EX-99.1 2 a06-7068_2ex99d1.htm EXHIBIT 99

Exhibit 99.1

 

NASH-FINCH COMPANY

 

NEWS RELEASE      

 

NASH FINCH REPORTS FISCAL 2005 RESULTS

 

MINNEAPOLIS (March 16, 2006) — Nash-Finch Company (NASDAQ: NAFC), a leading national food distributor, today announced that net earnings for the fiscal 2005 year were $41.3 million, or $3.13 per diluted share, as compared to $14.9 million, or $1.18 per diluted share, for fiscal 2004. Fiscal 2005 results included a net favorable impact of $1.4 million, or $0.11 per diluted share, from three events listed on the schedule attached to this release. Fiscal 2004 net earnings included several events, also listed on the schedule attached to this release, which had a net unfavorable impact of $24.0 million, or $1.89 per diluted share, the largest of which was a special charge of $21.0 million, or $1.66 per diluted share, involving primarily non-cash costs associated with the closure of 18 retail stores at the end of the second quarter 2004. Total sales for fiscal 2005 were $4.56 billion as compared to $3.90 billion in fiscal 2004, primarily reflecting the Company’s acquisition from Roundy’s Supermarkets, Inc. of wholesale food distribution centers located in Lima, Ohio and Westville, Indiana effective March 31, 2005.

 

For the fourth quarter of 2005, total sales were $1.12 billion compared to $920 million in the prior-year period. Net earnings were $13.5 million, or $1.01 per diluted share, for the fourth quarter 2005, compared to $11.2 million, or $0.87 per diluted share for the fourth quarter 2004. Net earnings for the fourth quarter 2005 were favorably affected by $1.1 million or $0.09 per diluted share as a result of the reversal of tax reserves. Net earnings for the fourth quarter 2004 were affected by several events, listed on the attached schedule, that had a net unfavorable impact of $0.5 million, or $0.04 per diluted share, the most significant of which were the payment of a call premium for early redemption of our 8.5% Senior Subordinated Notes and non-cash charges related to the refinancing of our Senior Credit Facility.

 

Food Distribution Results

 

Food distribution segment sales for fiscal 2005 increased 36.1% to $2.67 billion compared to $1.96 billion in fiscal 2004, and for the fourth quarter 2005 increased 45.7% to $684.8 million from $470.0 million in the fourth quarter 2004. The acquisition of the distribution centers represented approximately 89% and 90% of the increase in food distribution sales in the yearly and quarterly comparisons, respectively. Excluding the impact of the acquisition, food distribution sales increased 4.0% in 2005 as compared to 2004, and 4.4% in the fourth quarter 2005 as compared to the year earlier quarter, primarily as a result of adding new accounts.

 

Food distribution segment profits increased to $88.3 million in fiscal 2005 from $76.0 million in fiscal 2004, and increased to $23.6 million from $19.7 million in the fourth quarter comparison. In both the annual and quarterly comparisons, however, segment profits decreased as a percentage of sales, from 3.9% in fiscal 2004 to 3.3% in fiscal 2005, and from 4.2% to 3.4% in the quarterly comparison. The decrease in profit margins in the food distribution segment was partially due to inadequate execution in the management of manufacturer promotional spending. Also contributing to the margin decline were the demands of integrating the acquired distribution

 



 

centers. This was a significant acquisition for the Company that diverted attention from our core business operations and entailed a more complex and costly integration process than we had expected.

 

Military Distribution Results

 

Military distribution segment sales for fiscal 2005 were $1.16 billion compared to $1.12 billion in fiscal 2004, an increase of 3.1%. Fourth quarter 2005 military segment sales of $272.4 million were slightly lower than the $274.7 million of sales recorded in the fourth quarter 2004. The sales growth during all of fiscal 2005 was due to increases in domestic commissary customer traffic, which in the fourth quarter 2005 was essentially offset by a decline in shipments to the overseas commissary system. Segment profits increased 8.3% in the annual comparison, from $36.3 million to $39.3 million, and 7.2% in the quarterly comparison, from $8.6 million to $9.3 million, reflecting increased annual sales as well as productivity improvements.

