Earns $0.29 Per Diluted Share, Excluding Special Items, for the 2002 Fourth Quarter Reports 15.6% Annual Sales Gain to Record $1.2 Billion in Fiscal 2002
Net sales for the fourth quarter of fiscal 2002 were $309.3 million, an increase
of 14.7% from the $269.7 million recorded in the fourth quarter of fiscal 2001.
The increase was primarily due to growth in the supernatural and mass market
distribution channels of approximately 27% and 19%, respectively. Sales growth
for the quarter, excluding the effect of acquisitions, was 13%.
Net income for the fourth quarter of fiscal 2002, excluding the effect of
special items, increased 17.4% to $5.6 million, or $0.29 per diluted share,
compared to $4.7 million, or $0.25 per diluted share, excluding special items,
for the quarter ended July 31, 2001. Fourth quarter 2002 net income growth was
partially offset by short-term incremental costs relating to the recent
relocation of the Company's Hershey Import facility in New Jersey. The special
items for the quarter ended July 31, 2002, consisted of a non-cash charge
related to the change in fair value of interest rate swaps and related option
agreements and moving and other costs related to the relocation of the Company's
manufacturing subsidiary, Hershey Import. A special non-cash charge was recorded
in the fourth quarter of fiscal 2001 related to the change in fair value of an
interest rate swap and related option agreement. Net income including special
items decreased 2.1 % to $4.1 million, or $0.21 per diluted share, for the
fourth quarter of 2002 compared to $4.2 million, or $0.22 per diluted share, in
the prior year period.
The following table details the amounts and effects of these items:
Quarter Ended July 31, 2002
(in thousands, except per
share data) Pretax Income Net of Tax Per diluted
share
Income, excluding special items: $9,277 $5,566 $0.29
Less: Special Items
Interest rate swap agreements
(change in value of financial
instruments) 2,136 1,281 0.07
Moving and other costs
(included in operating
expenses) 284 171 0.01
Income, including special
items: $6,857 $4,114 $0.21
Quarter Ended July 31, 2001
(in thousands, except per
share data) Pretax Income Net of Tax Per diluted
share
Income, excluding special
items: $7,903 $4,742 $0.25
Less: Special Item
Interest rate swap agreement
(change in value of
financial instruments) 896 538 0.03
Income, including special
items: $7,007 $4,204 $0.22
The Company adopted Statement of Financial Accounting Standards No. 142 (SFAS
No. 142), "Goodwill and Other Intangible Assets," on August 1, 2001. The result
of adopting SFAS No. 142 was a reduction in amortization of intangibles of
approximately $0.2 million, or $0.01 per diluted share, in the fourth quarter of
fiscal 2002.
Year End Results
Net sales for the twelve months ended July 31, 2002 were $1.2 billion, an
increase of 15.6% over the $1.0 billion recorded in the comparable prior year
period. Net sales, excluding the effect of acquisitions, increased 14.4%. Net
income for the twelve months ended July 31, 2002, excluding special items, was
$21.2 million, or $1.10 per diluted share, compared to $14.8 million, or $0.79
per diluted share, for the twelve months ended July 31, 2001. The special items
for the twelve months ended July 31, 2002 included a non-cash charge related to
the change in fair value of interest rate swaps and related option agreements,
relocation, asset impairment and redundant rent expense related to moving the
Company's Atlanta, GA distribution facility, incremental costs such as labor,
utilities and rent related to the startup of its southern California
distribution facility and labor, utilities, rent and severance related to
relocating Hershey Import. Special items for the twelve months ended July 31,
2001 consisted of a non-cash charge related to the change in fair value of an
interest rate swap and related option agreement, costs related to the expansion
of the Company's New Oxford, PA distribution facility and asset impairment
charges, primarily goodwill, associated with closing an unprofitable retail
store. The result of adopting SFAS No. 142 was a reduction in amortization of
intangibles of approximately $0.9 million, or $0.05 per diluted share, for the
twelve months ended July 31, 2002. Net income including special items was $17.2
million, or $0.89 per diluted share, for the twelve months ended July 31, 2002
compared to $13.4 million, or $0.71 per diluted share, for the same period last
year.
