Earns $0.28 excluding special items Reports 10.9% sales gain to record
$311 million in First Quarter Of Fiscal 2003
DAYVILLE, Conn., Dec. 4 /PRNewswire-FirstCall/ --
United Natural Foods, Inc. (Nasdaq: UNFI) today reported net income of
$5.4 million for the first quarter of fiscal 2003, or $0.28 per share on a
diluted basis, excluding special items, at the upper end of guidance
previously provided by the Company.
Net sales for the first quarter of fiscal 2003 were $311.0 million, an
increase of 10.9% from the $280.3 million recorded in the first quarter of
fiscal 2002. The increase was primarily due to growth in the independent and
mass market distribution channels of approximately 11.8% and 21.4%,
respectively. The supernatural distribution channel increased approximately
5.5%. These increases all include sales from the Blooming Prairie division,
acquired on October 11, 2002, and Boulder Fruit Express, acquired on November
7, 2001. Sales growth for the quarter, excluding the effect of acquisitions,
was 6.5%. Sales growth was also impacted by the transition of the Company's
second-largest customer to a new primary distributor. Sales growth excluding
acquisitions and the impact of this transition was 16.5%.
Net income for the first quarter of fiscal 2003, excluding the effect of
special items, increased 9.0% to $5.4 million, or $0.28 per diluted share,
compared to $4.9 million, or $0.26 per diluted share, excluding special items,
for the quarter ended October 31, 2001. The special items for the quarter
ended October 31, 2002, consisted of a non-cash charge related to the change
in fair value of interest rate swaps and related option agreements and certain
costs relating to the transition of the Company's second largest customer to a
new primary distributor. A special non-cash charge was recorded in the first
quarter of fiscal 2002 related to the change in fair value of interest rate
swaps and related option agreements. Net income including special items
increased 53.1 % to $4.0 million, or $0.21 per diluted share, for the first
quarter of 2003 compared to $2.6 million, or $0.14 per diluted share, in the
prior year period.
The following table details the amounts and effects of these items:
Quarter Ended October 31, 2002
(in thousands, except per share data) Pretax Net of Tax
Per diluted
Income share
Income, excluding special items: $8,920 $5,352 $0.28
Less: special items
Interest rate swap agreements
(change in value of financial
instruments) 1,706 1,023 0.05
Costs related to loss of major customer
(included in operating expenses) 574 345 0.02
Income, including special items: $6,640 $3,984 $0.21
Quarter Ended October 31, 2001
(in thousands, except per share data) Pretax Net of Tax Per diluted
Income share
Income, excluding special items: $8,180 $4,908 $0.26
Less: special items
Interest rate swap agreement (change in
value of financial instruments) 3,787 2,272 0.12
Costs related to relocating distribution
center (included in operating expenses) 57 34 -
Income, including special items: $4,336 $2,602 $0.14
The non-cash charge from the change in fair value on interest rate swap
agreements was caused by unfavorable changes in yield curves during the
quarters ended October 31, 2002 and 2001, respectively. The costs related to
the transition of the Company's second largest customer to a new primary
distributor consisted primarily of severance and expenses related to the
transfer of private label inventory.
Comments from Management
Commenting on the first quarter results, Michael Funk, Chief Executive
Officer, said, "This is an excellent start to our new fiscal year, continuing
on track with executing our business plan and growth objectives. During the
quarter we achieved year-over-year double-digit sales growth and a 9% increase
in net income. This growth was driven by a strong performance in sales to
independent and mass market customers, which increased 11.8% and 21.4%,
respectively. Regarding supernatural customers, sales increased 5.5% when
compared to the same period last year. Growth in the supernatural channel was
33.8% excluding acquisitions and the effects of the transition of our second
largest customer to a new primary distributor. The continued strong demand for
our products and programs demonstrates that we are meeting the needs of our
customers and we intend to be their leading natural products resource for the
long-term."
Mr. Funk added, "Operationally, we continue to pursue internal and
external growth strategies focused on expanding our customer base, increasing
market share and extending our presence in both existing operating areas and
new, under-penetrated markets. Consistent with this strategy we completed
the acquisition of Blooming Prairie Cooperative, the largest volume
distributor of natural foods in the Midwest and also entered into an agreement
to merge with Northeast Cooperatives, a natural foods distributor in the
Northeast and Midwest."
The Company believes sales growth for the quarter ending January 31, 2003,
will be in the 9 - 12% range, including growth in the mid-teens for the
business excluding acquisitions and the effects of the transition of its
second largest customer to a new primary distributor. The earnings per diluted
share outlook for the quarter ending January 31, 2003 and the fiscal year
ending July 31, 2003 is $0.26 - $0.28 and $1.18 - $1.20, respectively,
consistent with prior guidance.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m.