 

Retail Results

 

Corporate retail sales were $729.1 million in fiscal 2005 as compared to $813.8 million in fiscal 2004, and $166.0 million in the fourth quarter 2005 compared to $175.3 million in the comparable 2004 quarter. The decrease in retail sales is due to store closures that occurred during 2004 and 2005 and to same store sales decreases of 4.1% in the annual comparison and 2.7% in the quarterly comparison.

 

Retail segment fiscal 2005 profits were $26.6 million, or 3.7% of sales, compared to $28.1 million, or 3.5% of sales, in fiscal 2004. Retail segment fourth quarter 2005 profits were $8.3 million, or 5.0% of sales, compared to $10.3 million, or 5.9% of sales, in the year earlier quarter. The decrease in retail profitability was primarily the result of negative same store sales as well as inadequate execution in pricing during the third quarter of 2005.

 

The Company’s store count at the end of fiscal 2005 was 78 compared to 85 at the end of fiscal 2004. The net decrease in stores during 2005 reflects both opportunistic sales of retail stores to existing food distribution customers and the closing of underperforming stores.

 

A conference call to review fourth quarter results is scheduled for 10:00 a.m. (CT) on March 16, 2006. Interested participants can listen to the conference call over the Internet by logging onto the “Investor Relations” portion of Nash Finch’s website at www.nashfinch.com. A replay of the webcast will be available and the transcript of the call will be archived on the “Investor Relations” portion of Nash Finch’s website under the heading “Audio Archives.”  A copy of this press release and the other financial and statistical information about the periods to be discussed in the conference call will be available at the time of the call on the “Investor Relations” portion of the Nash Finch website under the caption “Press Releases.”

 

Nash Finch is a Fortune 500 company and one of the leading food distribution companies in the United States. Nash Finch’s core business, food distribution, serves independent retailers and military commissaries in 31 states, the District of Columbia, Europe, Cuba, Puerto Rico, Iceland, the Azores and Honduras. The Company also owns and operates a base of retail stores,

 

2



 

primarily supermarkets under the Econofoods®, Family Thrift Center® and Sun Mart® trade names. Further information is available on the Company’s website at www.nashfinch.com.

 

The statements in this release that refer to plans and expectations for fiscal 2006 and other future periods are forward-looking statements based on current expectations and assumptions, and entail risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Important factors that could cause actual results to differ materially from published plans and expectations include the following:

 

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

                  our ability to identify and execute plans to improve the competitive position of our retail operations;

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

                  credit risk from financial accommodations extended to customers;

                  general sensitivity to economic conditions, including volatility in energy prices;

                  future changes in market interest rates;

                  our ability to identify and execute plans to expand our food distribution operations;

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

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

                  possible changes in the military commissary system, including those stemming from the redeployment of forces;

                  adverse determinations or developments with respect to the litigation or SEC inquiry discussed in Part I, Item 3 of our 2005 Annual Report on Form 10-K filed with the SEC;

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

                  unanticipated problems with product procurement; and

                  the success or failure of new business ventures and initiatives.

 

A more detailed discussion of these factors, as well as other factors that could affect the Company’s results, is contained in the Company’s periodic reports filed with the SEC. The Company does not undertake to update forward-looking statements to reflect future events or circumstances, but investors are advised to consult future disclosures involving these topics in its periodic reports filed with the SEC.

 

#  #  #

 

Contact: LeAnne Stewart, 952-844-1060

 

3



 

NASH FINCH COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except per share amounts)

 

 

 

Twelve

 

Fifty-Two

 

 

 

Weeks Ended

 

Weeks Ended

 

 

 

December 31,

 

January 1,

 

December 31,

 

January 1,

 

 

 

2005

 

2005

 

2005

 

2005

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

1,123,236

 

920,040

 

4,555,507

 

3,897,074

 

 

 

 

 

 

 

 

 

 

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

Cost of sales

 

1,018,764

 

821,883

 

4,124,344

 

3,474,329

 

Selling, general and administrative

 

69,284

 

66,341

 

300,837

 

299,727

 

Gains on sale of real estate

 

(2,600

)

(2,173

)

(3,697

)

(5,586

)

Special charge

 

 

(1,715

)

(1,296

)

34,779

 

Extinguishment of debt

 

 

7,204

 

 

7,204

 

Depreciation and amortization

 

10,376

 

8,670

 

43,721

 

