments based on floating rates, without an exchange of the notional amount upon which the payments are based. The agreements commenced and expire as follows (dollars in thousands):

Notional		Effective Date	Termination Date	Fixed Rate
$	50,000	12/13/2004	12/13/2005	2.985	%
	40,000	12/13/2004	12/13/2005	3.010	%
	50,000	12/13/2004	12/13/2005	2.992	%
	45,000	12/13/2005	12/13/2006	3.809	%
	20,000	12/13/2005	12/13/2006	3.825	%
	20,000	12/13/2006	12/13/2007	4.095	%
	30,000	12/13/2006	12/13/2007	4.100	%

     We are also using commodity swap agreements to reduce price risk associated with anticipated purchases of diesel fuel. The outstanding commodity swap agreements hedge approximately 35% of our expected fuel usage for the periods set forth in the swap agreements. At October 8, 2005, we had two outstanding commodity swap agreements which commenced and expire as follows:

Notional	Effective Date	Termination Date	Fixed Rate
100,000 gallons/month	12/7/2004	11/30/2006	$	1.18
100,000 gallons/month	1/1/2005	12/31/2006	$	1.16

Off-Balance Sheet Arrangements

     As of the date of this report, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

     The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience, consultation with experts and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that may not be readily apparent from other sources.

     An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our financial statements. We consider the accounting policies discussed under the caption “Critical Accounting Policies” in Part II, Item 7 of our Form 10-K for the year ended January 1, 2005 to be critical in that materially different amounts could be reported under different conditions or using different assumptions.

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     Any effects on our business, financial position or results of operations resulting from revised estimates or different assumptions are recorded in the period in which the facts that give rise to the revision become known.

Forward Looking Information and Cautionary Factors

     This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding the Company contained in this report that are not historical in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “likely,” “expects,” “anticipates,” “estimates,” “believes” or “plans,” or comparable terminology, are forward-looking statements based on current expectations and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Important factors known to us that could cause material differences include the following:

• the effect of competition on our distribution, military and retail businesses;

• our ability to identify and execute plans to increase or preserve the value of our remaining retail operations;

• our ability to identify and execute plans to expand our wholesale operations;

• general sensitivity to economic conditions;

• risks entailed by acquisitions, including the ability to successfully integrate acquired operations and retain the customers of those operations;

• changes in the nature of vendor promotional programs and the allocation of funds among the programs;

• credit risk from financial accommodations extended to customers;

• limitations on financial and operating flexibility due to debt levels and debt instrument covenants;

• future changes in market interest rates;

• changes in consumer spending, buying patterns or food safety concerns;

• adverse determinations or developments with respect to litigation, other legal proceedings or the SEC investigation discussed in Part I, Item 3 of our Annual Report on Form 10-K for the fiscal year ended January 1, 2005;

• unanticipated problems with product procurement;

• the success or failure of new business ventures or initiatives; and

• possible changes in the military commissary system.

     A more detailed discussion of these factors is contained in Part I, Item 3 of our Annual Report on Form 10-K for the fiscal year ended January 1, 2005 and in Part I, Item 2 of our Quarterly Report on Form 10-Q for the twelve weeks ended June 18, 2005. You should carefully consider each cautionary factor and all of the other information in this report. We undertake no obligation to revise or update publicly any forward-looking statements. You are advised, however to consult any future disclosures we make on related subjects in future reports to the SEC.

New Accounting Standards

     In December 2004, the FASB issued SFAS 123(R) (Revised 2004), “Share-Based Payment.” The revisions to SFAS No 123 require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS 123(R) replaces FASB SFAS 123, “Accounting for Stock Based

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Compensation,” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” For public entities, the provisions of the statement are effective as of the beginning of the first annual reporting period that begins after June 15, 2005, however early adoption is allowed. We expect to adopt the provisions of the new statement in the first quarter of fiscal 2006 and do not expect the impact on net income on a full year basis will be significantly different from the historical pro forma impacts as previously disclosed in the “Stock Option Plans” policy description in Part II, Item 8 in our January 1, 2005 Form 10-K under Note (1) — “Summary of Significant Accounting Policies,” and under Note 4 discussed above.

     On March 29, 2005 the SEC issued Staff Accounting Bulletin (SAB) 107 to provide guidance in applying the provisions of SFAS No. 123(R). The SAB describes SEC expectations in determining assumptions that underlie the fair value estimates. The provisions of the SAB are not expected to result in significant differences between compensation expense recognized upon adoption of SFAS 123(R) and the pro forma impacts as previously disclosed in the “Stock Option Plans” policy description in Part II, Item 8 in our January 1, 2005 Form 10-K under Note (1) — “Summary of Significant Accounting Policies,” and under Note 4 discussed above.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We have market risk exposure to changing interest rates primarily as a result of our borrowing activities. We use interest rate swap agreements to manage our risk exposure (See Part II, Item 7 of our January 1, 2005 Form 10-K and Part I, Item 2 of this report under the caption “Liquidity and Capital Resources”).

