UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

 

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  ý  No  o

 

As of July 16, 2003, 11,955,327 shares of Common Stock of the Registrant were outstanding.

 

 

Index

 

Part I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements and Notes
	Consolidated Statements of Income
	Consolidated Balance Sheets
	Consolidated Statements of Cash Flows
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures about Market Risk
Item 4.	Controls and Procedures
Part II – OTHER INFORMATION
Item 6.	Exhibits and Reports on Form 8-K
SIGNATURES

 

2

 

PART 1 - FINANCIAL INFORMATION

 

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

 

NASH FINCH COMPANY AND SUBSIDIARIES

Consolidated Statements of Income (unaudited)

(In thousands, except per share amounts)

 

		Twelve Weeks Ended						Twenty-Four Weeks Ended
		June 14, 2003			June 15, 2002			June 14, 2003			June 15, 2002
Sales		$	888,612		$	908,266		$	1,745,276		$	1,802,841
Cost and expenses:
Cost of sales		785,031			796,797			1,541,671			1,585,436
Selling, general and administrative		74,994			79,858			149,441			158,549
Depreciation and amortization		9,642			9,165			19,082			18,472
Interest expense		7,035			6,651			17,826			13,298
Total costs and expenses		876,702			892,471			1,728,020			1,775,755
Earnings before income taxes and cumulative effect of change in accounting principle		11,910			15,795			17,256			27,086
Income tax expense		4,645			6,302			6,730			10,807
Earnings before cumulative effect of change in accounting principle		7,265			9,493			10,526			16,279
Cumulative effect of change in accounting principle, net of income tax benefits of $4,450		—			—			—			(6,960		)
Net earnings		$	7,265		$	9,493		$	10,526		$	9,319
Basic earnings per share:
Earnings before cumulative effect of change in accounting principle		$	0.61		$	0.80		$	0.88		$	1.39
Cumulative effect of change in accounting principle, net of income tax benefits		—			—			—			(0.60		)
Net earnings per share		$	0.61		$	0.80		$	0.88		$	0.79
Diluted earnings per share:
Earnings before cumulative effect of change in accounting principle		$	0.61		$	0.78		$	0.88		$	1.34
Cumulative effect of change in accounting principle, net of income tax benefits		—			—			—			(0.57		)
Net earnings per share		$	0.61		$	0.78		$	0.88		$	0.77
Cash dividends per common share:		$	0.18		$	0.09		$	0.18		$	0.18
Weighted average number of common shares outstanding and common equivalent shares outstanding:
Basic		11,906			11,795			11,904			11,752
Diluted		11,983			12,196			11,973			12,154

 

See accompanying notes to consolidated financial statements.

 

3

 

NASH FINCH COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except per share amounts)

 

		June 14, 2003			December 28, 2002			June 15, 2002
		(unaudited)						(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	8,398		$	31,419		$	1,501
Accounts and notes receivable, net		148,787			165,527			165,974
Inventories		245,339			245,477			245,826
Prepaid expenses		15,172			12,335			12,975
Deferred tax assets		9,405			13,523			11,528
Total current assets		427,101			468,281			437,804
Investments in affiliates		20			556			556
Notes receivable, net		30,751			32,596			38,110
Property, plant and equipment:
Land		25,452			25,500			26,828
Buildings and improvements		156,049			155,865			158,540
Furniture, fixtures and equipment		325,971			323,201			319,906
Leasehold improvements		78,499			75,360			71,256
Construction in progress		7,676			7,169			7,977
Assets under capitalized leases		42,040			42,040			42,040
		635,687			629,135			626,547
Less accumulated depreciation and amortization		(372,284		)	(360,615		)	(355,253		)
Net property, plant and equipment		263,403			268,520			271,294
Goodwill, net		150,053			148,028			139,721
Investment in direct financing leases		13,959			14,463			13,017
Deferred tax asset, net		—			467			2,407
Other assets		14,441			15,011			16,495
Total assets		$	899,728		$	947,922		$	919,404
Liabilities and Stockholders' Equity
Current liabilities:
Outstanding checks		$	5,108		$	27,076		$	13,408
Current maturities of long-term debt and capitalized lease obligations		7,046			7,497			6,738
Accounts payable		175,214			170,542			216,626
Accrued expenses		89,004			94,068			83,293
Income taxes payable		10,954			10,073			7,377
Total current liabilities		287,326			309,256			327,442
Long-term debt		323,343			357,592			320,792
Capitalized lease obligations		45,962			47,784			47,027
Other liabilities		12,908			11,811			10,783
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 12,012, 12,012 and 11,981 shares, respectively		20,021			20,021			19,969
Additional paid-in capital		26,458			26,275			25,643
Restricted stock		(676		)	(894		)	(1,252		)
Accumulated other comprehensive income		(7,638		)	(7,507		)	(2,479		)
Retained earnings		193,021			184,645			172,494
		231,186			222,540			214,375
Less cost of 57, 70 and 68 shares of common stock in treasury, respectively		(997		)	(1,061		)	(1,015		)
Total stockholders equity		230,189			221,479			213,360
Total liabilities and stockholders equity		$	899,728		$	947,922		$	919,404

 

See accompanying notes to consolidated financial statements.

