Earns $0.31 Per Diluted Share Excluding Special Items, $0.29 Per Diluted Share Including Special ItemsDAYVILLE, Conn., Jun 4, 2003 /PRNewswire-FirstCall via COMTEX/ -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net income of
$5.8 million, or $0.29 per share on a diluted basis, for the third quarter of
fiscal 2003, ended April 30, 2003. Net income for the third quarter of fiscal
2003, excluding special items, was $6.2 million or $0.31 per share on a
diluted basis.
Net sales for the third quarter of fiscal 2003 were $363.6 million, an
increase of 21% from the $300.4 million recorded in the third quarter of
fiscal 2002. This increase included growth in the mass market and independent
distribution channels of approximately 21% and 38%, respectively. Sales in
the supernatural distribution channel decreased by approximately 3% compared
to the same period last year primarily due to the previously announced
transition of the Company's former second-largest customer to a new primary
distributor. These results included a full quarter of the net sales resulting
from the acquisitions of Blooming Prairie and Northeast Cooperatives. Sales
for the third quarter of fiscal 2003, excluding the effect of acquisitions,
were relatively flat compared to the same period last year.
Net income increased 9.4% to $5.8 million, or $0.29 per diluted share, for
the third quarter of fiscal 2003 compared to $5.3 million, or $0.27 per
diluted share, in the same period last year. Net income for the third quarter
of fiscal 2003, excluding the effect of special items, increased 11.2% to
$6.2 million, or $0.31 per diluted share, compared to $5.6 million, or
$0.29 per diluted share, excluding special items, for the same period last
year.
The special items for the third quarter of fiscal 2003 included non-cash
expense related to the change in fair value of interest rate swaps and related
option agreements caused by unfavorable changes in yield curves. In addition,
special items included labor, moving and other costs related to the expansion
of the Company's Chesterfield, New Hampshire distribution facility. Special
items for the third quarter of fiscal 2002 consisted of moving and other costs
related primarily to the start up 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 options agreements. The following table
details the amounts and effect of these items:
Quarter Ended April 30, 2003
(in thousands, except per Pretax Per diluted
share data) Income Net of Tax share
Income, excluding special items: $10,162 $6,199 $0.31
Less: special items expense
Interest rate swap agreements
(change in value of financial
instruments) 360 220 0.01
Costs related to expanding
Chesterfield, New Hampshire
distribution center (included in
operating expenses) 336 205 0.01
Income, including special items: $9,466 $5,774 $0.29
Quarter Ended April 30, 2002
(in thousands, except per Pretax Per diluted
share data) Income Net of Tax share
Income, excluding special items: $9,284 $5,570 $0.29
Less: special items (income) /
expense
Moving and other startup costs
related to southern California
distribution center
(operating expenses) 720 431 0.02
Interest rate swap agreements
(change in value of financial
instruments) (234) (140) (0.01)
Income, including special items: $8,798 $5,279 0.27*
*Total reflects rounding
All non-GAAP numbers have been adjusted to exclude special charges. A
reconciliation of specific adjustments to GAAP results for the third
quarter of fiscal 2003 and the same period last year is included in the
financial tables shown above. A description of the Company's use of non-
GAAP information is provided under "Non-GAAP Results" below.
Comments from Management
Steven Townsend, President and Chief Executive Officer of United Natural
Foods, said, "Our solid third quarter performance reflects continued strong
consumer demand for natural foods as well as our commitment to effectively
service customers at the highest levels. Operationally, we continue to focus
on the integration of our recent acquisitions, and have seen the benefits with
improved operating margins over the second quarter of this year. The
improvements have come about through our ability to gain efficiencies in our
purchasing practices and by leveraging operating expenses. Additionally, we
have completed the expansion of our Chesterfield, New Hampshire distribution
center and we are on track to consolidate Northeast Cooperatives' Brattleboro
division into our Chesterfield facility this June."
The Company believes that sales growth for the fourth quarter of fiscal
2003 will be in the 15% - 19% range. The Company believes earnings per
diluted share for the fiscal year ending July 31, 2003 will be $1.18 - $1.20,
consistent with previous guidance.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m.
ET on June 4, 2003 to review the Company's quarterly results, market trends
and outlook. The conference call dial-in number is 703-871-3597. 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 30,500 products to
more than 11,000 customers nationwide. The Company serves a wide variety of
retail formats including conventional supermarket chains, natural product
superstores and independent retail operators.
Financial Tables Follow
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 March 17, 2003, 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.
