Prepared by MERRILL CORPORATION

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
	For the forty weeks ended October 6, 2001

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

Commission File No. 0-785

NASH-FINCH COMPANY

(Exact Name of Registrant as Specified in its Charter)

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

7600 France Ave. South, Edina, Minnesota		55435
(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 ý

NO o

As of November 9, 2001, 11,745,075 shares of Common Stock of the Registrant were outstanding.

PART I - FINANCIAL INFORMATION

This report is for the forty week interim period beginning December 31, 2000, through October 6, 2001.

The accompanying unaudited condensed 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. In the opinion of management, all adjustments necessary to a fair presentation have been included.

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 December 30, 2000.

NASH FINCH COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (unaudited)

(In thousands, except per share amounts)

	Sixteen Weeks Ended			Forty Weeks Ended
	October 6,		October 7,	October 6,	October 7,
	2001		2000	2001	2000

Total sales and revenues	$	1,274,843	1,204,533	3,129,341	2,987,702

Cost and expenses:
Cost of sales	1,136,018		1,071,528	2,780,338	2,656,039
Selling, general and administrative	103,894		101,417	261,937	253,320
Depreciation and amortization	14,139		13,992	35,417	33,896
Interest expense	10,472		10,628	26,759	26,001
Total costs and expenses	1,264,523		1,197,565	3,104,451	2,969,256

Earnings before income taxes	10,320		6,968	24,890	18,446

Income taxes	4,272		2,954	10,304	7,821

Net earnings	$	6,048	4,014	14,586	10,625


Basic earnings per share:	$	0.52	0.35	1.26	0.93

Diluted earnings per share:	0.50		0.35	1.23	0.93

Weighted average number of common shares outstanding and common equivalent shares outstanding:
Basic	11,684		11,471	11,599	11,433
Diluted	12,065		11,476	11,889	11,438

See accompanying notes to condensed consolidated financial statements.

NASH FINCH COMPANY AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

	October 6,			December 30,
	2001			2000
	(unaudited)
Assets
Current assets:
Cash	$	22,844		1,534
Accounts and notes receivable, net	134,717			132,992
Inventories	290,565			270,481
Prepaid expenses	12,082			11,920
Deferred tax assets	12,103			16,612
Total current assets	472,311			433,539

Investments in affiliates	725			588
Notes receivable, net	35,936			31,866

Property, plant and equipment:
Land	27,067			23,002
Buildings and improvements	162,974			135,250
Furniture, fixtures and equipment	312,679			311,199
Leasehold improvements	67,055			74,591
Construction in progress	3,202			6,416
Assets under capitalized leases	40,860			36,993
	613,837			587,451
Less accumulated depreciation and amortization	(340,761		)	(330,935	)
Net property, plant and equipment	273,076			256,516


Goodwill, net	138,103			113,584
Investment in direct financing leases	13,721			14,372
Deferred tax asset, net	9,293			9,810
Other assets	26,788			20,553
Total assets	$	969,953		880,828

Liabilities and Stockholders' Equity
Current liabilities:
Outstanding checks	$	17,640		52,042
Current maturities of long-term debt and capitalized lease obligations	5,666			4,646
Accounts payable	271,448			188,682
Accrued expenses	93,629			66,016
Income taxes	12,149			13,400
Total current liabilities	400,532			324,786

Long-term debt	308,445			308,618
Capitalized lease obligations	47,588			45,046
Other liabilities	13,926			17,838
Stockholders' equity:
Preferred stock - no par value
Authorized 500 shares; none issued	-			-
Common stock of $1.66 2/3 par value
Authorized 25,000 shares, issued 11,818 and 11,711 shares, respectively	19,697			19,518
Additional paid-in capital	21,713			18,564
Restricted stock	-			(10	)
Accumulated other comprehensive income	(637		)	-
Retained earnings	159,694			148,254
	200,467			186,326
Less cost of 73 and 226 shares of common stock in treasury, respectively	(1,005		)	(1,786	)
Total stockholders' equity	199,462			184,540

Total liabilities and stockholders' equity	$	969,953		880,828

See accompanying notes to condensed consolidated financial statements.

NASH FINCH COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Forty Weeks Ended
	October 6,			October 7,
	2001			2000
Operating activities:
Net earnings	$	14,586		10,625
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	35,417			33,896
Provision for bad debts	3,763			5,702
Deferred income tax expense	6,052			2,415
Other	564			(757	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts and notes receivable	(2,619		)	30,635
Inventories	(18,725		)	(17,936	)
Prepaid expenses	8,876			(493	)
Accounts payable	79,827			13,370
Accrued expenses	18,842			(9,905	)
Income taxes	(545		)	1,869
Net cash provided by operating activities	146,038			69,421

Investing activities:
Disposal of property, plant and equipment	4,161			10,940
Additions to property, plant and equipment	(30,516		)	(40,466	)
Business acquired, net of cash	(46,904		)	(19,890	)
Loans to customers	(11,798		)	(26,378	)
Payments from customers on loans	6,961			10,230
Sale (repurchase) of receivables	675			(7,245	)
Other	(8,043		)	(1,054	)
Net cash used in investing activities	(85,464		)	(73,863	)

Financing activities:
(Payments) proceeds of revolving debt	(2,300		)	2,000
Dividends paid	(3,146		)	(3,089	)
Payments of long-term debt	(1,293		)	(792	)
Payments of capitalized lease obligations	(1,178		)	(1,325	)
Decrease in outstanding checks	(34,402		)	(334	)
Other	3,055			1,364

Net cash used in financing activities	(39,264		)	(2,176	)
Net increase (decrease) in cash	$	21,310		(6,618	)

Supplemental disclosure of cash flow information:
Non cash investing and financing activities
Purchase of real estate under capital leases	$	3,866		13,249
Acquisition of minority interests	$	4,294		-

See accompanying notes to condensed consolidated financial statements.

