- * Quarterly net sales increased 21.7% from the fourth quarter of fiscal 2003 to $446.4 million
- * Annual net sales increased 21% from fiscal 2003 to $1.7 billion
- * Annual net sales increased 21% from fiscal 2003 to $1.7 billion
- * Quarterly net income increased to $0.23 per diluted share from the fourth quarter of fiscal 2003
- * Annual net income increased 34% from fiscal 2003 to $0.79 per diluted share, excluding special items, and increased 53% to $0.78 per diluted share, including special items
DAYVILLE, Conn., Aug 31, 2004 /PRNewswire-FirstCall via COMTEX/ -- United Natural Foods,
Inc. (Nasdaq: UNFI) (the "Company") today reported net income of $9.6 million,
or $0.23 per diluted share, for the fourth quarter of fiscal 2004, which ended
July 31, 2004.
Net sales for the fourth quarter of fiscal 2004 were $446.4 million, an
increase of 21.7% from the $366.8 million recorded in the fourth quarter of
fiscal 2003. Sales in the fourth quarter included a full quarter of the
Company's sales as the primary distributor to Wild Oats Markets, Inc. ("Wild
Oats Markets"), a relationship which was transitioned back to the Company
during the third quarter of fiscal 2004.
Net income for the fourth quarter of fiscal 2004 increased 93.1% to $9.6
million, or $0.23 per diluted share, compared to $5.0 million, or $0.12 per
diluted share, for the same period last year, including special items recorded
in fiscal 2003. Net income for the fourth quarter of fiscal 2004 increased
48.6% to $9.6 million, or $0.23 per diluted share, compared to $6.4 million,
or $0.16 per diluted share, for the same period last year, excluding special
items recorded in fiscal 2003.
There were no special items for the fourth quarter of fiscal 2004. The
special items for the fourth quarter of fiscal 2003 included a goodwill
impairment charge, inventory write down, and restructuring and asset
impairment charges at the Company's subsidiary, Hershey Import. In addition,
the Company recorded non-cash income related to the change in fair value of
interest rate swaps and related options agreements caused by favorable changes
in yield curves. The special items also included moving and other costs
related to the completion of the expansion of the Company's Chesterfield, New
Hampshire distribution facility.
The following tables detail the amounts and effect of these special items
and the reconciliation of net income, excluding special items (Non-GAAP
basis), to net income, including special items (GAAP basis):
Quarter Ended July 31, 2003 Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
Income, excluding special items: $10,549 $6,435 $0.16
Special items - Income (Expense)
Goodwill impairment charge (1,353) (825) (0.02)
Interest rate swap and related option
agreements (change in value of financial
instruments) 1,355 827 0.02
Inventory write down (cost of goods sold) (1,104) (673) (0.02)
Restructuring and asset impairment charges (773) (472) (0.01)
Moving and other costs (included in
operating expenses) (554) (339) (0.01)
Net income, including special items: $8,120 $4,953 $0.12
All non-GAAP numbers have been adjusted to exclude special charges. A
reconciliation of specific adjustments to GAAP results for the fourth quarter
of fiscal 2003 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.
Year End Results
Net sales for the year ended July 31, 2004 were $1.7 billion, an increase
of 21.0% over the $1.4 billion recorded in the same period last year. Sales
for the year ended July 31, 2003 included over nine months of sales from
Blooming Prairie, acquired by the Company on October 11, 2002, and seven
months of sales from Northeast Cooperatives, acquired by the Company on
December 31, 2002. Net income for the year ended July 31, 2004 increased
$11.8 million, or 58.2%, to $32.0 million, or $0.78 per diluted share, from
$20.2 million, or $0.51 per diluted share, for the year ended July 31, 2003.
Net income, excluding special items, was $32.5 million, or $0.79 per diluted
share, compared to $23.4 million, or $0.59 per diluted share, for the year
ended July 31, 2003.
The special items for the fiscal year ended July 31, 2004 included
non-cash income related to the change in fair value of interest rate swaps and
related options agreements caused by favorable changes in yield curves as well
as start-up and transition costs of the new Wild Oats Markets primary
distributorship. The special items for the twelve months ended July 31, 2003
included a goodwill impairment charge, inventory write down and restructuring
and asset impairment charges related to the Company's subsidiary, Hershey
Import, and, moving and other costs related to the expansion of the Company's
Chesterfield, New Hampshire distribution facility. In addition, the special
items for the fiscal year ended July 31, 2003 included costs related to the
loss of a major customer (Wild Oats Market, which has now resumed its primary
distribution relationship with the Company) and a non-cash charge related to
the change in fair value of interest rate swaps and related option agreements.