40,241

 

Interest expense

 

6,048

 

5,369

 

24,732

 

27,181

 

Total cost and expenses

 

1,101,872

 

905,579

 

4,488,641

 

3,877,875

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before income taxes

 

21,364

 

14,461

 

66,866

 

19,199

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

7,924

 

3,274

 

25,670

 

4,322

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

13,440

 

11,187

 

41,196

 

14,877

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Gain on disposition

 

92

 

91

 

92

 

91

 

Tax expense

 

36

 

36

 

36

 

36

 

Net earnings from discontinued operations

 

56

 

55

 

56

 

55

 

 

 

 

 

 

 

 

 

 

 

Net Earnings

 

$

13,496

 

11,242

 

41,252

 

14,932

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

1.02

 

0.89

 

3.19

 

1.20

 

Discontinued operations

 

 

 

 

 

Net earnings per share

 

$

1.02

 

0.89

 

3.19

 

1.20

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

1.01

 

0.87

 

3.13

 

1.18

 

Discontinued operations

 

 

 

 

 

Net earnings per share

 

$

1.01

 

0.87

 

3.13

 

1.18

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per common share

 

$

0.180

 

0.135

 

0.675

 

0.540

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding and common equivalent shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

13,295

 

12,621

 

12,942

 

12,450

 

Diluted

 

13,421

 

12,896

 

13,185

 

12,657

 

 

4



 

NASH FINCH COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except per share amounts)

 

 

 

December 31,

 

January 1,

 

 

 

2005

 

2005

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash

 

$

1,257

 

5,029

 

Accounts and notes receivable, net

 

195,367

 

157,397

 

Inventories

 

289,123

 

213,343

 

Prepaid expenses

 

16,984

 

15,524

 

Deferred tax assets

 

9,476

 

9,294

 

Total current assets

 

512,207

 

400,587

 

 

 

 

 

 

 

Investments in marketable securities

 

703

 

1,661

 

Notes receivable, net

 

16,299

 

26,554

 

 

 

 

 

 

 

Property, plant and equipment:

 

 

 

 

 

Land

 

18,107

 

21,289

 

Buildings and improvements

 

193,181

 

155,906

 

Furniture, fixtures and equipment

 

311,778

 

300,432

 

Leasehold improvements

 

65,451

 

71,907

 

Construction in progress

 

1,876

 

1,784

 

Assets under capitalized leases

 

40,171

 

40,171

 

 

 

630,564

 

591,489

 

Less accumulated depreciation and amortization

 

(387,857

)

(377,820

)

Net property, plant and equipment

 

242,707

 

213,669

 

 

 

 

 

 

 

Goodwill

 

244,471

 

147,435

 

Customer contracts and relationships, net

 

35,619

 

4,059

 

Investment in direct financing leases

 

9,920

 

10,876

 

Deferred tax asset, net

 

1,667

 

2,560

 

Other assets

 

13,831

 

8,227

 

Total assets

 

$

1,077,424

 

815,628

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Outstanding checks

 

$

10,787

 

11,344

 

Current maturities of long-term debt and capitalized lease obligations

 

5,022

 

5,440

 

Accounts payable

 

217,368

 

180,359

 

Accrued expenses

 

83,539

 

72,200

 

Income taxes

 

9,143

 

10,819

 

Total current liabilities

 

325,859

 

280,162

 

 

 

 

 

 

 

Long-term debt

 

370,248

 

199,243

 

Capitalized lease obligations

 

37,411

 

40,360

 

Other liabilities

 

21,328

 

21,935

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock - no par value
Authorized 500 shares; none issued

 

 

 

Common stock of $1.66 2/3 par value
Authorized 50,000 shares, issued 13,317 and 12,657 shares, respectively

 

22,195

 

21,096

 

Additional paid-in capital

 

49,430

 

34,848

 

Restricted stock

 

(78

)

(224

)

Common stock held in trust

 

(1,882

)

(1,652

)

Deferred compensation obligations

 

1,882

 

1,652

 

Accumulated other comprehensive income

 

(4,912

)

(5,262

)

Retained earnings

 

256,149

 

223,676

 

 

 

322,784

 

274,134

 

Less cost of 11 and 11 shares of common stock in treasury, respectively

 

(206

)

