$0.29 Earnings Per Share Excluding Special Items
Net sales for the third quarter of fiscal 2002 ending April 30, 2002 totaled
$300.4 million, a 16.2% increase compared to $258.5 million reported in the
third quarter of fiscal 2001. This increase was primarily due to increased sales
throughout all the Company's divisions and included growth percentages in the
mid-twenties in both the super natural and mass market distribution channels.
Sales growth for the quarter, excluding acquisitions, was 14.8%. Net sales for
the nine months ended April 30, 2002 were $866.1 million, a 15.9% increase
compared to $747.1 million in the prior year period. The nine-month sales
growth, excluding acquisitions, was 14.9%.
Net income for the third quarter of fiscal 2002, excluding the effect of special
items, was $5.6 million, or $0.29 per diluted share, compared to $4.1 million,
or $0.22 per diluted share, for the quarter ended April 30, 2001. Including the
effect of special items, net income for the third quarter of fiscal 2002 was
$5.3 million, or $0.27 per diluted share, compared to $3.3 million, or $0.17 per
diluted share. The special items for the quarter ended April 30, 2002 consisted
of moving and other costs related primarily to the startup of the Company's
southern California distribution facility and non-cash income related to the
change in fair value of interest rate swaps and related option agreements.
Special items for the quarter ended April 30, 2001 consisted of asset
impairment, moving and other costs related to the expansion of the Company's New
Oxford, PA distribution facility, a non-cash expense related to the change in
fair value of interest rate swaps and related option agreements, and asset
impairment charges, primarily goodwill, associated with closing an unprofitable
retail store.
The following table details the amounts and effects of these items:
Quarter Ended April 30, 2002 Pretax Per diluted
($ in thousands, except per share data) Income Net of Tax share
Income, excluding special items: $9,284 $5,570 $0.29
Less: Special Items-
Relocation and startup costs (operating
expenses) 720 431 0.02
Interest rate swap agreement income (234) (140) (0.01)
Income, including special items: $8,798 $5,279 $0.27
Quarter Ended April 30, 2001 Pretax Per diluted
($ in thousands, except per share data) Income Net of Tax share
Income, excluding special items: $6,824 $4,094 $0.22
Less: Special Items-
Interest rate swap agreement expense 394 236 0.01
Restructuring and asset impairment 802 481 0.03
Expansion expenses (operating expenses) 158 95 0.00
Income, including special items: $5,470 $3,282 $0.17
Comments from Management
Commenting on the third quarter results, Michael Funk, Chief Executive Officer,
said, "We are pleased to report another quarter of strong operating results and
continue to be on track with executing our business plan and growth objectives.
Each of our operating units contributed to our growth with sales growth
percentages in our supernatural and mass market distribution channels in the
mid-twenties as a result of our focus on customer service, expanding our
customer base and increasing our penetration with existing accounts."
"To meet the growing consumer demand for natural foods and related products we
continue to expand and enhance our distribution network and, during the quarter,
we completed the startup of our new distribution center in southern California.
The Fontana facility will enable us to provide enhanced service levels to our
southwestern customers, realize transportation savings and efficiencies and
allow us to penetrate that market further." Mr. Funk added, "Looking forward, we
believe our sales growth for the fourth quarter of fiscal 2002 will continue in
the 12% - 14% range. We expect net income, excluding special items, for the
fiscal 2002 fourth quarter to be approximately $0.28 - $0.30 per diluted share.
Our guidance excludes special income or charges related to interest rate swaps."