The following tables detail the amounts and effect of these special items
and the reconciliation of net income, excluding special items (Non-GAAP
basis), to net income, including special items (GAAP basis):
Year Ended July 31, 2004 Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
Net income, excluding special items: $53,293 $32,509 $0.79
Special items - Income (Expense):
Wild Oats Markets, Inc. primary
distributorship transition related
costs (included in operating expenses) (1,561) (952) (0.02)
Interest rate swap and related option
agreements change in fair value of
financial instruments) 704 429 0.01
Net income, including special items: $52,436 $31,986 $0.78
Year Ended July 31, 2003 Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
Net income, excluding special items: $38,655 $23,395 $0.59
Special items - Income (Expense):
Goodwill impairment charge (1,353) (819) (0.02)
Inventory write down (cost of goods sold) (1,104) (668) (0.02)
Moving and other costs (included in
operating expenses) (1,004) (607) (0.02)
Restructuring and asset impairment charges (773) (467) (0.01)
Costs related to loss of major customer
(included in operating expenses) (530) (321) (0.01)
Interest rate swap and related option
agreements (change in value of financial
instruments) (484) (293) (0.01)
Net income, including special items: $33,407 $20,220 $0.51*
*Total reflects rounding
All non-GAAP numbers have been adjusted to exclude special charges. A
reconciliation of specific adjustments to GAAP results for the years ended
July 31, 2004 and 2003 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.
On December 29, 2003, the Company assigned and transferred all of its
obligations of its two "ineffective" interest rate swaps to a third party at a
cost of $5.4 million plus accrued interest. As a result of this novation,
these "ineffective" swaps will no longer be included as a special item for
future fiscal periods. These "ineffective" swaps were included as a special
item through the second quarter of fiscal 2004.
The Company entered into interest rate swap agreements in October 1998,
August 2001 and May 2003. The October 1998 and August 2001 agreements were
"ineffective" hedges as a result of the options held by the counter parties
that may extend the original term of the interest rate swap agreements.
Applicable accounting treatment requires that the Company record the changes
in fair value of the October 1998 and August 2001 agreements in its
consolidated statement of income, rather than within "other comprehensive
income" in its statement of stockholders' equity. The changes in fair value
are dependent upon the forward looking yield curves for each swap. The May
2003 agreement is an "effective" hedge and therefore does not require this
treatment. The Company believes that its October 1998 and August 2001
agreements are special items that are excludable as non-recurring items.
First, the Company only intends to enter into "effective" hedges going
forward. This stated intention began with the May 2003 agreement. Second,
the Company believes that the October 1998 and August 2001 agreements may
distort and confuse investors if the change in fair value cannot be treated as
a special item because their inclusion directly impacts its reported earnings
per share. A change in fair value, whether positive or negative, can
significantly increase or decrease its reported earnings per share. For
example, the Company recorded a positive change in fair value for the second
quarter of fiscal 2004 that increased its diluted earnings per share by $0.01,
and in the first quarter of fiscal 2003, the company recorded a negative
change in fair value that decreased its diluted earnings per share by $0.03.
If the Company were prohibited from excluding this item as a special item, it
would artificially inflate its reported earnings per share and thereby mislead
investors as to its results of operations and our financial condition.
Comments from Management
"I am very pleased with our Company's performance in fiscal 2004,"
commented Steven Townsend, Chairman and Chief Executive Officer. "These
results reflect the success of our operating and marketing strategies which
enabled us to experience solid growth in our three primary distribution
channels. We were also able to strengthen our financial position and solidify
our balance sheet. At the same time, we continued to strengthen our industry
presence by entering new channels of business and fostering several new and
renewed business relationships."
Mr. Townsend added, "As we look ahead, we are excited about our Company's
prospects for fiscal 2005 and beyond. Our efforts remain focused on helping
our customers be more successful in their marketplace while maintaining our
position as America's premier certified organic distributor. To ensure that
United Natural Foods is well positioned to capitalize on favorable growth
opportunities in the natural and organic foods industry we will continue to
invest in our people, facilities, equipment and new technologies."
The Company reaffirms its guidance for fiscal 2005, ending July 31, 2005,
with revenues in the $1.9 to $2.0 billion range, and net income, excluding
potential special items, in the range of $0.93 - $0.97 per diluted share.
Special items may include labor, moving and other costs related to the
expansion of the Company's distribution facilities. Historically, expenses
related to the change in fair value of interest rate swaps, distribution
facility expansions and asset impairment charges (including goodwill) have
been classified as special items. However, at this time the Company does not
know the extent or significance of these items or whether the Company will in
fact incur any of these or other special items in fiscal 2005. The Company's
guidance is based on a number of assumptions, which are subject to change and
many of which are outside the control of the Company. If any of these
assumptions vary, the Company's guidance may change. There can be no
assurance that the Company will achieve these results. A description of the
Company's use of non-GAAP information is provided under "Non-GAAP Results"
below.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m.
ET on August 31, 2004 to review the Company's quarterly results, market trends
and outlook. The conference call dial-in number is 303-262-2140. The audio
webcast will be available, on a listen only basis, via the Internet at
http://www.fulldisclosure.com or at the Investor Relations section of the
Company's website, http://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
The Company carries and distributes over 35,000 products to more than
18,000 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 http://www.unfi.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this press release regarding the Company's business
that 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 June 14, 2004, 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. The Company is not undertaking to
update any information in the foregoing reports until the effective date of
its future reports required by applicable laws. Any projections of future
results of operations should not be construed in any manner as a guarantee
that such results will in fact occur. These projections are subject to change
and could differ materially from final reported results. The Company may from
time to time update these publicly announced projections, but it is not
obligated to do so.
