Performance Food Group | 12500 West Creek Parkway |
Richmond, VA 23238 | |
Phone (804) 484-7700 | |
FAX (804) 484-7701 | |
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FOR MORE INFORMATION, CONTACT: | John D. Austin |
PERFORMANCE FOOD GROUP REPORTS 28% INCREASE IN NET SALES
TO NEW QUARTERLY HIGH OF $1.4 BILLION
RICHMOND, Va. (July 29, 2003)Performance Food Group (Nasdaq/NM:PFGC) today announced record net sales and net earnings for the second quarter ended June 28, 2003. Sales for the second quarter of 2003 amounted to $1.4 billion, up 28% from $1.1 billion in the year-earlier period. Net earnings for the quarter increased 7% to $23.9 million compared with $22.3 million a year ago. Net earnings per share for the quarter increased 4% to $0.49 per share diluted versus net earnings of $0.47 per share diluted in the year-earlier quarter.
Sales for the first six months of 2003 amounted to $2.6 billion, up 28% from $2.1 billion in the year-earlier period. Net earnings for the same period increased 22% to $40.4 million compared with $33.0 million a year ago. Net earnings per share year-to-date increased 18% to $0.84 per share diluted versus net earnings of $0.71 per share diluted in the year-earlier period.
C. Michael Gray, President and Chief Executive Officer, remarked, "Even with the higher costs of lettuce as we disclosed on July 14, 2003, our gains during the second quarter are gratifying and continue to validate our growth strategies. The second quarter represented the 34th consecutive quarter in which net sales and net earnings have increased compared with the prior-year period.Acquisitions contributed 14% of our sales growth during the quarter and our internal sales growth was 14%. Inflation amounted to slightly less than 1% during the quarter."
"Broadline sales continued to grow, increasing 37% as a result of our strategy of pursuing acquisitions that broaden our product line and geographic reach, increasing sales to independent restaurants, and generating incremental growth from existing customers and markets. Internal growth in Broadline amounted to 8% while the 2002 acquisitions of Quality Foods, Middendorf Meat and TPC contributed the balance of our sales growth. Street sales represented 49% of Broadline sales for the first half of 2003. Sales of proprietary brands increased 35% and comprised 24% of street sales year to date. Inflation in the Broadline segment amounted to approximately 1 ½% in the quarter."
Gray added, "Customized recorded a 26% increase in sales which was driven by expanding relationships with Ruby Tuesday, Inc., T.G.I. Friday's and Mimi's Café which were rolled out in late 2002 and 2003. Inflation for the Customized segment was nominal for the quarter."
"Fresh-Cut sales grew 10% during the quarter. We're seeing strong demand for our fresh-cut products in both the retail and foodservice channels as we continue to develop and provide innovative new bagged salad mixes and blends. Product testing of our fresh fruit product on the West Coast continues to progress and our focus is on refining our product offering and expanding our test markets. We are also very happy to be partnering with McDonald's in testing a new sliced apple product called Apple Dippers, beginning in the third quarter. The Fresh-Cut segment experienced slight inflation for the quarter."
"On July 14, 2003, the Company issued a press release reviewing its anticipated earnings for the second quarter in light of unanticipated industry-wide demand for salad products and the resulting significant increases in costs for raw lettuce in the last few weeks of June. We estimate the impact of these additional costs was approximately $0.03 per share for the second quarter."
"Our balance sheet remains strong, providing us with an array of financial options and flexibility. In April, we increased our revolving credit facility to $350 million and in June, we terminated our synthetic lease facilities. Our debt-to-capital ratio is 32% at the end of the second quarter, excluding $78 million of interests in accounts receivable sold under our accounts receivable purchase facility."
Gray concluded, "We are very pleased with our quarterly results despite the challenges associated with the increased costs of lettuce in June, 2003. Our earnings guidance, provided July 14, 2003, is unchanged and we believe our full-year results will be in the range of $1.75 to $1.79 per share diluted. This includes expected earnings per share in the $0.45 to $0.47 range in the third quarter and $0.46 to $0.48 range in the fourth quarter."
Performance Food Group markets and distributes more than 61,000 national and private label food and food-related products to approximately 46,000 restaurants, hotels, cafeterias, schools, healthcare facilities and other institutions. For more information on Performance Food Group, visitwww.pfgc.com.
Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and are based on current expectations and management's estimates; actual results may differ materially. The risks and uncertainties which could impact these statements include, but are not limited to, general economic condition; the relatively low margins and economic sensitivity of the foodservice business; the Company's reliance on major customers; the ability to identify and successfully complete acquisitions of other foodservice distributors; the Company's ability to successfully develop, market and meet demand for new products; management of the Company's planned growth; and the effect of the Company's identification of certain accounting errors on its anticipated results of operations, all as detailed from time to time in the reports filed by the Company with the Securities and Exchange Commission.