NASH FINCH COMPANY AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

Fiscal period ended October 6, 2001 December 30, 2000 and							Accumulated
January 1, 2000				Additional			other									Total
(In thousands, except	Common stock			paid-in	Retained		comprehensive		Restricted		Treasury stock					stockholders'
per share amounts)	Shares	Amount		capital	earnings		income		stock		Shares		Amount			equity

Balance at January 2, 1999	11,575	$	19,292	17,944	121,185		-		(113	)	(234	)	$	(1,835	)	156,473
Net earnings	-	-		-	19,803		-		-		-		-			19,803
Dividend declared of $.36 per share	-	-		-	(4,083	)	-		-		-		-			(4,083	)
Common stock issued for employee stock purchase plan	66	110		294	-		-		-		-		-			404
Amortized compensation under restricted stock plan	-	-		-	-		-		13		-		-			13
Repayment of notes receivable from holders of restricted stock	-	-		-	-		-		43		-		-			43
Distribution of stock pursuant to performance awards	-	-		9	-		-		-		3		12			21

Balance at January 1, 2000	11,641	19,402		18,247	136,905		-		(57	)	(231	)	(1,823		)	172,674
Net earnings	-	-		-	15,471		-		-		-		-			15,471
Dividend declared of $.36 per share	-	-		-	(4,122	)	-		-		-		-			(4,122	)
Common stock issued for employee stock purchase plan	70	116		309	-		-		-		-		-			425
Amortized compensation under restricted stock plan	-	-		-	-		-		4		-		-			4
Repayment of notes receivable from holders of restricted stock	-	-		-	-		-		43		-		-			43
Distribution of stock pursuant to performance awards	-	-		8	-		-		-		5		37			45

Balance at December 30, 2000	11,711	19,518		18,564	148,254		-		(10	)	(226	)	(1,786		)	184,540
Net earnings	-	-		-	14,586		-		-		-		-			14,586
Dividend declared of $.27 per share	-	-		-	(3,146	)	-		-		-		-			(3,146	)
Cumulative effect of an accounting change	-	-		-	-		(637	)	-		-		-			(637	)
Treasury stock issued upon exercise of options	-	-		942	-		-		-		102		521			1,463
Common stock issued upon exercise of options	15	25		84	-		-		-		-		-			109
Common stock issued for employee stock purchase plan	92	154		655	-		-		-		-		-			809
Amortized compensation under restricted stock plan	-	-		-	-		-		1		-		-			1
Stock based deferred compensation	-	-		993	-		-		-		-		-			993
Repayment of notes receivable from holders of restricted stock	-	-		-	-		-		9		-		-			9
Distribution of stock pursuant to performance awards	-	-		475	-		-		-		51		260			735

Balance at October 6, 2001 (unaudited)	11,818	$	19,697	21,713	159,694		(637	)	-		(73	)	$	(1,005	)	199,462

See accompanying notes to condensed consolidated financial statements.

Nash Finch Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

October 6, 2001

Note 1

The accompanying financial statements include all adjustments which are, in the opinion of management, necessary to present fairly the financial position of the Company and its subsidiaries at October 6, 2001, and December 30, 2000, and the results of operations for the 16 and 40-weeks ended October 6, 2001 and October 7, 2000, and the changes in cash flows for the 40-weeks ended October 6, 2001 and October 7, 2000, respectively. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. Results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

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 have been made in the 2000 financial statements to conform to classifications used in 2001. These reclassifications had no impact on net income, earnings per share or stockholders’ equity.

Note 2

The Company used the LIFO method for valuation of a substantial portion of inventories. If the FIFO method has been used, inventories would have been approximately $47.8 million and $45.1 million higher at October 6, 2001 and December 30, 2000, respectively.

Note 3

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Sixteen Weeks Ended			Forty Weeks Ended
	October 6,		October 7,	October 6,	October 7,
	2001		2000	2001	2000
Numerator:
Net earnings	$	6,048	4,014	14,586	10,625
Denominator:
Denominator of basic earnings per share (weighted-average shares)	11,684		11,471	11,599	11,433
Effect of dilutive options and awards	381		5	290	5
Denominator for diluted earnings per share (adjusted weighted average shares)	12,065		11,476	11,889	11,438
Basic earnings per share	$	.52	.35	1.26	.93
Diluted earnings per share	$	.50	.35	1.23	.93

Note 4

The Company uses interest rate swap agreements that effectively convert a portion of variable rate debt to a fixed rate basis. Such agreements are considered to be a hedge against changes in future cash flows. Accordingly, the interest rate swap agreements are reflected at fair value in the Company’s consolidated balance sheet and the related gains or losses on these contracts are deferred in stockholders’ equity as a component of other comprehensive income. These deferred gains and losses are then recognized as an adjustment to interest expense over the same period in which the related interest payments being hedged are recognized in the income statement.

At October 6, 2001 the Company had one outstanding swap agreement with a notional amount of $125 million expiring on December 6, 2001. The fair market value of this agreement at the end of the quarter was $.6 million, net of taxes, and is recognized in accumulated other comprehensive income in stockholders’ equity. For the third quarter and year to date, the Company recognized additional interest expense resulting from the cash flow hedge in a pretax amount of $1.1 million and $1.6 million, respectively.

Note 5

1998 Special Charges

During the fourth quarter of 1998, the Company recorded special charges totaling $71.4 million (offset by $2.9 million of 1997 adjustments) as a result of the Company’s revitalization plan designed to redirect its technology efforts, optimize warehouse capacity through consolidation, and close, sell or reassess under-performing businesses and investments. All actions contemplated by the original 1998 plan and subsequent revisions have been implemented.

The activity for the third quarter recorded through the remaining special charge accrual included $.4 million of pension benefits related to the distribution segment and $.3 million in continuing lease and exit costs related to closed retail stores. For the forty weeks, $1.2 million of such costs were incurred and charged to the accrual. As of October 6, 2001, the food distribution portion of the special charge liability consisted of $1.2 million related to certain pension and post-employment benefits. Also, liabilities in the amount of $5.2 million remain related to continuing lease commitments and occupancy costs associated with retail stores closed under the 1998 special charge.

