 Nash Finch Company | NEWS RELEASE |
Nash Finch Reports SecondQuarter 2008 Results
MINNEAPOLIS (July 17, 2008) — 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 14, 2008.
Financial Results
Total company sales for the second quarter 2008 were $1.042 billion compared to $1.064 billion in the prior-year quarter, a decline of 2.0%. Sales for the first twenty-four weeks of 2008 were $2.064 billion compared to $2.096 billion in the prior-year period, a decline of 1.5%. Excluding the impact of the sales decrease attributable to a large customer who transitioned to another supplier in mid-2007 totaling $34.3 million in the second quarter and $70.5 million year-to-date, total company sales increased by 1.2% in the second quarter and 1.9% year-to-date. The second quarter was negatively impacted from the shift of Easter to the first quarter in 2008 vs. the second quarter in 2007 by approximately $8.7 million or 0.9%. After adjusting for these items, sales would have increased by 2.1% vs. last year and 1.9% year-to-date.
Net earnings for the second quarter 2008 were $10.1 million, or $0.77 per diluted share, as compared to net earnings of $9.6 million, or $0.70 per diluted share, in the prior year quarter. Net earnings for the first twenty-four weeks of 2008 were $21.4 million, or $1.62 per diluted share, as compared to net earnings of $14.9 million, or $1.10 per diluted share, in the same prior-year period. Net earnings for both years were affected by several significant items and are detailed in the table below.
Consolidated EBITDA1 for the second quarter 2008 was $33.6 million, or 3.2% of sales, as compared to $33.3 million, or 3.1% of sales, for the prior year quarter. For the first twenty-four weeks
| 1 | Consolidated EBITDA, 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. 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. |
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of 2008, Consolidated EBITDA was $64.2 million, or 3.1% of sales, compared to $58.5 million, or 2.8% of sales, in the same 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 following table identifies the significant net credits affecting our Consolidated EBITDA, net earnings and diluted earnings per share for the second quarter and year-to-date 2008 and prior year results:
| 2nd Quarter | YTD | ||||||||||||||||
| (dollars in millions except per share amounts) | 2008 | 2007 | 2008 | 2007 | |||||||||||||
Significant credits (charges) | |||||||||||||||||
| Gain on sale of intangible asset | $ | — | 0.7 | 0.3 | 0.7 | ||||||||||||
| Reduction in customer bad debt reserves | — | — | 1.8 | — | |||||||||||||
| Lease buyout payment | — | — | (1.4 | ) | — | ||||||||||||
| Other | (0.4 | ) | — | (0.7 | ) | — | |||||||||||
Significant net credits (charges) impacting Consolidated EBITDA | $ | (0.4 | ) | 0.7 | 0.0 | 0.7 | |||||||||||
| Write-off of deferred financing charges | $ | (1.0 | ) | — | (1.0 | ) | — | ||||||||||
| Asset impairments and lease costs on closed retail stores | (0.3 | ) | (0.3 | ) | (0.3 | ) | (0.3 | ) | |||||||||
| Asset impairments and lease reserve adjustments (net of pmt) | — | (0.8 | ) | 2.6 | (0.7 | ) | |||||||||||
| Change in estimate of 2004 special charge | — | 1.3 | — | 1.3 | |||||||||||||
| Other | 0.2 | — | 0.2 | — | |||||||||||||
Total significant net credits (charges) impacting earnings before tax | (1.5 | ) | 0.9 | 1.5 | 1.0 | ||||||||||||
| Income tax on significant net credits | 0.6 | (0.4 | ) | (0.6 | ) | (0.4 | ) | ||||||||||
| Tax refunds and reversal of previously recorded income tax reserves | 1.2 | — | 2.3 | — | |||||||||||||
Total significant net credits impacting net earnings | $ | 0.3 | 0.5 | 3.2 | 0.6 | ||||||||||||
Diluted earnings per share impact | $ | 0.02 | 0.04 | 0.24 | 0.05 | ||||||||||||
“In spite of strategic investment activity which temporarily negatively impacted the results of our retail division, we were able to improve Consolidated EBITDA slightly over the prior year as we had expected,” said Alec Covington, President and CEO of Nash Finch. “This was possible due to the strong and dependable performance of both our food distribution and military segments, both of which made solid improvements over prior year.”
