MINNEAPOLIS--(BUSINESS WIRE)--Nov. 13, 2007--Nash Finch Company
(NASDAQ:NAFC), one of the leading food distribution companies in the
United States, today announced financial results for the third quarter
ended October 6, 2007.
Financial Results
Total company sales for the sixteen week third quarter of 2007
were $1.367 billion compared to $1.427 billion in the prior-year
quarter. Sales for the first forty weeks of 2007 were $3.463 billion
compared to $3.532 billion in the prior-year period. The third quarter
and year-to-date sales declines of 4.2% and 2.0%, respectively, result
primarily from the transition of a large customer to another supplier
which was announced earlier this year, the closure of unprofitable
retail stores, and to a lesser degree customer attrition that occurred
in 2006 that has not yet been fully offset by new customer gains in
2007.
Net earnings for the third quarter 2007 were $15.4 million, or
$1.12 per diluted share, as compared to net loss of ($4.6) million, or
($0.34) per diluted share, in the prior year quarter. During the third
quarter the Company reported the effect of resolving two Internal
Revenue Service examinations, 2003 statute of limitations expiration
and filing of various reports to settle potential tax liabilities
resulting in a decrease to income tax expense of approximately $4.9
million, or $0.36 per diluted share. Net earnings for the first forty
weeks of 2007 were $30.3 million, or $2.22 per diluted share, as
compared to net earnings of $3.4 million, or $0.25 per diluted share,
in the prior-year period. Net earnings for both years were affected by
several significant items and are detailed in the table below.
Consolidated EBITDA(1) for the third quarter 2007 was $40.1
million, or 2.9% of sales, compared to $27.5 million, or 1.9% of
sales, for the prior year quarter. For the first forty weeks of 2007,
Consolidated EBITDA was $98.6 million, or 2.8% of sales, compared to
$78.8 million, or 2.2% 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.
"I remain quite pleased with the overall improvements our company
has made thus far this year, and specifically the improvements in
EBITDA visible in the third quarter results," said Alec Covington,
President and CEO of Nash Finch. "EBITDA as a percentage of sales
increased once again among all three business units versus the prior
year, a trend which we have been able to sustain throughout 2007.
These accomplishments have primarily resulted from improved inventory
management resulting in higher gross margins and lower product cost,
as well as significant reductions in our overall expense structure."
The following table identifies the significant pre-tax items
affecting our earnings and Consolidated EBITDA for the third quarter
and year-to-date 2007 and prior year results:
----------------------------------------------------------------------
(dollars in millions
except per share 3rd Quarter 3rd Quarter Year-to-date Year-to-date
amounts) 2007 2006 2007 2006
----------------------------------------------------------------------
Significant items
Increase in allowance
for doubtful
accounts relating to
customer receivables $ - $ 0.5 $ - $ 1.8
Inventory markdown
and closure costs of
retail stores 0.5 0.3 0.5 1.2
Reversal related to
change in vacation
policy - - - (1.5)
Executive severance - 4.2 - 4.2
Gain on the sale of
intangible asset - - (0.7) -
----------- ----------- ------------ ------------
Significant items
impacting
Consolidated EBITDA 0.5 5.0 (0.2) 5.7
----------- ----------- ------------ ------------
Asset impairments and
lease costs on
closed retail stores $ 1.2 $ 0.5 $ 1.4 $ 2.0
Asset impairments and
lease reserve
adjustments relating
to customers at risk
and other lease
reserves - 4.5 0.7 4.5
Trade name impairment - 2.0 - 2.0
Change in estimate of
2004 special charge
for locations
subsequently sublet
and updated
assumptions - 6.3 (1.3) 6.3
Charges due to the
bankruptcy of a
long-time customer - - - 4.1
----------- ----------- ------------ ------------
Significant items
impacting pre-tax
income $ 1.7 $18.3 $ 0.6 $ 24.6
=========== =========== ============ ============
Diluted earnings per
share impact $0.08 $0.83 $ .03 $ 1.12
=========== =========== ============ ============
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Food Distribution Results
------------------------------
----------------------------------------------------------------------
(dollars in 3rd 3rd
millions) Quarter Quarter % Year-to-date Year-to-date %
2007 2006 Change 2007 2006 Change
----------------------------------------------------------------------
Sales $810.3 $861.2 -5.9% $2,058.1 $2,121.2 -3.0%
Segment
EBITDA (1) $31.8 $26.0 22.0% $76.1 $66.5 14.5%
Percentage of
Sales 3.9% 3.0% 3.7% 3.1%
----------------------------------------------------------------------
----------------------------------------------------------------------
The decreases in the third quarter and year-to-date 2007 food
distribution segment sales versus the comparable 2006 periods were
primarily attributable to the impact of a large customer which
transitioned to another supplier earlier in 2007 along with customer
attrition experienced in 2006 which has not been fully offset by new
business gains in 2007. Excluding the impact of the $43.8 million
sales decrease during the quarter attributable to this customer, the
Food Distribution segment sales decrease would have been 0.8% which is
a slight improvement to the year-to-date trend. The increase in the
food distribution segment EBITDA for the third quarter and
year-to-date periods was primarily due to significant improvements
realized in gross margin and expense reductions.