(206

)

Total stockholders’ equity

 

322,578

 

273,928

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

1,077,424

 

815,628

 

 

5



 

NASH FINCH COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

2005

 

2004

 

2003

 

Operating activities:

 

 

 

 

 

 

 

Net earnings

 

$

41,252

 

14,932

 

35,092

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Special charges - non cash portion

 

(1,296

)

34,779

 

 

Discountinued operations

 

(92

)

(91

)

(678

)

Extinguishment of debt

 

 

2,530

 

 

Curtailment of post retirement plan

 

 

 

(4,004

)

Depreciation and amortization

 

43,721

 

40,241

 

42,412

 

Amortization of deferred financing costs

 

821

 

1,115

 

1,129

 

Amortization of rebatable loans

 

2,595

 

2,392

 

1,521

 

Provision for bad debts

 

4,851

 

4,220

 

8,707

 

Deferred income tax expense

 

711

 

(12,487

)

15,480

 

Gain on sale of property, plant and equipment

 

(4,505

)

(6,001

)

(1,003

)

LIFO charge (credit)

 

724

 

3,525

 

(1,120

)

Asset impairments

 

5,170

 

853

 

2,706

 

Other

 

3,606

 

5,228

 

(832

)

Changes in operating assets and liabilities, net of effects of acquisitions

 

 

 

 

 

 

 

Accounts and notes receivable

 

(5,522

)

(11,270

)

18,484

 

Inventories

 

(31,295

)

19,421

 

13,145

 

Prepaid expenses

 

(1,202

)

(388

)

(2,564

)

Accounts payable

 

(1,298

)

13,617

 

(3,817

)

Accrued expenses

 

6,368

 

(17,780

)

(9,411

)

Income taxes payable

 

(1,677

)

206

 

541

 

Other assets and liabilities

 

(1,615

)

6,852

 

(1,286

)

Net cash provided by operating activities

 

$

61,317

 

101,894

 

114,502

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

Disposal of property, plant and equipment

 

16,346

 

17,136

 

9,002

 

Additions to property, plant and equipment

 

(24,638

)

(22,327

)

(40,728

)

Business acquired, net of cash

 

(226,351

)

 

(2,054

)

Loans to customers

 

(3,086

)

(4,364

)

(10,626

)

Payments from customers on loans

 

7,797

 

2,916

 

7,058

 

Purchase of marketable securities

 

(2,112

)

(2,610

)

 

Sale of marketable securities

 

2,927

 

1,113

 

 

Corporate owned life insurance, net

 

(1,707

)

 

 

Other

 

144

 

(144

)

 

Net cash used in investing activities

 

$

(230,680

)

(8,280

)

(37,348

)

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

Proceeds (payments) of revolving debt

 

30,600

 

14,674

 

(79,400

)

Dividends paid

 

(8,779

)

(6,673

)

(4,320

)

Proceeds from exercise of stock options

 

11,686

 

5,380

 

1,087

 

Proceeds from employee stock purchase plan

 

567

 

654

 

638

 

Proceeds from long-term debt

 

150,087

 

175,000

 

 

Payments of long-term debt

 

(10,425

)

(268,047

)

(7,195

)

Payments of capitalized lease obligations

 

(2,623

)

(2,515

)

(2,900

)

Decrease in outstanding checks

 

(557

)

(12,006

)

(3,726

)

Premium paid for early extinguishment of debt

 

 

(4,674

)

 

Payments of deferred financing costs

 

(4,965

)

(3,135

)

 

Net cash provided by (used) in financing activities

 

165,591

 

(101,342

)

(95,816

)

Net decrease in cash

 

(3,772

)

(7,728

)

(18,662

)

Cash at beginning of year

 

5,029

 

12,757

 

31,419

 

Cash at end of year

 

$

1,257

 

5,029

 

12,757

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Non cash investing and financing activities

 

 

 

 

 

 

 

Purchase of real estate under capital leases

 

$

 

 

 

Acquisition of minority interest

 

21

 

 

 

 

6



 

NASH FINCH COMPANY AND SUBSIDIARIES

Supplemental Data (Unaudited)

 

Impact on Actual Results due to Items Referenced in Press Release (In thousands, except per share amounts)

 

 

 

Twelve Weeks Ended
December 31, 2005

 