 

4

 

NASH FINCH COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

		Twenty-Four Weeks Ended
		June 14, 2003			June 15, 2002
Operating activities:
Net earnings		$	10,526		$	9,319
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		19,082			18,472
Amortization of deferred financing costs		521			524
Amortization of rebatable loans		728			318
Provision for bad debts		2,881			1,790
Cumulative effect of change in accounting principle		—			6,960
Deferred income tax expense		6,177			8,375
LIFO charge		800			1,323
Impairments		390			—
Gain on sale of property, plant & equipment		(413		)	(117		)
Other		(161		)	43
Changes in operating assets and liabilities, net of effects of acquisitions
Accounts and notes receivable		17,955			153
Inventories		2,175			20,806
Prepaid expenses		(2,564		)	2,035
Accounts payable		3,318			134
Accrued expenses		(6,112		)	(13,401		)
Income taxes payable		881			(4,005		)
Other assets and liabilities		(364		)	(2,525		)
Net cash provided by operating activities		55,820			50,204
Investing activities:
Disposal of property, plant and equipment		1,449			629
Additions to property, plant and equipment		(14,289		)	(14,441		)
Business acquired, net of cash		(2,054		)	(3,356		)
Loans to customers		(4,142		)	(1,609		)
Payments from customers on loans		2,717			5,785
Other		4			2,025
Net cash used in investing activities		(16,315		)	(10,967		)
Financing activities:
Payment of revolving debt		(33,400		)	—
Dividends paid		(2,150		)	(2,142		)
Payments of long-term debt		(3,946		)	(990		)
Payments of capitalized lease obligations		(1,062		)	(987		)
Decrease in outstanding checks		(21,968		)	(44,342		)
Other		—			258
Net cash used in financing activities		(62,526		)	(48,203		)
Net decrease in cash and cash equivalents		(23,021		)	(8,966		)
Cash and cash equivalents at beginning of the period		31,419			10,467
Cash and cash equivalents at end of the period		$	8,398		$	1,501
Supplemental disclosure of cash flow information:
Non cash investing and financing activities Purchase of real estate under capital leases		$	—		$	1,180

 

See accompanying notes to consolidated financial statements.

 

5

 

Nash Finch Company and Subsidiaries

Notes to Consolidated Financial Statements

June 14, 2003

 

Note 1 – Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2002.

 

The accompanying financial statements include all adjustments which are, in the opinion of management, necessary to present fairly the financial position of the Company and its subsidiaries at June 14, 2003, December 28, 2002 and June 15, 2002, and the results of operations and changes in cash flows for the twelve and twenty-four weeks ended June 14, 2003 and June 15, 2002.  All material intercompany accounts and transactions have been eliminated in the unaudited consolidated financial statements.  Results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

 

As previously disclosed, effective October 5, 2002, the Company reclassified its treatment of facilitated services, which include invoicing and payment services, where it acts as a processing agent for its independent retailers.  Prior to the reclassification, amounts invoiced to independent retailers by the Company for facilitated services were recorded as sales and the related amounts due and paid by the Company to its vendors were recorded as cost of sales.  The reclassification reduced both sales and cost of sales by $24.4 million and $28.8 million for the twelve weeks ended June 14, 2003 and June 15, 2002, respectively.  For the twenty-four weeks ended June 14, 2003 and June 15, 2002, both sales and cost of sales were reduced by $47.3 million and $55.1 million, respectively. The reclassification did not have an impact on gross profit, earnings before income taxes, net earnings, cash flows or financial position.

 

Certain other reclassifications have been made to the prior period financial statements.  These reclassifications had no impact on net income, earnings per share or stockholders’ equity.

 

Note 2 – Vendor Allowances and Credits

 

The Company participates with its vendors in a broad menu of promotions to increase sales of products.  These promotions fall into two main categories:  off-invoice allowances and performance-based allowances.  These promotional arrangements are often subject to negotiation with the Company’s vendors.

 

6

 

In the case of off-invoice allowances, discounts are typically offered by vendors with respect to certain merchandise purchased by the Company during a specified period of time.  The Company uses off-invoice allowances to support a variety of marketing programs such as reduced price offerings for specific time periods, food shows, pallet promotions and private label promotions.  The discounts are either reflected directly on the vendor invoice, as a reduction from the normal wholesale prices for merchandise to which the allowance applies, or the Company is allowed to deduct the allowance as an offset against the vendor’s invoice when it is paid.

 

In the case of performance-based allowances, the allowance or rebate is based on the Company’s completion of some specific activity, such as purchasing or selling product during a certain time period.  This basic performance requirement may be accompanied by an additional performance requirement such as providing advertising or special in-store promotion, tracking quantities of product sold, slotting (adding a new item to the system) and merchandising a new item, or achieving certain minimum purchase quantities.  The billing for these performance-based allowances is normally in the form of a “bill-back” in which case the Company is invoiced at the regular price with the understanding that the Company may bill back the vendor for the requisite allowance when the performance is satisfied.

 

Collectively with its vendors, the Company plans promotions and arrives at the amount the respective vendor plans to spend on promotions with the Company. The Company and the vendors then monitor, review and discuss the results of such promotions, and resolve issues relating to promotions and billings.  Each vendor has its own method for determining the amount of promotional funds budgeted to be spent with the Company during the period.  In most situations, the vendor allowances are based on units the Company purchased from the vendor.  In other situations, the allowances are based on its past or anticipated purchases and/or the anticipated performance of the planned promotions.