The following table details the amounts and effects of these items:
Twelve Months Ended July 31, 2002
(in thousands, except per Per diluted
share data) Pretax Income Net of Tax share
Income, excluding special
items: $35,409 $21,245 $1.10
Less: Special Items
Interest rate swap agreements
(change in value of
financial instruments) 4,331 2,599 0.13
Relocation and startup costs
(included in operating
expenses) 1,972 1,183 0.06
Restructuring and asset
impairment charges 424 254 0.01
Income, including special
items: $28,682 $17,209 $0.89
Twelve Months Ended July 31, 2001
(in thousands, except per Per diluted
share data) Pretax Income Net of Tax share
Income, excluding special
items: $24,746 $14,848 $0.79
Less: Special Items
Interest rate swap
agreements (change in value
of financial instruments) 1,290 774 0.04
Restructuring and asset
impairment charges 801 481 0.03
Expansion costs (operating
expenses) 391 235 0.01
Income, including special
items: $22,264 $13,358 $0.71
Commenting on the fourth quarter results, Michael Funk, Chief Executive Officer,
said, "Earnings for the quarter met our expectations. In terms of revenues,
sales to our supernatural and mass market customers grew approximately 27% and
19%, respectively, and sales to our independent customers increased 6% compared
to the same period last year. We are pleased with these results as we continue
to execute at superior service levels and fill rates. Our results for fiscal
year 2002 were strong given the projects we undertook. We successfully delivered
four consecutive quarters of double digit sales and earnings growth, as we
relocated our Atlanta, GA distribution facility and our subsidiary Hershey
Import, launched a new distribution facility in Fontana, CA and acquired Boulder
Fruit Express. Looking ahead, we are confident that our organization can
continue this momentum into fiscal year 2003, and towards this end have recently
signed a letter of intent to acquire Blooming Prairie Cooperative, the largest
volume distributor of natural foods in the Midwest region. One of our stated
goals has been to further broaden our presence and increase customer penetration
in the fast growing Midwest market. Acquiring Blooming Prairie's Iowa City and
Minneapolis facilities will provide us with an immediate physical base and
growth platform to meet that goal as well as the volume to expand
cost-effectively."
Mr. Funk continued, "In addition, we recently received approval from local
planning and zoning officials to commence the expansion of our Chesterfield, NH
distribution facility from its existing 117,000 square feet to 289,000 square
feet, making it our largest distribution center. The benefits of additional
warehouse space include improved capacity to service existing and new customers
and more product diversity, giving us the opportunity to better balance products
among the distribution centers on the Eastern seaboard."
The Company reaffirms its outlook for fiscal 2003, ending July 31, 2003, with
revenues in the $1.15 billion to $1.17 billion range and net income, excluding
special items, in the range of $1.18 - $1.20 per diluted share. The earnings per
share outlook for the first quarter ending October 31, 2002 is $0.26 - $0.28 per
diluted share, excluding special items. The Company's 2003 guidance excludes the
impact of the proposed Blooming Prairie Cooperative acquisition.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. ET on
September 5, 2002 to review the Company's quarterly and annual results, market
trends and future outlook. The conference call dial-in number is 703- 871-3722.
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 30,000 products to more
than 7,000 customers in 50 states. The Company serves a wide variety of retail
formats including conventional supermarket chains, natural product superstores
and independent retail operators.
For more information on United Natural Foods, Inc., visit the Company's web-site
at www.unfi.com .
"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 June
13, 2002, 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.
