Nash Finch Company (Nasdaq: NAFC), a Fortune 500 Minneapolis-based food retailer and distributor, today reported for the second quarter ended June 16, 2001 that net earnings rose 20 percent to $5.3 million, or 44 cents per diluted share, compared to net earnings of $4.4 million, or 38 cents per diluted share, reported for the second quarter of 2000. Total revenues for the second quarter of 2001 were $949.6 million versus revenues of $905.9 million in the second quarter of 2000, a 5 percent increase.

EBITDA (earnings from operations before interest, taxes, depreciation, amortization, LIFO and non-recurring items) totaled $28.5 million in the second quarter of 2001, or 3.0 percent of sales, which is a 12 percent increase over EBITDA in the second quarter of 2000 of $25.4 million, or 2.8 percent of sales.

"We are very pleased with the continued trend line in our earnings performance. In fact, this is our seventh consecutive quarter with year-over-year improvement in comparable earnings. The strategy we laid out three years ago and the hard work of our associates is clearly reflected in our strong earnings momentum," said Ron Marshall, president and chief executive officer. "Based on this performance, we are revising our earnings guidance for 2001 to a range of $1.70 to $1.75 per share, which is an improvement from the previously announced range of $1.55 to $1.65 per share. This is a 26 to 30 percent increase over last year's E.P.S. of $1.35. A key factor in our revised earnings guidance is that we now expect EBITDA for 2001 to improve 15 to 16 percent over last year."

For the first 24 weeks of 2001, total revenues increased 4 percent to $1.85 billion compared to $1.78 billion in the prior year period. Net earnings rose 29 percent to $8.5 million, or 72 cents per diluted share, versus $6.6 million, or 58 cents per diluted share, in the first 24 weeks of 2000. EBITDA for the 24-week period in 2001 increased 17 percent to $53.4 million, or 2.9 percent of sales, from $45.5 million, or 2.6 percent of sales, in the first 24 weeks of 2000.

"We had a strong first quarter, with the momentum continuing through the second quarter and we fully expect into the rest of the year. Our focus on quality, innovative products and promotions continues to earn us new business. At the same time, we're building a culture which is keenly focused on cost improvement," said Marshall.

Business Segments

Revenues in Nash Finch's retail segment for the second quarter 2001 were $237.1 million compared to revenues of $245.2 million in the second quarter of 2000, or a 3 percent decrease. Retail segment EBITDA in the second quarter of 2001 was $12.3 million, or 5.2 percent of sales, versus $11.5 million, or 4.7 percent of sales, in the second quarter of 2000. Retail segment profit in the second quarter 2001 improved by 5 percent to $8.7 million, compared to $8.3 million in the second quarter of 2000.

A key factor in the decreased second quarter revenues this year compared to second quarter last year was the company's announcement that its corporate retail business was exiting the Southeast Region. The stores are being sold to undisclosed buyers who are wholesale customers of Nash Finch's food distribution business. The agreements contain multi-year sales and service provisions whereby the stores will continue to be supplied by Nash Finch. The divestiture allows the company to focus its retail operations in the Upper Midwest where it currently owns 97 retail stores. The majority of the sale transactions have been completed and the company expects the final transactions to be completed early in the third quarter.

Excluding the stores in the Southeast region, revenues increased 2 percent compared to the second quarter of last year. Same-store-sales, excluding the stores in the Southeast Region, were down one percent in the second quarter of 2001 compared to the second quarter of 2000 and were flat for the first 24 weeks of 2001 compared to the same period in 2000.

Also during the second quarter, the company announced that Lonnie Eggers had joined the management team of Nash Finch's retail operations. Eggers was named vice president of retail operations and is responsible for the company's retail stores. He has over 30 years of retail experience, primarily with Baker's Supermarkets in Omaha, Nebraska, and reports to Michael Petersen, executive vice president and president of retail operations.

"We are particularly proud of the retail management talent we have recently attracted to the company. These are people with a wealth of knowledge and experience in running strong, profitable retail chains,'' said Marshall. ``Best of all, they have a passion for creating an in-store customer experience that builds revenue and profitability. We are already benefiting from their contributions to the company."

Nash Finch's food distribution segment improved revenues in the second quarter of 2001 by 8 percent to $478.3 million, compared to $444.4 million in the second quarter of 2000. Segment EBITDA increased to $16.2 million in the second quarter of 2001, or 3.4 percent of sales, from $15.3 million in the second quarter to 2000, which also was 3.4 percent of sales. Profit in the food distribution segment was $13.6 million in the second quarter of 2001, a 13 percent increase from profit in the second quarter of 2000 of $12.0 million.