"These results reflect the stabilization of the operations within
our core food distribution segment as compared to last year," said Mr.
Covington. "Through our continued focus on inventory management
practices, vendor relationships, and operational and overhead expense
controls, we have seen significant improvement in our results. In
addition, these actions are aiding our customers by providing
additional promotional product allowances with deeper discounts
resulting in improved overall product costs."
----------------------------------------------------------------------
Military Distribution Results
------------------------------
----------------------------------------------------------------------
(dollars in 3rd 3rd
millions) Quarter Quarter % Year-to-date Year-to-date %
2007 2006 Change 2007 2006 Change
----------------------------------------------------------------------
Sales $376.1 $365.0 3.0% $948.4 $906.5 4.6%
Segment
EBITDA (1) $13.0 $11.9 9.7% $33.5 $31.3 7.0%
Percentage of
Sales 3.5% 3.2% 3.5% 3.5%
----------------------------------------------------------------------
----------------------------------------------------------------------
The military segment sales increase in the third quarter reflects
stronger sales domestically which were offset by a small decline in
export sales. Year-to-date sales for both domestic and export sales
increased relative to the prior year. The increase in military segment
EBITDA for the third quarter and year-to-date periods is primarily due
to operating expense reductions and slightly improved margins.
----------------------------------------------------------------------
Retail Results
---------------------
----------------------------------------------------------------------
(dollars in 3rd 3rd
millions) Quarter Quarter % Year-to-date Year-to-date %
2007 2006 Change 2007 2006 Change
----------------------------------------------------------------------
Sales $180.7 $200.8 -10.0% $456.8 $504.8 -9.5%
Segment
EBITDA (1) $7.9 $8.6 -8.4% $23.5 $24.3 -3.3%
Percentage of
Sales 4.4% 4.3% 5.2% 4.8%
----------------------------------------------------------------------
----------------------------------------------------------------------
The retail segment sales decreases in both the third quarter and
year-to-date comparisons are attributable to the closure of eight
stores since the end of the third quarter 2006. Same store sales
decreased 1.6% in the third quarter 2007 and were down 0.6%
year-to-date when compared to the same periods in 2006. The retail
segment EBITDA comparisons for the quarter and year-to-date periods
were lower due to costs incurred relative to unprofitable stores which
were closed, along with expenses associated with a major third quarter
marketing campaign launched by the company in one of it's core
markets. Retail segment EBITDA margins as a percent of sales were
slightly improved from the prior year.
Liquidity
During the third quarter and year-to-date periods of 2007, the
Company repaid $16.0 million and $41.3 million, respectively, of debt
on its senior credit facilities. The Company continues to focus on
effectively managing its working capital, reducing indebtedness,
improving cash flow, and is currently in compliance with all of its
debt covenants. The debt leverage ratio as of the end of the third
quarter 2007 was 2.51, a significant improvement from 3.42 at the end
of fiscal 2006. Availability on the Company's revolving credit
facility at the end of the quarter was $105.9 million.
Share Repurchase Program
On November 6, 2007, the Board of Directors authorized a share
repurchase program authorizing the Company to purchase up to 1 million
shares of the Company's common stock. The program will take effect on
November 19, 2007 and will continue until January 3, 2009.
Financial Target Progress
The following table charts the Company's progress towards its
long-term financial targets that are anticipated to be attained
through successful execution of the strategic plan. Substantial
improvement has been achieved in 2007 relative to fiscal 2006 results
towards three of the four targets, namely, consolidated EBITDA margin,
the ratio of free cash flow to net assets, and debt leverage ratio.
