Nash Finch Reports Fiscal 2005 Results.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- Nash-Finch Company (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :NAFC NAFC National Association For Continence (formerly HIP: Help for Incontinent People) NAFC National Association of Friendship Centres (Association Nationale des Centres d'Amitié - Canada) ), a leading national food distributor, today announced that net earnings for the fiscal 2005 year were $41.3 million, or $3.13 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, as compared to $14.9 million, or $1.18 per diluted share, for fiscal 2004. Fiscal 2005 results included a net favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. 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 Roundy's Supermarkets (Roundy's) is a Milwaukee, Wisconsin-based supermarket chain with 153 stores in Illinois, Minnesota, and Wisconsin.[1] Supermarket News Supermarkets Supermarkets, past and present, include: Transnational Originating (HQ) country first. The rest in alphabetical order.
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 fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. affected by $1.1 million or $0.09 per diluted share as a result of the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its 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 The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of our 8.5% Senior Subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. Notes and non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to the refinancing Refinancing An extension and/or increase in amount of existing debt. 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 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 di·vert v. di·vert·ed, di·vert·ing, di·verts v.tr. 1. To turn aside from a course or direction: Traffic was diverted around the scene of the accident. 2. attention from our core business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets 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 COMMISSARY. An officer whose principal duties are to supply the army with provisions. 2. The Act of April 14, 1818, s. 6, requires that the president, by and with the consent of the senate, shall appoint a commissary general with the rank, pay, and emoluments 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 Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of 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 opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by logging onto the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " portion of Nash Finch's website at www.nashfinch.com. A replay of the webcast will be available and the transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record of the call will be archived on the "Investor Relations" portion of Nash Finch's website under the heading "Audio Archives archives Repository for an organized body of records. Archives are produced or received by a public, semipublic, institutional, or business entity in the transaction of its affairs and are preserved by it or its successors. ." 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 finch, common name for members of the Fringillidae, the largest family of birds (including over half the known species), found in most parts of the world except Australia. 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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Nash Finch's core business, food distribution, serves independent retailers and military commissaries in 31 states, the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Cuba Cuba (ky `bə, Span. k`bä), officially Republic of Cuba, republic (2005 est. pop. ,
Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , Iceland Iceland, Icel. Ísland, officially Republic of Iceland, republic (2005 est. pop. 297,000), 39,698 sq mi (102,819 sq km), the westernmost state of Europe, occupying an island in the Atlantic Ocean just S of the Arctic Circle, c. , the Azores Azores (əzôrz`, ā`zôrz), Port. Açores [Port.,=hawks], islands (1991 pop. 241,592), 905 sq mi (2,344 sq km), in the Atlantic Ocean, c.900 mi (1,448 km) W of mainland Portugal. and Honduras Honduras (hŏndr`əs, –dyr`–; Span., ōnd . The Company also owns and
operates a base of retail stores, primarily supermarkets under the
Econofoods Econofoods is a chain of grocery stores located in Michigan, Minnesota, Wisconsin, Illinois, Iowa, South Dakota, North Dakota, and Wyoming. Econofoods is part of the Nash Finch Company, and is one of several supermarket brands operated by the company. (R), Family Thrift thrift: see leadwort. Center(R) and Sun Mart(R) 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on current expectations and assumptions, and entail entail, in law, restriction of inheritance to a limited class of descendants for at least several generations. The object of entail is to preserve large estates in land from the disintegration that is caused by equal inheritance by all the heirs and by the ordinary 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 To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution 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 Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the 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 The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as 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 stemming - stemmer from the redeployment re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. of forces; --adverse determinations or developments with respect to the litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. or SEC inquiry discussed in Part I, Item 3 of our 2005 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the SEC; --changes in consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. , buying patterns or food safety concerns; --unanticipated problems with product procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. ; 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , but investors are advised to consult future disclosures involving these topics in its periodic reports filed with the SEC.
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
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share amounts)
December 31, January 1,
Assets 2005 2005
------ ------------ -----------
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
============ ===========
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 - -
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 Twelve Weeks Ended
December 31, 2005 January 1, 2005
Diluted Diluted
$ EPS $ 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 Fifty-Two Weeks
Ended Ended
December 31, 2005 January 1, 2005
Diluted Diluted
$ EPS $ 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)
Twelve Twelve Fifty-Two Fifty-Two
Weeks Weeks Weeks Weeks
Ended Ended Ended Ended
December January December January
31, 1, 31, 1,
Other Data (In thousands) 2005 2005 2005 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 Actual
Ratio Ratio
---------------------------- --------- ---------
Working capital ratio 1.75
(minimum) 2.29
Interest coverage ratio 3.50
(minimum) 5.43
Senior secured leverage 2.75
ratio (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.
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
Segment Consolidated Qtr 1 Qtr 2 Qtr 3 Qtr 4 4 Qtr
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
Segment profit after Qtr 1 Qtr 2 Qtr 3 Qtr 4 4 Qtr
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
Segment Consolidated Qtr 1 Qtr 2 Qtr 3 Qtr 4 4 Qtr
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
Segment profit after Qtr 1 Qtr 2 Qtr 3 Qtr 4 4 Qtr
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.
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