In May, the company announced $60 million in new annualized revenues from over 40 suppliers to military commissaries. The new volume is being serviced from the company's distribution centers in Cincinnati, Ohio and Cedar Rapids, Iowa for shipment to military bases in the central region of the United States. This new business will be included in the food distribution segment for reporting purposes because these centers, along with several other existing centers, currently serve corporate stores, independent retailers, as well as military bases.

In addition to the increased volume in military distribution, the company's food distribution segment captured new wholesale business totaling $25 million in annualized revenues from independent retailers during the second quarter. Combined with the $45 million in new annualized revenues announced for first quarter, the food distribution segment's new wholesale business from independent retailers and military suppliers is over $130 million year-to-date in annualized revenues.

The company also reported that quality standards for the food distribution segment remained very strong during second quarter. The company regularly monitors on-time deliveries, selector accuracy and fill-rate metrics against an industry-leading set of standards.

Nash Finch's store brands continued to have significant growth, with sales of private label products during the first 24 weeks of 2001 increasing over 18% compared to the first 24 weeks of 2000. Store brands include Nash Finch's private label products under the Our Family®, IGA® and Fame® brands. In addition, Nash Finch's Signature Program of branded products, introduced last year to corporate stores and independent retailers, is also producing strong sales growth. The program includes Bernini(TM) Pizza, Cinnfully Good(TM) Cinnamon Rolls, and other items which are exclusively available at Nash Finch's company-owned or supplied stores. The company attributes the strong growth rates in store brands and Signature items to innovative promotions, in- store displays and aggressive pricing strategies available as Nash Finch leverages its buying power across its corporate stores and the over 2000 independent retailers supplied through the company's food distribution operations.

During the quarter, the company announced the addition of Jeffrey Poore to the management team of the food distribution segment. Poore was named Vice President of Distribution and Logistics, reporting to Jerry Nelson, President of Food Distribution. Poore has over 20 years of logistics experience, most recently with SuperValu, Inc.

"Our continued performance improvement in our food distribution segment can be attributed to a set of factors, from our focus on quality standards to our ability to deliver to the retailer a set of innovative products and merchandising support unlike they can receive from any other supplier," said Marshall. "Our private label products and our Signature Program are yielding great results for our corporate stores and our independent retailers. As we have helped our existing independent retailers to be more successful in their business, that same success translates into increased earnings for Nash Finch."

The military segment of Nash Finch, which operates distribution centers exclusively dedicated to serving military bases on the east coast of the United States and Europe, increased revenue in the second quarter of 2001 to $234.1 million, up 8 percent from revenues of $216.0 million in the second quarter of 2000. Military EBITDA increased to $5.9 million, compared to $5.5 million in the second quarter of 2000, consistently representing 2.5 percent of sales. Profit in the military segment was $5.6 million in the second quarter of 2001, a 12 percent improvement from profits of $5.0 million in the second quarter of 2000.


"Our performance to-date in 2001 has further affirmed our strategy and business plan," said Marshall. "We use the term 'performance-driven' to describe our operating expectations and we are applying that expectation to everything we do. We will remain focused on delivering exceptional value to customers. At the same time, we continue to explore opportunities to enhance shareholder value."

Nash Finch Company is a Fortune 500 company and one of the leading food retail and distribution companies in the United States with over $4 billion in annual revenues. The company owns and operates a base of 97 retail stores, principally supermarkets under the Econofoods, Sun Mart and Family Thrift Center trade names. Independent retailers and military commissaries in approximately 30 states and Europe are key customers of Nash Finch's food distribution business. Further information is available on the company's website at

Forward-looking statements combined in this news release are made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors may include, but are not limited to: general business conditions, the impact of competition, and other risks detailed from time to time in the Company's periodic reports available from the Security and Exchange Commission.

         Condensed Consolidated Statements of Operations (unaudited)
                   (In thousands, except per share amounts)

                                        Twelve Weeks      Twenty-four Weeks
                                           Ended                Ended
                                      June 16, June 17,  June 16,   June 17,
                                        2001     2000      2001       2000

    Total sales and revenues          $949,559  905,894  1,854,498  1,783,169

    Cost and expenses:
      Cost of sales                    842,447  802,367  1,644,320  1,584,511
      Selling, general and
       administrative                   79,380   78,166    158,043    151,903
      Depreciation and amortization     10,631   10,023     21,278     19,904
      Interest expense                   8,085    7,770     16,287     15,373
        Total cost and expenses        940,543  898,326  1,839,928  1,771,691

        Earnings before income taxes     9,016    7,568     14,570     11,478

    Income taxes                         3,733    3,209      6,032      4,867

        Net earnings                     5,283    4,359      8,538      6,611

    Basic earnings per share:            $0.46     0.38       0.74       0.58

    Diluted earnings per share:           0.44     0.38       0.72       0.58

    Weighted average number of common
     shares outstanding and common
     equivalent shares outstanding:
      Basic                             11,579   11,408     11,543     11,407
      Diluted                           12,025   11,413     11,876     11,412