The Company expects to make improvements on the organic revenue growth
metric as we implement initiatives associated with our strategic plan.
----------------------------------------------------------------------
Financial Objectives Long-term Year End 3rd Quarter Year-to-date
Target 2006 2007 2007
----------------------------------------------------------------------
Organic Revenue Growth 2.0% -2.9% -4.2% -2.0%
Consolidated EBITDA Margin 4.0% 2.2% 2.9% 2.8%
Trailing Four Quarter Free
Cash Flow(2) / Net Assets 10.0% 8.7% 10.9% 10.9%
Debt Leverage Ratio (Total 2.50 x 3.42 x 2.51 x 2.51 x
Debt / Trailing Four
Quarter Consolidated
EBITDA)
----------------------------------------------------------------------
----------------------------------------------------------------------
(2)Defined as cash provided from operations less capital
expenditures for property, plant & equipment during the trailing four
quarters.
Other Matters
Currently the Company's Board of Directors is divided into three
classes of Directors, with the Directors serving staggered terms. The
Board of Directors has determined that the Company should declassify
its Board, and will present at the 2008 annual meeting of
shareholders, and recommend that Shareholders support, a proposal to
amend the Company's Restated Certificate of Incorporation to provide
for annual election of Directors. If the proposal is successful, each
Director will stand for election annually.
A conference call to review the third quarter 2007 results is
scheduled for 8 a.m. (CT) on November 13, 2007. 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 31 states, the District of Columbia, Europe, Cuba,
Puerto Rico, the Azores and Egypt. The Company also owns and operates
a base of retail stores, primarily supermarkets under the
Econofoods(R), Family Thrift Center(R) and Sun Mart(R) 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 are 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 success or failure of strategic plans, new business
ventures or initiatives;
-- 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 future acquisitions, including the ability
to successfully integrate acquired operations and retain the
customers of those operations;
-- technology failures which have a material adverse effect on
our business;
-- changes in credit risk from financial accommodations extended
to new or existing customers;
-- general sensitivity to economic conditions, including
volatility in energy prices, food commodities, and changes in
market interest rates;
-- our ability to identify and execute plans to expand our food
distribution, military and retail operations;
-- 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;
-- possible changes in the military commissary system, including
those stemming from the redeployment of forces, congressional
action and funding levels;
-- legal, governmental or administrative proceedings and/or
disputes that result in adverse outcomes, such as adverse
determinations or developments with respect to the litigation
or SEC inquiry discussed in Part I, Item 3 of our Annual
Report on Form 10-K for the fiscal year ended December 30,
2006;
-- changes in consumer spending or buying patterns;
-- unanticipated problems with product procurement;
-- severe weather and natural disasters adversely impacting our
supply chain;
-- changes in health care, pension and wage costs, and labor
relations issues; and
-- threats or potential threats to security or food safety.
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).
(1) Consolidated EBITDA, as defined in our credit agreement, and
segment EBITDA is calculated as 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, 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, operating
performance, cash flows or liquidity. The amount of consolidated
EBITDA is provided as additional information relevant to compliance
with our debt covenants.
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts)
Sixteen Forty
Weeks Ended Weeks Ended
--------------------- ---------------------
October 6, October 7, October 6, October 7,
2007 2006 2007 2006
---------- ---------- ---------- ----------
Sales $ 1,367,116 1,426,967 $3,463,333 3,532,490
Cost of sales 1,245,731 1,307,171 3,155,145 3,223,760