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. ET on
June 4, 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 and at the Investor Relations section of the Company's
website 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 NINE MONTHS ENDED
APRIL 30, APRIL 30,
(In thousands, except per
share data) 2002 2001 2002 2001
Net sales $300,362 $258,536 $866,139 $747,100
Cost of sales 242,048 208,853 696,312 601,576
Gross profit 58,314 49,683 169,827 145,524
Operating expenses 47,535 41,182 139,816 123,337
Restructuring and asset
impairment charges - 802 424 802
Restructuring and merger
expenses
Amortization of intangibles 56 269 134 793
Total operating expenses 47,591 42,253 140,374 124,932
Operating income 10,723 7,430 29,453 20,592
Other expense (income):
Interest expense 1,934 1,692 5,323 5,292
Change in value of financial
instruments (234) 394 2,195 394
Other, net 225 (126) 110 (351)
Total other expense 1,925 1,960 7,628 5,335
Income before income
taxes 8,798 5,470 21,825 15,257
Income taxes 3,519 2,188 8,730 6,103
Net income $5,279 $3,282 $13,095 $9,154
Per share data (basic):
Net income $0.28 $0.18 $0.69 $0.50
Weighted average basic shares
of common stock 19,049 18,580 18,874 18,436
Per share data (diluted):
Net income $0.27 $0.17 $0.68 $0.49
Weighted average diluted
shares of common stock 19,493 18,839 19,304 18,752
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
APRIL 30, JULY 31,
2002 2001
(UNAUDITED)
ASSETS
Current assets:
Cash $6,498 $6,393
Accounts receivable, net 90,059 81,559
Notes receivable, trade 590 685
Inventories 139,769 110,653
Prepaid expenses 5,585 5,394
Deferred income taxes 4,434 3,513
Refundable income taxes - 366
Total current assets 246,935 208,563
Property & equipment, net 80,793 62,186
Other assets:
Notes receivable, trade, net 1,117 1,050
Goodwill, net 31,401 27,500
Covenants not to compete, net 284 180
Other, net 2,767 965
Total assets $363,297 $300,444
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - line of credit $107,067 $68,056
Current installments of long-term debt 1,255 19,625
Current installment of obligations under
capital leases 637 1,120
Accounts payable 65,018 53,169
Accrued expenses 23,357 13,242
Income taxes payable 1,726 -
Total current liabilities 199,060 155,212
Long-term debt, excluding current installments 6,670 7,805
Obligations under capital leases, excluding
current Installments 1,755 1,484
Total liabilities 207,485 164,501
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 19,105 at
April 30 2002; issued and outstanding 18,653 at
July 31, 2001 191 187
Additional paid-in capital 79,291 72,644
Unallocated shares of ESOP (2,135) (2,258)
Retained earnings 78,465 65,370
Total stockholders' equity 155,812 135,943
Total liabilities and stockholders' equity $363,297 $300,444
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED APRIL 30,
2002 2001
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $13,095 $9,154
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,899 5,830
Change in fair value of financial instruments 2,195 394
Loss on impairment of intangible assets - 255
Loss on disposals of property & equipment 295 582
Deferred income tax benefit (921) (316)
Provision for doubtful accounts 1,379 2,198
Changes in assets and liabilities, net of
acquired companies:
Accounts receivable (9,197) (20,227)
Inventory (28,928) (8,265)
Prepaid expenses (172) 828
Refundable income taxes 366 3,308
Other assets (1,679) 237
Notes receivable, trade 29 (224)
Accounts payable 11,537 27,348
Accrued expenses 7,033 2,327
Income taxes payable 1,727 -
Net cash provided by operating activities 2,658 23,429
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of acquired businesses, net of
cash acquired (19) (2,393)
Proceeds from disposals of property and
equipment 31 43
Capital expenditures (23,633) (14,166)
Net cash used in investing activities (23,621) (16,516)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under note
payable 39,011 (954)
Repayments on long-term debt (20,739) (2,032)
Proceeds from long-term debt 1,234 39
Principal payments of capital lease
obligations (840) (849)
Proceeds from exercise of stock options 2,402 2,769
Net cash provided by (used in)
financing activities 21,068 (1,027)
NET INCREASE IN CASH 105 5,886
Cash at beginning of period 6,393 1,943
Cash at end of period $6,498 $7,829
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $5,240 $5,171
Income taxes, net of refunds $8,980 $3,100
The fair value of common stock issued for the acquisition of a subsidiary was
$4,250.
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
SPECIAL ITEMS RECONCILIATION
(In thousands, except per
share data)
QUARTER ENDED NINE MONTHS ENDED
APRIL 30, 2002 APRIL 30, 2002
Pre-tax Net Per Pre-tax Net Per
of diluted of diluted
tax share tax share
Income $8,798 $5,279 $0.27 $21,825 $13,095 $0.68
Interest rate swap
agreement income (234) (140) (0.01) 2,195 1,317 0.07
Restructuring and
asset impairment - - - 424 254 0.01
Relocation and
startup costs
(operating
expenses) 720 431 0.02 1,687 1,013 0.05
Income excluding
special items $9,284 $5,570 $0.29 $26,131 $15,679 $0.81
(In thousands, except per
share data) QUARTER ENDED NINE MONTHS ENDED
APRIL 30, 2001 APRIL 30, 2001
Pre-tax Net Per Pre-tax Net Per
of diluted of diluted
tax share tax share
Income including
special items $5,470 $3,282 $0.17 $15,257 $ 9,154 $0.49
Interest rate swap
agreement expense 394 236 0.01 394 236 0.01
Restructuring and
asset impairment 802 481 0.03 802 481 0.03
Expansion expenses
(operating
expenses) 158 95 0.00 390 234 0.01
Income excluding
special items $6,824 $4,094 $0.22 $16,843 $10,105 $0.54
CONTACT: Todd Weintraub, Chief Financial Officer, of United Natural
Foods, +1-860-779-2800; or General Information, Joseph Calabrese,
+1-212-445-8434, Analyst Information, Vanessa Schwartz, +1-212-445-8433, or
Media Information, Judith Sylk-Siegel, +1-212-445-8431, all of FRB Weber
Shandwick