Twelve Weeks Ended
January 1, 2005

 

 

 

$

 

Diluted EPS

 

$

 

Diluted EPS

 

Net earnings from continuing operations as reported

 

13,440

 

1.01

 

11,187

 

0.87

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses referenced in the press release

 

 

 

 

 

 

 

 

 

Call premium for early redemption of Senior Subordinated Notes (Q4 2004)

 

 

 

2,819

 

0.22

 

Write-off of unamortized finance costs and original

 

 

 

 

 

issuance discount on credit facility and senior subordinated notes (Q4 2004)

 

 

 

1,525

 

0.12

 

Change in estimate of special charge from store dispositions (Q4 2004)

 

 

 

(1,312

)

(0.10

)

Reduction in income tax expense (Q4 2005 and Q4 2004)

 

(1,076

)

(0.09

)

(2,500

)

(0.20

)

 

 

 

Fifty-Two Weeks Ended
December 31, 2005

 

Fifty-Two Weeks Ended
January 1, 2005

 

 

 

$

 

Diluted EPS

 

$

 

Diluted EPS

 

Net earnings from continuing operations as reported

 

41,196

 

3.13

 

14,877

 

1.18

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses referenced in the press release

 

 

 

 

 

 

 

 

 

Call premium for early redemption of Senior Subordinated Notes (Q4 2004)

 

 

 

2,819

 

0.22

 

Write-off of unamortized finance costs and original

 

 

 

 

 

issuance discount on credit facility and senior subordinated notes (Q4 2004)

 

 

 

1,525

 

0.12

 

Bridge loan fee (Q2 2005)

 

457

 

0.03

 

 

 

 

 

Change in estimate of special charge from store dispositions (Q2 2005 and Q4 2004)

 

(791

)

(0.06

)

(1,312

)

(0.10

)

Special charge from store dispositions (Q2 2004)

 

 

 

22,261

 

1.76

 

Store closure cost reflected in operations (Q2 2004)

 

 

 

2,009

 

0.16

 

Resolution of outstanding state and federal tax issues (Q4 2005 and Q3 and Q4 2004)

 

(1,076

)

(0.08

)

(3,300

)

(0.27

)

 

Other Data (In thousands)

 

 

 

Twelve
Weeks Ended
December 31,
2005

 

Twelve
Weeks Ended
January 1,
2005

 

Fifty-Two
Weeks Ended
December 31,
2005

 

Fifty-Two
Weeks Ended
January 1,
2005

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$

412,681

 

245,043

 

412,681

 

245,043

 

Stockholders’ equity

 

$

322,578

 

273,928

 

322,578

 

273,928

 

Capitalization

 

$

735,259

 

518,971

 

735,259

 

518,971

 

Debt to total capitalization

 

56

%

47

%

56

%

47

%

Working capital ratio (a)

 

2.29

 

2.07

 

2.29

 

2.07

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Data

 

 

 

 

 

 

 

 

 

Consolidated EBITDA (b)

 

$

32,706

 

36,494

 

130,954

 

128,751

 

Interest coverage ratio - trailing 4 qtrs. (consolidated EBITDA to interest expense) (c)

 

5.43

 

4.95

 

5.43

 

4.95

 

Leverage ratio - trailing 4 qtrs. (debt to consolidated EBITDA) (d)

 

2.99

 

1.92

 

2.99

 

1.92

 

Senior secured leverage ratio (senior secured debt to consolidated EBITDA) (e)

 

1.56

 

1.45

 

1.56

 

1.45

 

 

 

 

 

 

 

 

 

 

 

Comparable GAAP Data

 

 

 

 

 

 

 

 

 

Earnings before income taxes to interest expense (c)

 

2.77

 

0.71

 

2.77

 

0.71

 

Debt to earnings before income taxes (d)

 

5.91

 

15.68

 

5.91

 

15.68

 

Senior secured debt to earnings before income taxes (e)

 

3.09

 

7.64

 

3.09

 

7.64

 

 

Debt Covenants

 

Required Ratio

 

Actual Ratio

 

Working capital ratio

 

1.75 (minimum)

 

2.29

 

Interest coverage ratio

 

3.50 (minimum)

 

5.43

 

Senior secured leverage ratio

 

2.75 (maximum)

 

1.56

 

Leverage ratio

 

3.50 (maximum)

 

2.99

 

 


(a)                        Working capital ratio is defined as net trade accounts receivable plus inventory divided by the sum of loans and letters of credit outstanding under our senior secured credit agreement plus certain additional secured debt.