ITEM 4. CONTROLS AND PROCEDURES

     Management of the Company, with the participation and under the supervision of the Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this quarterly report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report to provide reasonable assurance that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms. There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) The following table summarizes purchases of Nash Finch common stock by the trustee of the Nash Finch Company Director Deferred Compensation Plan Trust during the third quarter 2005. All such purchases reflect the reinvestment by the trustee of dividends paid during the third quarter of 2005 on shares of the Company’s common stock held in the Trust in accordance with the requirements of the trust agreement.

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					(c)			(d)
					Total number of			Maximum number (or
	(a)				shares purchased as			approximate dollar value) of
	Total number		(b)		part of publicly			shares that may yet be
	of shares		Average price		announced plans or			purchased under plans or
Period	purchased		paid per share		programs			programs
Period 7 (June 19 to July 16, 2005)		600	$	36.82		(1	)		(1	)
Period 8 (July 17 to August 13, 2005)		—		—		—			—
Period 9 (August 14 to September 10, 2005)		—		—		—			—
Period 10 (September 11 to October 8, 2005)		—		—		—			—
Total		600	$	36.82		(1	)		(1	)

(1) The Nash Finch Company Deferred Compensation Plans Trust Agreement requires that dividends paid on Company common stock held in the Trust be reinvested in additional shares of such common stock.

ITEM 5. OTHER INFORMATION

     During the third quarter of 2005, Bruce Cross, formerly the Company’s Senior Vice President, Business Transformation, was promoted to Executive Vice President, Merchandising, replacing James Patitucci who has left the Company. Michael Lewis, formerly Executive Vice President, Retail Strategy, resigned from the Company effective October 28, 2005.

ITEM 6. EXHIBITS

Exhibits filed or furnished with this Form 10-Q:

Exhibit
No.	Description
10.1	Summary Sheet of Salary Actions Affecting Named Executive Officers.
10.2	Form of Executive Retention Letter Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 21, 2005 (File No. 0-785)).
31.1	Rule 13a-14(a) Certification of the Chief Executive Officer.
31.2	Rule 13a-14(a) Certification of the Chief Financial Officer.
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer (furnished herewith).

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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 10, 2005	By	/s/ Ron Marshall
	Ron Marshall
	Chief Executive Officer
Date: November 10, 2005	By	/s/ LeAnne M. Stewart
	LeAnne M. Stewart
	Senior Vice President and Chief Financial Officer

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NASH FINCH COMPANY

EXHIBIT INDEX TO QUARTERLY REPORT
ON FORM 10-Q

For the Sixteen Weeks Ended October 8, 2005

Exhibit No.	Item	Method of Filing
10.1	Summary Sheet of Salary Actions Affecting Named Executive Officers.	Filed electronically herewith (E)
10.2	Form of Executive Retention Letter Agreement	Incorporated by reference
31.1	Rule 13a-14(a) Certification of the Chief Executive Officer.	E
31.2	Rule 13a-14(a) Certification of the Chief Financial Officer.	E
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer.	Furnished electronically herewith

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EX-10.1

Exhibit 10.1

SUMMARY SHEET OF SALARY ACTIONS AFFECTING
NAMED EXECUTIVE OFFICERS

On July 18, 2005, the Compensation Committee of the Board of Directors of Nash-Finch Company reviewed officer compensation and approved increases in annual base salaries for the following named executive officers:

	Previous		New
Named Executive Officer(1)	Base Salary		Base Salary
Bruce A. Cross	$	270,000	$	300,000	(2)
Senior Vice President, Business Transformation
Kathleen E. McDermott	$	285,000	$	295,000
Senior Vice President, General Counsel & Secretary

(1)	No changes were made to the annual base salaries for Ron Marshall, Chief Executive Officer, James M. Patitucci, Executive Vice President, Merchandising and Marketing, and Michael J. Lewis, Executive Vice President, Retail Strategy.
(2)	As reported in a Current Report on Form 8-K filed August 15, 2005, Mr. Cross’ annual base salary was subsequently increased to $315,000 effective August 10, 2005 in connection with his promotion to Executive Vice President, Merchandising.

EX-31.1

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION OF THE
CHIEF EXECUTIVE OFFICER

I, Ron Marshall, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Nash Finch Company for the sixteen and forty weeks ended October 8, 2005;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2005

By:	/s/ Ron Marshall
Name: Ron Marshall
Title: Chief Executive Officer

EX-31.2

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION OF THE
CHIEF FINANCIAL OFFICER

I, LeAnne M. Stewart, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Nash Finch Company for the sixteen and forty weeks ended October 8, 2005;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2005

By:	/s/ LeAnne M. Stewart
Name: LeAnne M. Stewart
Title: Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION OF THE CHIEF EXCECUTIVE
OFFICER AND CHIEF FINANCIAL OFFICER

In connection with the Quarterly Report on Form 10-Q of Nash Finch Company, (the “Company”) for the period ended October 8, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Ron Marshall and LeAnne M. Stewart, Chief Executive Officer and Senior Vice President and Chief Financial Officer, respectively, of the Company, certify, pursuant to 18. U.S.C. Section 1350, that to our knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: November 10, 2005

By:	/s/ Ron Marshall
Name: Ron Marshall
Title: Chief Executive Officer
By:	/s/ LeAnne M. Stewart
Name: LeAnne M. Stewart
Title: Senior Vice President and Chief Financial Officer