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 of America. 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 INCOME
(UNAUDITED)
Quarter Ended July 31, Year Ended July 31,
(In thousands, except per
share data) 2004 2003 2004 2003
Net sales $446,422 $366,843 $1,669,952 $1,379,893
Cost of sales 358,500 292,482 1,339,496 1,099,704
Gross profit 87,922 74,361 330,456 280,189
Operating expenses 70,960 63,483 270,666 236,784
Goodwill impairment charge -- 1,353 -- 1,353
Restructuring and asset
impairment charges -- 773 -- 773
Amortization of intangibles 164 229 1,306 463
Total operating expenses 71,124 65,838 271,972 239,373
Operating income 16,798 8,523 58,484 40,816
Other expense (income):
Interest expense 1,275 2,065 7,265 7,795
Change in value of
financial instruments -- (1,355) (704) 484
Other, net (154) (307) (513) (870)
Total other expense 1,121 403 6,048 7,409
Income before income
taxes 15,677 8,120 52,436 33,407
Income taxes 6,114 3,167 20,450 13,187
Net income $9,563 $4,953 $31,986 $20,220
Per share data (basic):
Net income $0.24 $0.13 $0.81 $0.53
Weighted average basic shares
of common stock 39,993 38,949 39,471 38,471
Per share data (diluted):
Net income $0.23 $0.12 $0.78 $0.51
Weighted average diluted
shares of common stock 41,623 40,049 41,025 39,454
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 31, 2004 and 2003
(UNAUDITED)
(In thousands) 2004 2003
ASSETS
Current assets:
Cash $13,633 $3,645
Accounts receivable, net 106,178 90,111
Notes receivable, trade, net 772 585
Inventories 196,171 158,263
Prepaid expenses and other current assets 7,007 6,410
Deferred income taxes 7,610 6,455
Total current assets 331,371 265,469
Property & equipment, net 114,140 101,238
Other assets:
Goodwill 57,242 57,400
Notes receivable, trade, net 1,601 1,261
Other intangibles, net 154 1,014
Other, net 4,259 3,717
Total assets $508,767 $430,099
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - line of credit $107,004 $96,170
Current installments of long-term debt 4,766 4,459
Current installment of obligations
under capital leases 454 903
Accounts payable 80,875 67,187
Accrued expenses and other current
liabilities 29,047 26,347
Financial instruments -- 6,104
Total current liabilities 222,146 201,170
Long-term debt, excluding current installments 43,978 38,507
Deferred income taxes 7,577 2,247
Obligations under capital leases, excluding
current installments 137 612
Total liabilities 273,838 242,536
Stockholders' equity:
Preferred stock, $0.01 par value, authorized
5,000 shares; none issued and outstanding
Common stock, $0.01 par value, authorized
50,000 shares; issued and outstanding 40,118
and 19,510 at July 31, 2004 and 2003,
respectively 401 195
Additional paid-in capital 101,118 86,068
Unallocated shares of ESOP (1,768) (1,931)
Other comprehensive income 393 432
Retained earnings 134,785 102,799
Total stockholders' equity 234,929 187,563
Total liabilities and stockholders' equity $508,767 $430,099
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended July 31, 2004 and 2003
(UNAUDITED)
(In thousands) 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 31,986 $ 20,220
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 11,660 10,330
Change in fair value of financial instruments (704) 484
Goodwill impairment charge -- 1,353
(Gain) loss on disposals of property & equipment (95) 154
Deferred income taxes 3,724 1,667
Provision for doubtful accounts 3,586 2,622
Changes in assets and liabilities:
Accounts receivable (19,653) (1,083)
Inventory (37,801) (3,861)
Prepaid expenses and other assets (913) (2,330)
Notes receivable, trade (527) 87
Accounts payable 13,688 (496)
Accrued expenses and other current liabilities 3,202 1,775
Financial instruments (5,400) --
Tax effect of stock option exercises 6,213 950
Net cash provided by operating activities 8,966 31,872
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (23,851) (20,025)
Proceeds from sale of property and equipment 244 257
Purchases of acquired businesses, net of cash
acquired (6) (43,723)
Net cash used in investing activities (23,613) (63,491)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under note payable 10,834 (9,939)
Net proceeds from issuance of long-term debt 10,204 32,110
Proceeds from exercise of stock options 9,043 5,411
Repayments on long-term debt (4,522) (2,073)
Principal payments of capital lease obligations (924) (1,429)
Net cash provided by financing activities 24,635 24,080
NET INCREASE (DECREASE) IN CASH 9,988 (7,539)
Cash at beginning of period 3,645 11,184
Cash at end of period $ 13,633 $ 3,645
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 7,074 $ 7,697
Income taxes, net of refunds $ 9,851 $ 7,999
SOURCE United Natural Foods, Inc.
Rick D. Puckett, Vice President, CFO and Treasurer of United
Natural Foods, Inc., +1-860-779-2800;
or Joseph Calabrese of Financial
Relations Board, +1-212-445-8434, for United Natural Foods, Inc.
http://www.unfi.com