 

The Company jointly negotiates with its vendors the promotional calendar that governs all promotions. Forecasting promotional expenditures is a critical part of the Company’s twice yearly planning sessions with its vendors.  Most vendors work with the Company to project not just overall spending, but also spending on a category and regional basis.  As individual promotions are completed and the associated billing is processed, the vendors track the Company’s promotional program execution and spend rate.  The vendors discuss the tracking, performance and spend rate with the Company on a regular basis throughout the year.  Depending upon the vendor arrangements, such discussions can occur on a weekly, monthly, quarterly or annual basis.  These communications include future promotions, product cost, targeted retails and price points, anticipated volume, promotion expenditures, vendor maintenance, billing issues and procedures, new items/discontinued items, and trade spend levels relative to budget per event and per year, as well as the resolution of any issues that arise between the vendor and the Company. In the future, the nature and menu of promotional programs and the allocation of dollars among them may change as a result of ongoing negotiations and commercial relationships between vendors and the Company.

 

Note 3 - Inventories

 

The Company uses the LIFO method for valuation of a substantial portion of inventories.  An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time.  Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of expected year-end inventory levels and costs.  Because these are subject to many factors beyond management’s control, interim results are subject to the final year-end LIFO inventory valuation. If the FIFO method had been used, inventories would have been

 

7

 

approximately $46.3 million, $45.5 million and $49.0 million higher at June 14, 2003, December 28, 2002 and June 15, 2002, respectively.  For the twelve weeks ending June 14, 2003 and June 15, 2002, the Company recorded LIFO charges of $0.4 million and $0.3 million, respectively.  For the twenty-four weeks ending June 14, 2003 and June 15, 2002, the Company recorded LIFO charges of $0.8 million and $1.2 million, respectively.

 

Note 4 – Stock Option Plans

 

As permitted by the provisions of Statement of Financial Accounting Standard (SFAS) No. 123, “Accounting for Stock-Based Compensation”, the Company has chosen to continue to apply Accounting Principles Board Opinion No. 25 (APB 25), “Accounting for Stock Issued to Employees” and related interpretations in accounting for its stock-based compensation.  As a result, the Company does not recognize compensation costs if the option price equals or exceeds market price at date of grant. The following table illustrates the effect on net income and earnings per share for the twelve and twenty-four weeks ended June 14, 2003 and June 15, 2002 if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation (in thousands, except per share amounts):

 

		Twelve Weeks Ended						Twenty-Four Weeks Ended
		June 14, 2003			June 15, 2002			June 14, 2003			June 15, 2002
Reported net earnings		$	7,265		$	9,493		$	10,526		$	9,319
Total stock-based employee compensation expense determined under fair value based method for all option awards, net of tax		$	(318	)	$	(269	)	$	(558	)	$	(501	)
Adjusted net earnings		$	6,947		$	9,224		$	9,968		$	8,818
Reported basic earnings per share		$	0.61		$	0.80		$	0.88		$	0.79
Adjusted basic earnings per share		$	0.58		$	0.78		$	0.84		$	0.75
Reported diluted earnings per share		$	0.61		$	0.78		$	0.88		$	0.77
Adjusted diluted earnings per share		$	0.58		$	0.76		$	0.83		$	0.73

 

Note 5 – Other Comprehensive Income

 

Comprehensive income is as follows (in thousands):

 

		Twelve Weeks Ended						Twenty-Four Weeks Ended
		June 14, 2003			June 15, 2002			June 14, 2003			June 15, 2002
Net earnings:		$	7,265		$	9,493		$	10,526		$	9,319
Unrealized gain, net of tax		(117		)	(150		)	(80		)	24
Comprehensive income		$	7,148		$	9,343		$	10,446		$	9,343

 

During 2003 and 2002, other comprehensive income consisted of market value adjustments to reflect derivative instruments designated as cash flow hedges at fair value, pursuant to SFAS No. 133.

 

8

 

Note 6 – Recently Adopted and Issued Accounting Standards

 

Emerging Issues Task Force (EITF) Issue No. 02-16, “Accounting by a Customer (Including a Reseller) for Cash Consideration Received from a Vendor,” addresses how a reseller of a vendor’s products should account for cash consideration received from a vendor and how to measure that consideration in its income statement.

 

In January 2003, the EITF concluded that new vendor arrangements, including modifications of existing arrangements entered into after December 31, 2002, should apply the provisions outlined in EITF No. 02-16.  In March 2003, the EITF concluded that entities may elect to early adopt the provisions of EITF No. 02-16 as a cumulative effect of a change in accounting principle.  The Company elected to early adopt the provisions of EITF No. 02-16 in the fourth quarter of 2002, retroactive to the beginning of fiscal 2002 and recognized a charge of $7.0 million, net of income taxes of $4.4 million, which represented the cumulative effect of a change in accounting principle as of the beginning of fiscal 2002.  This adoption also resulted in the reclassification of our net cooperative advertising income in fiscal 2002 from selling, general, and administrative expense to cost of sales retroactively as of the beginning of fiscal 2002.

 

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities – an Interpretation of ARB No. 51” (FIN No. 46).  In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities.  A variable interest entity often holds financial assets, including loans or receivables, real estate or other property.  A variable interest entity may be essentially passive or it may engage in activities on behalf of another company.  Until now, a company generally has included another entity in its consolidated financial statements only if it controlled the entity through voting interests.  FIN No. 46 changes that by requiring a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns or both.  FIN No. 46’s consolidation requirements apply immediately to variable entities created or acquired after January 31, 2003.  The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003, which for the Company is the fourth quarter of fiscal 2003.  The Company is currently evaluating the impact the adoption of FIN No. 46 will have on the consolidated financial statements.

