EX-99.1 2 ex99-1.txt Exhibit 99.1 [LETTERHEAD OF UNITED NATURAL FOODS, INC.] IMMEDIATE RELEASE June 1, 2004 UNITED NATURAL FOODS ANNOUNCES 23% INCREASE IN NET REVENUE AND $0.22 IN EARNINGS PER SHARE, EXCLUDING SPECIAL ITEMS, A 42% INCREASE FOR THE THIRD QUARTER OF FISCAL 2004 Reports Record Sales of $449 Million in the Third Quarter of Fiscal 2004 Dayville, Connecticut - June 1, 2004 -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net income of $9.2 million for the third quarter of fiscal 2004, ended April 30, 2004, or $0.22 per share on a diluted basis, excluding special items. Net income for the third quarter of fiscal 2004, including special items, was $8.6 million, or $0.21 per share on a diluted basis. Net sales for the third quarter of fiscal 2004 were $448.9 million, an increase of $85.3 million, or 23.5%, from the $363.6 million recorded in the third quarter of fiscal 2003. This increase included growth in the supernatural, conventional mass market and independent channels of 44%, 20% and 9%, respectively. Net income for the third quarter of fiscal 2004, excluding the effect of special items, increased 48.7% to $9.2 million, or $0.22 per diluted share, compared to $6.2 million, or $0.16 per diluted share, excluding special items, for the quarter ended April 30, 2003. The special items for the third quarter of fiscal 2004 consisted of certain equipment rental and labor costs recorded in the third quarter of fiscal 2004 for start-up and transition costs associated with implementing the Company's primary distribution relationship with Wild Oats Market, Inc. In the third quarter of 2003, a special non cash expense item was recorded related to the change in fair value of certain interest rate swaps and the related option agreements, and certain costs relating to the expansion of the Chesterfield facility. Net income for the third quarter of fiscal 2004, including the effect of special items, increased 49.0% to $8.6 million, or $0.21 per diluted share, compared to $5.8 million, or $0.15 per diluted share, for the quarter ended April 30, 2003. The following table details the amounts and effects of these special items:
--------------------------------------------------------------------------------------- Quarter Ended April 30, 2004 Pretax Per diluted (in thousands, except per share data) Income Net of Tax share ------ ---------- ----- Income, excluding special items: $15,115 $9,220 $0.22 Special items - Income/(Expense) Related to the transition to the primary distributorship for Wild Oats Market, Inc. (included in operating expenses) (1,010) (616) (0.01) --------------------------------------------------------------------------------------- Income, including special items: $14,105 $8,604 $0.21 =======================================================================================
---------------------------------------------------------------------------------------------- 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 $0.16 Special items - Income/(Expense) Interest rate swap and related agreements (included in change in fair value of financial instruments) (360) (220) (0.01) Costs related to the Chesterfield expansion (included in operating expenses) (336) (205) (0.01) ---------------------------------------------------------------------------------------------- Income, including special items: $9,466 $5,774 $0.15* ==============================================================================================
* Total reflects rounding The non-cash item from the change in fair value on interest rate swap agreements was caused by unfavorable changes in interest rate yield curves during the quarter ended April 30, 2003. The costs related to the expansion of the Chesterfield facility were primarily labor related. On March 17, 2004, the Company's Board of Directors approved a two-for-one split of the Company's common stock that was payable in the form of a stock dividend. Stockholders received one additional share of the Company's common stock for each share of common stock held on the record date of March 29, 2004. The split became effective on April 20, 2004. The applicable share and per-share data for all periods included herein have been restated to give effect to this stock split. As previously reported, the Company entered into an amended and restated four-year $250 million revolving credit facility with a bank group that was led by Bank of America Business Capital (formerly Fleet Capital Corporation) as