EX-99.1 3 ex99-1.txt [LETTERHEAD OF UNITED NATURAL FOODS, INC.] For Immediate Release June 4, 2003 UNITED NATURAL FOODS REPORTS RESULTS FOR THIRD QUARTER ENDED APRIL 30, 2003 Earns $0.31 per diluted share excluding special items, $0.29 per diluted share including special items Dayville, Connecticut - June 4, 2003 -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net income of $5.8 million, or $0.29 per share on a diluted basis, for the third quarter of fiscal 2003, ended April 30, 2003. Net income for the third quarter of fiscal 2003, excluding special items, was $6.2 million or $0.31 per share on a diluted basis. Net sales for the third quarter of fiscal 2003 were $363.6 million, an increase of 21% from the $300.4 million recorded in the third quarter of fiscal 2002. This increase included growth in the mass market and independent distribution channels of approximately 21% and 38%, respectively. Sales in the supernatural distribution channel decreased by approximately 3% compared to the same period last year primarily due to the previously announced transition of the Company's former second-largest customer to a new primary distributor. These results included a full quarter of the net sales resulting from the acquisitions of Blooming Prairie and Northeast Cooperatives. Sales for the third quarter of fiscal 2003, excluding the effect of acquisitions, were relatively flat compared to the same period last year. Net income increased 9.4% to $5.8 million, or $0.29 per diluted share, for the third quarter of fiscal 2003 compared to $5.3 million, or $0.27 per diluted share, in the same period last year. Net income for the third quarter of fiscal 2003, excluding the effect of special items, increased 11.2% to $6.2 million, or $0.31 per diluted share, compared to $5.6 million, or $0.29 per diluted share, excluding special items, for the same period last year. The special items for the third quarter of fiscal 2003 included non-cash expense related to the change in fair value of interest rate swaps and related option agreements caused by unfavorable changes in yield curves. In addition, special items included labor, moving and other costs related to the expansion of the Company's Chesterfield, New Hampshire distribution facility. Special items for the third quarter of fiscal 2002 consisted of moving and other costs related primarily to the start up of the Company's southern California distribution facility and non-cash income related to the change in fair value of interest rate swaps and related options agreements. The following table details the amounts and effect of these items: -------------------------------------------------------------------------------- Quarter Ended April 30, 2003 Pretax Per diluted (in thousands, except per share data) Income Net of Tax share ------ ---------- ----- Income, excluding special items: $10,162 $6,199 $0.31 Less: special items expense Interest rate swap agreements (change in value of financial instruments) 360 220 0.01 Costs related to expanding Chesterfield, New Hampshire distribution center (included in operating expenses) 336 205 0.01 -------------------------------------------------------------------------------- Income, including special items: $ 9,466 $5,774 $0.29 ================================================================================ -------------------------------------------------------------------------------- Quarter Ended April 30, 2002 Pretax Per diluted (in thousands, except per share data) Income Net of Tax share ------ ---------- ----- Income, excluding special items: $9,284 $5,570 $0.29 Less: special items (income) / expense Moving and other startup costs related to southern California distribution center (operating expenses) 720 431 0.02 Interest rate swap agreements (change in value of financial instruments) (234) (140) (0.01) -------------------------------------------------------------------------------- Income, including special items: $8,798 $5,279 0.27* ================================================================================ *Total reflects rounding All non-GAAP numbers have been adjusted to exclude special charges. A reconciliation of specific adjustments to GAAP results for the third quarter of fiscal 2003 and the same period last year is included in the financial tables shown above. A description of the Company's use of non-GAAP information is provided under "Non-GAAP Results" below. Comments from Management Steven Townsend, President and Chief Executive Officer of United Natural Foods, said, "Our solid third quarter performance reflects continued strong consumer demand for natural foods as well as our commitment to effectively service customers at the highest levels. Operationally, we continue to focus on the integration of our recent acquisitions, and have seen the benefits with improved operating margins over the second quarter of this year. The improvements have come about through our ability