Reports $0.27 Net Income Per Share Before Special Items
Net sales for the second quarter of fiscal 2002 totaled $285.5 million, a 16.8%
increase over the $244.4 million reported in the second quarter of fiscal 2001,
above the Company's guidance of 10 - 14% sales growth. This increase was
primarily due to increased sales throughout all the Company's divisions and
included double digit growth in the super natural, independent and mass market
distribution channels. Sales in the second quarter included a full quarter of
sales for Boulder Fruit Express, an organic produce and perishables distributor
acquired by the Company in November 2001, and a full quarter of sales for a
Florida retail store opened by the Company in October 2001. Sales growth
excluding acquisition and new store sales would have been 15.3%. Net sales for
the six months ended January 31, 2001 were $565.8 million, a 15.8% increase over
the comparable prior year period.
Net income for the second quarter of fiscal 2002, excluding the effect of
special items, was $5.2 million, or $0.27 per diluted share, compared to net
income of $2.6 million, or $0.14 per diluted share for the second quarter of
fiscal 2001. There were no special items recorded during the second quarter of
fiscal 2001. The special items consisted of non-cash income of $1.4 million
($0.8 million, net of tax), or $0.04 per diluted share, related to the change in
fair value of interest rate swaps and related option agreements, and
restructuring, asset impairment and other costs of $(1.3) million ($(0.8)
million, net of tax), or $(0.04) per diluted share, related to the relocation of
our Atlanta facility. Net income including these items totaled $5.2 million, or
$0.27 per diluted share.
The FAS 133 income of approximately $1.4 million ($0.8 million, net of tax), or
$0.04 per diluted share, on interest rate swap agreements resulted from
favorable changes in yield curves during the quarter. The Atlanta relocation
costs of $(1.3) million ($(0.8) million, net of tax), or $(0.04) per diluted
share, consisted of incremental and redundant costs incurred during the
transition from the Company's former warehouse and outside storage facility into
its new larger facility. A portion of these costs are reflected in
"Restructuring and asset impairment" on the consolidated statements of income,
with the remainder reflected as part of "Operating expenses." The Company
adopted Statement of Financial Accounting Standards No. 142 (FAS No. 142),
"Goodwill and Other Intangible Assets" on August 1, 2001. The result of adopting
FAS No. 142 was a reduction in amortization of intangibles of approximately $0.2
million.
Comments from Management
Commenting on the second quarter results, Michael Funk, Chief Executive Officer,
said, "We are extremely pleased by the strength of our 2002 second quarter
operating results which we believe reflect the effectiveness of our business
plan. During the quarter we achieved higher than expected sales as we achieved
double-digit growth in both our eastern and western regions. Additionally, sales
growth exceeded 25% in our supernatural distribution channel and approached 20%
in our mass market distribution channel. Further, operating metrics continue to
track at efficient levels with customer service rates continuing to perform at
near optimum levels." Mr. Funk added, "Looking forward, we believe our sales
growth for fiscal 2002 will continue in the 12% - 14% range. We are raising our
net income expectations for fiscal 2002 to approximately $1.08 - $1.12 per
diluted share and net income for the fiscal 2002 third quarter to be
approximately $0.27 - $0.29 per diluted share. Our guidance for both fiscal 2002
and the third quarter excludes special income or charges for FAS 133 income or
expense and relocation expenses related to the new distribution facilities in
Atlanta and southern California."