Performance Food Group Company | ||||||
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Three Months Ended | ||||||
June 28, |
| June 29, | ||||
Net sales | $ | 1,366,883,000 |
| $ | 1,068,054,000 | |
Net earnings | $ | 23,944,000 |
| $ | 22,278,000 | |
Net earnings per share: |
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| Basic | $ | 0.53 |
| $ | 0.51 |
| Diluted | $ | 0.49 |
| $ | 0.47 |
Weighted average number of shares outstanding |
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| Basic |
| 45,451,000 |
|
| 44,024,000 |
| Diluted |
| 52,817,000 |
|
| 51,622,000 |
| Six Months Ended | |||||
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June 28, | June 29, | |||||
Net sales | $ | 2,635,988,000 |
| $ | 2,064,957,000 | |
Net earnings | $ | 40,364,000 |
| $ | 33,034,000 | |
Net earnings per share: |
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| Basic | $ | 0.89 |
| $ | 0.75 |
| Diluted | $ | 0.84 |
| $ | 0.71 |
Weighted average number of shares outstanding |
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| Basic |
| 45,398,000 |
|
| 43,935,000 |
| Diluted |
| 52,749,000 |
|
| 51,580,000 |
Performance Food Group Company | |||||||
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Assets | June 28, 2003 |
| Dec. 28, 2002 | ||||
Cash and cash equivalents | $ | 44,355 |
| $ | 33,660 | ||
Accounts and notes receivable, net, including |
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| retained interest in securitized receivables |
| 237,196 |
|
| 220,676 | |
Inventories |
| 237,679 |
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| 239,846 | ||
Other current assets |
| 32,532 |
|
| 34,964 | ||
| Total current assets |
| 551,762 |
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| 529,146 | |
Property, plant and equipment, net |
| 326,149 |
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| 293,994 | ||
Goodwill, net |
| 584,917 |
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| 575,464 | ||
Other intangible assets, net |
| 201,361 |
|
| 205,497 | ||
Other assets |
| 8,598 |
|
| 13,616 | ||
| Total assets | $ | 1,672,787 |
| $ | 1,617,717 | |
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Liabilities and Shareholders' Equity | |||||||
Checks in excess of deposits | $ | 61,853 |
| $ | 74,759 | ||
Trade accounts payable |
| 261,622 |
|
| 236,438 | ||
Current installments of long-term debt |
| 1,856 |
|
| 2,504 | ||
Other current liabilities |
| 148,998 |
|
| 134,363 | ||
| Total current liabilities |
| 474,329 |
|
| 448,064 | |
Long-term debt, excluding current installments |
| 349,419 |
|
| 370,095 | ||
Deferred income taxes |
| 87,644 |
|
| 84,689 | ||
Shareholders' equity |
| 761,395 |
|
| 714,869 | ||
| Total liabilities and shareholders' equity | $ | 1,672,787 |
| $ | 1,617,717 | |
| Three Months Ended |
| Six Months Ended | ||||||||||||||||||||||
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| June 28, 2003 |
| June 29, 2002 |
| June 28, 2003 |
| June 29, 2002 | ||||||||||||||||||
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Net sales | $ | 1,366,883 | 100.0 | % |
| $ | 1,068,054 |
| 100.0 | % |
| $ | 2,635,988 |
| 100.0 | % |
| $ | 2,064,957 |
| 100.0 | % | |||
Cost of goods sold |
| 1,151,879 |
| 84.3 | % |
|
| 885,960 |
| 83.0 | % |
|
| 2,221,646 |
| 84.3 | % |
|
| 1,729,538 |
| 83.8 | % | ||
| Gross profit |
| 215,004 |
| 15.7 | % |
|
| 182,094 |
| 17.0 | % |
|
| 414,342 |
| 15.7 | % |
|
| 335,419 |
| 16.2 | % | |
Operating expenses |
| 171,258 |
| 12.5 | % |
|
| 141,834 |
| 13.2 | % |
|
| 340,192 |
| 12.9 | % |
|
| 273,743 |
| 13.2 | % | ||
| Operating profit |
| 43,746 |
| 3.2 | % |
|
| 40,260 |
| 3.8 | % |
|
| 74,150 |
| 2.8 | % |
|
| 61,676 |
| 3.0 | % | |
Other income (expense): |
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| Interest expense |
| (4,955 | ) |
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| (4,442 | ) |
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| (9,745 | ) |
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| (8,741 | ) |
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| Loss on sale of receivables |
| (378 | ) |
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| (493 | ) |
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| (702 | ) |
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| (931 | ) |
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| Other, net |
| 207 |
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| 320 |
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| 1,400 |
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| 851 |
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| Other expense, net |
| (5,126 | ) | 0.4 | % |
|
| (4,615 | ) | 0.5 | % |
|
| (9,047 | ) | 0.3 | % |
|
| (8,821 | ) | 0.4 | % |
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| Earnings before income taxes |
| 38,620 |
| 2.8 | % |
|
| 35,645 |
| 3.3 | % |
|
| 65,103 |
| 2.5 | % |
|
| 52,855 |
| 2.6 | % |
Income taxes | 14,676 |
| 1.0 | % |
|
| 13,367 |
| 1.2 | % |
|
| 24,739 |
| 1.0 | % |
|
| 19,821 |
| 1.0 | % | |||
| Net earnings | $ | 23,944 |
| 1.8 | % |
| $ | 22,278 |
| 2.1 | % |
| $ | 40,364 |
| 1.5 | % |
| $ | 33,034 |
| 1.6 | % | |
Weighted average common |
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| shares outstanding |