to gain efficiencies in our purchasing practices and by leveraging operating expenses. Additionally, we have completed the expansion of our Chesterfield, New Hampshire distribution center and we are on track to consolidate Northeast Cooperatives' Brattleboro division into our Chesterfield facility this June." The Company believes that sales growth for the fourth quarter of fiscal 2003 will be in the 15% - 19% range. The Company believes earnings per diluted share for the fiscal year ending July 31, 2003 will be $1.18 - $1.20, consistent with previous guidance. Conference Call Management will conduct a conference call and audio webcast at 11:00 a.m. ET on June 4, 2003 to review the Company's quarterly results, market trends and outlook. The conference call dial-in number is 703-871-3597. The audio webcast will be available, on a listen only basis, via the Internet at www.viavid.com or at the Investor Relations section of the Company's website, www.unfi.com. Please allow extra time to the webcast to visit the site and download any software required to listen to the Internet broadcast. The online archive of the webcast will be available for 30 days. About United Natural Foods United Natural Foods, Inc. carries and distributes over 30,500 products to more than 11,000 customers nationwide. The Company serves a wide variety of retail formats including conventional supermarket chains, natural product superstores and independent retail operators. Financial Tables Follow For more information on United Natural Foods, Inc., visit the Company's web-site at www.unfi.com. AT THE COMPANY: FRB | Weber Shandwick -------------------------------------------------------------------------------- Rick Puckett Joseph Calabrese Vanessa Schwartz Chief Financial Officer General Information Analyst Information (860) 779-2800 (212) 445-8434 (212) 445-8433 "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding United Natural's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, including but not limited to general business conditions, the impact of competition and our dependence on principal customers, see "Risk Factors" in the Company's quarterly report on Form 10-Q filed with the Commission on March 17, 2003, and its other filings under the Securities Exchange Act of 1934, as amended. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. United Natural is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by applicable laws. Non-GAAP Results: To supplement its financial statements presented on a GAAP basis, the Company uses non-GAAP additional measures of operating results, net earnings and earnings per share adjusted to exclude special charges. The Company believes that the use of these additional measures is appropriate to enhance an overall understanding of its past financial performance and also its prospects for the future as these special charges are not expected to be part of the Company's ongoing business. The adjustments to the Company's GAAP results are made with the intent of providing both management and investors with a more complete understanding of the underlying operational results and trends and its marketplace performance. For example, these adjusted non-GAAP results are among the primary indicators management uses as a basis for its planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net earnings or diluted earnings per share prepared in accordance with generally accepted accounting principles in the United States. A comparison and reconciliation from non-GAAP to GAAP results is included in the tables within this release. UNITED NATURAL FOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
QUARTER ENDED NINE MONTHS ENDED APRIL 30, APRIL 30, (In thousands, except per share data) 2003 2002 2003 2002 Net sales $363,611 $300,362 $1,013,050 $866,139 Cost of sales 290,056 239,408 807,222 688,733 -------- -------- ---------- -------- Gross profit 73,555 60,954 205,828 177,406 -------- -------- ---------- -------- Operating expenses 61,930 50,175 173,301 147,395 Restructuring and asset impairment charges -- -- -- 424 Amortization of intangibles 130 56 234 134 -------- -------- ---------- -------- Total operating expenses 62,060 50,231 173,535 147,953 -------- -------- ---------- -------- Operating income 11,495 10,723 32,293 29,453 -------- -------- ---------- -------- Other expense (income): Interest expense 1,811 1,934 5,729 5,323 Change in value of financial instruments 360 (234) 1,839 2,195 Other, net (142) 225 (562) 110 -------- -------- ---------- -------- Total other expense 2,029 1,925 7,006 7,628 -------- -------- ---------- -------- Income before income taxes 9,466 8,798 25,287 21,825 Income taxes 3,692 3,519 10,020 8,730 -------- -------- ---------- -------- Net income $ 5,774 $ 5,279 $ 15,267 $ 13,095 ======== ======== ========== ======== Per share data (basic): Net income $0 .30 $ 0.28 $ 0.80 $ 0.69 ======== ======== ========== ======== Weighted average basic shares of common stock 19,242 19,049 19,155 18,874 ======== ======== ========== ======== Per share data (diluted): Net income $ 0.29 $ 0.27 $ 0.78 $ 0.68 ======== ======== ========== ======== Weighted average diluted shares of common stock 19,750 19,493 19,636 19,304 ======== ======== ========== ========
