Earns $0.28 per Diluted Share
Net sales, including acquisitions, for the second quarter of fiscal 2003 were
$338.4 million, an increase of 18.6% from the $285.5 million recorded in the
second quarter of fiscal 2002. This included growth in the mass market and
independent distribution channels of approximately 30% and 28%, respectively.
Sales in the supernatural distribution channel were unchanged compared to the
same period last year due primarily 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 net sales from the acquisition of Blooming
Prairie and one month of net sales from Northeast Cooperatives acquired on
December 31, 2002. Sales growth for the quarter, excluding the effect of
acquisitions, was 2.3%. Sales growth excluding the effect of acquisitions and
sales in each period to the Company's former second-largest customer was 17.4%.
Net income for the second quarter of fiscal 2003, excluding the effect of
special items, increased 4.1% to $5.4 million, or $0.28 per diluted share,
compared to $5.2 million, or $0.27 per diluted share, excluding special items,
for the second quarter of fiscal 2002. The special items for the second quarter
of fiscal 2003 consisted of non-cash income related to the change in fair value
of interest rate swaps and related option agreements caused by favorable changes
in yield curves. In addition, special items included labor costs related to the
expansion of the Company's Chesterfield, New Hampshire distribution facility.
Special items recorded during the second quarter of fiscal 2002 included
non-cash income related to the change in fair value of interest rate swaps and
related option agreements caused by favorable changes in yield curves. In
addition, special items included restructuring, asset impairment and other costs
related to the relocation of the Company's Atlanta, Georgia facility. Net income
including special items increased 5.6% to $5.5 million, or $0.28 per diluted
share, for the second quarter of 2003 compared to $5.2 million, or $0.27 per
diluted share, in the same period last year.
The following table details the amounts and effect of these items:
Quarter Ended January 31, 2003
(in thousands, except Pretax Per diluted
per share data) Income Net of Tax share
Income, excluding special items: $9,023 $5,414 $0.28
Less: special items (income)/
expense Interest rate swap
agreements (change in value of
financial instruments) (226) (136) (0.01)
Costs related to the expansion
of Chesterfield, New Hampshire
(included in operating expenses) 69 42 0.00
Income, including special
items: $9,180 $5,508 $0.28*
*Total reflects rounding
Quarter Ended January 31, 2002
(in thousands, except Pretax Per diluted
per share data) Income Net of Tax share
Income, excluding special items: $8,667 $5,200 $0.27
Less: special items (income)/
expense Interest rate swap
agreement (change in value of
financial instruments) (1,358) (815) (0.04)
Costs related to relocating
Atlanta, Georgia distribution
center (included in operating
expenses) 1,335 801 0.04
Income, including special items: $8,690 $5,214 $0.27
Steven Townsend, President and Chief Executive Officer of United Natural Foods,
said, "Robust consumer demand for natural foods continues to drive the market
and we believe that our continued success demonstrates that our operating
strategies, designed to meet the long-term needs of customers while being their
leading natural products resource, are working. Operationally, we continue to
focus on the integration of our recent acquisitions, and have made significant
progress on the expansion of our Chesterfield, New Hampshire distribution center
to accommodate the Northeast Cooperatives business. Additionally, we are gaining
efficiencies in our purchasing practices and operating expenses as we integrate
Blooming Prairie into our Western region."
The Company believes that sales growth for the third quarter of fiscal 2003 will
be in the 18% - 22% range. The Company expects sales growth in the mid-teens
during the third quarter of fiscal 2003 for the business excluding the impact of
its recent acquisitions and sales to the Company's former second-largest
customer. The earnings per diluted share outlook for the quarter ending April
30, 2003 and the fiscal year ending July 31, 2003 is $0.30 - $0.32 and $1.18 -
$1.20, respectively, consistent with previous guidance.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. ET on
March 4, 2003 to review the Company's quarterly results, market trends and
future outlook. The conference call dial-in number is 703-871-3862. 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.