---------- ---------- ---------- ----------
Gross profit 121,385 119,796 308,188 308,730
Other costs and expenses:
Selling, general and
administrative 84,298 99,214 216,492 243,787
Losses (gains) on sale
of real estate - 25 (147) (1,167)
Special charges - 6,253 (1,282) 6,253
Depreciation and
amortization 11,902 12,685 29,885 32,004
Interest expense 6,948 7,906 18,214 20,093
---------- ---------- ---------- ----------
Total other costs
and expenses 103,148 126,083 263,162 300,970
Earnings (loss)
before income
taxes and
cumulative
effect of a
change in
accounting
principle 18,237 (6,287) 45,026 7,760
Income tax expense
(benefit) 2,832 (1,670) 14,726 4,560
---------- ---------- ---------- ----------
Net earnings (loss)
before cumulative
effect of a change in
accounting principle 15,405 (4,617) 30,300 3,200
Cumulative effect of a
change in accounting
principle, net of
income tax expense of
$119 in 2006 - - - 169
---------- ---------- ---------- ----------
Net earnings (loss) $ 15,405 (4,617)$ 30,300 3,369
========== ========== ========== ==========
Net earnings (loss) per
share:
Basic:
Net earnings
(loss) before
cumulative
effect of a
change in
accounting
principle $ 1.14 (0.34)$ 2.25 0.24
Cumulative effect
of a change in
accounting
principle, net
of income tax
expense - - - 0.01
---------- ---------- ---------- ----------
Net earnings
(loss) per share$ 1.14 (0.34)$ 2.25 0.25
========== ========== ========== ==========
Diluted:
Net earnings
(loss) before
cumulative
effect of a
change in
accounting
principle $ 1.12 (0.34)$ 2.22 0.24
Cumulative effect
of a change in
accounting
principle, net
of income tax
expense - - - 0.01
---------- ---------- ---------- ----------
Net earnings
(loss) per share$ 1.12 (0.34)$ 2.22 0.25
========== ========== ========== ==========
Declared dividends per
common share $ 0.180 0.180 $ 0.540 0.540
Weighted average number
of common shares
outstanding and common
equivalent shares
outstanding:
Basic 13,524 13,384 13,490 13,368
Diluted 13,720 13,384 13,622 13,382
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share amounts)
October 6, December 30,
Assets 2007 2006
----------- ------------
Current assets: (unaudited)
Cash and cash equivalents $ 4,687 958
Accounts and notes receivable, net 184,242 186,833
Inventories 286,395 241,875
Prepaid expenses and other 14,342 15,445
Deferred tax asset, net 19,919 11,942
----------- ------------
Total current assets 509,585 457,053
Notes receivable, net 12,002 13,167
Property, plant and equipment:
Property, plant and equipment 620,684 620,555
Less accumulated depreciation and
amortization (420,400) (400,750)
----------- ------------
Net property, plant and equipment 200,284 219,805
Goodwill 215,174 215,174
Customer contracts and relationships, net 29,239 32,141
Investment in direct financing leases 5,081 6,143
Other assets 10,217 10,820
----------- ------------
Total assets $ 981,582 954,303
=========== ============
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt and
capitalized lease obligations $ 4,028 3,776
Accounts payable 243,269 209,503
Accrued expenses 65,840 64,943
----------- ------------
Total current liabilities 313,137 278,222
Long-term debt 272,451 313,985
Capitalized lease obligations 31,088 33,869
Deferred tax liability, net 994 4,214
Other liabilities 40,281 29,633
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 13,548
and 13,409 shares, respectively 22,580 22,348
Additional paid-in capital 60,268 53,697
Common stock held in trust (2,122) (2,051)
Deferred compensation obligations 2,122 2,051
Accumulated other comprehensive income
(loss) (4,904) (4,582)
Retained earnings 246,186 223,416
Common stock in treasury, 21 and 21 shares,
respectively (499) (499)
----------- ------------
Total stockholders' equity 323,631 294,380
----------- ------------
Total liabilities and stockholders'
equity $ 981,582 954,303
=========== ============
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
(In thousands)
Forty
Weeks Ended
---------------------
October 6, October 7,
2007 2006
---------- ----------
Operating activities:
Net earnings $ 30,300 3,369
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Special charges (1,282) 6,253
Depreciation and amortization 29,885 32,004
Amortization of deferred financing costs 629 634