      EBITDA (a)                       $28,548   25,376     53,433     45,469
      EBITDA as a percent of revenue      3.01%    2.80%      2.88%      2.55%

    (a) EBITDA (operating cash flow) represents earnings from operations
        before interest, income tax, depreciation, amortization, LIFO, gains
        from the sale of real estate, special charges and other non-recurring

                    Condensed Consolidated Balance Sheets
                                (In thousands)

                                            June 16,   December 30,  June 17,
                                              2001         2000        2000
                                           (unaudited)             (unaudited)

    Current assets:
       Cash                                    $8,380       1,534       1,419
       Accounts and notes receivable, net     131,736     132,992     127,419
       Inventories                            262,562     270,481     252,485
       Other current assets                    32,366      28,532      32,153
          Total current assets                435,044     433,539     413,476

    Investments and noncurrent
     receivables                               37,682      32,454      32,000

    Property, plant and equipment, net        260,135     256,516     247,468

    Goodwill, net                             112,824     113,584     114,364
    Other assets                               48,335      44,735      43,633

          Total assets                       $894,020     880,828     850,941

    Liabilities and Stockholders' Equity
    Current liabilities:
       Current maturities of long-term
        debt and capitalized lease
        obligations                            $5,716       4,646       3,641
       Accounts payable                       247,332     240,724     224,030
       Accrued and other liabilities           90,276      79,416      76,302
            Total current liabilities         343,324     324,786     303,973

    Long-term debt                            294,082     308,618     319,628
    Capitalized lease obligations              48,120      45,046      33,803
    Deferred credits and other
     liabilities                               15,220      17,838      16,268

    Stockholders' equity                      193,274     184,540     177,269

            Total liabilities and
             stockholders' equity            $894,020     880,828     850,941

              Consolidated Statements of Cash Flows  (unaudited)
                                (In thousands)

                                                     Twenty-four Weeks Ended
                                                    June 16,          June 17,
                                                      2001              2000
    Operating activities:
       Net earnings                                  $8,538             6,611
       Adjustments to reconcile net income
        to net cash provided by operating
          Depreciation and amortization              21,278            19,904
          Provision for bad debts                     2,210             4,167
          Deferred income taxes                       2,131               988
          Other                                         (99)              194
       Changes in operating assets and
        liabilities                                  67,742            32,352
             Net cash provided by
              operating activities                  101,800            64,216

    Investing activities:
       Net increase in property, plant and
        equipment                                   (17,294)          (21,873)
       Business acquired, net of cash
        acquired                                     (1,070)          (20,431)
       Loans to customers                            (6,287)          (13,587)
       Repurchase of receivables                     (3,950)          (10,920)
       Other                                         (6,324)             (792)
          Net cash used for investing
           activities                               (34,925)          (67,603)

    Financing activities:
       (Payments) proceeds from long-term
        debt                                        (17,962)            5,544
       Proceeds from short-term debt                     --               400
       Dividends paid                                (2,090)           (2,055)
       Decrease in outstanding checks               (41,380)          (16,230)
       Other                                          1,403               758

          Net cash used for financing
           activities                               (60,029)          (11,583)
             Net decrease in cash                    $6,846           (14,970)

    Supplemental disclosure of cash flow
       Non cash investing and financing
          Purchase of real estate under
           capital leases                            $3,866               954
          Acquisition of minority
           interests                                 $4,294                --

                                                            Twenty-Four Weeks
                                        Twelve Weeks Ended        Ended
                                         June 16, June 17,  June 16, June 17,
                                           2001     2000      2001     2000
    EBITDA Reconciliation ($ Thousands)

    Pre-tax earnings                        9,016    7,568    14,570   11,478

       LIFO                                   662     (313)      862     (813)
       Depreciation and amortization       10,631   10,023    21,278   19,904
       Interest expense                     8,085    7,770    16,287   15,373
       Closed store lease costs                --      328       282      954
       Gains on sales of real estate          154       --       154   (1,427)
    Total EBITDA                           28,548   25,376    53,433   45,469

    Other Data ($ Thousands)

       Cash from operations - 2nd qtr.    $69,615   33,796  $101,800   64,216
       Debt to EBITDA - trailing 4 qtrs.
        EBITDA                                3.1      3.8       3.1      3.8
       Interest coverage - trailing 4
        qtrs.                                 3.2      2.9       3.2      2.9
       Debt to total capitalization            64%      67%       64%      67%
       Total debt                        $347,918  357,072  $347,918  357,072
       Capital spending - 2nd qtr.         $7,414   15,816   $20,413   23,999
       Capitalization                    $541,192  534,341  $541,192  534,341
       Stockholders' Equity              $193,274  177,269  $193,274  177,269