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
December 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 SIX MONTHS ENDED
(In thousands, except JANUARY 31, JANUARY 31,
per share data) 2003 2002 2003 2002
Net sales $338,447 $285,461 $649,440 $565,776
Cost of sales 272,360 228,949 522,518 454,263
Gross profit 66,087 56,512 126,922 111,513
Operating expenses 55,178 47,258 106,020 92,282
Restructuring and
asset impairment charges - 424 - 424
Amortization of
intangibles 66 13 104 77
Total operating
expenses 55,244 47,695 106,124 92,783
Operating income 10,843 8,817 20,798 18,730
Other expense (income):
Interest expense 2,072 1,643 3,919 3,389
Change in value of
financial instruments (226) (1,358) 1,479 2,429
Other, net (183) (158) (420) (114)
Total other expense 1,663 127 4,978 5,704
Income before
income taxes 9,180 8,690 15,821 13,026
Income taxes 3,672 3,476 6,328 5,210
Net income $5,508 $5,214 $9,492 $7,816
Per share data
(basic):
Net income $0.29 $0.28 $0.50 $0.42
Weighted average
basic shares of
common stock 19,119 18,915 19,113 18,790
Per share data
(diluted):
Net income $0.28 $0.27 $0.49 $0.41
Weighted average
diluted shares of
common stock 19,526 19,371 19,471 19,217
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(In thousands) JANUARY 31, JULY 31,
2003 2002
ASSETS
Current assets:
Cash $11,827 $11,184
Accounts receivable, net 84,785 84,303
Notes receivable, trade 448 513
Inventories 151,696 131,932
Prepaid expenses 7,790 4,493
Deferred income taxes 4,612 4,612
Refundable income taxes 303 58
Total current assets 261,461 237,095
Property & equipment, net 97,956 82,702
Other assets:
Notes receivable, trade, net 2,954 956
Goodwill 60,564 31,399
Intangibles, net 1,286 248
Other, net 2,184 2,057
Total assets $426,405 $354,457
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - line of credit $137,501 $106,109
Current installments of long-term debt 1,595 1,658
Current installment of obligations under
capital leases 923 1,037
Accounts payable 70,342 52,789
Accrued expenses 26,715 18,185
Financial instruments 7,099 5,620
Total current liabilities 244,175 185,398
Long-term debt, excluding current installments 10,481 7,677
Obligations under capital leases, excluding
current Installments 1,365 995
Total liabilities 256,021 194,070
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
19,135 at January 31, 2003; issued and
outstanding 19,106 at July 31, 2002 191 191
Additional paid-in capital 80,135 79,711
Unallocated shares of ESOP (2,013) (2,094)
Retained earnings 92,071 82,579
Total stockholders' equity 170,384 160,387
Total liabilities and stockholders' equity $426,405 $354,457
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JANUARY 31,
2003 2002
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $9,492 $7,816
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 5,051 3,783
Change in fair value of financial
instruments 1,479 2,429
(Gain) Loss on disposals of property &
equipment (6) 296
Deferred income tax benefit - (605)
Provision for doubtful accounts 1,699 1,045
Changes in assets and liabilities, net of
acquired companies:
Accounts receivable 5,242 (10,280)
Inventory 2,934 (15,864)
Prepaid expenses (1,328) (307)
Refundable income taxes (246) (426)
Other assets (1,603) (1,348)
Notes receivable, trade (1,467) (182)
Accounts payable 2,658 14,083
Accrued expenses 1,331 5,842
Net cash provided by operating activities 25,236 6,282
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of acquired businesses, net of
cash acquired (43,724) 65
Proceeds from disposals of property and
equipment 47 21
Capital expenditures (11,221) (20,437)
Net cash used in investing activities (54,898) (20,351)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under note payable 31,392 31,961
Repayments on long-term debt (854) (20,411)
Principal payments of capital lease obligations (657) (543)
Proceeds from exercise of stock options 424 1,448
Net cash provided by financing activities 30,305 12,455
NET INCREASE (DECREASE) IN CASH 643 (1,614)
Cash at beginning of period 11,184 6,393
Cash at end of period $11,827 $4,779
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $3,798 $3,299
Income taxes, net of refunds $3,911 $7,095
In the six months ended January 31, 2003 and 2002, the Company incurred $0
and $628, respectively, of capital lease obligations.
In the six months ended January 31, 2002 the fair value of common stock
issued for the acquisition of subsidiary was $4,250.
CONTACT: Rick Puckett, Chief Financial Officer of United Natural Foods,
+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