Amortization of rebatable loans 2,126 3,503
Provision for bad debts 894 4,274
Provision for lease reserves 551 4,542
Deferred income tax expense (benefit) 5,299 (2,049)
Gain on sale of real estate and other (422) (1,225)
LIFO charge 2,692 2,513
Asset impairments 1,781 7,316
Share-based compensation 4,172 680
Cumulative effect of a change in accounting
principle - (288)
Deferred compensation 558 (696)
Other (36) (719)
Changes in operating assets and liabilities:
Accounts and notes receivable 2,048 (2,375)
Inventories (47,213) (996)
Prepaid expenses (259) 5,064
Accounts payable 32,837 16,424
Accrued expenses (1,802) (12,453)
Income taxes payable 7,747 (6,714)
Other assets and liabilities (8,920) (2,753)
---------- ----------
Net cash provided by operating activities 61,585 56,308
---------- ----------
Investing activities:
Disposal of property, plant and equipment 2,412 5,284
Additions to property, plant and equipment (10,371) (18,434)
Loans to customers (2,494) (5,767)
Payments from customers on loans 1,493 1,867
Purchase of marketable securities - (233)
Sale of marketable securities 2 921
Corporate owned life insurance, net (85) (246)
Other - (180)
---------- ----------
Net cash used in investing activities (9,043) (16,788)
---------- ----------
Financing activities:
Payments of revolving debt (41,300) (24,200)
Dividends paid (7,269) (7,202)
Proceeds from exercise of stock options 1,913 647
Proceeds from employee stock purchase plan 497 502
Payments of long-term debt (344) (5,823)
Payments of capitalized lease obligations (2,418) (2,241)
Decrease in book overdraft (851) (2,081)
Tax benefit from exercise of stock options 959 58
Other - 493
---------- ----------
Net cash used by financing activities (48,813) (39,847)
---------- ----------
Net increase (decrease) in cash and cash
equivalents 3,729 (327)
Cash and cash equivalents:
Beginning of year 958 1,257
---------- ----------
End of period $ 4,687 930
========== ==========
NASH FINCH COMPANY AND SUBSIDIARIES
Supplemental Data (Unaudited)
Sixteen Sixteen Forty Forty
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
October 6, October 7, October 6, October 7,
Other Data (In
thousands) 2007 2006 2007 2006
----------------- -------------- ------------- ----------- -----------
Total debt $307,567 $379,972 $307,567 $379,972
Stockholders'
equity $323,631 321,644 $323,631 321,644
Capitalization $631,198 701,616 $631,198 701,616
Debt to total
capitalization 49% 54% 49% 54%
Working capital
ratio (a) 3.83 2.62 3.83 2.62
Non-GAAP Data
--------------
Consolidated
EBITDA (b) $ 40,132 27,520 $ 98,611 78,810
Interest
coverage ratio
- trailing 4
qtrs.
(consolidated
EBITDA to
interest
expense) (c) 5.08 4.35 5.08 4.35
Leverage ratio -
trailing 4
qtrs. (debt to
consolidated
EBITDA) (d) 2.51 3.43 2.51 3.43
Senior secured
leverage ratio
(senior secured
debt to
consolidated
EBITDA) (e) 0.97 1.68 0.97 1.68
Comparable GAAP
Data
---------------
Earnings before
income taxes to
interest
expense (c) 0.82 1.14 0.82 1.14
Debt to earnings
before income
taxes (d) 15.55 13.05 15.55 13.05
Senior secured
debt to
earnings before
income taxes
(e) 6.00 6.40 6.00 6.40
Debt Covenants Required Ratio Actual Ratio
-------------- -------------- -------------
Working capital 1.75 (minimum)
ratio 3.83
Interest 3.50 (minimum)
coverage ratio 5.08
Senior secured 2.50 (maximum)
leverage ratio 0.97
Leverage ratio 3.50 (maximum) 2.51
(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, 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, 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 October 6, 2007 and October 7, 2006, respectively. The
most comparable GAAP ratio is earnings from continuing operations
before income taxes divided by interest expense (less deferred
financing costs) for the same periods.
(d)Leverage ratio is defined as the Company's total debt at October
6, 2007 and October 7, 2006, divided by Consolidated EBITDA for
the respective four trailing quarters. 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.
(e)Senior secured leverage ratio is defined as total senior secured
debt at October 6, 2007 and October 7, 2006 divided by
Consolidated EBITDA for the respective four trailing quarters.
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.