 

(b)                       Consolidated EBITDA, as defined in our credit agreement, is earnings before interest, income tax, 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, and non-cash charges (such as LIFO, asset impairments and closed store lease costs), less cash payments made during the current period on non-cash charges recorded in prior periods. Consolidated EBITDA should not be considered an alternative measure of our net income, operating performance, cash flows or liquidity. The amount of consolidated EBITDA is provided as additional information relevant to compliance with our debt covenants.

 

(c)                        Interest coverage ratio is defined as the Company’s Consolidated EBITDA divided by interest expense for the four trailing quarters ending December 31, 2005 and January 1, 2005, respectively. The most comparable GAAP ratio is earnings from continuing operations before income taxes divided by interest expense for the same periods.

 

(d)                       Leverage ratio is defined as the Company’s total debt at December 31, 2005 and January 1, 2005, divided by Consolidated EBITDA for the respective four trailing quarters. The December 31, 2005 ratio included Consolidated EBITDA calculated on a pro-forma basis giving effect to the acquisition from Roundy’s as if it had occurred at the beginning of the trailing four quarter period. The cumulative effect of these pro-forma adjustments for the four quarters ended December 31, 2005 was $7.2 million, resulting in pro-forma Consolidated EBITDA for purposes of the leverage ratios of $138.1 million. The most comparable GAAP ratio is debt at the same date divided by earnings from continuing operations before income taxes for the respective four trailing quarters, also calculated on a pro-forma basis, of $69.8 million.

 

(e)                        Senior secured leverage ratio is defined as total senior secured debt at December 31, 2005 divided by Consolidated EBITDA for the respective four trailing quarters. The December 31, 2005 ratio included Consolidated EBITDA calculated on a pro-forma basis giving effect to the acquisition from Roundy’s as if it had occurred at the beginning of the trailing four quarter period. The cumulative effect of these pro-forma adjustments for the four quarters ending December 31, 2005 was $7.2 million, resulting in pro-forma Consolidated EBITDA for purposes of the leverage ratios of $138.1 million. The most comparable GAAP ratio is total senior secured debt at the same date divided by earnings from continuing operations before income taxes for the respective four trailing quarters, also calculated on a pro-forma basis, of $69.8 million.

 

7



 

Derivation of Consolidated EBITDA; Segment Consolidated EBITDA; and Segment Profit (in thousands):

 

 

 

2005

 

 

 

 

 

 

 

 

 

 

 

Rolling

 

 

 

Qtr 1

 

Qtr 2

 

Qtr 3

 

Qtr 4

 

4 Qtr

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before income taxes

 

$

11,361

 

16,041

 

18,100

 

21,364

 

66,866

 

Add/(deduct)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

4,187

 

6,578

 

7,919

 

6,048

 

24,732

 

Depreciation and amortization

 

8,374

 

10,614

 

14,357

 

10,376

 

43,721

 

LIFO

 

577

 

828

 

(229

)

(452

)

724

 

Closed store lease costs

 

178

 

 

216

 

(191

)

203

 

Asset impairments

 

458

 

2,089

 

1,772

 

851

 

5,170

 

Gains on sale of real estate

 

 

(541

)

(556

)

(2,600

)

(3,697

)

Subsequent cash payments on non-cash charges

 

(1,375

)

(652

)

(752

)

(2,690

)

(5,469

)

Special charges

 

 

(1,296

)

 

 

(1,296

)

Total Consolidated EBITDA

 

$

23,760

 

33,661

 

40,827

 

32,706

 

130,954

 

 

 

 

 

 

 

 

 

 

 

 

Rolling

 

 

 

Qtr 1

 

Qtr 2

 

Qtr 3

 

Qtr 4

 

4 Qtr

 

Segment Consolidated EBITDA after reclass of marketing revenues (a)

 

 

 

 

 

 

 

 

 

 

 

Food Distribution

 

$

17,726

 

24,291

 

30,379

 

25,962

 

98,358

 

Military

 