Note 6

The Company has a Receivables Purchase Agreement (the “Agreement”) executed between the Company, Nash Finch Funding Corporation (NFFC), a wholly owned subsidiary of the Company, and a certain third party purchaser (the “Purchaser”) pursuant to a securitization transaction. The Agreement is a $50 million revolving receivable purchase facility allowing the Company to sell additional receivables to NFFC, and NFFC to sell, from time to time, variable undivided interests in these receivables to the Purchaser. As of October 6, 2001 and December 30, 2000 the Company had sold $44.7 million and $41.2 million, respectively, of accounts receivable on a non-recourse basis to NFFC. NFFC sold $34.5 million and $33.9 million, respectively, of its undivided interest in such receivables to the third party Purchaser, subject to collateral requirements specified by the Agreement.

Note 7

On August 13, 2001, the Company acquired U Save Foods, Inc. (“U Save”), through a cash purchase of 100% of U Save’s outstanding capital stock. U Save was a privately held retail food store chain operating 14 stores, primarily in Nebraska, with annual sales of approximately $145 million. Final determination of the purchase price is dependent upon completion and acceptance of an independent audit of the closing balance sheet, which is expected in the fourth quarter. Preliminary purchase price allocation resulted in goodwill of $27.1 million which is not required to be amortized in accordance with new accounting pronouncements (see Note 8).

Note 8

In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. These standards require that all business combinations be accounted for using the purchase method and that goodwill and intangible assets with indefinite useful lives no longer be amortized but instead tested for impairment at least annually. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. These standards outline the criteria for initial recognition and measurement of intangibles, assignment of assets and liabilities including goodwill to reporting units and goodwill impairment testing. The Company is required to apply the provisions of SFAS No. 141 including the nonamortization provision of goodwill under SFAS No. 142 to all business combinations completed after June 30, 2001, while SFAS No. 142 is fully effective at the beginning of 2002. In fiscal 2002, the Company will perform the required impairment tests of goodwill and indefinite lived intangible assets. At this time the Company does not expect the impact of the impairment testing to have a material effect on the financial statements. Goodwill amortization expense for the third quarter was $1.8 million pretax and $1.4 million after tax or $.12 per diluted share. Year to date goodwill amortization was $4.5 million pretax and $3.6 million after tax or $.30 per diluted share.

In April 2001, the FASB’s Emerging Issues Task Force (“EITF”) reached consensus on Issue 00-25 - Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor’s Products. The new ruling provides guidance on income statement classification on consideration paid to a reseller of a vendor’s products and must be applied for periods beginning after December 15, 2001. The Company has evaluated this rule change and determined it will have no effect on the financial statements.

During the second quarter, the Company applied EITF Issue 00-22 - Accounting for “Points” and Other Time Based or Volume Based Sales Incentive Offers. The new ruling requires that certain time or volume based rebates or refunds be classified as a reduction of revenues instead of an expense or cost of sale. Amounts reclassified from expense and cost of sales reducing revenues were not material and had no impact on net earnings. Prior year results were restated to reflect application of the new ruling.

Note 9

A summary of the major segments of the business is as follows:

Sixteen weeks ended October 6, 2001

	Food Distribution		Retail	Military	Totals

Revenue from external customers	$	655,864	314,879	304,100	1,274,843
Inter-segment revenue	170,975		-	-	170,975
Segment profit	18,587		12,656	7,238	38,481

Sixteen weeks ended October 7, 2000

	Food Distribution		Retail	Military	Totals

Revenue from external customers	$	582,398	322,313	299,822	1,204,533
Inter-segment revenue	180,705		-	-	180,705
Segment profit	11,899		10,338	6,953	29,190

Forty weeks ended October 6, 2001

	Food Distribution		Retail	Military	Totals

Revenue from external customers	$	1,588,586	781,523	759,232	3,129,341
Inter-segment revenue	431,115		-	-	431,115
Segment profit	44,081		28,340	17,751	90,172

Forty weeks ended October 7, 2000

	Food Distribution		Retail	Military	Totals

Revenue from external customers	$	1,464,407	792,278	731,017	2,987,702
Intra segment revenue	446,953		-	-	446,953
Segment profit	33,491		23,201	16,513	73,205

Reconciliation to statements of operations:

(In thousands)

Sixteen weeks ended October 6, 2001 and October 7, 2000

	2001			2000

Profit and loss
Total profit for segments	$	38,481		29,190
Unallocated amounts:
Adjustment of inventory to LIFO	(1,769		)	243
Unallocated corporate overhead	(26,392		)	(22,465	)

Earnings before income taxes	$	10,320		6,968

Forty weeks ended October 6, 2001 and October 7, 2000

	2001			2000

Profit and loss
Total profit for segments	$	90,172		73,205
Unallocated amounts:
Adjustment of inventory to LIFO	(2,661		)	1,055
Unallocated corporate overhead	(62,621		)	(55,814	)

Earnings before income taxes	24,890			18,446

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Revenues

Total revenues for the sixteen-week third quarter were $1.275 billion compared to $1.205 billion last year, an increase of 5.8%. For the forty-weeks, total revenues were $3.129 billion compared to $2.988 billion, an increase of 4.7%.

Food distribution revenues for the third quarter increased 12.6% from $582.4 million to $655.9 million. Year to date revenues increased 8.5% from $1.464 billion last year to $1.589 billion. Increased revenues are attributed to new food distribution customers as the Company continues to improve service to new and existing independent retailers. During the quarter, the Company announced the addition of $70 million in annualized revenues from new accounts, and subsequent to quarter end a new account representing another $20 million, bringing the total for the year to approximately $220 million in new annualized revenues. Food distribution revenues were also favorably impacted by the shift in revenues from the retail segment to the food distribution segment, resulting from the sale in June and July of substantially all corporate-owned retail stores in the Southeast to existing independent customers.