Derivation of Consolidated EBITDA; Segment Consolidated EBITDA; and
Segment Profit (in thousands)
----------------------------------------------------------------------
FY 2007
2006 2007 2007 2007 Rolling
Qtr 4 Qtr 1 Qtr 2 Qtr 3 4 Qtr
-------- -------- -------- -------- ---------
Earnings (loss) from
continuing operations
before income taxes $(25,253) 9,485 17,304 18,237 19,773
Add/(deduct)
Interest expense 6,551 5,595 5,671 6,948 24,765
Depreciation and
amortization 9,447 9,082 8,901 11,902 39,332
LIFO 117 808 807 1,077 2,809
Lease reserves 2,675 (888) 825 614 3,226
Asset impairments 4,127 866 275 640 5,908
Losses (gains) on
sale of real estate 37 - (147) - (110)
Subsequent cash
payments on non-cash
charges (686) (700) (663) (918) (2,967)
Goodwill impairment 26,419 - - - 26,419
Share based
compensation(b) 486 956 1,584 1,632 4,658
Special charges - - (1,282) - (1,282)
-------- -------- -------- -------- ---------
Total Consolidated
EBITDA $ 23,920 25,204 33,275 40,132 122,531
======== ======== ======== ======== =========
2006 2007 2007 2007 Rolling
Segment Consolidated Qtr 4 Qtr 1 Qtr 2 Qtr 3 4 Qtr
EBITDA
-------- -------- -------- -------- ---------
Food Distribution $ 20,234 20,637 23,715 31,750 96,336
Military 9,941 9,892 10,602 13,000 43,435
Retail 6,227 6,784 8,857 7,905 29,773
Unallocated Corporate
Overhead (12,482) (12,109) (9,899) (12,523) (47,013)
-------- -------- -------- -------- ---------
$ 23,920 25,204 33,275 40,132 122,531
======== ======== ======== ======== =========
2006 2007 2007 2007 Rolling
Segment profit Qtr 4 Qtr 1 Qtr 2 Qtr 3 4 Qtr
-------- -------- -------- -------- ---------
Food Distribution $ 17,676 18,180 21,343 28,601 85,800
Military 9,485 9,472 10,170 12,406 41,533
Retail 4,296 4,821 6,818 5,096 21,031
Unallocated Corporate
Overhead (56,710) (22,988) (21,027) (27,866) (128,591)
-------- -------- -------- -------- ---------
$(25,253) 9,485 17,304 18,237 19,773
======== ======== ======== ======== =========
FY 2006
2005 2006 2006 2006 Rolling
Qtr 4 Qtr 1 Qtr 2 Qtr 3 4 Qtr
-------- -------- -------- -------- ---------
Earnings (loss) from
continuing operations
before income taxes $ 21,364 6,314 7,733 (6,287) 29,124
Add/(deduct)
Interest expense 6,048 6,067 6,120 7,906 26,141
Depreciation and
amortization 10,376 9,702 9,617 12,685 42,380
LIFO (452) 462 461 1,590 2,061
Lease reserves (191) 902 1,327 4,455 6,493
Asset impairments 851 1,547 3,247 2,522 8,167
Losses (gains) on
sale of real estate (2,600) 33 (1,225) 25 (3,767)
Subsequent cash
payments on non-cash
charges (2,690) (808) (656) (1,862) (6,016)
Special Charge - - - 6,253 6,253
Share based
compensation(b) 14 (187) 634 233 694
-------- -------- -------- -------- ---------
Total Consolidated
EBITDA $ 32,720 24,032 27,258 27,520 111,530
======== ======== ======== ======== =========
Segment Consolidated
EBITDA after reclass
of marketing revenues
and bad debt expense 2005 2006 2006 2006 Rolling
(a) Qtr 4 Qtr 1 Qtr 2 Qtr 3 4 Qtr
-------- -------- -------- -------- ---------
Food Distribution $ 22,962 20,352 20,089 26,030 89,433
Military 9,669 9,173 10,295 11,850 40,987
Retail 10,969 6,743 8,965 8,633 35,310
Unallocated Corporate
Overhead (10,880) (12,236) (12,091) (18,993) (54,200)
-------- -------- -------- -------- ---------
$ 32,720 24,032 27,258 27,520 111,530
======== ======== ======== ======== =========
Segment profit after
reclass of marketing
revenues and bad debt 2005 2006 2006 2006 Rolling
expense (a) Qtr 4 Qtr 1 Qtr 2 Qtr 3 4 Qtr
-------- -------- -------- -------- ---------
Food Distribution $ 20,576 17,841 17,584 22,689 78,690
Military 9,259 8,747 11,011 11,283 40,300
Retail 8,284 4,272 6,600 5,645 24,801
Unallocated Corporate
Overhead (16,755) (24,546) (27,462) (45,904) (114,667)
-------- -------- -------- -------- ---------
$ 21,364 6,314 7,733 (6,287) 29,124
======== ======== ======== ======== =========
(a)Segment information for periods prior to fiscal year 2006 reflect
a reclassification of bad debt expense from Unallocated Corporate
Overhead to Food Distribution
(b)The calculation of EBITDA has been revised for all periods
presented to include an adjustment for noncash share-based
compensation.
CONTACT: Nash Finch Company
Bob Dimond, 952-844-1060
SOURCE: Nash Finch Company