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. 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)
QUARTER ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
(In thousands, except
per share data) 2003 2002 2003 2002
Net sales $363,611 $300,362 $1,013,050 $866,139
Cost of sales 290,056 239,408 807,222 688,733
Gross profit 73,555 60,954 205,828 177,406
Operating expenses 61,930 50,175 173,301 147,395
Restructuring and
asset impairment charges --- --- --- 424
Restructuring and
merger expenses
Amortization of
intangibles 130 56 234 134
Total operating
expenses 62,060 50,231 173,535 147,953
Operating income 11,495 10,723 32,293 29,453
Other expense (income):
Interest expense 1,811 1,934 5,729 5,323
Change in value of
financial instruments 360 (234) 1,839 2,195
Other, net (142) 225 (562) 110
Total other expense 2,029 1,925 7,006 7,628
Income before
income taxes 9,466 8,798 25,287 21,825
Income taxes 3,692 3,519 10,020 8,730
Net income $5,774 $5,279 $15,267 $13,095
Per share data (basic):
Net income $0.30 $0.28 $0.80 $0.69
Weighted average basic
shares of common stock 19,242 19,049 19,155 18,874
Per share data (diluted):
Net income $0.29 $0.27 $0.78 $0.68
Weighted average diluted
shares of common stock 19,750 19,493 19,636 19,304
In consideration of guidance issued by the Financial Accounting Standards
Board's Emerging Issues Task Force Issue No. 02-16, Accounting by a
Customer (Including a Reseller) for Certain Consideration Received from a
Vendor, vendor payments received for advertising arrangements formerly
classified as reductions of operating expenses have been re-classified as
a reduction of cost of sales for all the periods presented. These changes
reduce cost of sales and also increase operating expenses by $3.1 million
and $2.6 million in the third quarters of fiscal 2003 and 2002,
respectively, and $8.4 million and $7.6 million in the first nine months
of fiscal 2003 and 2002, respectively. This accounting change had no
impact on reported operating income, net income or earnings per share for
any of the periods presented.
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(In thousands) APRIL 30, JULY 31,
2003 2002
ASSETS
Current assets:
Cash $4,956 $11,184
Accounts receivable, net 91,982 84,303
Notes receivable, trade 549 513
Inventories 161,205 131,932
Prepaid expenses 6,645 4,493
Deferred income taxes 4,612 4,612
Refundable income taxes --- 58
Total current assets 269,949 237,095
Property & equipment, net 99,233 82,702
Other assets:
Notes receivable, trade, net 1,354 956
Goodwill 60,901 31,399
Intangibles, net 1,150 248
Other, net 2,678 2,057
Total assets $435,265 $354,457
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - line of credit $96,842 $106,109
Current installments of long-term debt 3,830 1,658
Current installment of obligations
under capital leases 742 1,037
Accounts payable 77,290 52,789
Accrued expenses 26,244 18,185
Financial instruments 7,459 5,620
Income taxes payable 2,651 ---
Total current liabilities 215,058 185,398
Long-term debt, excluding current
installments 38,772 7,677
Obligations under capital leases,
excluding current installments 1,200 995
Total liabilities 255,030 194,070
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 19,454 at
April 30, 2003; issued and
outstanding 19,106 at July 31, 2002 194 191
Additional paid-in capital 84,167 79,711
Unallocated shares of ESOP (1,972) (2,094)
Retained earnings 97,846 82,579
Total stockholders' equity 180,235 160,387
Total liabilities and stockholders'
equity $435,265 $354,457
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
APRIL 30,
2003 2002
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $15,267 $13,095
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 7,663 5,899
Change in fair value of financial
instruments 1,839 2,195
(Gain) loss on disposals of property
& equipment (18) 295
Deferred income tax benefit --- (921)
Provision for doubtful accounts 1,952 1,379
Changes in assets and liabilities,
net of acquired companies:
Accounts receivable (2,279) (9,197)
Inventory (6,575) (28,928)
Prepaid expenses (183) (172)
Refundable income taxes 58 366
Other assets (2,029) (1,679)
Notes receivable, trade 31 29
Accounts payable 9,606 11,537
Accrued expenses 806 7,033
Income taxes payable 2,651 1,727
Net cash provided by operating
activities 28,789 2,658
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of acquired businesses,
net of cash acquired (43,964) (19)
Proceeds from disposals of property
and equipment 60 31
Capital expenditures (14,975) (23,633)
Net cash used in investing activities (58,879) (23,621)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under
note payable (9,267) 39,011
Repayments on long-term debt (1,282) (20,739)
Proceeds from long-term debt 30,954 1,234
Principal payments of capital lease
obligations (1,002) (840)
Proceeds from exercise of stock options 4,459 2,402
Net cash provided by financing
activities 23,862 21,068
NET (DECREASE) INCREASE IN CASH (6,228) 105
Cash at beginning of period 11,184 6,393
Cash at end of period $4,956 $6,498
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $5,591 $5,240
Income taxes, net of refunds $4,598 $8,980
In the nine months ended April 30, 2003 and 2002, the Company incurred $0
and $628, respectively, of capital lease obligations.
In the nine months ended April 30, 2002 the fair value of common stock
issued for the acquisition of subsidiary was $4,250.
SOURCE United Natural Foods, Inc.
Rick Puckett, Chief Financial Officer of United Natural Foods,
Inc., +1-860-779-2800; or General Information, Joseph Calabrese,
+1-212-445-8434, or Analyst Information, Vanessa Schwartz, +1-212-445-8433,
both of FRB Weber Shandwick, for United Natural Foods, Inc.