Nash Finch Reports Second Quarter 2012 Results

Nash Finch Company (NASDAQ: NAFC), one of the leading food distribution companies in the United States, today announced financial results for the twelve weeks (second quarter) ended June 16, 2012.

Financial ResultsTotal Company sales for the second quarter 2012 were $1.09 billion compared to $1.10 billion in the prior-year quarter, a decrease of 0.6%. The acquisition of twelve Bag ‘N Save stores during the second quarter of 2012 contributed to a net increase in total Company sales of $13.0 million, which is comprised of a $29.1 million increase in Retail segment sales being partially offset by a $16.1 million decrease in Food Distribution segment sales that are now reported in the Retail segment. Sales in the Retail segment were negatively impacted by the sale and closing of retail stores since the first quarter of 2011 which resulted in a reduction in sales of $5.8 million. After adjusting for these items, total Company second quarter comparable sales decreased 1.5% relative to the prior year period. Sales for the first twenty-four weeks of 2012 were $2.15 billion compared to $2.20 billion in the prior year period, a decrease of 2.2%. After adjusting for the net increase in year-to-date total Company sales of $13.0 million attributable to the Bag ‘N Save acquisition, offset by the Retail segment year-to-date sales loss of $16.8 million due to the sale and closing of retail stores since the first quarter of 2011, total Company year-to-date comparable sales decreased 2.3% relative to last year.

Consolidated EBITDA 1, adjusted to exclude the impact of significant items totaling $1.6 million and $1.0 million in the second quarter 2012 and 2011, respectively, was $27.8 million, or 2.5% of sales in the second quarter of 2012 as compared to $34.4 million, or 3.1% of sales in the second quarter of 2011. Including the impact of significant items, Consolidated EBITDA for the second quarter 2012 was $26.2 million, or 2.4% of sales, as compared to $33.4 million, or 3.0% of sales, in the prior year quarter. For the first twenty-four weeks of 2012, Consolidated EBITDA, adjusted to exclude the impact of significant items totaling $2.6 million and $2.0 million in 2012 and 2011, respectively, was $51.7 million or 2.4% of sales in 2012, compared to $65.2 million, or 3.0% of sales in 2011. Including the impact of significant items, Consolidated EBITDA for the second quarter year-to-date 2012 was $49.0 million, or 2.3% of sales, compared to $63.2 million, or 2.9% of sales, in the prior year period. Consolidated EBITDA is a non-GAAP financial measure that is reconciled to the most directly comparable GAAP financial results in the attached financial statements.

"The investments we made in our food distribution marketing programs which were designed to help drive sales appear to be taking hold as is evidenced by the sequential improvement in comparable sales, but as we expected, lower food price inflation trends continued to negatively impact our EBITDA results in the second quarter compared to last year,” said Alec Covington, President and CEO of Nash Finch

Net earnings in the second quarter, adjusted to exclude the impact of significant items totaling $94.0 million or $7.24 per diluted share in 2012 and $2.0 million or $0.15 per diluted share in the 2011 quarter, were $9.0 million or $0.69 per diluted share in the second quarter of 2012, compared to $12.1 million or $0.92 per diluted share in the second quarter of 2011. Including the impact of significant items, our reported net loss for the second quarter of 2012 was $85.0 million or $6.55 per diluted share, as compared to net earnings of $10.1 million or $0.77 per diluted share in the prior year quarter, and is detailed in the table below. For the first twenty-four weeks of 2012, net earnings, adjusted to exclude the impact of significant items totaling $94.8 million or $7.31 per diluted share in 2012 and $4.1 million or $0.31 per diluted share in 2011, were $15.3 million or $1.17 per diluted share in 2012, compared to $21.7 million or $1.66 per diluted share in 2011. Including the impact of significant items, our reported net loss for the first twenty-four weeks of 2012 was $79.5 million or $6.14 per diluted share, compared to net earnings of $17.5 million or $1.35 per diluted share in the prior year period.

The Company took a non-cash goodwill impairment charge of $96.9 million after tax in the second quarter 2012 to write-off the carrying values of goodwill in the Food Distribution and Retail segments. Both the goodwill impairment charge and the $4.1 million after tax gain on acquisition are non-cash items in our consolidated financial statements. Accordingly, neither the impairment of goodwill nor the gain on acquisition has any impact on our cash flows or Consolidated EBITDA. Nash Finch has a strong balance sheet and the net asset values of the business segments are substantially higher than our current market capitalization.