Food Distribution Results
| 2nd Quarter | % | YTD | % | ||||||||||||||||||||||
| (dollars in millions) | 2008 | 2007 | Change | 2008 | 2007 | Change | |||||||||||||||||||
| Sales | $ | 600.1 | 633.1 | (5.2 | %) | 1,194.2 | 1,247.9 | (4.3 | %) | ||||||||||||||||
Segment EBITDA1 | $ | 25.0 | 23.7 | 5.3 | % | 50.2 | 44.4 | 13.3 | % | ||||||||||||||||
| Percentage of Sales | 4.2 | % | 3.8 | % | 4.2 | % | 3.6 | % | |||||||||||||||||
The decrease in the second quarter and year-to-date 2008 food distribution segment sales versus the comparable 2007 period was primarily attributable to the impact of a large customer which transitioned to another supplier in mid-2007. Excluding the impact of the sales decrease attributable to a large customer who transitioned to another supplier in mid-2007 totaling $34.3 million in the
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second quarter and $70.5 million year-to-date, food distribution sales increased by 0.2% in the second quarter and 1.4% year-to-date. The shift of Easter to the first quarter in 2008 vs. the second quarter in 2007 created an unfavorable variance in the second quarter of approximately $6.4 million, or 1.1%. After adjusting for both of these items, sales would have increased by 1.3% in the second quarter and 1.4% year-to-date.
The food distribution segment EBITDA increased by 5.3%, or 41 basis points, in the second quarter and increased by 13.3%, or 66 basis points, in the year-to-date as compared to the same periods last year. EBITDA as a percentage of sales increased to 4.2% in the second quarter 2008 as compared to 3.8% last year. EBITDA as a percentage of sales increased to 4.2% in the year-to-date period in 2008 as compared to 3.6% in 2007.
Military Distribution Results
| 2nd Quarter | % | YTD | % | ||||||||||||||||||||||
| (dollars in millions) | 2008 | 2007 | Change | 2008 | 2007 | Change | |||||||||||||||||||
| Sales | $ | 304.6 | 290.5 | 4.9 | % | 601.9 | 572.3 | 5.2 | % | ||||||||||||||||
Segment EBITDA1 | $ | 11.6 | 10.6 | 9.0 | % | 22.8 | 20.5 | 11.2 | % | ||||||||||||||||
| Percentage of Sales | 3.8 | % | 3.7 | % | 3.8 | % | 3.6 | % | |||||||||||||||||
The military segment sales increase in the second quarter primarily reflects stronger domestic sales to commissaries. Military EBITDA increased by 9.0% in the second quarter and 11.2% year-to-date as compared to the same periods last year. The improvement in EBITDA margin as a percent of sales relative to the prior year periods was partially due to improved inventory management and partially due to improvements in productivity.
Retail Results
| 2nd Quarter | % | YTD | % | ||||||||||||||||||||||
| (dollars in millions) | 2008 | 2007 | Change | 2008 | 2007 | Change | |||||||||||||||||||
| Sales | $ | 137.7 | 140.5 | (2.0 | %) | 268.1 | 276.1 | (2.9 | %) | ||||||||||||||||
Segment EBITDA1 | $ | 7.0 | 8.9 | (20.9 | %) | 13.6 | 15.6 | (12.7 | %) | ||||||||||||||||
| Percentage of Sales | 5.1 | % | 6.3 | % | 5.1 | % | 5.7 | % | |||||||||||||||||
The retail segment sales decrease in both the second quarter and year-to-date comparisons is primarily attributable to the closure of four stores since the end of the second quarter 2007. Same store sales decreased 3.9% in the second quarter 2008 and 2.2% year-to-date when compared to the same periods in 2007. Same store sales were unfavorably affected by approximately $2.3 million, or 1.7% due to the shift of Easter to the first quarter in 2008 as compared to the second quarter in 2007. Excluding this impact, same store sales would have been down 2.2% for the quarter.