 

Note 7 – Segment Reporting

 

A summary of the major segments of the business is as follows:

(In thousands)

 

 Twelve weeks ended June 14, 2003

		Food Distribution			Retail			Military			Totals
Revenue from external customers		$	420,740		$	220,019		$	247,853		$	888,612
Inter-segment revenue		113,940			—			—			113,940
Segment profit		13,585			9,955			6,695			30,235

 

9

 

Twelve weeks ended June 15, 2002

		Food Distribution			Retail			Military			Totals
Revenue from external customers		$	427,931		$	245,073		$	235,262		$	908,266
Inter-segment revenue		130,706			—			—			130,706
Segment profit		16,298			9,952			7,499			33,749

 

 

Twenty-four weeks ended June 14, 2003

		Food Distribution			Retail			Military			Totals
Revenue from external customers		$	809,188		$	441,476		$	494,612		$	1,745,276
Inter-segment revenue		231,496			—			—			231,496
Segment profit		24,788			17,192			13,371			55,351

 

 

Twenty-four weeks ended June 15, 2002

		Food Distribution			Retail			Military			Totals
Revenue from external customers		$	853,842		$	482,903		$	466,096		$	1,802,841
Inter-segment revenue		259,334			—			—			259,334
Segment profit		29,590			18,904			14,651			63,145

 

10

 

Reconciliation to statements of operations:

(In thousands)

 

Twelve weeks ended June 14, 2003 and June 15, 2002

 

		2003			2002
Profit and loss
Total profit for segments		$	30,235		$	33,749
Unallocated amounts:
Adjustment of inventory to LIFO		(400		)	(300		)
Unallocated corporate overhead		(17,925		)	(17,654		)
Earnings before income taxes and cumulative effect of change in accounting principle		$	11,910		$	15,795

 

Twenty-four weeks ended June 14, 2003 and June 15, 2002

 

		2003			2002
Profit and loss
Total profit for segments		$	55,351		$	63,145
Unallocated amounts:
Adjustment of inventory to LIFO		(800		)	(1,223		)
Unallocated corporate overhead		(37,295		)	(34,836		)
Earnings before income taxes and cumulative effect of change in accounting principle		$	17,256		$	27,086

 

Note 8 – Guarantees

 

FIN 45, issued in November 2002, elaborates on the existing disclosure requirements for most guarantees, including residual value guarantees issued in conjunction with operating lease agreements.  It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value of the obligation it assumes under that guarantee and must disclose that information in its interim and annual financial statements.

 

In the normal course of business, the Company may guarantee lease and debt obligations of retailers.  In the event these retailers are unable to meet their debt service payments or otherwise experience an event of default, the Company would be unconditionally liable for the outstanding balance of their debt and lease obligations, which would be due in accordance with the underlying agreements.  As of June 14, 2003, the Company has guaranteed outstanding debt and lease obligations of retailers in the amount of $21.9 million.

 

11

 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

RESULTS OF OPERATIONS

 

Sales

 

Sales by the Company (also referred to as “we” or “us”) for the twelve weeks ended June 14, 2003 were $888.6 million compared to $908.3 million for the same period last year, reflecting a decrease of $19.7 million or 2.2%.  For the twenty-four weeks ended June 14, 2003, sales were $1,745.3 million compared to $1,802.8 million for the same period last year reflecting a decrease of $57.5 million or 3.2%.  The distribution of sales by segment is as follows:

 

		Twelve Weeks Ended						Twenty-Four Weeks Ended
		June 14, 2003			June 15, 2002			June 14, 2003			June 15, 2002
Food distribution		$	420.7		$	427.9		$	809.2		$	853.8
Retail		220.0			245.1			441.5			482.9
Military		247.9			235.3			494.6			466.1
		$	888.6		$	908.3		$	1,745.3		$	1,802.8

 

Food distribution sales for the twelve weeks ended June 14, 2003 decreased $7.2 million or 1.7% compared to the prior year period and sales for the twenty-four weeks ended June 14, 2003 decreased $44.6 million or 5.2% compared to the prior year period.  The decreased sales are due to continued difficult economic conditions and soft sales/store closings experienced by independent retailers because of increased supercenter competition in certain markets, the effects of which were partially offset by new business with Kmart and various Fleming accounts.

 

Retail segment sales for the twelve weeks ended June 14, 2003 decreased $25.1 million or 10.2% compared to the prior year period. Sales for the twenty-four weeks ended decreased $41.4 million or 8.6% compared to the prior year period.  Same store sales, which compares retail sales for stores which were in operation for the same number of weeks in the comparative periods, declined by 12.3% and 11.6% for the twelve and twenty-four weeks ended June 14, 2003, respectively.  The decline is attributed to the intense level of competition throughout our retail marketing areas, largely reflecting the growth of supercenter competition, and retail customers trading down and/or purchasing less in conventional supermarket channels.  As a result of the competitive and economic environment, we do not expect any significant improvement in same store sales comparisons prior to the fourth quarter of fiscal 2003.  During the twelve and twenty-four weeks ended June 14, 2003, our corporate store count changed as follows:

 

		Twelve Weeks		Twenty-Four Weeks
Number of stores at beginning of period		111		109
New stores		—		1
Acquired stores		—		6
Closed or sold stores		(3	)	(8	)
Number of stores at end of period		108		108

 

12

 

During the first quarter of fiscal 2003, we opened our third AVANZA^TM store in Denver, Colorado.  This format is designed to service the Hispanic market, which we believe is under-served by conventional grocery stores.  We opened a fourth AVANZA store in Pueblo, Colorado in June 2003 and anticipate opening two stores in Chicago, Illinois later this year.  In addition, we closed two underperforming Buy·n·SaveÒ stores during the first quarter of fiscal 2003, reducing to six the total number of these stores serving low income, value conscious consumers as of June 14, 2003.