“The goodwill impairment charge resulted from having a depressed stock price during this down economy. The goodwill impairment does not reflect management’s outlook on the financial future of Nash Finch or any of its business segments. We are committed to the long term success of each of our business segments and we are making capital investments to promote the growth of the business,” said Covington.

The following table identifies the significant items affecting our Consolidated EBITDA, net earnings and diluted earnings per share for the second quarter 2012 and prior year results:
(dollars in millions except per share amounts)   2nd Quarter   Fiscal
2012   2011   2012   2011
Significant items      
Transaction and integration costs related to business acquisitions $ (0.9 ) - (1.2 ) -
Restructuring costs for centralization - (0.5 ) - (0.5 )
Net costs associated with retail stores sold, closed or remodeled - (0.3 ) - (0.3 )
Military distribution center conversion and transition costs   (0.7 )   (0.2 )  

(1.4
)   (1.2 )
Significant charges impacting Consolidated EBITDA $ (1.6 ) (1.0 ) (2.6 ) (2.0 )
 
LIFO charges (0.4 ) (2.1 ) (0.6 ) (2.7 )
Goodwill impairment (132.0 ) - (132.0 ) -
Retail impairments - (0.3 ) - (0.3 )
Early termination of capital lease - 0.4 - 0.4
Gain on acquisition of business 6.6 - 6.6 -
Military distribution center non-cash pre-opening expense - - (0.1 ) -
Non-cash loss on sale of retail stores   -     (0.2 )   -     (2.2 )
Total significant charges impacting earnings before tax $ (127.4 ) (3.3 ) (128.7 ) (6.8 )
Income tax on significant net charges 0.8 1.3 1.3 2.7
Tax on gain on acquisition of business (2.5 ) - (2.5 ) -
Tax on goodwill impairment   35.1     -     35.1     -  
Total significant charges impacting net earnings $ (94.0 )   (2.0 )   (94.8 )   (4.1 )
Diluted earnings (loss) per share impact from significant items (7.24 ) (0.15 ) (7.31 ) (0.31 )
Diluted earnings (loss) per share, as reported   (6.55 )   0.77     (6.14 )   1.35  
Diluted earnings per share, as adjusted $ 0.69     0.92     1.17     1.66  
 

Military Distribution Results
       
 
(dollars in millions) 2nd Quarter   Fiscal
2012   2011   2012   2011
Net Sales $ 523.2 529.1 1,054.5 1,066.6
Segment EBITDA1 11.8 14.8 25.2 29.9
Percentage of Sales 2.3% 2.8% 2.4% 2.8%
 

The Military segment net sales decreased 1.1% in both the second quarter 2012 and year-to-date 2012 compared to the prior year. However, a larger portion of Military sales during the current year have been on a consignment basis, which are included in our reported sales on a net basis. The year-over-year increase in consignment sales was approximately $3.4 million during the second quarter and $2.6 million in the year-to-date period. Including the impact of consignment sales, comparable Military sales decreased 0.5% in the second quarter 2012 and 0.8% in the year-to-date 2012 period compared to the prior year.

The Military segment EBITDA was $11.8 million, or 2.3% of sales, in the second quarter 2012 as compared to $14.8 million, or 2.8% of sales, in the second quarter 2011. Military segment EBITDA for the year-to-date 2012 period was $25.2 million, or 2.4% of sales, as compared to $29.9 million, or 2.8% of sales, in the prior year period. The decrease in Military EBITDA is primarily due to declines in margins related to lower inflation year-over-year, and partially due to approximately $0.7 million in start-up and transition costs associated with the opening of the Oklahoma City distribution center and our newest location in Landover, Maryland which replaces our Jessup, Maryland location.

"We continue to be under pressure in this segment due to increased competition and the low rate of product inflation compared to the prior year. I'm pleased to report that we've taken another step in continuing to grow our Military segment. We signed a lease on a 367,000 square foot Northeast distribution center in Landover, Maryland, which replaces a smaller distribution center in Jessup, Maryland that was at the end of its lease. We started shipping from the facility during the last week of June. This new facility will be much more efficient, will complete our worldwide network and gives us the ability to deliver products to commissaries that we don't currently serve in the Northeast,” said Covington.