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The decrease in the retail segment EBITDA for the second quarter as compared to the prior year was primarily due to conversion costs totaling $1.0 million that were incurred during the second quarter 2008 in two acquired stores and two stores being remodeled and a prior year gain on the sale of an intangible asset of $0.5 million in the second quarter 2007.
“As planned and previously outlined, we invested in several strategic projects which negatively impacted our corporate retail segment results during the second quarter,” Said Mr. Covington “We believe these investments are essential and will help to better position our corporate store group for the future as part of our overall strategic plan. I am delighted to welcome our new associates that came to Nash Finch through the stores we recently acquired from Albertson’s LLC in Rapid City, South Dakota and Scottsbluff, Nebraska. In addition, I am delighted by the initial customer response to our new prototype Family Fresh Market® that opened during the quarter in Hudson, Wisconsin.”
Liquidity
Total debt decreased slightly by $6.1 million during the second quarter 2008 to $327.1 million. 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 2008 was 2.43, relatively flat to the ratio of 2.42 at the end of fiscal 2007. Availability on the Company’s revolving credit facility at the end of the quarter was $141.2 million.
New Asset-Backed Loan Credit Facility
As previously announced, during the second quarter 2008, the Company completed the replacement of our senior secured credit facility. The Company entered into a $300 million revolving credit facility on April 11, 2008. This new asset-backed loan facility provides greater flexibility as well as reduced interest expense.
Share Repurchase Program Update
During the second quarter 2008 the Company repurchased 71,574 shares in the open market for $2.3 million at an average price per share of $32.57. As of June 14, 2008, the Company had repurchased 842,038 shares of its common stock for a total of $29.3 million at an average price per share of $34.83, as a part of the share repurchase program, which authorizes the Company to purchase up to 1,000,000 shares of the Company’s common stock. The program took effect on November 19, 2007 and will continue until January 3, 2009.
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Financial Target Progress
Substantial improvement on most financial targets has been achieved since the targets were announced as part of the Company’s strategic plan in November 2006. In particular, from Fiscal 2006 to the second quarter 2008, Consolidated EBITDA margin improved from 2.2% to 3.2% of sales and the debt leverage ratio has improved by a full turn of EBITDA from 3.42 to 2.43. The organic revenue growth metric continues to improve as we have started to benefit from the initiatives associated with our strategic plan. The ratio of free cash flow to net assets metric was impacted during the second quarter of 2008 primarily due to our investment in a higher level of inventory in 2008. 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.
| Long-term | 2nd Quarter | Fiscal | Fiscal | |||||||||||||
| Financial Targets | Target | 2008 | 2007 | 2006 | ||||||||||||
| Organic Revenue Growth | 2.0 | % | (2.0 | %) | (2.1 | %) | (2.9 | %) | ||||||||
| Consolidated EBITDA Margin | 4.0 | % | 3.2 | % | 2.8 | % | 2.2 | % | ||||||||
Trailing Four Quarter Free Cash Flow2 / Net Assets | — | 6.0 | % | 9.2 | % | 8.7 | % | |||||||||
Trailing Four Quarter Free Cash Flow2 / Net Assets Excluding Impact of Strategic Projects | 10.0 | % | 6.8 | % | — | — | ||||||||||
| Total Leverage Ratio (Total Debt / Trailing Four Quarter Consolidated EBITDA) | 2.5 - 3.0 | x | 2.43 | x | 2.42 | x | 3.42 | x | ||||||||
| 2 | Defined as cash provided from operations less capital expenditures for property, plant & equipment during the trailing four quarters. |
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A conference call to review the second quarter 2008 results is scheduled for at 10 a.m. CT (11 a.m. ET) on July 17, 2008. 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 1000 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®, Family Thrift Center®, Avanza® and Sun Mart® trade names. Further information is available on the Company’s website at www.nashfinch.com.