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
QUARTER ENDED YEAR ENDED
JULY 31, JULY 31,
(In thousands, except per
share data) 2002 2001 2002 2001
Net sales $309,254 $269,734 $1,175,393 $1,016,834
Cost of sales 248,466 216,464 944,777 818,040
Gross profit 60,788 53,270 230,616 198,794
Operating expenses 50,231 43,988 190,047 167,325
Restructuring and
asset impairment
charges - - 424 801
Amortization of
intangibles 46 243 180 1,036
Total operating
expenses 50,277 44,231 190,651 169,162
Operating income 10,511 9,039 39,965 29,632
Other expense (income):
Interest expense 1,910 1,647 7,233 6,939
Change in value of
financial
instruments 2,136 896 4,331 1,290
Other, net (392) (511) (281) (861)
Total other
expense 3,654 2,032 11,283 7,368
Income before
income taxes 6,857 7,007 28,682 22,264
Income taxes 2,743 2,803 11,473 8,906
Net income $4,114 $4,204 $17,209 $13,358
Per share data (basic):
Net income $0.22 $0.23 $0.91 $0.72
Weighted average basic
shares of common stock 19,106 18,616 18,933 18,482
Per share data (diluted):
Net income $0.21 $0.22 $0.89 $0.71
Weighted average
diluted shares of
common stock 19,423 19,027 19,334 18,818
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) JULY 31, JULY 31,
2002 2001
(UNAUDITED)
ASSETS
Current assets:
Cash $11,184 $6,393
Accounts receivable, net 84,303 81,559
Notes receivable, trade 513 685
Inventories 131,932 110,653
Prepaid expenses 4,493 5,394
Deferred income taxes 4,612 3,513
Refundable income taxes 58 366
Total current assets 237,095 208,563
Property & equipment, net 82,702 62,186
Other assets:
Notes receivable, trade, net 956 1,050
Goodwill, net 31,399 27,500
Covenants not to compete, net 248 180
Deferred taxes 800 275
Other, net 1,257 690
Total assets $354,457 $300,444
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - line of credit $106,109 $68,056
Current installments of long-term debt 1,658 19,625
Current installment of obligations under
capital leases 1,037 1,120
Accounts payable 52,789 53,169
Accrued expenses 18,185 11,952
Financial instruments 5,620 1,290
Total current liabilities 185,398 155,212
Long-term debt, excluding current installments 7,677 7,805
Obligations under capital leases, excluding
current installments 995 1,484
Total liabilities 194,070 164,501
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 19,106
at July 31, 2002; issued and outstanding
18,653 at July 31, 2001 191 187
Additional paid-in capital 79,711 72,644
Unallocated shares of ESOP (2,094) (2,258)
Retained earnings 82,579 65,370
Total stockholders' equity 160,387 135,943
Total liabilities and stockholders' equity $354,457 $300,444
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
TWELVE MONTHS ENDED
JULY 31,
(In thousands) 2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $17,209 $13,358
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,206 7,908
Change in fair value of financial instruments 4,331 1,290
Loss on impairment of intangible asset - 255
Loss on disposals of property & equipment 307 640
Deferred income tax benefit (1,099) (1,529)
Provision for doubtful accounts 1,806 2,903
Changes in assets and liabilities, net of
acquired companies:
Accounts receivable (3,867) (14,887)
Inventory (21,091) (5,719)
Prepaid expenses 921 713
Refundable income taxes 308 4,035
Other assets (928) 42
Notes receivable, trade 266 (514)
Accounts payable (692) 13,725
Accrued expenses 5,346 (234)
Net cash provided by operating activities 11,023 21,986
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchases of subsidiaries,
net of cash acquired (16) (2,393)
Proceeds from disposals of property and
equipment 33 46
Capital expenditures (27,789) (15,891)
Net cash used in investing activities (27,772) (18,238)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under note payable 38,053 49
Repayments on long-term debt (21,062) (2,742)
Proceeds from long-term debt 2,967 89
Principal payments of capital lease
obligations (1,240) (1,162)
Proceeds from exercise of stock options 2,822 4,468
Net cash provided by financing activities 21,540 702
NET INCREASE IN CASH 4,791 4,450
Cash at beginning of period 6,393 1,943
Cash at end of period $11,184 $6,393
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $7,089 $6,822
Income taxes, net of refunds $12,883 $5,709
In 2002 and 2001 the Company incurred $667 and $923, respectively, of
capital lease obligations.
The fair value of common stock issued for the acquisition of subsidiary
was $4,250.
CONTACT: Todd Weintraub, Chief Financial Officer of United Natural
Foods, Inc., +1-860-779-2800, or General, Joseph Calabrese, +1-212-445-8434,
Analysts, Vanessa Schwartz, +1-212-445-8433, both of FRB Weber Shandwick
URL: http://www.unfi.com