In consideration of guidance issued by the Financial Accounting Standards Board's Emerging Issues Task Force Issue No. 02-16, Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor, vendor payments received for advertising arrangements formerly classified as reductions of operating expenses have been re-classified as a reduction of cost of sales for all the periods presented. These changes reduce cost of sales and also increase operating expenses by $3.1 million and $2.6 million in the third quarters of fiscal 2003 and 2002, respectively, and $8.4 million and $7.6 million in the first nine months of fiscal 2003 and 2002, respectively. This accounting change had no impact on reported operating income, net income or earnings per share for any of the periods presented. UNITED NATURAL FOODS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS UNAUDITED
APRIL 30, JULY 31, (In thousands) 2003 2002 ---- ---- ASSETS ------ Current assets: Cash $ 4,956 $ 11,184 Accounts receivable, net 91,982 84,303 Notes receivable, trade 549 513 Inventories 161,205 131,932 Prepaid expenses 6,645 4,493 Deferred income taxes 4,612 4,612 Refundable income taxes -- 58 --------- --------- Total current assets 269,949 237,095 Property & equipment, net 99,233 82,702 Other assets: Notes receivable, trade, net 1,354 956 Goodwill 60,901 31,399 Intangibles, net 1,150 248 Other, net 2,678 2,057 --------- --------- Total assets $ 435,265 $ 354,457 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Notes payable - line of credit $ 96,842 $ 106,109 Current installments of long-term debt 3,830 1,658 Current installment of obligations under capital leases 742 1,037 Accounts payable 77,290 52,789 Accrued expenses 26,244 18,185 Financial instruments 7,459 5,620 Income taxes payable 2,651 -- --------- --------- Total current liabilities 215,058 185,398 Long-term debt, excluding current installments 38,772 7,677 Obligations under capital leases, excluding current installments 1,200 995 --------- --------- Total liabilities 255,030 194,070 --------- --------- Stockholders' equity: Preferred stock, $.01 par value, authorized 5,000 shares; none issued and outstanding Common stock, $.01 par value, authorized 50,000 shares; issued and outstanding 19,454 at April 30, 2003; issued and outstanding 19,106 at July 31, 2002 194 191 Additional paid-in capital 84,167 79,711 Unallocated shares of ESOP (1,972) (2,094) Retained earnings 97,846 82,579 --------- --------- Total stockholders' equity 180,235 160,387 --------- --------- Total liabilities and stockholders' equity $ 435,265 $ 354,457 ========= =========
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED APRIL 30, 2003 2002 ---- ---- (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 15,267 $ 13,095 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,663 5,899 Change in fair value of financial instruments 1,839 2,195 (Gain) loss on disposals of property & equipment (18) 295 Deferred income tax benefit -- (921) Provision for doubtful accounts 1,952 1,379 Changes in assets and liabilities, net of acquired companies: Accounts receivable (2,279) (9,197) Inventory (6,575) (28,928) Prepaid expenses (183) (172) Refundable income taxes 58 366 Other assets (2,029) (1,679) Notes receivable, trade 31 29 Accounts payable 9,606 11,537 Accrued expenses 806 7,033 Income taxes payable 2,651 1,727 -------- -------- Net cash provided by operating activities 28,789 2,658 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of acquired businesses, net of cash acquired (43,964) (19) Proceeds from disposals of property and equipment 60 31 Capital expenditures (14,975) (23,633) -------- -------- Net cash used in investing activities (58,879) (23,621) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net (repayments) borrowings under note payable (9,267) 39,011 Repayments on long-term debt (1,282) (20,739) Proceeds from long-term debt 30,954 1,234 Principal payments of capital lease obligations (1,002) (840) Proceeds from exercise of stock options 4,459 2,402 -------- -------- Net cash provided by financing activities 23,862 21,068 -------- -------- NET (DECREASE) INCREASE IN CASH (6,228) 105 Cash at beginning of period 11,184 6,393 -------- -------- Cash at end of period $ 4,956 $ 6,498 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 5,591 $ 5,240 ======== ======== Income taxes, net of refunds $ 4,598 $ 8,980 ======== ========
In the nine months ended April 30, 2003 and 2002, the Company incurred $0 and $628, respectively, of capital lease obligations. In the nine months ended April 30, 2002 the fair value of common stock issued for the acquisition of subsidiary was $4,250.