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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 distribution, military and retail businesses; | ||
| • | 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; | ||
| • | possible changes in the military commissary system, including those stemming from the redeployment of forces, congressional action and funding levels; | ||
| • | the success or failure of strategic plans, new business ventures or initiatives; | ||
| • | changes in consumer buying and spending patterns; | ||
| • | risks entailed by future acquisitions, including the ability to successfully integrate acquired operations 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, such as adverse determinations or developments with respect to the litigation or SEC inquiry discussed in Part I, Item 3 of this report; | ||
| • | technology failures that may have a material adverse effect on our business; | ||
| • | severe weather and natural disasters that may impact our supply chain; | ||
| • | changes in health care, pension and wage costs and labor relations issues; | ||
| • | threats or potential threats to security or food safety; and | ||
| • | unanticipated problems with product procurement. |
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).
Contact:Bob Dimond, 952-844-1060
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NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
Consolidated Statements of Income
(In thousands, except per share amounts)
| 12 | 24 | |||||||||||||||
| Weeks Ended | Weeks Ended | |||||||||||||||
| June 14, | June 16, | June 14, | June 16, | |||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Sales | $ | 1,042,388 | 1,063,974 | 2,064,298 | 2,096,217 | |||||||||||
| Cost of sales | 948,100 | 967,892 | 1,877,396 | 1,909,414 | ||||||||||||
| Gross profit | 94,288 | 96,082 | 186,902 | 186,803 | ||||||||||||
Gross profit margin | 9.1 | % | 9.0 | % | 9.1 | % | 8.9 | % | ||||||||
| Other costs and expenses: | ||||||||||||||||
| Selling, general and administrative | 64,988 | 65,488 | 126,172 | 132,047 | ||||||||||||
| Special charges | — | (1,282 | ) | — | (1,282 | ) | ||||||||||
| Depreciation and amortization | 8,703 | 8,901 | 17,735 | 17,983 | ||||||||||||
| Interest expense | 5,651 | 5,671 | 10,685 | 11,266 | ||||||||||||
| Total other costs and expenses | 79,342 | 78,778 | 154,592 | 160,014 | ||||||||||||
| Earnings before income taxes | 14,946 | 17,304 | 32,310 | 26,789 | ||||||||||||
| Income tax expense | 4,838 | 7,697 | 10,925 | 11,894 | ||||||||||||
| Net earnings | $ | 10,108 | 9,607 | 21,385 | 14,895 | |||||||||||
| Net earnings per share: | ||||||||||||||||
| Basic | $ | 0.79 | 0.71 | 1.65 | 1.11 | |||||||||||
| Diluted | $ | 0.77 | 0.70 | 1.62 | 1.10 | |||||||||||
| Cash dividends per common share | $ | 0.180 | 0.180 | 0.360 | 0.360 | |||||||||||
| Weighted average number of common shares outstanding and common equivalent shares outstanding: | ||||||||||||||||
| Basic | 12,847 | 13,492 | 12,927 | 13,465 | ||||||||||||
| Diluted | 13,068 | 13,630 | 13,184 | 13,563 | ||||||||||||
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NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share amounts)
Consolidated Balance Sheets
(In thousands, except per share amounts)
| 06/14/2008 | 12/29/2007 | |||||||
Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 863 | 862 | |||||