Food Distribution & Retail Results
   
 
(dollars in millions) 2nd Quarter   Fiscal
2012   2011   2012   2011
Sales    
Food Distribution $ 433.1 459.5 857.7 909.8
Retail   136.5   111.0   239.2   223.0
Total $ 569.6   570.5   1,096.9   1,132.8
Segment EBITDA1
Food Distribution $ 9.4 13.8 16.0 24.4
Retail   5.0   4.8   7.9   8.9
Total $ 14.4   18.5   23.8   33.3
 
Percentage of Sales
Food Distribution 2.2% 3.0% 1.9% 2.7%
Retail   3.6%   4.3%   3.3%   4.0%
Total   2.5%   3.3%   2.2%   2.9%
 

The combined Food Distribution and Retail segment sales decreased 0.1% in the second quarter and decreased 3.2% in the year-to-date period as compared to the prior year periods. The increase in Retail sales was primarily attributable to the Bag ‘N Save acquisition, which was responsible for a $29.1 million increase in sales as compared to the prior year quarter. Because Bag ‘N Save was a Food Distribution customer, this acquisition was also responsible for $16.1 million of the year-over-year decrease in Food Distribution segment sales. In addition, sales losses of $5.8 million and $16.8 million in the second quarter and year-to-date 2012, respectively, were due to the closing or sale of retail stores since the end of the first quarter 2011. Retail same store sales declined 0.3% as compared to the prior year quarter and 0.8% in the year-to-date comparison.

The combined Food Distribution and Retail segment EBITDA was $14.4 million, or 2.5% of sales, in the second quarter 2012 as compared to $18.5 million, or 3.3% of sales, in the second quarter 2011. The combined segment EBITDA was $23.8 million, or 2.2% of sales, in the year-to-date period as compared to $33.3 million, or 2.9% of sales, in the prior year period. The decrease in second quarter EBITDA was partially due to higher inflation in the previous year resulting in a higher than normal prior year gross margin performance, and partially due to approximately $0.9 million in transaction integration costs associated with the retail acquisitions.

“While we are disappointed that the economic conditions continue to be challenging, we are pleased with the sales improvement achieved in our Food Distribution and Retail businesses and we will continue to make short term investments in new initiatives which we believe will promote future growth in both businesses,” said Covington. “The acquisitions of Bag ‘N Save and No Frills provide an exciting opportunity to increase our geographic footprint in Nebraska and to incorporate successful businesses into our corporate-owned store base. We remain committed to implementing strategies aimed at growing sales and EBITDA.”

Financial Target ProgressThe following table charts the Company’s progress towards its long-term financial targets that were announced as part of the Company’s strategic plan in November 2006.
Financial Targets     2nd            
Quarter
Long-term YTD Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
    Target   2012   2011   2010   2009   2008   2007   2006
Organic Revenue Growth3 2.0% (3.1%) (3.8%) (5.4%) (0.6%) 3.1% (2.6%) (3.1%)
Consolidated EBITDA Margin4 4.0% 2.3% 2.9% 2.8% 2.7% 3.1% 2.9% 2.2%
Trailing Four Quarter Free Cash Flow / Net Assets5 3.3% 6.8% 0.9% 10.6% 12.0% 9.2% 8.7%
Trailing Four Quarter Free Cash Flow to Net Assets excluding impact of strategic projects6 10.0% 6.1% 13.9% 8.4% 13.1% 14.0% 9.7% 8.7%
Total Leverage Ratio7 2.5 - 3.0 x 2.83x 2.14x 2.29x 2.02x 1.75x 2.20x 3.11x
 

LiquidityTotal debt at the end of the second quarter 2012 was $354.4 million as compared to $319.4 million at the end of the second quarter 2011. The Company continues to focus on effectively managing its balance sheet and is currently in compliance with all of its debt covenants. The debt leverage ratio as of the end of the second quarter 2012 was 2.83. Availability on the Company’s revolving credit facility at the end of the quarter was $231.2 million.

Gain on Acquisition of Bag ‘N SaveA $6.6 million pre-tax gain on the acquisition of a business of was recognized during the second quarter 2012 related to the Bag ’N Save acquisition. The fair value of the identifiable assets acquired net of liabilities assumed of $36.3 million exceeded the purchase price paid for the business of $29.7 million. As a result, the Company recognized a pre-tax gain of $6.6 million associated with the acquisition of the business.