 

Military segment sales for the twelve weeks ended June 14, 2003 increased $12.6 million or 5.4% over the prior year period.   Sales for the twenty-four weeks ended increased by $28.5 million or 6.1% over the prior year period.  The increase is primarily attributed to the positive impact of the military deployment in the Middle East.  This trend is not expected to continue as a result of the end of the war in Iraq and/or upon the return of troops deployed in the Middle East.

 

Gross Profit

 

Gross profit for the twelve weeks ended June 14, 2003 was 11.7% of sales compared to 12.3% for the same period last year.  Gross profit for the twenty-four weeks ended was 11.7% of sales compared to 12.1% for the same period last year.  The decrease in both periods is primarily attributed to an increase in the percentage of our overall sales that is derived from our food distribution and military segments, both of which operate at lower gross profit margins than our retail segment. For the twelve and twenty-four weeks ended June 14, 2003, gross margins included a LIFO charge of $0.4 million and $0.8 million, respectively, compared to a charge of $0.3 million and $1.2 million, respectively, for the same periods last year.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses for the twelve weeks ended June 14, 2003 were 8.4% of sales compared to 8.8% for the same period last year.  Selling, general and administrative expenses for the twenty-four weeks ended were 8.6% of sales compared to 8.8% for the same period last year.  The decrease in both periods is primarily attributed to the increase in the percentage of our overall sales that is derived from our food distribution and military segments, both of which incur fewer selling, general and administrative expenses as a percentage of sales as compared to our retail segment.

 

Depreciation and Amortization Expense

 

Depreciation and amortization expense for the twelve and twenty-four weeks ended June 14, 2003 was $9.6 million and $19.1 million as compared to $9.2 and $18.5 million, respectively, for the same periods last year, reflecting an increase of 4.4 % and 3.2%.    The increase in both periods primarily represents the addition of information technology products which are being depreciated over three years.

 

Interest Expense

 

Interest expense for the twelve weeks ended June 14, 2003 was $7.0 million compared to $6.7 million for the same period last year, reflecting an increase of $0.3 million, or 4.5%.   Interest expense for the twenty-four weeks ended June 14, 2003 was $17.8 million compared to $13.3 million for the same period last year, reflecting an increase of $4.5 million, or 33.8%.  The increase in interest expense for the twenty-four weeks ended is primarily attributed to $2.5 million paid to our bondholders and $1.3 million paid to our bank lenders during the first quarter of 2003 as consideration for waivers to extend the deadlines for providing our third quarter Form 10-Q for fiscal 2002, our Form 10-K for fiscal 2002

 

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and our first quarter Form 10-Q for fiscal 2003.  In addition, our average borrowing rate (including the impact of our interest rate swap agreements) under the bank credit facility, which consists of a $100 million term loan and $150 million in revolving credit, was 4.8% for the twelve weeks and twenty-four weeks ended June 14, 2003 compared to 4.4% for the same periods last year.   The increase in our average borrowing rate for the twelve weeks ended June 14, 2003 was offset by a decrease in our average borrowing level with respect to the bank credit facility for the same period last year.  Our average borrowing level for the twenty-four weeks ended June 14, 2003 remained relatively flat compared to the same period last year.

 

Income Taxes

 

Income tax expense is provided on an interim basis using management’s estimate of the annual effective rate.  The effective income tax rate for the twelve weeks and twenty-four weeks ended June 14, 2003 was 39.0% compared to 39.9% for the same period last year.  The reduction in the effective rate is primarily attributed to a higher proportion of taxable income being generated in lower tax jurisdictions.

 

Cumulative Effect of Change in Accounting Principle

 

We adopted the provisions of EITF Issue No. 02-16, “Accounting by a Customer (Including a Reseller) for Cash Considerations Received From a Vendor” as of the beginning of fiscal 2002.  The cumulative effect at the beginning of fiscal 2002 was a charge of $7.0 million, net of income taxes of $4.4 million.  The cumulative effect of a change in accounting principle has been presented in our consolidated statement of income for the twenty-four weeks ended June 15, 2002.