| Accounts and notes receivable, net | 194,791 | 197,807 | ||||||
| Inventories | 272,906 | 246,762 | ||||||
| Prepaid expenses and other | 21,269 | 27,882 | ||||||
| Deferred tax assets | 687 | 4,621 | ||||||
| Total current assets | 490,516 | 477,934 | ||||||
| Notes receivable, net | 14,990 | 12,429 | ||||||
| Property, plant and equipment: | 602,324 | 617,241 | ||||||
| Less accumulated depreciation and amortization | (405,813 | ) | (414,704 | ) | ||||
| Net property, plant and equipment | 196,511 | 202,537 | ||||||
| Goodwill | 218,406 | 215,174 | ||||||
| Customer contracts and relationships, net | 26,704 | 28,368 | ||||||
| Investment in direct financing leases | 3,490 | 4,969 | ||||||
| Other assets | 12,674 | 9,971 | ||||||
| Total assets | $ | 963,291 | 951,382 | |||||
Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt and capitalized lease obligations | $ | 3,914 | 3,842 | |||||
| Accounts payable | 210,155 | 209,402 | ||||||
| Accrued expenses | 59,607 | 69,113 | ||||||
| Total current liabilities | 273,676 | 282,357 | ||||||
| Long-term debt | 296,116 | 278,443 | ||||||
| Capitalized lease obligations | 27,051 | 29,885 | ||||||
| Deferred tax liability, net | 11,964 | 7,227 | ||||||
| Other liabilities | 28,474 | 37,854 | ||||||
| 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 13,603 and 13,559 shares respectively | 22,673 | 22,599 | ||||||
| Additional paid-in capital | 69,174 | 61,446 | ||||||
| Common stock held in trust | (2,170 | ) | (2,122 | ) | ||||
| Deferred compensation obligations | 2,170 | 2,122 | ||||||
| Accumulated other comprehensive income (loss) | (5,092 | ) | (5,092 | ) | ||||
| Retained earnings | 268,745 | 252,142 | ||||||
| Treasury stock at cost, 848 and 434 shares, respectively | (29,490 | ) | (15,479 | ) | ||||
| Total stockholders’ equity | 326,010 | 315,616 | ||||||
| Total liabilities and stockholders’ equity | $ | 963,291 | 951,382 | |||||
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NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Consolidated Statements of Cash Flows
(In thousands)
| 24 | ||||||||
| Weeks Ended | ||||||||
| June 14, | June 16, | |||||||
| 2008 | 2007 | |||||||
| Operating activities: | ||||||||
| Net earnings | $ | 21,385 | 14,895 | |||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
| Special charge | — | (1,282 | ) | |||||
| Depreciation and amortization | 17,735 | 17,983 | ||||||
| Amortization of deferred financing costs | 1,360 | 377 | ||||||
| Amortization of rebatable loans | 1,878 | 1,446 | ||||||
| Increase (decrease)��in provision for bad debts | (1,212 | ) | 873 | |||||
| Provision for lease reserves | (1,995 | ) | (63 | ) | ||||
| Deferred income tax expense | 8,671 | 2,963 | ||||||
| LIFO charge | 3,531 | 1,615 | ||||||
| Stock-based compensation | 3,965 | 2,540 | ||||||
| Other | 1,030 | 1,124 | ||||||
| Changes in operating assets and liabilities, net of effects of acquisitions | ||||||||
| Accounts and notes receivable | 4,733 | 6,856 | ||||||
| Inventories | (27,351 | ) | (19,545 | ) | ||||
| Prepaid expenses | 1,784 | 2,630 | ||||||
| Accounts payable | (4,495 | ) | 649 | |||||
| Accrued expenses | (10,638 | ) | (1,179 | ) | ||||
| Income taxes payable | 4,831 | 8,468 | ||||||
| Other assets and liabilities | (2,301 | ) | (283 | ) | ||||
| Net cash provided by operating activities | 22,911 | 40,067 | ||||||
| Investing activities: | ||||||||