Goodwill ImpairmentDuring the second quarter we performed an impairment test of goodwill due to market conditions as of the end of our fifth fiscal period. The Company’s market capitalization as calculated, using the share price multiplied by the shares outstanding, had declined in the second quarter and from fiscal year end 2011 resulting in a market value significantly lower than the carrying value of the business segments. We recorded goodwill impairment charges of $132.0 million in the second quarter of fiscal 2012, of which $113.0 million related to our Food Distribution segment and $19.0 million related to our Retail segment. The impairment of goodwill is a non-cash charge that does not impact cash flow or Consolidated EBITDA. At the end of the second quarter there is approximately $34.6 million of goodwill remaining on the Company’s balance sheet related to the Military business segment.

Subsequent Event - No Frills AcquisitionAs previously announced, U Save Foods, Inc., a Nash Finch wholly-owned subsidiary, completed an asset purchase of NF Foods, LLC (DBA No Frills Supermarkets, herein referred to as “No Frills”) on June 25, 2012. The Company acquired certain assets and liabilities, relating to eighteen retail grocery stores. Fourteen stores are located in Nebraska, primarily in the Greater Omaha market, and the other four stores are located in western Iowa. No Frills was a longtime customer of Nash Finch. The eighteen retail grocery stores represent approximately $230.9 million in annual retail sales for the No Frills fiscal year ended December 31, 2011.

The acquisition was funded through the Asset Based Credit agreement. The aggregate purchase price paid was approximately $47.5 million, and is subject to customary post-closing adjustments based upon changes in the working capital of the purchased businesses.

1 References to EBITDA, Consolidated EBITDA, and segment EBITDA are calculated as earnings (loss) 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, closed store lease costs and share-based compensation), 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 (loss), operating performance, cash flows or liquidity. Consolidated EBITDA is provided as additional information as a key metric used to determine payout pursuant to our Short-Term and Long-Term Incentive Plans. The Company also believes investors find the information useful because it reflects the resources available for strategic investments including, for example, capital needs of the business, strategic acquisitions and debt service.

2 Adjusted EPS is defined as net earnings adjusted for any significant items divided by diluted shares outstanding.

3 Organic Revenue Growth is the percentage change in revenues for a fiscal period(s) compared to the similar prior year fiscal period(s), excluding incremental revenue obtained through acquisitions.

4 Consolidated EBITDA Margin is calculated by dividing Consolidated EBITDA by sales.

5 Trailing Four Quarter Free Cash Flow to Net Assets ratio is defined as cash provided from operations less capital expenditures for property, plant & equipment during the trailing four quarters divided by the average net assets for the current period and prior year comparable period (total assets less current liabilities plus current portion of long-term debt and capital leases).

6 Trailing Four Quarter Free Cash Flow to Net Assets excluding impact of strategic projects ratio is defined as cash provided from operations less capital expenditures for property, plant & equipment (excluding capital expenditures for strategic projects) during the trailing four quarters divided by the average net assets (excluding average net assets generated from strategic projects) for the current period and prior year comparable period (total assets less current liabilities plus current portion of long-term debt and capital leases).

7 Total Leverage Ratio is defined as total debt (current portion of long-term debt and capital leases, long-term debt and capitalized lease obligations) divided by the trailing four quarters Consolidated EBITDA.

A conference call to review the second quarter 2012 results is scheduled at 9 a.m. CT (10 a.m. ET) on July 19, 2012. Interested participants can listen to the conference call over the Internet by logging onto the “Investor Relations” portion of Nash Finch's website at http://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 Company 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 36 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt. The Company also owns and operates a base of retail stores, primarily supermarkets under the Econofoods®, Family Thrift Center®, AVANZA®, Family Fresh Market®, No Frills®, Bag ‘N Save® and Sun Mart® trade names. Further information is available on the Company's website at www.nashfinch.com.

