2010 ANNUAL REPORT FINANCIAL Fiscal Years Ended January 1, 2011 and January 2, 2010 2010 HIGHLIGHTS ($ in thousands, except per share data and number of associates) Percent Increase/ 2010 2009 (Decrease) Sales $ 4,991,979 $ 5,212,655 (4.2) % Net earnings (a) $ 50,941 $ 2,778 1,733.7 % As a percent of sales 1.02 % 0.05 % Diluted earnings per share (EPS) $ 3.86 $ 0.21 1,738.1 % Consolidated EBITDA(b) $ 137,464 $ 140,137 (1.9) % As a percent of sales 2.75 % 2.69 % Dividends paid per share $ 0.72 $ 0.72 - % Net working capital $ 298,268 $ 249,307 19.6 % Ratio of current assets to current liabilities 2.02 1.81 Total stockholders’ equity $ 377,004 $ 350,559 7.5 % Return on stockholders’ equity 14.00 % 1.58 % Capital expenditures (c) $ 59,295 $ 30,402 95.0 % Weighted-average number of shares outstanding on a diluted basis 13,186 13,378 Number of associates 6,822 7,563 (9.8) % (a) Fiscal 2009 net earnings were negatively NON-GAAP RECONCILIATION impacted by non-cash goodwill and asset 2010 2009 impairments of $50.9 million and $8.2 million, OF CONSOLIDATED EBITDA Percent Percent of Sales of Sales respectively, which were partially offset by a $6.7 million (net of tax) gain on the acquisition Earnings before income taxes $ 72,126 1.4 % $ 23,750 0.5 % of a business and a $7.6 million gain on the Add/(Deduct) settlement of litigation. These impairments and gains contributed to a net reduction in Depreciation and amortization $ 36,119 0.7 % $ 40,603 0.8 % our income tax expense of $5.3 million. (b) Consolidated EBITDA is calculated as earnings Interest expense $ 23,403 0.5 % $ 24,372 0.5 % before interest, income tax, depreciation and LIFO charge (credit) $ 53 0.0 % $ (3,033) (0.1) % amortization, adjusted to exclude extraordinary gains or losses, gains or losses from sales of Goodwill impairment $ - 0.0 % $ 50,927 1.0 % assets other than inventory in the ordinary course of business, and non-cash charges Asset impairment $ 937 0.0 % $ 2,460 0.0 % (such as LIFO, asset impairments, closed store lease costs and share-based compensation), Closed store lease costs $ 320 0.0 % $ 3,135 0.1 % less cash payments made during the current Special charges $ - 0.0 % $ 6,020 0.1 % period on non-cash charges recorded in prior periods. Consolidated EBITDA should not be Gain on sale of real estate $ - 0.0 % $ (54) 0.0 % considered an alternative measure of our net income, operating performance, cash flows or Gain on acquisition of a business $ - 0.0 % $ (6,682) (0.1) % liquidity. Consolidated EBITDA is provided as additional information as a key metric used to Gain on litigation settlement $ - 0.0 % $ (7,630) (0.1) % determine payout pursuant to our Short-Term Settlement of pre-acquisition contingency $ (310) 0.0 % $ - 0.0 % and Long-Term Incentive Plans. (c) Capital expenditures include the purchase Stock compensation $ 7,871 0.2 % $ 9,084 0.2 % of a facility in Bloomington, Indiana, two adjacent facilities in Oklahoma City, Oklahoma, Subsequent cash payments a facility in Columbus, Georgia and real estate on non-cash charges $ (3,055) (0.1) % $ (2,815) (0.1) % in Pensacola, Florida for expansion of our Consolidated EBITDA $ 137,464 2.8 % $ 140,137 2.7 % military food distribution business. LEADERSHIP LETTER THE LONG HAUL In 2010 we marked the 125th anniversary of Nash Finch, pausing to consider the privilege and responsibility of working for a company that has persisted and thrived through so much. As we continued to face the economic headwinds of the Great Recession, we remained focused on creating a better future by improving productivity, reducing expenses, and maintaining profi tability for our company and our customers. We believe founder Fred Nash would approve. In spite of some positive trends, the economy remained Our history sluggish, signifi cantly affecting our top-line sales this teaches us year. Still, we saw some momentum as our Consolidated EBITDA in the fourth quarter exceeded the prior ...we will year by 6%, on lower sales, and all business units emerge a posted year-over-year improvements in Consolidated EBITDA margins for two consecutive quarters. We stronger, took advantage of a depressed real estate market by smarter, signifi cantly increasing the footprint of our military business. By expanding our One Way effi ciency and better initiative across all Nash Finch locations, we sharpened company. operations to boost productivity and customer service while reducing costs. Finally, we were able to initiate a share repurchase program, taking effect November 16, 2009, authorizing the company to spend up to $25 million to purchase shares of the company’s common stock. When the program Alec C. Covington President & Chief Executive Offi cer 2 2010 ANNUAL