 

Net Earnings

 

Net earnings for the twelve weeks ended June 14, 2003 were $7.3 million, or $0.61 per diluted share, compared to $9.5 million, or $0.78 per diluted share, for the twelve weeks ended June 15, 2002.  Net earnings for the twenty-four weeks ended June 14, 2003 were $10.5 million, or $0.88 per diluted share, compared to $9.3 million or $0.77 per diluted share for the same period last year.  Excluding the waiver fees paid to our bondholders and our bank lenders during the twenty-four weeks ended June 14, 2003 and the cumulative effect of a change in accounting principle due to the adoption of EITF No. 02-16 for the twenty-four weeks ended June 15, 2002, adjusted earnings and adjusted diluted earnings per share (which are non-GAAP financial measures) are as follows:

 

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		Twenty-Four Weeks Ended
		June 14, 2003			June 15, 2002
Reported net earnings:		$	10,526		$	9,319
Debt waiver fees, net of income taxes of $1,496		2,339			—
Cumulative effect of change in accounting principle, net of income taxes		—			6,960
Adjusted earnings		$	12,865		$	16,279
Diluted earnings per share:
Reported earnings per share		$	0.88		$	0.77
Debt waiver fees, net of income taxes		0.20			—
Cumulative effect of change in accounting principle, net of income taxes		—			0.57
Adjusted earnings per share		$	1.08		$	1.34

 

We believe that the presentation of adjusted earnings and adjusted earnings per diluted share provides useful information to investors in that it enhances the comparability of results of operations between the twenty-four weeks of 2003 and 2002 by excluding charges that have not occurred within the past two years and are not expected to occur within the next two years.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in applying certain critical accounting policies.  Critical accounting policies are those that require the most subjective and complex judgments.

 

On an on-going basis, the Company evaluates its estimates utilizing historic experience, consultation with experts and other methods the Company considers reasonable.  In any case, actual results may differ significantly from the Company’s estimates.  Any effects on the Company’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known (See Part II, Item 7 under the caption “Critical Accounting Policies” of our Form 10-K for the year ended December 28, 2002 for additional discussion).

 

LIQUIDITY AND CAPITAL RESOURCES

 

Historically, we have financed our capital needs through a combination of internal and external sources.  These sources include cash flow from operations, short-term bank borrowings, various types of long-term debt and lease financing.

 

Operating cash flows were $55.8 million for the twenty-four weeks ended June 14, 2003 compared to $50.2 million for the same period last year.  The change in cash flows from operating activities is primarily due to changes in operating assets and liabilities.  For the twenty-four weeks ended June 14, 2003, the most significant of these changes was a decrease in accounts receivable of

 

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$18.0 million due to reduced sales volume and the timing of payments received.  The cash flow impact of that decrease was partially offset by a decrease in accrued expenses of $6.1 million.  For the twenty-four weeks ended June 14, 2002, the most significant change involved a decrease in inventories of $20.8 million, partially offset by a decrease in accrued expenses of $13.4 million.

 

Cash used in investing activities was $16.3 million for the twenty-four weeks ended June 14, 2003 compared to $11.0 million for the same period last year.  Investing activities for the twenty-four weeks ended June 14, 2003 consisted primarily of $14.3 million in capital expenditures, $2.1 million in acquisition costs and $1.4 million of new loans to customers, net of payments on loans from customers.  We expect our capital expenditures to be approximately $50 million for fiscal 2003.  The majority of these expenditures have been identified for use within our retail segment for continued expansion of our AVANZA store format and the remodeling of several of our existing conventional retail stores in response to the intense level of competition throughout our retail marketing areas.   Investing activity in the comparable twenty-four week period in the prior year consisted primarily of $14.4 million in capital expenditures, $3.4 million in acquisition costs and $4.2 million of net loan payments received from customers

 

Cash used in financing activities was $62.5 million for the twenty-four weeks ended June 14, 2003 compared to $48.2 million for the same period last year.  Cash used in the 2003 period primarily reflects payments of $33.4 million made on the credit facility and a decrease in the outstanding checks balance of $22.0 million.  In the 2002 period, cash used for financing activities primarily reflected a decrease of $44.3 million in the outstanding checks balance.

 

At June 14, 2003 total debt, including capitalized leases, was $376.4 million compared to $412.9 million at December 28, 2002 and $374.6 million as of June 15, 2002.  Amounts outstanding under the revolving credit facility were $46.0 million at June 14, 2003, $79.4 million at December 28, 2002 and $40.0 million at June 15, 2002.

 

Our revolving credit facility contains various restrictive covenants.  The agreement contains financial covenants which, among other matters, require us to maintain predetermined ratio levels related to interest coverage, fixed charge coverage and leverage.  These ratios are based on EBITDA with some adjustments (Adjusted EBITDA).  Adjusted EBITDA is a non-GAAP financial measure that is defined as earnings before interest, income taxes, depreciation and amortization, adjusted to exclude extraordinary gains or losses, gains or losses from sales of real estate, and non-cash LIFO and other charges (such as closed store lease costs and retail impairments).  Adjusted EBITDA should not be considered an alternative measure of our net income, operating performance, cash flow or liquidity.  It is provided as additional information relative to our debt covenants.

 

As of June 14, 2003, we were in compliance with all Adjusted EBITDA-based debt covenants as defined in our credit agreement.  The following summarizes our compliance with the aforementioned covenants as of June 14, 2003:

 

Financial Covenant		Required Ratio		Actual Ratio
Interest Coverage Ratio (1)		3.00:1.00 (minimum)		3.42:1.00
Fixed Coverage Ratio (2)		1.05:1.00 (minimum)		1.23:1.00
Leverage Ratio (3)		3.75:1.00 (maximum)		3.23:1.00

 

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(1)           Ratio of Adjusted EBITDA for the trailing four quarters to interest expense for such period.  The required minimum ratio per the credit agreement will be adjusted to 3.25:1.00 as of the fourth quarter of fiscal 2003.