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements relate to trends and events that may affect our future financial position and operating results. Any statement contained in this release that is not statements of historical fact may be deemed forward-looking statements. For example, words such as “may,” “will,” “should,” “likely,” “expect,” “anticipate,” “estimate,” “believe,” “intend, ” “potential” or “plan,” or comparable terminology, are intended to identify forward-looking statements. Such statements are based upon current expectations, estimates 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 or contribute to material differences include, but are not limited to, the following:
  • the effect of competition on our food distribution, military and retail businesses;
  • general sensitivity to economic conditions, including the uncertainty related to the current state of the economy in the U.S. and worldwide economic slowdown; disruptions to the credit and financial markets in the U.S. and worldwide; changes in market interest rates; continued volatility in energy prices and food commodities;
  • macroeconomic and geopolitical events affecting commerce generally;
  • changes in consumer buying and spending patterns;
  • our ability to identify and execute plans to expand our food distribution, military and retail operations;
  • possible changes in the military commissary system, including those stemming from the redeployment of forces, congressional action and funding levels;
  • our ability to identify and execute plans to improve the competitive position of our retail operations;
  • the success or failure of strategic plans, new business ventures or initiatives;
  • our ability to successfully integrate and manage current or future businesses we acquire, including the ability to manage credit risks and retain the customers of those operations;
  • changes in credit risk from financial accommodations extended to new or existing customers;
  • significant 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;
  • legal, governmental, legislative or administrative proceedings, disputes, or actions that result in adverse outcomes;
  • our ability to identify and remediate any material weakness in our internal controls that could affect our ability to detect and prevent fraud, expose us to litigation, or prepare financial statements and reports in a timely manner;
  • changes in accounting standards;
  • technology failures that may have a material adverse effect on our business;
  • severe weather and natural disasters that may impact our supply chain;
  • unionization of a significant portion of our workforce;
  • costs related to a multi-employer pension plan which has liabilities in excess of plan assets;
  • changes in health care, pension and wage costs and labor relations issues;
  • product liability claims, including claims concerning food and prepared food products;
  • threats or potential threats to security;
  • unanticipated problems with product procurement; and
  • maintaining our reputation and corporate image.

A more detailed discussion of many 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. You should carefully consider each of these factors and all of the other information in this release. We believe that all forward-looking statements are based upon reasonable assumptions when made. However, we caution that it is impossible to predict actual results or outcomes and that accordingly you should not place undue reliance on these statements. Forward-looking statements speak only as of the date when made and we undertake no obligation to revise or update these statements in light of subsequent events or developments. Actual results and outcomes may differ materially from anticipated results or outcomes discussed in forward-looking statements. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the Securities and Exchange Commission (SEC).
NASH-FINCH COMPANY AND SUBSIDIARIES          
Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts)
 
12 Weeks Ended 24 Weeks Ended
June 16, June 18, June 16, June 18,
2012 2011 2012 2011
 
Sales $ 1,092,798 1,099,575 2,151,432 2,199,384
Cost of sales 1,004,004   1,008,998 1,981,915   2,019,818
Gross profit 88,794   90,577 169,517   179,566
 
Other costs and expenses:
Selling, general and administrative 62,900 60,241 121,212 122,818
Gain on acquisition of a business (6,639 ) - (6,639 ) -
Goodwill impairment 131,991 - 131,991 -
Depreciation and amortization 8,382 8,367 16,586 16,950
Interest expense 5,460   5,355 10,598   10,814
Total other costs and expenses 202,094   73,963 273,748   150,582
 
Earnings (loss) before income taxes (113,300 ) 16,614 (104,231 ) 28,984
 
Income tax expense (benefit) (28,332 ) 6,563 (24,717 ) 11,452
Net earnings (loss) $ (84,968 ) 10,051 (79,514 ) 17,532
 
Net earnings (loss) per share:
Basic $ (6.55 ) 0.79 (6.14 ) 1.38
Diluted $ (6.55 ) 0.77 (6.14 ) 1.35
 
Declared dividends per common share $ 0.18 0.18 0.36 0.36
 
Weighted average number of common shares
outstanding and common equivalent shares outstanding:
Basic 12,966 12,744 12,958 12,731
Diluted 12,966 13,042 12,958 13,029
 
NASH-FINCH COMPANY AND SUBSIDIARIES    
Consolidated Balance Sheets
(In thousands, except per share amounts)
    June 16, December 31,

Assets
2012 2011
Current assets: (unaudited)
Cash $ 857 773
Accounts and notes receivable, net 253,820 243,763
Inventories 352,380 308,621
Prepaid expenses and other 15,434 17,329
Deferred tax asset, net 7,604   6,896  
Total current assets 630,095 577,382
 