REPORT - NASH FINCH COMPANY CONSOLIDATED SALES (a) EBITDA(a) ($ Billions) ($ Millions) 150 5 120 4 90 3 60 2 30 1 0 0 06 07 08 09 10 06 07 08 09 10 concluded on December 31, 2010, we had repurchased Our new distribution center in Columbus, Georgia, 673,954 shares for $23.8 million, at an average price per was acquired in December 2009. We expect to begin share of $35.31. shipping product at the end of the third quarter of 2010 and to realize signifi cant transportation cost Growth of the military business savings with this facility, which will also provide for This was a year of rapid expansion for our military signifi cant strategic growth opportunities. division, which serves members of the armed forces and their families at home and abroad. Growing Food distribution looks for effi ciencies the military business was a key initiative in our 2006 Our combined food distribution and retail segment was strategic plan, Operation Fresh Start, and we continue challenged this year because of soft comparable sales to to deliver on our promise to provide a sense of home existing customers in both businesses, continued defl ation to America’s military families by enabling them to in some product categories, and the closing of fi ve retail buy popular, familiar products through the military stores since fourth quarter 2009. As a result, this business commissary and exchange systems. segment continues to look for ways to cut costs, operate During the third quarter, we announced the purchase more effi ciently and help our customers do the same. of a 303,000-square-foot facility in Bloomington, In May we announced the completion of an expansion of Indiana, and two facilities totaling 538,000 square feet the Lima, Ohio, distribution center, doubling the freezer in Oklahoma City, Oklahoma. The Bloomington facility capacity and allowing us to triple the amount of frozen began servicing military commissaries and exchanges volume shipped from Lima. Customers from the phased- at the end of the fourth quarter of 2010, and the out Bridgeport, Michigan, center were integrated two adjacent facilities in Oklahoma City will become into the expanded Lima facility. With improved capacity operational in fi scal 2012. and productivity in Lima, we are better able to serve existing customers and add new ones. (a) Fiscal 2008 results contain an additional week of sales of $77.1 million, which resulted in additional EBITDA of approximately $3.0 million. 2010 ANNUAL REPORT - NASH FINCH COMPANY 3 Financial results The past as perspective Sales for fi scal 2010 were $4.992 billion, compared The story of our company is a long one, stretching to $5.213 billion in the prior year, a decrease of from the small candy store opened by Fred Nash in 4.2%. Excluding the transition of a portion of 1885, through the Great Depression and World War II, a food distribution customer buying group to expanding into the $5 billion company I am privileged another supplier during 2010 ($95.2 million) and to lead today. Our rich history gives us perspective. the non-comparable sales increase ($59.4 million) While the rough economic times of recent years were attributable to the acquisition of the three military challenging for all of us, our history teaches us that distribution centers on January 31, 2009, total they will pass—as they are passing now—and we company comparable sales for fi scal 2010 decreased will emerge a stronger, smarter, and better company. 3.6%. Consolidated EBITDA for fi scal 2010 decreased We will keep our balance sheet strong, look for new 1.9% to $137.5 million, or 2.8% of sales, as compared opportunities, and stay close to our customers, just to $140.1 million, or 2.7% of sales, for the prior year. as our founders did. Net earnings for fi scal 2010 were $50.9 million, or We started with a single man’s vision. Today we $3.86 per diluted share, as compared to net earnings share a vision with thousands of associates in 36 states of $2.8 million, or $0.21 per diluted share, in fi scal and customers around the world. What a remarkable 2009. Net earnings for fi scal 2010 benefi ted by journey we have taken together. Every day I am signifi cant items totaling $4.0 million (net of tax), grateful for the opportunity to work together with or $0.30 per diluted share, while net earnings for such an outstanding group of people and I thank all fi scal 2009 were negatively impacted by signifi cant the Nash Finch associates who have helped create items totaling $39.5 million (net of tax), or $2.95 this great company. Here’s to our next 125 years. per diluted share, resulting primarily from a non-cash goodwill impairment charge in the fourth quarter of fi scal 2009 related to the retail segment.