Retail segment revenues for the quarter were $314.9 million compared to $322.3 million, a decrease of 2.3%. The decline is primarily attributed to the Company’s decision to sell its stores in the Southeast region. The sale of the stores allows the Company to focus its retail strategy on stores it currently operates in the Upper Midwest. On August 13, the Company acquired 14 stores from U Save Foods, Inc. (“U Save”), a privately held company operating stores primarily in Nebraska. U Save’s annual revenues are approximately $145 million. All stores acquired from U Save have been re-bannered as Sun MartÒ stores. Same store sales declined 2.3% compared to the third quarter last year as a result of competitive pressures in certain areas.

For the forty-week period, retail segment revenues were $781.5 million compared to $792.3 million last year, a decrease of 1.4%. A decline in same store sales of .9%, due to increased competition in certain areas, and sale of the Southeast stores, largely contributed to the decrease compared to last year. At the end of the quarter, the Company operated 111 stores compared to 122 stores last year.

The Company is currently developing two specialty store formats, one designed to service the Hispanic market, which is considered under-served by traditional grocery stores, and a second format under the Buy n SaveÒ name to service low income, value conscious consumers. Based on the growth potential of both store concepts, the Company plans to roll out additional locations in fiscal 2002. The Company currently operates three Hispanic format stores and has announced a new banner for the Hispanic stores called AvanzandoÔ. The first Avanzando stores will open early next year in Denver, Colorado, with expectation of opening as many as ten stores per year. The Company operates four Buy N Save stores and expects to expand this format in the Upper Midwest in 2002 by at least an additional ten stores per year.

Military segment revenues for the quarter were $304.1 million compared to $299.8 million last year, an increase of 1.4%. Year to date revenues were $759.2 compared to $731.0 a year ago, an increase of 3.9%. The increases, in particular year to date, largely reflect new distribution business in North Carolina and Europe, added during the second half of fiscal 2000 from a major manufacturer. The deployment of military forces in response to the September 11 terrorist attacks has had some impact, though not significant, in the military business. However, based on information currently available, we expect overall sales to remain stable for the remainder of the year.

Gross Margin

Gross margin for the quarter was 10.9% compared to 11.0% last year. Although retail margins improved as a result of reduced promotional activities this year relative to the third quarter last year, the decrease in overall margins is attributed to a greater proportion of food distribution revenues which contribute lower margins as a percent of revenues. The Company recorded a LIFO charge of $1.8 million compared to a credit of $.2 million last year. Year to date gross margins were 11.2% in fiscal 2001, compared to 11.1% last year. Gross margin included a LIFO charge of $2.7 million this year, compared to a credit of $1.1 million last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the third quarter, as a percent of total revenues, were 8.1% compared to 8.4% a year ago. Year to date selling, general and administrative expenses were 8.4% compared to 8.5% last year. The decrease reflected in both periods is largely the result of expense control and a higher percentage of food distribution and military revenues that operate at lower expense levels than does retail.

Depreciation and Amortization Expense

Depreciation and amortization expense for the quarter was relatively flat at $14.1 million compared to $14.0 million last year. Year to date depreciation and amortization expense increased from $33.9 million last year to $35.4 million in 2001, an increase of 4.4%. The increase primarily reflects the addition of several new stores and a number of store remodels since the prior year quarter, offset by lower expense resulting from the sale of the Southeast stores. Amortization of goodwill and other intangibles for the sixteen and forty-weeks was $2.5 million and $6.2 million, respectively, compared to $2.5 million and $6.0 million for the comparable periods last year. Goodwill recorded as a result of the U Save acquisition is exempt from amortization in accordance with new accounting pronouncements.

Interest Expense

Interest expense for the quarter was relatively flat at $10.5 million compared to $10.6 million last year. Year to date interest expense was $26.8 million compared to $26.0 million, an increase of 3.1%. The increased costs are attributed to higher average borrowing rates under the revolving credit facility and swap agreement which were partially offset by an average revolver level that was lower compared to last year. The Company also purchased real estate under several capital lease agreements which contributed to higher interest expense compared to last year.

Income Taxes

The effective income tax rate for 2001 is 41.4% compared to 42.4% in fiscal 2000. The reduction in the effective rate is attributed to certain tax initiatives the Company has implemented in 2001.

Net Earnings

Net earnings for the quarter were $6.0 million or $.50 per diluted share compared to $4.0 million or $.35 per diluted share last year, an increase of 50.0%. For the year to date, net earnings increased 37.7% to $14.6 million or $1.23 per diluted share from $10.6 million or $.93 per diluted share last year. Excluding goodwill amortization, which will no longer be required in 2002 (see Note 8), net earnings for the third quarter and year to date of 2001 would have been $7.5 million or $.62 per diluted share and $18.2 million or $1.53 per diluted share, respectively.

1998 Special Charges

During the fourth quarter of 1998, the Company announced a five-year revitalization plan to streamline food distribution operations and build retail operations resulting in the Company recording special charges totaling $71.4 million (offset by $2.9 million of 1997 special charge adjustments). The new strategic plan’s objectives were to: leverage Nash Finch’s scale by centralizing operations; improve operational efficiency; and develop a strong retail competency. The Company also redirected technology efforts and set out to close, sell or reassess underperforming businesses and investments.

With the closure of the final retail location included in the 1998 revitalization plan, completed in the first quarter of 2001, all actions contemplated by the original 1998 plan and subsequent revisions have been implemented. The Company continues to incur costs, primarily related to continuing lease commitments of closed locations, and charges them to the remaining special charge accrual. For the sixteen and forty weeks ended October 6, 2001, $.7 million and $1.2 million, respectively, of such costs were incurred and charged to the accrual. The remaining special charges liabilities consist of the following elements: $1.2 million related to the food distribution segment for certain pension and post-employment benefits; and $5.2 million related to a portion of the continuing lease commitments and occupancy costs of eight closed retail stores. The Company is actively seeking to sublease these properties. The Company does not expect any future impact on earnings to result from any of the continuing issues under the 1998 special charges.