9,315

 

9,855

 

12,187

 

9,669

 

41,026

 

Retail

 

8,387

 

8,829

 

10,273

 

10,969

 

38,458

 

Unallocated Corporate Overhead

 

(11,668

)

(9,314

)

(12,012

)

(13,894

)

(46,888

)

 

 

$

23,760

 

33,661

 

40,827

 

32,706

 

130,954

 

 

 

 

 

 

 

 

 

 

 

 

Rolling

 

 

 

Qtr 1

 

Qtr 2

 

Qtr 3

 

Qtr 4

 

4 Qtr

 

Segment profit after reclass of marketing revenues (a)

 

 

 

 

 

 

 

 

 

 

 

Food Distribution

 

$

15,913

 

21,734

 

27,112

 

23,576

 

88,335

 

Military

 

8,910

 

9,452

 

11,644

 

9,259

 

39,265

 

Retail

 

5,729

 

6,155

 

6,444

 

8,284

 

26,612

 

Unallocated Corporate Overhead

 

(19,191

)

(21,300

)

(27,100

)

(19,755

)

(87,346

)

 

 

$

11,361

 

16,041

 

18,100

 

21,364

 

66,866

 

 

 

 

2004

 

 

 

 

 

 

 

 

 

 

 

Rolling

 

 

 

Qtr 1

 

Qtr 2

 

Qtr 3

 

Qtr 4

 

4 Qtr

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before income taxes

 

$

7,757

 

(25,639

)

22,620

 

14,461

 

19,199

 

Add/(deduct)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

6,706

 

6,677

 

8,429

 

5,369

 

27,181

 

Depreciation and amortization

 

10,156

 

9,800

 

11,615

 

8,670

 

40,241

 

LIFO

 

392

 

783

 

1,043

 

1,307

 

3,525

 

Closed store lease costs

 

(129

)

1,146

 

643

 

3,211

 

4,871

 

Asset impairments

 

 

 

 

853

 

853

 

Gains on sale of real estate

 

(82

)

(14

)

(3,317

)

(2,173

)

(5,586

)

Subsequent cash payments on non-cash charges

 

(565

)

(625

)

(1,633

)

(693

)

(3,516

)

Special charges

 

 

36,494

 

 

(1,715

)

34,779

 

Extinguishment of debt

 

 

 

 

7,204

 

7,204

 

Total Consolidated EBITDA

 

$

24,235

 

28,622

 

39,400

 

36,494

 

128,751

 

 

 

 

 

 

 

 

 

 

 

 

Rolling

 

 

 

Qtr 1

 

Qtr 2

 

Qtr 3

 

Qtr 4

 

4 Qtr

 

Segment Consolidated EBITDA after reclass of marketing revenues (a)

 

 

 

 

 

 

 

 

 

 

 

Food Distribution

 

$

17,034

 

20,227

 

25,422

 

21,549

 

84,232

 

Military

 

8,579

 

8,988

 

11,340

 

9,029

 

37,936

 

Retail

 

7,002

 

7,665

 

14,620

 

13,050

 

42,337

 

Unallocated Corporate Overhead

 

(8,380

)

(8,258

)

(11,982

)

(7,134

)

(35,754

)

 

 

$

24,235

 

28,622

 

39,400

 

36,494

 

128,751

 

 

 

 

 

 

 

 

 

 

 

 

Rolling

 

 

 

Qtr 1

 

Qtr 2

 

Qtr 3

 

Qtr 4

 

4 Qtr

 

Segment profit after reclass of marketing revenues (a)

 

 

 

 

 

 

 

 

 

 

 

Food Distribution

 

$

15,086

 

18,275

 

22,937

 

19,652

 

75,950

 

Military

 

8,217

 

8,605

 

10,806

 

8,638

 

36,266

 

Retail

 

3,009

 

3,926

 

10,908

 

10,265

 

28,108

 

Unallocated Corporate Overhead

 

(18,555

)

(56,445

)

(22,031

)

(24,094

)

(121,125

)

 

 

$

7,757

 

(25,639

)

22,620

 

14,461

 

19,199

 

 


(a)          Prior quarter segment information reflect a reclassification of marketing revenues and costs from Unallocated Corporate Overhead to the Food Distribution and Retail segments.

 

8