ET on December 4, 2002 to review the Company's quarterly results, market
trends and future outlook. The conference call dial-in number is 703-871-3599.
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 for 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 10,000 customers nationwide. 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 annual report on Form 10-K
filed with the Commission on October 28, 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
OCTOBER 31,
(In thousands, except per share data) 2002 2001
Net sales $310,993 $280,315
Cost of sales 250,157 225,314
Gross profit 60,836 55,001
Operating expenses 50,843 45,024
Amortization of intangibles 38 64
Total operating expenses 50,881 45,088
Operating income 9,955 9,913
Other expense (income):
Interest expense 1,847 1,746
Change in fair value of financial instruments 1,706 3,787
Other, net (238) 44
Total other expense 3,315 5,577
Income before income taxes 6,640 4,336
Income taxes 2,656 1,734
Net income $3,984 $2,602
Per share data (basic):
Net income $0.21 $0.14
Weighted average basic shares of common stock 19,106 18,665
Per share data (diluted):
Net income $0.20 $0.14
Weighted average diluted shares of common stock 19,434 19,060
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) OCTOBER 31, JULY 31,
2002 2002
(UNAUDITED) (AUDITED)
ASSETS
Current assets:
Cash $4,399 $11,184
Accounts receivable, net 86,418 84,303
Notes receivable, trade 474 513
Inventories 150,386 131,932
Prepaid expenses 6,144 4,493
Deferred income taxes 4,612 4,612
Refundable income taxes - 58
Total current assets 252,433 237,095
Property & equipment, net 92,415 82,702
Other assets:
Notes receivable, trade, net 1,365 956
Goodwill, net 45,049 31,399
Covenants not to compete, net 221 248
Deferred taxes 800 800
Other, net 1,453 1,257
Total assets $393,736 $354,457
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - line of credit $118,186 $106,109
Current installments of long-term debt 1,593 1,658
Current installment of obligations under
capital leases 783 1,037
Accounts payable 67,566 52,789
Accrued expenses 20,105 18,185
Financial instruments 7,326 5,620
Income taxes payable 1,838 -
Total current liabilities 217,397 185,398
Long-term debt, excluding current installments 10,867 7,677
Obligations under capital leases, excluding
current installments 936 995
Deferred revenue 120 -
Total liabilities 229,320 194,070
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 19,110 at
October 31, 2002; issued and outstanding 19,106
at July 31, 2002 191 191
Additional paid-in capital 79,716 79,711
Unallocated shares of ESOP (2,054) (2,094)
Retained earnings 86,563 82,579
Total stockholders' equity 164,416 160,387
Total liabilities and stockholders' equity $393,736 $354,457
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
QUARTER ENDED
OCTOBER 31,
(In thousands) 2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,984 $2,602
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,370 1,814
Change in fair value of financial instruments 1,706 3,787
Gain (loss) on disposals of property & equipment 9 (3)
Deferred income tax benefit - (287)
Provision for doubtful accounts 1,060 513
Changes in assets and liabilities, net of
acquired companies:
Accounts receivable (227) (9,487)
Inventory (4,111) (14,208)
Prepaid expenses (1,404) (643)
Refundable income taxes 57 366
Other assets 758 (727)
Notes receivable, trade 95 141
Accounts payable 9,304 19,532
Accrued expenses 750 6,038
Income taxes payable 1,805 2,006
Net cash provided by operating activities 16,156 11,444
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of acquired businesses, net of
cash acquired (29,960) -
Proceeds from disposals of property and
equipment 33 16
Capital expenditures (4,313) (4,360)
Net cash used in investing activities (34,240) (4,344)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under note payable 12,077 12,184
Repayments on long-term debt (470) (20,188)
Principal payments of capital lease obligations (312) (299)
Proceeds from exercise of stock options 4 119
Net cash provided by (used in) financing
activities 11,299 (8,184)
NET DECREASE IN CASH (6,785) (1,084)
Cash at beginning of period 11,184 6,393
Cash at end of period $4,399 $5,309
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $1,823 $1,629
Income taxes, net of refunds $819 $196
In 2002 and 2001 the Company incurred $0 and $628, respectively, of capital
lease obligations.
SOURCE United Natural Foods, Inc.
-0- 12/04/2002
/CONTACT: Todd Weintraub, Chief Financial Officer, of United Natural
Foods, +1-860-779-2800; General Information, Joseph Calabrese,
+1-212-445-8434, or Analyst Information, Vanessa Schwartz, +1-212-445-8433,
both of FRB Weber Shandwick/