EBITDA

The Company’s new revolving credit facility contains various restrictive covenants. Several of these covenants are based on earnings from operations before interest, taxes, depreciation, amortization and non-recurring items (EBITDA). This information is not intended to be an alternative to performance measures under generally accepted accounting principles, but rather as a presentation important for understanding the Company’s performance relative to its debt covenants (in thousands):

	Sixteen Weeks				Forty Weeks
	October 6,		October 7,		October 6,	October 7,
	2001		2000		2001	2000
Earnings before income taxes	$	10,320	6,968		24,890	18,446
Add (Deduct):
LIFO effect	1,799		(242	)	2,661	(1,055	)
Depreciation and amortization	14,139		13,992		35,417	33,896
Interest expense	10,472		10,628		26,759	26,001
Closed store lease costs	--		242		282	1,196
(Gains)losses on sale of real estate	44		(267	)	198	(1,694	)

Total EBITDA	$	36,774	31,321		90,207	76,790

Sale of Southeast Region Stores

On April 17, 2001 the Company announced its intention to sell its 20 supermarket stores in North and South Carolina. As of October 6, 2001, 18 of the stores had been sold to independent retailers under agreements that contain multi-year sales and service provisions, whereby the stores will continue to be food distribution customers supplied from the Company’s Lumberton, North Carolina distribution center. The sale of these stores allows the Company to align its retail efforts with its strategy of being a leading supermarket chain in the upper Midwest. The Company expects to complete transactions on the two remaining stores in the fourth quarter.

Acquisition of U Save Foods, Inc.

On August 13, 2001 the Company purchased for cash, all of the outstanding capital stock of U Save Foods, Inc., a privately-held retail food store chain operating 12 stores in Nebraska and one each in Colorado and Kansas. The acquisition furthers the Company’s strategic plan of retail growth in the Upper Midwest, generating additional annualized retail segment revenues of approximately $145 million, while adding incremental food distribution volume which is expected to lower operating cost as a percent of revenues. The stores, which operated under various banners, have all been converted to the Company’s Sun Mart banner.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has financed its capital needs through a combination of internal and external sources. These sources include cash flow from operations, short-term bank borrowings, various types of long-term debt and lease financing.

Operating cash flows were $146.0 million for the forty-weeks compared to $69.4 million last year. The change in operating cash flows is primarily the result of changes in operating assets and liabilities as compared to the same period last year. Working capital was $71.8 million at the end of the quarter compared to $108.8 million at the end of fiscal 2000.

Cash used in investing activities increased 15.7% from $73.9 million last year to $85.5 million for the forty-week period this year. Investing activities in 2001 consisted primarily of $46.9 million for the purchase of U Save and another business from an existing customer, $30.5 million in capital expenditures, and $4.8 million in loans to customers, net of payments received. These activities were funded by cash flows from operations and the revolving credit facility. Prior year investing activities primarily included $40.5 million for capital expenditures, $19.9 million for the purchase of retail stores including Hinky Dinky Supermarkets, Inc., a 12-store chain in Nebraska, and loans to customers of $16.1 million, net of payments received.

In December 2000, the Company completed the refinancing of its credit facility. The new five year agreement provides a $100 million term loan and a $150 million revolving credit facility. At October 6, 2001, $25 million of the revolving credit facility was outstanding. In conjunction with the new financing the Company entered into a swap agreement based on a notional amount of $125 million fixing the interest rate at 6.37%. The agreement expires in December 2001 and will be replaced by three separate agreements each with notional amounts of $35 million, at fixed interest rates of 2.35%, 2.58% and 2.97% expiring in six, twelve and eighteen month intervals, respectively.

Total debt in the third quarter, despite the U Save acquisition, remained flat at $361.7 million compared to the year ago balance of $361.4 million and the $358.3 million outstanding at the end of last year. Total debt to EBITDA improved to 3.0 for the quarter versus 3.5 in the same period a year ago. On a pro forma basis, reflecting the U Save acquisition as if it had occurred at the beginning of the year, total debt to EBITDA fell to 2.89. Under terms of its credit agreement, this lower ratio allows the Company to borrow at 175 basis points over LIBOR rather than the previous spread of 200 basis points.

The Company believes that borrowing under the revolving credit facility, proceeds from its sale of subordinated notes, other credit agreements, cash flows from operating activities and lease financing will be adequate to meet the Company’s working capital needs, planned capital expenditures and debt service obligations for the foreseeable future.

FORWARD-LOOKING STATEMENTS

The information contained in this Form 10-Q Report includes forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements can be identified by the use of words like “believes,” “expects,” “may,” “will,” “should,” “anticipates,” or similar expressions, as well as discussions of strategy. Although such statements represent management’s current expectations based on available data, they are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those anticipated. Such risks, uncertainties and other factors may include, but are not limited to, the ability to: meet debt service obligations and maintain future financial flexibility; respond to continuing competitive pricing pressures; retain existing independent wholesale customers and attract new accounts; and fully integrate acquisitions and realize expected synergies.

PART II - OTHER INFORMATION

Items 1, 2, 3, 4 and 5 are not applicable.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits:

10.1 Nash Finch Executive Incentive Bonus and Deferred Compensation Plan (as amended effective September 30, 2001)

(b) Reports on Form 8-K:

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NASH-FINCH COMPANY
Registrant


Date: November 19, 2001			By /s/ Ron Marshall
			Ron Marshall
			President and Chief Executive Officer


			By /s/ Robert B. Dimond
			Robert B. Dimond
			Senior Vice President and Chief Financial Officer

NASH FINCH COMPANY

EXHIBIT INDEX TO QUARTERLY REPORT

ON FORM 10-Q

For the Forty Weeks Ended October 6, 2001

Item No.	Item	Method of Filing
10.1	Nash Finch Executive Incentive Bonus and Deferred Compensation Plan (as amended effective September 30, 2001)	Filed herewith

NASH FINCH COMPANY

EXECUTIVE INCENTIVE BONUS AND

DEFERRED COMPENSATION PLAN

(As Amended Through September 30, 2001.)

1. PURPOSE OF THE PLAN. The purpose of this Executive Incentive Bonus and Deferred Compensation Plan is to increase the interest of the Company's top executives and key employees in continuing their employment and to increase their incentive in the management, growth and success of the business by giving such employees an opportunity to participate in the profits and growth of the business in the same manner as if they were shareholders. The term "Company" as used in this Plan includes Nash Finch Company and each of its present and future subsidiaries.