(2)           Ratio of Adjusted EBITDA plus rent expense for the trailing four quarters to the sum of interest expense, rent expense and capital expenditures for such period.  The required minimum ratio per the credit agreement will be adjusted to 1.10:1.00 as of the first quarter of fiscal 2004.

(3)           Total outstanding debt and capitalized leases to Adjusted EBITDA for the trailing four quarters.  The maximum permitted ratio per the credit agreement will be adjusted to 3.50:1:00 as the fourth quarter of fiscal 2003.

 

The following is a summary of the calculation of Adjusted EBITDA (in thousands) for the twelve and twenty-four week periods ended June 14, 2003 and June 15, 2002:

 

		Twelve Weeks Ended						Twenty-Four Weeks Ended
		June 14, 2003			June 15, 2002			June, 14 2003			June 15, 2002
Earnings before income taxes and cumulative effect of change in accounting principle		$	11,910		$	15,795		$	17,256		$	27,086
Add (Deduct):
LIFO		400			300			800			1,223
Depreciation and amortization		9,642			9,165			19,082			18,472
Interest expense		7,035			6,651			17,826			13,298
Impairments								390
Closed store lease costs		32						386
Gains on sale of real estate		(126		)	(5		)	(192		)	(12		)
Total Adjusted EBITDA		$	28,893		$	31,906		$	55,548		$	60,067

 

Borrowings under the credit facility are collateralized by a security interest in substantially all assets of the Company and its wholly-owned subsidiaries that are not pledged under other debt agreements.  The credit agreement also contains covenants that specify a minimum working capital ratio, limit our ability to incur debt (including guaranteeing the debt of others) and liens, acquire or dispose of assets, pay dividends on and repurchase our stock, make capital expenditures and make loans or advances to others, including customers.

 

We have market risk exposure to changing interest rates primarily as a result of our borrowing activities and commodity price risk associated with anticipated purchases of diesel fuel. Our objective in managing our exposure to changes in interest rates and commodity prices is to reduce fluctuations in earnings and cash flows. To achieve these objectives, we use derivative instruments, primarily interest rate and commodity swap agreements, to manage risk exposures when appropriate, based on market conditions.  We do not enter into derivative agreements for trading or other speculative purposes, nor are we a party to any leveraged derivative instrument.

 

The interest rate swap and commodity swap agreements are designated as cash flow hedges and are reflected at fair value in our consolidated balance sheet and the related gains or losses on these contracts are deferred in stockholders’ equity as a component of other comprehensive income.

 

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Deferred gains and losses are amortized as an adjustment to expense over the same period in which the related items being hedged are recognized in income.  However, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the items being hedged, any changes in fair value relating to the ineffective portion of these contracts are immediately recognized in income.

 

Interest rate swap agreements are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures.  At June 14, 2003 we had three outstanding interest rate swap agreements which commenced on July 26, 2002, December 6, 2002 and June 6, 2003 to manage interest rates on a portion of our long-term debt.  The agreements expire on September 25, 2004, October 6, 2004 and October 6, 2004 with notional amounts of $50 million, $35 million and $35 million, respectively.  The agreements call for an exchange of interest payments with us making payments based on fixed rates of 2.75%, 3.5% and 3.97% for the respective time intervals and receiving payments based on floating rates, without an exchange of the notional amount upon which the payments are based.  In addition, we are using a commodity swap agreement to reduce price risk associated with anticipated purchases of diesel fuel.  The commodity swap agreement, with a notional amount of 3,500 barrels per month, or approximately 40% of our monthly fuel consumption, expires in August 2003.

 

We believe that borrowing under the revolving credit facility, cash flows from operating activities and lease financing will be adequate to meet our working capital needs, planned capital expenditures and debt service obligations for the foreseeable future.

 

FORWARD LOOKING INFORMATION

 

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  The statements regarding the Company contained in this report that are not historical in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “likely,” “expects,” “anticipates,” “estimates,” “believes” or “plans,” or comparable terminology, are forward-looking statements based on current expectations 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 material differences include the following:

 

•                  the effect of competition on the Company’s distribution and retail businesses;

•                  general economic conditions;

•                  credit risk from financial accommodations extended to customers;

•                  risks entailed by expansion, affiliations and acquisitions;

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

•                  changes in vendor promotions or allowances;

•                  changes in consumer spending and buying patterns;

•                  the ability to execute plans to improve retail operations and to enhance wholesale operations;

•                  adverse determinations or developments with respect to litigation, other legal proceedings or the SEC investigation; and

•                  the success or failure of new business ventures or initiatives.

 

These factors are discussed more fully in Part I, Item 3 and Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 28, 2002, under the caption “Cautionary Factors.”  You should carefully consider each cautionary factor and all of the other information in this report.  We

 

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undertake no obligation to revise or update publicly any forward-looking statements.  You are advised, however to consult any future disclosures we make on related subjects in future reports to the SEC.

 

NEW ACCOUNTING STANDARDS

 

Emerging Issues Task Force (EITF) Issue No. 02-16, “Accounting by a customer (Including a Reseller) for Cash Consideration Received from a Vendor,” addresses how a reseller of a vendor’s products should account for cash consideration received from a vendor and how to measure that consideration in its income statement.