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. ET on
March 5, 2002 to review the Company's quarterly results, market trends and
future outlook. The conference call dial-in number is 703-871-3795. The audio
webcast will be available, on a listen only basis, via the Internet at
http://www.viavid.com or at www.unfi.com . Please allow extra time prior to the
webcast to visit the webcast 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 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
23, 2001, 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 Foods, Inc. 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 SIX MONTHS ENDED
(In thousands, except per JANUARY 31, JANUARY 31,
share data) 2002 2001 2002 2001
Net sales $285,461 $244,422 $565,776 $488,564
Cost of sales 228,949 196,632 454,263 392,723
Gross profit 56,512 47,790 111,513 95,841
Operating expenses 47,258 41,373 92,282 82,155
Restructuring and asset
impairment charges 424 - 424 -
Amortization of intangibles 13 261 77 524
Total operating expenses 47,695 41,634 92,783 82,679
Operating income 8,817 6,156 18,730 13,162
Other expense (income):
Interest expense 1,643 1,822 3,389 3,600
Change in value of
financial instruments (1,358) - 2,429 -
Other, net (158) (11) (114) (225)
Total other expense 127 1,811 5,704 3,375
Income before income
taxes 8,690 4,345 13,026 9,787
Income taxes 3,476 1,738 5,210 3,915
Net income $5,214 $2,607 $7,816 $5,872
Per share data (basic):
Net income $0.28 $0.14 $0.42 $0.32
Weighted average basic
shares of common stock 18,915 18,414 18,790 18,367
Per share data (diluted):
Net income $0.27 $0.14 $0.41 $0.31
Weighted average diluted
shares of common stock 19,371 18,784 19,217 18,710
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) JANUARY 31, JULY, 31
2002 2001
(UNAUDITED)
ASSETS
Current assets:
Cash $4,779 $6,393
Accounts receivable, net 91,477 81,559
Notes receivable, trade 748 685
Inventories 126,706 110,653
Prepaid expenses 5,720 5,394
Deferred income taxes 4,118 3,513
Refundable income taxes 792 366
Total current assets 234,340 208,563
Property & equipment, net 79,677 62,186
Other assets:
Notes receivable, trade, net 1,169 1,050
Goodwill, net 31,517 27,500
Covenants not to compete, net 129 180
Other, net 2,395 965
Total assets $349,227 $300,444
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - line of credit $100,017 $68,056
Current installments of long-term debt 1,048 19,625
Current installment of obligations under capital
leases 861 1,120
Accounts payable 67,564 53,169
Accrued expenses 22,399 13,242
Total current liabilities 191,889 155,212
Long-term debt, excluding current installments 5,970 7,805
Obligations under capital leases, excluding
current installments 1,829 1,484
Total liabilities 199,688 164,501
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 19,004 at
January 31, 2002; issued and outstanding 18,653
at July 31, 2001 191 187
Additional paid-in capital 78,337 72,644
Unallocated shares of ESOP (2,176) (2,258)
Retained earnings 73,187 65,370
Total stockholders' equity 149,539 135,943
Total liabilities and stockholders' equity $349,227 $300,444
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JANUARY 31,
2002 2001
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $7,816 $5,872
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,783 3,759
Change in fair value of financial instruments 2,429 -
Loss on disposals of property & equipment 296 85
Deferred income tax (benefit) expense (605) 202
Provision for doubtful accounts 1,045 1,043
Changes in assets and liabilities, net of
acquired companies:
Accounts receivable (10,280) (13,786)
Inventory (15,864) (2,921)
Prepaid expenses (307) 11
Refundable income taxes (426) 1,918
Other assets (1,348) 201
Notes receivable, trade (182) (426)
Accounts payable 14,083 14,572
Accrued expenses 5,842 1
Net cash provided by operating activities 6,282 10,531
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash acquired from purchase of subsidiaries 65 -
Proceeds from disposals of property and equipment 21 38
Capital expenditures (20,437) (11,902)
Net cash used in investing activities (20,351) (11,864)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under note payable 31,961 1,495
Repayments on long-term debt (20,411) (1,381)
Proceeds from long-term debt - 39
Principal payments of capital lease obligations (543) (551)
Proceeds from exercise of stock options 1,448 2,579
Net cash used in financing activities 12,455 2,181
NET (DECREASE) INCREASE IN CASH (1,614) 848
Cash at beginning of period 6,393 1,943
Cash at end of period $4,779 $2,791
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $3,299 $3,339
Income taxes, net of refunds $7,095 $1,746
In the quarters ended January 31, 2001 and 2000, the Company incurred
$628 and $639, respectively, of capital lease obligations.
The fair value of common stock issued for the acquisition of subsidiary
was $4,250.
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
SPECIAL ITEMS RECONCILIATION
(In thousands, except QUARTER ENDED SIX MONTHS ENDED
per share data) JANUARY 31, 2002 JANUARY 31, 2002
Pre-tax Net Per Pre-tax Net Per
(income)/ of diluted (income)/ of diluted
expense tax share expense tax share
Net income including
special items $8,690 $5,214 $0.27 $13,026 $7,816 $0.41
Interest rate swap
agreement (income)
expense (1,358) (815) (0.04) 2,429 1,457 0.08
Atlanta relocation:
Restructuring and
asset impairment 424 254 0.01 424 254 0.01
Transition expenses
(operating
expenses) 911 547 0.03 968 581 0.03
Net income excluding
special items $8,667 $5,200 $0.27 $16,847 $10,108 $0.53
CONTACT: Thomas Simone, Chairman of the Board of United Natural Foods,
Inc., +1-707-537-9872, or General, Joseph Calabrese, +1-212-445-8434, Analyst,
Vanessa Schwartz, +1-212-445-8433, or Media, Judith Sylk-Siegel,
+1-212-445-8431, all of FRB Weber Shandwick