2. ADMINISTRATION OF THE PLAN. This Plan will be administered by the Compensation Committee (the "Committee") of the Board of Directors. Members of the Committee shall not be eligible to vote on any resolution relating to their individual eligibility to participate in the Plan or individual contract. The Committee is empowered to make such rules and regulations and interpretations as may be necessary to carry out the Plan, and its decisions by majority vote shall be binding and conclusive upon all persons participating in this Plan or claiming any rights thereunder. A majority of the members of the Committee shall constitute a quorum for the transaction of business, and all actions taken at a meeting shall be by the vote of a majority of those present at such meeting. Any action may be taken by the Committee without a meeting upon written consent signed by all the members of the Committee. The Committee shall authorize records required to be maintained under the Plan. The form of the agreement under this Plan to be entered into with employees shall be approved by the Committee.

3. PARTICIPANTS. The Committee shall determine from time to time which executives or key employees of the Company or any subsidiary shall participate in the Plan. Participants may include (a) directors who are full-time Officers or employees of the Company, (b) full-time officers and other executive employees of the Company or any subsidiary, and (c) any other full–time executives or key employees of the Company or any subsidiary selected by the Committee for any calendar year, established by the Committee pursuant to its rules and regulations. Notwithstanding the foregoing, an executive or key employee who was not participating in the Plan prior to January 1, 2000 shall not begin participating after December 31, 1999.

4. PROCEDURE FOR SELECTION OF PARTICIPANTS. At the end of each year or at such time as the Committee shall establish under its rules and regulations, the Committee shall, exclusive of any participants who may be members of the Committee, select the participants to whom allotments are to be made for such year. The selection of a participant for any year shall not entitle such participant to an allotment for any subsequent year for which he is not selected for an allotment. Notwithstanding the foregoing, the Committee shall select no participants to receive allotments under the Plan for any year beginning after December 31, 1999.

5. AMOUNT OF ALLOTMENTS. As of the end of each year, the Committee shall allot to the participants selected for such year, from the amount of the Incentive Bonus Fund for that year as hereinafter determined, such amount as the Committee in its sole discretion deems to be advisable and appropriate, but not more than 33-1/3% of each participant's basic annual salary from the Company or any subsidiary for such year shall be allotted to him. The Committee shall notify each participant promptly in writing of any allotment made to him. Such allotment shall be evidenced by a written agreement between the Company and the participant if such allotment is the first for such participant, or such allotment shall be included as part of the agreement for any prior year entered into between the Company and the participant. Each allotment shall be contingently credited and converted into share equivalents, as further provided herein, and shall be distributable only in the manner and subject to the conditions set forth herein. The entire amount of each allotment to each participant shall be contingently credited to him at the end of each year. The portion of the Incentive Bonus Fund for any year in excess of the maximum limitation for all participants, as determined by the Committee, shall be canceled. In order to qualify for an allotment, a participant must be actively employed by the Company, or be on an approved leave of absence, on the last day of the year for which the allotment is made.

The allotments to participants for any year shall be made from an Incentive Bonus Fund computed to be 5% of the excess, if any, of the consolidated net income of the Company and its consolidated subsidiaries for the year over 6% of the stockholders' equity, as shown in the consolidated balance sheet of the Company and its consolidated subsidiaries at the end of the preceding year as certified by the Company's independent certified public accountants. No Incentive Bonus Fund shall be computed if the consolidated net income of the Company and its consolidated subsidiaries for a year does not exceed 6% of the stockholders' equity at the end of the preceding year. However, the Committee may, in its discretion and by appropriate action, authorize an Incentive Bonus Fund of any amount for such year in the event that the amount of the Incentive Bonus Fund computed under the formula for such year is zero or an insignificant amount in the judgment of the Committee. "Consolidated net income" as used herein, shall mean the amount of the net earnings as shown in the consolidated statement of earnings of the Company and its consolidated subsidiaries for the year as certified by the Company's independent certified public accountants; subject, however, to the discretion of the Committee to exclude all or any items of material amount therein applicable to any prior year.

Notwithstanding the foregoing, the Committee shall make no allotments under the Plan to any participants for any year beginning after December 31, 1999.

6. CONVERSION OF ALLOTMENTS INTO SHARE EQUIVALENTS AND CREDIT OF DIVIDEND AND INTEREST EQUIVALENTS. Each allotment contingently credited to a participant shall be converted into an equivalent number of shares of the common stock of the Company (the "Common Stock"). Commencing with any such allotment for 1993, and for subsequent years, the number of such share equivalents shall be determined by dividing (a) the amount of the allotment by (b) the average, rounded to the nearest one–tenth of a cent ($.001), of the closing sales prices per share for the Common Stock reported by the NASDAQ National Market System, or such other stock exchange or market on which the Common Stock may be listed at any particular time (the "Average Price"), for the last calendar quarter of the year for which the allotment is made. The number of share equivalents so determined shall be computed to four decimal places. For purposes of determining the Average Price, the closing sales price for any trading day for which there are no reported sales of the Common Stock shall be deemed to be the last previously reported closing sales price.

Each participant shall also be contingently credited as of the end of each year with an amount equal to the product of (x) the total dividends per share on the Common Stock declared in such year multiplied by (y) the aggregate number of share equivalents contingently credited to the said participant as of the beginning of such year. The amount so determined and credited shall be converted to additional share equivalents in the manner stated in the preceding paragraph using the Average Price for the last calendar quarter of such year. In the event that the authorized shares of Common Stock are split or changed in any manner by reason of any reorganization, merger, consolidation, stock split, stock dividend, or recapitalization, then the number of share equivalents and the market value equivalent thereof contingently credited to each participant shall be appropriately adjusted.