the administrative agent, effective April 30, 2004. The amended and restated credit facility provides for improved terms and conditions that provide the Company with more financial flexibility and reduced costs, as well as increased liquidity. The new credit facility replaces an existing $150 million revolving credit facility. The Company's outstanding commitments under the amended and restated credit facility as of April 30, 2004 were approximately $123 million. Comments from Management Commenting on the third quarter results, Steven Townsend, Chief Executive Officer, said, "We achieved another strong quarter of financial results reflecting the efforts of a well-focused team and the successful execution of our sales strategies designed to meet the growing demand for natural and organic products. Our results are highlighted by solid gains in net sales, net income and earnings per share, all indicators that our sales, marketing and operational plans are on target. We remain focused on serving a broad customer base and are pleased to realize sales growth of 23.5% and comparable sales growth of 15.1%, excluding sales to Wild Oats Markets. We remain committed to meeting the needs of all of our customers while consistently providing superior service levels across our entire distribution network." Mr. Townsend added, "We are also very pleased with our continued progress to improve our operating margins. Excluding special items, our fiscal 2004 third quarter operating margin was 3.7%, up 40 basis points from the same period last year." Raises Fiscal 2004 Guidance The Company is raising its guidance for revenue for fiscal year ended July 31, 2004 to $1.62 to $1.64 billion from $1.60 to $1.62 billion, and raising the guidance on earnings per share, excluding special items, to $0.74 to $0.77 from $0.73 to $0.76 per diluted share. Conference Call Management will conduct a conference call and audio webcast at 11:00 a.m. ET on June 1, 2004 to review the Company's quarterly results, market trends and future outlook. The conference call dial-in number is 303-262-2211 or 800-218-0204. The audio webcast will be available, on a listen only basis, via the Internet at www.fulldisclosure.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 35,000 products to more than 18,000 customers nationwide. The Company serves a wide variety of retail formats including conventional supermarket chains, natural product superstores, independent retail operators and the food service channel. For more information on United Natural Foods, Inc., visit the Company's website at www.unfi.com. Financial Tables Follow For more information on United Natural Foods, Inc., visit the Company's website at www.unfi.com. AT THE COMPANY: FINANCIAL RELATIONS BOARD -------------------------------------------------------------------------------- Rick Puckett Joseph Calabrese Chief Financial Officer General Information (860) 779-2800 (212) 445-8434 "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding the Company's business that 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 16, 2004, 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. The Company is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by applicable laws. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. The Company may from time to time update these publicly announced projections, but it is not obligated to do so. 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 of America. 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)
QUARTERS ENDED NINE MONTHS ENDED APRIL 30, APRIL 30, --------- --------- (In thousands, except per share data) 2004 2003 2004 2003 ---- ---- ---- ---- Net sales $448,900 $363,611 $1,223,530 $1,013,050 Cost of sales 361,323 290,056 980,995 812,574 -------- -------- ---------- ---------- Gross profit 87,577 73,555 242,535 200,476 -------- -------- ---------- ---------- Operating expenses 71,388 61,930 199,706 167,949 Amortization of intangibles 676 130 1,142 234 -------- -------- ---------- ---------- Total operating expenses 72,064 62,060 200,848 168,183 -------- -------- ---------- ---------- Operating income 15,513 11,495 41,687 32,293 -------- -------- ---------- ---------- Other expense (income): Interest expense 1,536 1,811 5,990 5,729 Change in fair value of financial instruments -- 360 (704) 1,839 Other, net (128) (142) (358) (562) -------- -------- ---------- ---------- Total other expense 1,408 2,029 4,928 7,006 -------- -------- ---------- ---------- Income before income taxes 14,105 9,466 36,759 25,287 Income taxes 5,501 3,692 14,336 10,020 -------- -------- ---------- ---------- Net income $ 8,604 $ 5,774 $ 22,423 $ 15,267 ======== ======== ========== ========== Per share data (basic): Net income $ 0.22 $ 0.15 $ 0.57 $ 0.40 ======== ======== ========== ========== Weighted average basic shares of common stock 39,648 38,483 39,296 38,310 ======== ======== ========== ========== Per share data (diluted): Net income $ 0.21 $ 0.15 $ 0.55 $ 0.39 ======== ======== ========== ========== Weighted average diluted shares of common stock 41,344 39,500 40,813 39,271 ======== ======== ========== ==========