Notes receivable, net 22,645 23,221
Property, plant and equipment:
Property, plant and equipment 717,038 686,794
Less accumulated depreciation and amortization (423,583 ) (413,695 )
Net property, plant and equipment 293,455 273,099
 
Goodwill 34,639 170,941
Customer contracts and relationships, net 14,357 15,399
Investment in direct financing leases 2,542 2,677
Other assets 11,637   11,049  
Total assets $ 1,009,370   1,073,768  
 

Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt and capital lease obligations $ 2,144 2,932
Accounts payable 237,992 234,722
Accrued expenses 54,904   61,459  
Total current liabilities 295,040 299,113
 
Long-term debt 337,386 278,546
Capital lease obligations 14,868 15,905
Deferred tax liability, net 8,524 40,671
Other liabilities 32,651 34,910
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 13,765 and 13,727 shares, respectively
22,943 22,878
Additional paid-in capital 118,619 118,222
Common stock held in trust (1,254 ) (1,254 )
Deferred compensation obligations 1,254 1,254
Accumulated other comprehensive loss (14,707 ) (14,707 )
Retained earnings 246,253 330,470
Common stock in treasury; 1,540 and 1,541 shares, respectively (52,207 ) (52,240 )
Total stockholders' equity 320,901   404,623  
Total liabilities and stockholders' equity $ 1,009,370   1,073,768  
 
NASH-FINCH COMPANY AND SUBSIDIARIES    
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
      24 Weeks Ended
June 16, June 18,
2012 2011
Operating activities:
Net earnings (loss) $ (79,514 ) 17,532

Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
Gain on acquisition of a business (6,639 ) -
Depreciation and amortization 16,586 16,950
Amortization of deferred financing costs 576 845
Non-cash convertible debt interest 2,815 2,610
Rebateable loans 1,942 2,066
Provision for (recovery of) bad debts (634 ) 779
Provision for (recovery of) lease reserves (33 ) 607
Deferred income tax expense (benefit) (33,657 ) 3,252
Loss (gain) on sale of property, plant and equipment (387 ) 1,422
LIFO charge 602 2,632
Asset impairments 62 349
Impairments of goodwill 131,991 -
Share-based compensation 1,641 2,531
Deferred compensation 507 609
Other (126 ) (584 )
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts and notes receivable (3,396 ) (5,548 )
Inventories (33,196 ) 21,279
Prepaid expenses (1,284 ) (446 )
Accounts payable (4,590 ) (23,230 )
Accrued expenses (6,275 ) (4,493 )
Income taxes payable 2,688 929
Other assets and liabilities (3,058 ) (2,599 )
Net cash provided by (used in) operating activities (13,379 ) 37,492  
 
Investing activities:
Proceeds from sale of assets 5,551 3,074
Additions to property, plant and equipment (9,903 ) (33,110 )
Business acquired, net of cash (29,700 ) (1,587 )
Loans to customers (7,766 ) (2,285 )
Payments from customers on loans 506 672
Corporate-owned life insurance, net (80 ) (902 )
Other (151 ) -  
Net cash used in investing activities (41,543 ) (34,138 )
Financing activities:
Proceeds from revolving debt 39,800 4,700
Dividends paid (4,398 ) (4,364 )
Proceeds from long-term debt 16,890 -
Payments of long-term debt (1,260 ) (251 )
Payments of capitalized lease obligations (1,194 ) (1,577 )
Increase (decrease) in outstanding checks 5,949 (1,526 )
Payments of deferred financing costs (125 ) -
Tax benefit from share-based compensation 66 -
Other (722 ) (507 )
Net cash provided by (used in) financing activities 55,006   (3,525 )
Net increase (decrease) in cash 84 (171 )
Cash at beginning of year 773   830  
Cash at end of period $ 857   659  
 
NASH FINCH COMPANY AND SUBSIDIARIES    
Supplemental Data (Unaudited)
 

Other Data (In thousands)
June 16, 2012 June 18, 2011
 
Total debt $ 354,398 319,425
Stockholders' equity $ 320,901 392,345
Capitalization $ 675,299 711,770
Debt to total capitalization

52.5%

 

44.9%

 
 
 
Non-GAAP Data
Consolidated EBITDA (a) $ 125,049 140,209
Leverage ratio - trailing 4 qtrs. (debt to consolidated EBITDA) (b) 2.83x 2.28x
 
 
Comparable GAAP Data
Debt to earnings (loss) before income taxes (b) (4.74 ) 4.58
 
  (a)  

Consolidated EBITDA, as defined in our credit agreement, is earnings (loss) 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, closed store lease costs and share-based compensation), 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 (loss), operating performance, cash flows or liquidity. The amount of Consolidated EBITDA is provided as a metric used to determine payout of performance units pursuant to our Long-Term Incentive Plan.
 