The methods for determining share equivalents to be credited to participants, as set forth in the preceding two paragraphs of this Section 6, shall be effective for allotments and dividend equivalents contingently credited to participants for 1993 and subsequent years. Further, the total "cash" balances contingently credited to participants' accounts for 1992 and prior years for (i) dividends declared and (ii) partial share equivalents, shall be converted as of December 31, 1993, into additional share equivalents in the manner stated in the first paragraph of this Section 6, using the Average Price for the last calendar quarter of 1993. The conversion of allotments for 1992 and prior years into share equivalents shall remain as originally determined; that is, on the basis of the last available closing market quotation price per share for the Common Stock for the applicable year.

In the event that a participant's allotment and dividend equivalents are to be distributed to the participant in more than one (1) installment, then the participant shall be paid an amount, within fifteen (15) days of the end of each quarter of the calendar year, equal to the interest which would have accrued during the quarter on the unpaid balance due the participant at the end of such calendar quarter. The interest rate shall equal the prime interest rate charged by Norwest Bank Minnesota, N.A. on the last business day of each quarter. For example, assume that the unpaid balance due a participant on December 31, Year I is $240,000, and that the participant will receive monthly payments of $2,000 for a ten (10)-year period beginning in Year II. Further assume that the prime interest rates in effect on the last business day of March, June, September and December, Year II, are 6-1/4%, 6-3/4%, 7-1/4% and 7-3/4%, respectively. During Year II, the participant will be due the following additional interest equivalency payments:

								Quarterly Interest Equivalency Payments
1^st Quarter	$	234,000	x	.0625	x	.25	=	$	3,656.25
2^nd Quarter	228,000		x	.0675	x	.25	=	3,847.50
3^rd Quarter	222,000		x	.0725	x	.25	=	4,023.75
4^th Quarter	216,000		x	.0775	x	.25	=	4,185.00

7. TERMS OF AGREEMENTS. Each agreement authorized under this Plan shall cover a period of one year unless additional allotments are made in any subsequent year, in which case such agreement shall also constitute an agreement for such subsequent year or years. Each agreement shall provide that (a) the participant will continue in full–time employment with the Company or a subsidiary until age 65 or other age approved and authorized by the Committee but in no case earlier than age 60; (b) the participant will, upon retirement, agree to be available for consultation during the period that he is receiving distributions hereunder; (c) the participant will refrain from actively participating or engaging in any business in competition with the Company or any subsidiary; (d) the participant will agree to the terms of accumulation and distribution of his allotments; and (e) the participant will agree to be bound concurrently with the Company under this Plan and the rules and regulations of the Committee promulgated thereunder.

8. FORFEITURES. Upon termination of a participant's service with the Company or a subsidiary prior to age 65, such participant shall forfeit 50% of all allotments and dividend equivalents contingently credited to him in any year, except that such forfeiture shall not apply in the case of termination of service (a) attributable to death, disability, or discharge without cause; (b) for any reason after the participant has attained age 60; or (c) attributable to any reason approved by the Committee. The entire amount of a participant's allotments, dividend equivalents, and interest equivalents shall be forfeited and canceled if, without the prior written consent of the Company, the participant at any time prior to his termination of service, or during the period that he is receiving distributions hereunder, actively participates or engages in any business in competition with the Company or any subsidiary, or fails to hold himself available for consultation, or if the employment of the participant is terminated at any time prior to age 65 because of evidence of dishonesty or mistrust in his employment or because of his involvement in a crime or misdemeanor against the Company or any subsidiary, or any employee thereof, for which he is convicted or which he has confessed in writing to the Company or to any law enforcement agency. Allotments and dividend equivalents contingently credited to a participant, as well as interest equivalents, that shall have been forfeited by such participant shall be canceled and shall not thereafter be reallotted to any other participant.

9. DISTRIBUTION OF ALLOTMENTS. Distribution of the allotments and dividend equivalents contingently credited to, and accumulated for the benefit of, a participant as of the end of the year in which termination of his service occurs, or as of an earlier date of retirement or other date of termination which does not entitle him to participate under this Plan for such year, shall be made by payments in cash in such manner and on such dates as determined by the Committee, in its sole discretion, immediately prior to the date the first payment is due or, if the Committee shall not have made such prior determination as aforesaid, then in equal monthly installments over a period of one hundred twenty (120) months, commencing with the second month following the month or following the end of the year of termination of service, whichever is applicable. Such installment payments shall also include an additional sum representing interest equivalency pursuant to Section 6 hereof.

In the event that a participant dies after retirement but before any or all payments have been made, all remaining payments shall be made to the person or persons or the survivors thereof as designated by the participant pursuant to his agreement with the Company. The Committee shall cause the Company to make such payments in the manner of payment then in effect pursuant to said agreement, or in one or more installments, as the Committee in its sole discretion may then determine. The Company shall deduct from the amount of all payments made under this Plan any taxes required to be withheld under federal, state or local laws.

The amount distributable to a participant shall be the greater of (a) the amount at which the participant's total share equivalents were contingently credited to the participant, or (b) an amount equal to the product of (x) the total share equivalents contingently credited to the participant multiplied by (y) the Average Price of the Common Stock for either (i) the calendar quarter ending on the date of termination (if the participant's date of termination is the last day of a calendar quarter or the next following day), or (ii) the last sixty–three (63) days U.S. stock markets are open for the trading of shares prior to or coinciding with the date of termination (if the participant's date of termination is not the last day of a calendar quarter or the next following day).

A participant who is actively employed by the Company, or is on an approved leave of absence, on the last day of 1999, may elect to transfer all, but not part, of the share equivalents contingently credited to the participant pursuant to the Plan as of December 31, 1999 to the Nash Finch Company Supplemental Executive Retirement Plan (the “SERP”). If such an election is made, a dollar denominated credit will be made to a bookkeeping account established under the SERP as of January 1, 2000. The amount of the credit to such account under the SERP shall be equal to the dollar value of the electing participant’s account under the Plan as of December 31, 1999, including share equivalents credited as of that date for 1999, determined in the manner established under this Section 9 for determining amounts distributable to a participant.

If a participant makes the election provided for in the preceding paragraph, the participant shall, as of January 1, 2000, cease to be a participant entitled to any benefit arising under or in connection with the Plan. The election shall be made in the manner, and in accordance with, the terms specified, in the SERP.