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
APRIL 30, JULY 31, 2004 2003 (In thousands) (UNAUDITED) (UNAUDITED) ----------- ----------- ASSETS Current assets: Cash $ 8,802 $ 3,645 Accounts receivable, net 110,094 90,111 Notes receivable, trade, net 690 585 Inventories 203,715 158,263 Prepaid expenses 5,672 5,706 Deferred income taxes 6,004 6,455 Refundable income taxes -- 704 --------- --------- Total current assets 334,977 265,469 Property & equipment, net 112,125 101,238 Other assets: Goodwill 57,242 57,400 Notes receivable, trade, net 2,264 1,261 Intangible assets, net 168 1,014 Other, net 3,532 3,717 --------- --------- Total assets $ 510,308 $ 430,099 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable - line of credit $ 114,514 $ 96,170 Accounts payable 96,531 67,187 Accrued expenses and other current liabilities 24,877 26,347 Current portion of long-term debt 4,597 4,459 Current portion of obligations under capital leases 512 903 Financial instruments -- 6,104 Income taxes payable 61 -- --------- --------- Total current liabilities 241,092 201,170 Long-term debt, excluding current portion 45,367 38,507 Deferred income taxes 2,247 2,247 Obligations under capital leases, excluding current portion 244 612 --------- --------- Total liabilities 288,950 242,536 --------- --------- Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, authorized 5,000 shares at April 30, 2004 and July 31, 2003, respectively; none issued and outstanding Common stock, $0.01 par value, authorized 50,000 shares; issued and outstanding 39,877 and 19,510 at April 30, 2004 and July 31, 2003, respectively 399 195 Additional paid-in capital 97,211 86,068 Unallocated shares of ESOP (1,809) (1,931) Accumulated other comprehensive income 335 432 Retained earnings 125,222 102,799 --------- --------- Total stockholders' equity 221,358 187,563 --------- --------- Total liabilities and stockholders' equity $ 510,308 $ 430,099 ========= =========
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED APRIL 30, (In thousands) 2004 2003 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 22,423 $ 15,267 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 8,807 7,663 Change in fair value of financial instruments (704) 1,839 Gains on disposals of property & equipment (61) (18) Provision for doubtful accounts 2,521 1,952 Changes in assets and liabilities, net of acquired companies: Accounts receivable (22,504) (2,279) Inventory (45,345) (6,575) Prepaid expenses and other assets 1,050 (2,155) Notes receivable, trade (1,108) 31 Accounts payable 29,344 9,606 Accrued expenses (968) 806 Income taxes payable 61 2,651 Financial instruments (5,400) -- Tax effect of stock options 3,870 846 -------------------- Net cash (used in) provided by operating activities (8,014) 29,635 -------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of acquired businesses, net of cash acquired (6) (43,964) Proceeds from disposals of property and equipment 202 60 Capital expenditures (18,989) (14,975) -------------------- Net cash used in investing activities (18,793) (58,879) -------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings (repayments) under note payable 18,344 (9,267) Proceeds from issuance of long-term debt 10,204 30,954 Repayments on long-term debt (3,302) (1,282) Principal payments of capital lease obligations (759) (1,002) Proceeds from exercise of stock options 7,477 3,613 -------------------- Net cash provided by financing activities 31,964 23,016 -------------------- NET INCREASE (DECREASE) IN CASH 5,157 (6,228) Cash at beginning of period 3,645 11,184 -------------------- Cash at end of period $ 8,802 $ 4,956 ==================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 5,788 $ 5,591 ==================== Income taxes, net of refunds $ 9,686 $ 4,598 ====================