| Disposal of property, plant and equipment | 246 | 2,259 | ||||||
| Additions to property, plant and equipment | (9,884 | ) | (5,804 | ) | ||||
| Business acquired, net of cash | (6,772 | ) | — | |||||
| Loans to customers | (5,102 | ) | (433 | ) | ||||
| Other | 349 | 634 | ||||||
| Net cash used in investing activities | (21,163 | ) | (3,344 | ) | ||||
| Financing activities: | ||||||||
| Proceeds (payments) of revolving debt | 136,600 | (25,300 | ) | |||||
| Dividends paid | (4,619 | ) | (4,834 | ) | ||||
| Repurchase of common stock | (14,348 | ) | — | |||||
| Payments of long-term debt | (118,913 | ) | (319 | ) | ||||
| Payments of capitalized lease obligations | (1,923 | ) | (1,451 | ) | ||||
| Increase (decrease) in bank overdraft | 3,988 | (6,590 | ) | |||||
| Payments of deferred financing costs | (2,868 | ) | — | |||||
| Other | 336 | 2,147 | ||||||
| Net cash used by financing activities | (1,747 | ) | (36,347 | ) | ||||
| Net increase in cash and cash equivalents | 1 | 376 | ||||||
| Cash and cash equivalents: | ||||||||
| Beginning of period | 862 | 958 | ||||||
| End of period | $ | 863 | 1,334 | |||||
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NASH FINCH COMPANY AND SUBSIDIARIES
Supplemental Data (Unaudited)
Supplemental Data (Unaudited)
| 12 | 12 | |||||||
| Weeks Ended | Weeks Ended | |||||||
| June 14, | June 16, | |||||||
| Other Data (In thousands) | 2008 | 2007 | ||||||
| Total debt | $ | 327,081 | 324,560 | |||||
| Stockholders’ equity | $ | 326,010 | 308,127 | |||||
| Capitalization | $ | 653,091 | 632,687 | |||||
| Debt to total capitalization | 50.1 | % | 51.3 | % | ||||
| Non-GAAP Data | ||||||||
| Consolidated EBITDA (a) | $ | 33,607 | 33,275 | |||||
| Leverage ratio — trailing 4 qtrs. (debt to consolidated EBITDA) (b) | 2.43 | 2.95 | ||||||
| Comparable GAAP Data | ||||||||
| Debt to earnings before income taxes (b) | 5.19 | (70.69 | ) | |||||
| (a) | 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 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 14, 2008 and June 16, 2007, 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 quarters. |
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Derivation of Consolidated EBITDA; Segment Consolidated EBITDA; and Segment Profit (in thousands)
FY 2008
| 2007 | 2007 | 2008 | 2008 | Rolling | ||||||||||||||||
| Qtr 3 | Qtr 4 | Qtr 1 | Qtr 2 | 4 Qtrs | ||||||||||||||||
| Earnings before income taxes | $ | 18,237 | 12,496 | 17,364 | 14,946 | 63,043 | ||||||||||||||
| Add/(deduct) | ||||||||||||||||||||
| Interest expense | 6,948 | 5,367 | 5,034 | 5,651 | 23,000 | |||||||||||||||
| Depreciation and amortization | 11,902 | 8,997 | 9,032 | 8,703 | 38,634 | |||||||||||||||
| LIFO | 1,077 | 2,399 | 1,134 | 2,397 | 7,007 | |||||||||||||||
| Lease reserves | 614 | — | (2,094 | ) | 99 | (1,381 | ) | |||||||||||||
| Asset impairments | 640 | 87 | 395 | 401 | 1,523 | |||||||||||||||
| Losses (gains) on sale of real estate | — | (1,720 | ) | — | — | (1,720 | ) | |||||||||||||
| Subsequent cash payments on non-cash charges | (918 | ) | (1,011 | ) | (2,184 | ) | (612 | ) | (4,725 | ) | ||||||||||
| Share-based compensation | 1,632 | 3,614 | 1,943 | 2,022 | 9,211 | |||||||||||||||
| Total Consolidated EBITDA | $ | 40,132 | 30,229 | 30,624 | 33,607 | 134,592 | ||||||||||||||
| 2007 | 2007 | 2008 | 2008 | Rolling | ||||||||||||||||
| Qtr 3 | Qtr 4 | Qtr 1 | Qtr 2 | 4 Qtrs | ||||||||||||||||