A participant who is actively employed by the Company, or is on an approved leave of absence, on September 30, 2001, may elect to transfer all, but not part, of the share equivalents contingently credited to such participant pursuant to the Plan as of such date into Performance Units (as defined in the Stock Incentive Plan, as hereinafter defined) granted under the Nash Finch Company 2000 Stock Incentive Plan (the “Stock Incentive Plan”). If such an election is made by a participant, Performance Units will be granted to such participant under the Stock Incentive Plan as of October 1, 2001. Such Performance Units shall represent the right of such participant to receive a distribution from the Company in the form of shares of Common Stock (the “Performance Shares”) upon the achievement of certain employment or service goals by such participant and upon the termination of such participant’s employment or other service with the Company, as set forth in more detail in such participant’s award agreement evidencing such Performance Units.

Prior to any such transfer of share equivalents and the grant of Performance Units under the Stock Incentive Plan to a participant pursuant to the preceding paragraph, such participant shall be contingently credited as of September 30, 2001 with an amount equal to the product of (x) the total cash dividends per share on the Common Stock declared during the calendar year 2001 and on or before September 30, 2001, multiplied by (y) the aggregate number of share equivalents contingently credited to such participant as of the beginning of the calendar year 2001. The amount so determined and credited shall be converted to additional share equivalents in the manner stated in the first paragraph of Section 6 of the Plan using the Average Price for the quarter ended September 30, 2001. In the event that the authorized shares of Common Stock are, on or before September 30, 2001, split or changed in any manner by reason of any reorganization, merger, consolidation, stock split, stock dividend, or recapitalization, then the number of share equivalents then held by such participant and the market value equivalent thereof contingently credited to such participant shall be appropriately adjusted.

If a participant makes the election provided for in the two preceding paragraphs, the participant shall, as of October 1, 2001, cease to be a participant entitled to any benefit arising under or in connection with the Plan.

10. RIGHTS OF PARTICIPANTS. No participant or any other person shall acquire or have any interest in any fund or in any specific asset or assets of the Company or any subsidiary by reason of any allotments to him hereunder, nor any right to receive any distribution under this Plan, except as and to the extent expressly provided in the Plan. Nothing in this Plan shall be deemed to give any officer or employee of the Company or any subsidiary any right to participate in the Plan except to such extent, if any, as the Committee may determine in accordance with the provisions of this Plan. The adoption of this Plan or the authorization and execution of an agreement thereunder shall not be held or construed to confer upon any employee any right or guarantee of continuation of employment by the Company or any subsidiary, nor shall it affect in any way the terms of any employment agreement now or hereafter in effect between the employee and the Company or a subsidiary; and, further, it shall not confer upon any, participant any rights of a shareholder by reason of the share equivalents contingently credited to him under this Plan.

11. NON-ASSIGNABILITY OF AGREEMENT. The agreement authorized under this Plan when entered into between the Company and the employee shall not be assignable or otherwise subject to hypothecation by the employee, nor Shall the employee acquire any rights to any distributable amount thereunder except as provided in this Plan and such agreement. Such agreement shall continue in force under its terms whether or not this Plan is amended or terminated, and shall constitute a legally enforceable contract between the Company and the employee during the period of its existence.

12. AMENDMENT OR TERMINATION OF PLAN. The Committee may amend or discontinue this Plan at any time by the affirmative vote of a majority of such Committee who are not participants under this Plan. No amendment, however, shall alter or impair any agreement then in force without the consent of the employee covered thereby, and no amendment shall apply to or affect the payment or distribution of any participant of any amounts contingently credited to him for any year ended prior to the effective date of such amendment. Termination of the Plan shall not affect the agreements theretofore entered into between the Company and its employees, but all such agreements shall continue in force after the termination of this Plan in accordance with their terms and provisions.

13. EFFECTIVE DATE OF PLAN. This Plan shall become effective upon the approval of the Executive Committee of the Board of Directors of the Company at any regular or special meeting, or at any adjournment thereof, called and held before December 31, 1967, and shall remain in effect until terminated by the Board of Directors.

14. CHANGE IN CONTROL. For purposes of this Section 14, a "Change in Control" of the Company shall mean (a) the sale, lease, exchange or other transfer of all or substantially all of the assets of the Company (in one transaction or in a series of related transactions) to any person that is not controlled by the Company; (b) the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company; or (c) a change in control of a nature that would be required to be reported (assuming such event has not been "previously reported") in response to Item 1(a) of the Current Report on Form 8-K, as in effect on May 1, 1988, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred at such time as (x) any person is or becomes the "beneficial owner" (as defined in Rule 13d–3 under the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors; or (y) individuals who constitute the Board of Directors on May 1, 1988, Cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to May 1, 1988, whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors comprising the Board of Directors on May 1, 1988, (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be, for purpose of this clause (y), considered as though such person were a member of the Board of Directors on May 1, 1988.

The Company expressly recognizes that a Change in Control of the Company would be likely to result in a material alteration or diminution of a participant's position and responsibilities, and if that were to occur, certain of the terms of this Plan would be unreasonable or unfair in their application to participants.

Accordingly, if during the term of this Plan, any Change in Control of the Company shall occur, the following provisions shall be applicable and shall supersede all other provisions of this Plan:

a. [Intentionally omitted.]

b. Forfeitures. The provisions of Section 8 shall lapse and shall have no further applicability to any participant; and

c. Acceleration. All amounts credited to and accumulated for the benefit of a participant (or other person receiving payments or entitled to receive payments under Section 9, such other person to be hereinafter called "other recipient"), shall become due and payable and shall be paid in full on the day the Change in Control becomes effective unless a participant or other recipient, prior thereto, shall notify the Committee, in writing, that such participant or other recipient waives the right to acceleration, in which case the provision of Section 9 shall continue to apply to such participant or other recipient. In effecting such payment, the Committee may make such arrangements, including deposits in escrow or in trust in advance of the anticipated effective date of the Change in Control, as it may deem advisable, to carry out the foregoing and to protect the interests of the Company in the event such Change in Control does not occur.