 

In January 2003, the EITF concluded that new vendor arrangements, including modifications of existing arrangements entered into after December 31, 2002, should apply the provisions outlined in EITF No. 02-16.  In March 2003, the EITF concluded that entities may elect to early adopt the provisions of EITF No. 02-16 as a cumulative effect of a change in accounting principle.  We elected to early adopt the provisions of EITF No. 02-16 in the fourth quarter of 2002, retroactive to the beginning of fiscal 2002 and recognized a charge of $7.0 million, net of income taxes of $4.4 million, which represented the cumulative effect of a change in accounting principle as of the beginning of fiscal 2002.  This adoption also resulted in the reclassification of our net cooperative advertising income in fiscal 2002 from selling, general, and administrative expense to cost of sales retroactively as of the beginning of fiscal 2002.

 

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities – an Interpretation of ARB No. 51” (FIN No. 46).  In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities.  A variable interest entity often holds financial assets, including loans or receivables, real estate or other property.  A variable interest entity may be essentially passive or it may engage in activities on behalf of another company.  Until now, a company generally has included another entity in its consolidated financial statements only if it controlled the entity through voting interests.  FIN No. 46 changes that by requiring a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns or both.  FIN No. 46’s consolidation requirements apply immediately to variable entities created or acquired after January 31, 2003.  The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003, which is our fourth quarter of fiscal 2003.  We are currently evaluating the impact the adoption of FIN No. 46 will have on our consolidated financial statements.

 

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We have market risk exposure to changing interest rates primarily as a result of our borrowing activities and commodity price risk associated with anticipated purchases of diesel fuel.  We use interest rate and commodity swap agreements to manage our risk exposure (See Part II, Item 7 of our December 28, 2002 Form 10-K and Part I, Item 2 of this report under the caption “Liquidity and Capital Resources”).

 

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ITEM 4.  CONTROLS AND PROCEDURES

 

In connection with the internal inquiry into our process for assessing count-recount charges to our vendors and how we account for those charges, we re-evaluated our system of internal controls and reporting processes as they relate to vendor allowances and credits generally.  As a result of that re-evaluation, we have implemented a number of additional controls and reporting processes and established a vendor policy oversight committee that includes senior Company officers to improve consistency, oversight and reporting in this area.  In addition, we have implemented a policy under which the administrative fee associated with count-recount charges will be set as a fixed percentage of sales and separately itemized on invoices.

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, subsequent to the events described in the previous paragraph and as of a date within 90 days prior to the filing date of this report.  Based on this evaluation, our principal executive officer and principal financial officer have concluded that the our disclosure controls and procedures are effective to insure that information required to be disclosed by us in reports that are filed or submitted to the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

 

Subsequent to the date of the most recent evaluation of our internal controls, and except as discussed in the first paragraph of this Item 4, there were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls, including any corrective actions with regard to significant deficiencies or material weaknesses.

 

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PART II - OTHER INFORMATION

 

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

 

(a)                                  Exhibits filed with this Form 10-Q:

 

99.1                           Certification Under Section 906 of the Sarbanes-Oxley Act of 2002.

 

(b)                               Reports on Form 8-K:

 

On May 22, 2003, the Company furnished a Form 8-K reporting in accordance with “Item 12 — Results of Operations and Financial Condition”:

 

The Company announced its results for the first quarter of its fiscal year 2003.

 

On May 13, 2003, the Company furnished a Form 8-K reporting in accordance with “Item 12 — Results of Operations and Financial Condition”:

 

The Company announced its results for the third and fourth quarters of its fiscal year 2002 and for its full fiscal year 2002 ended December 28, 2002.

 

On April 1, 2003, the Company filed a Form 8-K reporting under “Item 5 — Other Information and Regulation FD Disclosure”:

 

The Company announced that an amendment to the credit agreement between the Company and its bank lenders became effective on March 27, 2003.  The amendment extended from March 28, 2003 until June 15, 2003 the deadline for submission to the lenders of the Company’s audited fiscal 2002 financial statements.

 

On March 25, 2003, the Company filed a Form 8-K reporting under “Item 5 — Other Information and Regulation FD Disclosure”:

 

The Company announced that the Nasdaq Listing Qualifications Panel had agreed to extend the deadlines for the filing by the Company of its periodic reports for the third quarter 2002, fiscal 2002 and first quarter 2003.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

	NASH-FINCH COMPANY
	Registrant
	By   /s/ Ron Marshall
	Ron Marshall
	Chief Executive Officer
	By   /s/ Robert B. Dimond
	Robert B. Dimond
	Executive Vice President and Chief Financial Officer

 

Date: July 17, 2003

 

23

 

I, Ron Marshall, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Nash-Finch Company;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

 

(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

 

(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

 

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

 

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

Date: July 17, 2003	By:  /s/ Ron Marshall
	Name: Ron Marshall
	Title: Chief Executive Officer

 

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I, Robert B. Dimond, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Nash-Finch Company;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

 

(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

 

(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

 

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

 

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

Date:  July 17, 2003	By:  /s/ Robert B. Dimond
	Name:  Robert B. Dimond
	Title:  Executive Vice President and
	Chief Financial Officer

 

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NASH FINCH COMPANY

 

EXHIBIT INDEX TO QUARTERLY REPORT

ON FORM 10-Q

 

For the Twelve and Twenty-Four Weeks Ended June 14, 2003

 

Item No.		Item		Method of Filing
99.1		Certification Under Section 906 of the Sarbanes-Oxley Act of 2002.		Filed herewith.

 

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