| Segment Consolidated EBITDA | ||||||||||||||||||||
| Food Distribution | $ | 31,750 | 26,143 | 25,270 | 24,975 | 108,138 | ||||||||||||||
| Military | 13,000 | 10,545 | 11,234 | 11,554 | 46,333 | |||||||||||||||
| Retail | 7,905 | 4,000 | 6,645 | 7,003 | 25,553 | |||||||||||||||
| Unallocated Corporate Overhead | (12,523 | ) | (10,459 | ) | (12,525 | ) | (9,925 | ) | (45,432 | ) | ||||||||||
| $ | 40,132 | 30,229 | 30,624 | 33,607 | 134,592 | |||||||||||||||
| 2007 | 2007 | 2008 | 2008 | Rolling | ||||||||||||||||
| Qtr 3 | Qtr 4 | Qtr 1 | Qtr 2 | 4 Qtrs | ||||||||||||||||
| Segment profit | ||||||||||||||||||||
| Food Distribution | $ | 28,601 | 23,796 | 22,940 | 22,885 | 98,222 | ||||||||||||||
| Military | 12,406 | 10,067 | 10,762 | 11,091 | 44,326 | |||||||||||||||
| Retail | 5,096 | 1,902 | 4,543 | 4,774 | 16,315 | |||||||||||||||
| Unallocated Corporate Overhead | (27,866 | ) | (23,268 | ) | (20,881 | ) | (23,804 | ) | (95,819 | ) | ||||||||||
| $ | 18,237 | 12,497 | 17,364 | 14,946 | 63,044 | |||||||||||||||
FY 2007
| 2006 | 2006 | 2007 | 2007 | Rolling | ||||||||||||||||
| Qtr 3 | Qtr 4 | Qtr 1 | Qtr 2 | 4 Qtrs | ||||||||||||||||
| Earnings (loss) before income taxes | $ | (6,287 | ) | (25,253 | ) | 9,485 | 17,304 | (4,751 | ) | |||||||||||
| Add/(deduct) | ||||||||||||||||||||
| Interest expense | 7,906 | 6,551 | 5,595 | 5,671 | 25,723 | |||||||||||||||
| Depreciation and amortization | 12,685 | 9,447 | 9,082 | 8,901 | 40,115 | |||||||||||||||
| LIFO | 1,590 | 117 | 808 | 807 | 3,322 | |||||||||||||||
| Lease reserves | 4,455 | 2,675 | (888 | ) | 825 | 7,067 | ||||||||||||||
| Asset impairments | 2,522 | 4,127 | 866 | 275 | 7,790 | |||||||||||||||
| Losses (gains) on sale of real estate | 25 | 37 | — | (147 | ) | (85 | ) | |||||||||||||
| Subsequent cash payments on non-cash charges | (1,862 | ) | (686 | ) | (700 | ) | (663 | ) | (3,911 | ) | ||||||||||
| Share-based compensation | 233 | 486 | 956 | 1,584 | 3,259 | |||||||||||||||
| Special charges | 6,253 | — | — | (1,282 | ) | 4,971 | ||||||||||||||
| Goodwill impairment | — | 26,419 | — | — | 26,419 | |||||||||||||||
| Total Consolidated EBITDA | $ | 27,520 | 23,920 | 25,204 | 33,275 | 109,919 | ||||||||||||||
| 2006 | 2006 | 2007 | 2007 | Rolling | ||||||||||||||||
| Qtr 3 | Qtr 4 | Qtr 1 | Qtr 2 | 4 Qtrs | ||||||||||||||||
| Segment Consolidated EBITDA after reclass of bad debt expense | ||||||||||||||||||||
| Food Distribution | $ | 26,030 | 20,234 | 20,637 | 23,715 | 90,616 | ||||||||||||||
| Military | 11,850 | 9,941 | 9,892 | 10,602 | 42,285 | |||||||||||||||
| Retail | 8,633 | 6,227 | 6,784 | 8,857 | 30,501 | |||||||||||||||
| Unallocated Corporate Overhead | (18,993 | ) | (12,482 | ) | (12,109 | ) | (9,899 | ) | (53,483 | ) | ||||||||||
| $ | 27,520 | 23,920 | 25,204 | 33,275 | 109,919 | |||||||||||||||
| 2006 | 2006 | 2007 | 2007 | Rolling | ||||||||||||||||
| Qtr 3 | Qtr 4 | Qtr 1 | Qtr 2 | 4 Qtrs | ||||||||||||||||
| Segment profit after reclass of bad debt expense | ||||||||||||||||||||
| Food Distribution | $ | 22,689 | 17,676 | 18,180 | 21,343 | 79,888 | ||||||||||||||
| Military | 11,283 | 9,485 | 9,472 | 10,170 | 40,410 | |||||||||||||||
| Retail | 5,645 | 4,296 | 4,821 | 6,818 | 21,580 | |||||||||||||||
| Unallocated Corporate Overhead | (45,904 | ) | (56,710 | ) | (22,988 | ) | (21,027 | ) | (146,629 | ) | ||||||||||
| $ | (6,287 | ) | (25,253 | ) | 9,485 | 17,304 | (4,751 | ) | ||||||||||||
11