(b)

Leverage ratio is defined as the Company's total debt at June 16, 2012 and June 18, 2011, divided by Consolidated EBITDA for the respective four trailing quarters. The most comparable GAAP ratio is debt at the same date divided by earnings (loss) from continuing operations before income taxes for the respective four trailing quarters.

 

Derivation of Consolidated EBITDA; Segment Consolidated EBITDA and Segment Profit (Loss) (in thousands)
             
FY 2012
2011 2011 2012 2012 Rolling
Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
 
Earnings (loss) before income taxes $ 16,737 12,707 9,069 (113,300) (74,787)
Add/(deduct)
LIFO charge 7,085 4,503 181 420 12,189
Depreciation and amortization 10,738 8,016 8,204 8,382 35,340
Interest expense 7,014 7,066 5,138 5,460 24,678
Goodwill impairment - - - 131,991 131,991
Gain on acquisition of business - - - (6,639) (6,639)
Closed store lease costs 24 124 - (33) 115
Asset impairment 13 191 62 - 266
Net loss (gain) on sale of real estate and other assets (106) 41 (476) 89 (452)
Stock compensation 1,761 1,137 1,094 546 4,538
- - -
Subsequent cash payments on non-cash charges (650) (369) (442) (729) (2,190)
Total Consolidated EBITDA $ 42,616 33,416 22,830 26,187 125,049
 
 
2011 2011 2012 2012 Rolling
Segment Consolidated EBITDA Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Military $ 21,348 17,061 13,400 11,797 63,606
Food Distribution 15,907 10,747 6,539 9,419 42,612
Retail 5,361 5,608 2,891 4,971 18,831
$ 42,616 33,416 22,830 26,187 125,049
 
 
2011 2011 2012 2012 Rolling
Segment profit (loss) Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Military $ 14,666 12,314 10,474 8,570 46,024
Food Distribution 6,177 4,014 2,338 5,517 18,046
Retail 1,790 2,668 661 2,390 7,509
Unallocated:
Interest (5,896) (6,289) (4,404) (4,425) (21,014)
Gain on acquisition of business - - - 6,639 6,639
Goodwill Impairment - - - (131,991) (131,991)
$ 16,737 12,707 9,069 (113,300) (74,787)
 
 
FY 2011
2010 2010 2011 2011 Rolling
Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Earnings before income taxes $ 22,830 18,000 12,370 16,614 69,814
Add/(deduct)
LIFO charge (credit) 285 129 501 2,131 3,046
Depreciation and amortization 10,883 8,481 8,583 8,367 36,314
Interest expense 7,123 5,656 5,459 5,355 23,593
Settlement of pre-acquisition contingency (310) - 448 159 297
Closed store lease costs 725 29 - 349 1,103
Asset impairment 108 11 1,796 (391) 1,524
Stock compensation 2,717 1,692 1,159 1,372 6,940
Subsequent cash payments on non-cash charges (578) (768) (504) (572) (2,422)
Total Consolidated EBITDA $ 43,783 33,230 29,812 33,384 140,209
 
2010 2010 2011 2011 Rolling
Segment Consolidated EBITDA Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Military $ 17,412 14,081 15,107 14,835 61,435
Food Distribution 18,889 14,570 10,581 13,791 57,831
Retail 7,482 4,579 4,124 4,758 20,943
$ 43,783 33,230 29,812 33,384 140,209
 
2010 2010 2011 2011 Rolling
Segment profit Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Military $ 14,270 11,450 12,147 11,285 49,152
Food Distribution 11,666 9,444 5,845 7,709 34,664
Retail 2,558 1,892 (984) 2,128 5,594
Unallocated:
Interest (5,664) (4,786) (4,638) (4,508) (19,596)
$ 22,830 18,000 12,370 16,614 69,814
 

Copyright Business Wire 2010

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