Nash Finch Takes $70M Q4 Impairment Charge

Nash Finch Co. will take an approximately $70 million charge in fiscal 2009 to lower the value of its retail business on its balance sheet. The Minneapolis-based distributor and retailer — whose retail business includes Econofoods, Family Thrift Center, Avanza, Family Fresh Market, and Sun Market supermarkets — said the non-cash charge won’t impact its cash flow or consolidated earnings before interest, taxes, depreciation and amortization.

“It is important to understand that a write-down of goodwill is a non-cash charge on our consolidated statement of income, and does not impact our cash flows or consolidated EBITDA,” said Alec Covington, president and CEO of Nash Finch. Noting that the company “has a very strong balance sheet,” Covington added that in spite of the challenging economy, “[w]e maintain disciplined controls over our business segments and spending that allow us to generate significant cash from operations. We have one of the highest ratios of free cash flow to net assets in our industry.”

The company said its same-store fourth-quarter sales were weak as a result of the lingering economic downturn. After excluding the sales attributable to the GSC acquisition and the 53rd week in the company’s fiscal fourth quarter of 2008, Nash Finch expects fourth-quarter consolidated EBITDA to be below the fourth quarter of the prior year, after excluding the results of the 53rd week in its fiscal fourth quarter of 2008.

Nash Finch, whose core food distribution serves independent retailers and military commissaries in 36 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores and Egypt alongside its corporately owned Econofoods, Family Thrift Center, Avanza, Family Fresh and Sun Mart banners, is scheduled to report its fourth quarter and full-year financial results March 4.
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