| 45,451 |
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| 44,024 |
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| 45,398 |
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| 43,935 |
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Basic net earnings per common share | $ | 0.53 |
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| $ | 0.51 |
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| $ | 0.89 |
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| $ | 0.75 |
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Weighted average common shares and |
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| dilutive potential common shares outstanding |
| 52,817 |
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| 51,622 |
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| 52,749 |
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| 51,580 |
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Diluted net earnings per common share | $ | 0.49 | $ | 0.47 | $ | 0.84 | $ | 0.71 | |||||||||||||||||
Performance Food Group Company | ||||||||||||||||||
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2003 | Broadline | Customized | Fresh-Cut | Corporate & | Consolidated | |||||||||||||
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Second Quarter | ||||||||||||||||||
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Net external sales | $ | 687,695 |
| $ | 442,464 |
| $ | 236,724 |
| $ | - |
| $ | 1,366,883 |
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Intersegment sales |
| 259 |
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| 106 |
|
| 4,475 |
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| (4,840 | ) |
| - |
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Operating profit |
| 20,620 |
|
| 5,953 |
|
| 21,543 |
|
| (4,370 | ) |
| 43,746 |
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| Operating profit margin |
| 3.00 | % |
| 1.35 | % |
| 8.93 | % |
| - |
|
| 3.20 | % | ||
Total assets |
| 774,024 |
|
| 132,232 |
|
| 647,346 |
|
| 119,185 |
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| 1,672,787 |
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Interest expense (income) |
| 3,738 |
|
| 51 |
|
| 4,914 |
|
| (3,748 | ) |
| 4,955 |
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Loss (gain) on sale of receivables |
| 1,722 |
|
| 569 |
|
| - |
|
| (1,913 | ) |
| 378 |
| |||
Depreciation |
| 3,457 |
|
| 869 |
|
| 5,527 |
|
| 585 |
|
| 10,438 |
| |||
Amortization |
| 942 |
|
| - |
|
| 1,124 |
|
| - |
|
| 2,066 |
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Capital expenditures |
| 6,628 |
|
| 13,605 |
|
| 13,070 |
|
| (390 | ) |
| 32,913 |
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2002 | Broadline | Customized | Fresh-Cut | Corporate & | Consolidated | ||||||||||||
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Second Quarter | |||||||||||||||||
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Net external sales | $ | 500,401 |
| $ | 350,557 |
| $ | 217,096 |
| $ | - |
| $ | 1,068,054 |
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Intersegment sales |
| 148 |
|
| - |
|
| 2,735 |
|
| (2,883 | ) |
| - |
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Operating profit |
| 15,444 |
|
| 4,172 |
|
| 24,296 |
|
| (3,652 | ) |
| 40,260 |
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| Operating profit margin |
| 3.09 | % |
| 1.19 | % |
| 11.05 | % |
| - |
|
| 3.77 | % | |
Total assets |
| 573,986 |
|
| 96,675 |
|
| 610,695 |
|
| 107,487 |
|
| 1,388,843 |
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Interest expense (income) |
| 1,862 |
|
| 154 |
|
| 5,478 |
|
| (3,052 | ) |
| 4,442 |
| ||
Loss (gain) on sale of receivables |
| 1,563 |
|
| 400 |
|
| - |
|
| (1,470 | ) |
| 493 |
| ||
Depreciation |
| 2,991 |
|
| 743 |
|
| 4,631 |
|
| 360 |
|
| 8,725 |
| ||
Amortization |
| 602 |
|
| - |
|
| 1,129 |
|
| 322 |
|
| 2,053 |
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Capital expenditures |
| 2,912 |
|
| 2,679 |
|
| 9,692 |
|
| 1,669 |
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| 16,952 |
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Performance Food Group Company | |||||||||||||||||
2003 | Broadline | Customized | Fresh-Cut | Corporate & | Consolidated | ||||||||||||
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Year-to-Date | |||||||||||||||||
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Net external sales | $ | 1,330,378 |
| $ | 855,406 |
| $ | 450,204 |
| $ | - |
| $ | 2,635,988 |
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Intersegment sales |
| 472 |
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| 200 |
|
| 8,273 |
|
| (8,945 | ) |
| - |
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Operating profit |
| 32,582 |
|
| 10,828 |
|
| 39,769 |
|
| (9,029 | ) |
| 74,150 |
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| Operating profit margin |
| 2.45 | % |
| 1.27 | % |
| 8.67 | % |
| - |
|
| 2.81 | % | |
Total assets |
| 774,024 |
|
| 132,232 |
|
| 647,346 |
|
| 119,185 |
|
| 1,672,787 |
| ||
Interest expense (income) |
| 7,559 |
|
| 116 |
|
| 9,596 |
|
| (7,526 | ) |
| 9,745 |
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Loss (gain) on sale of receivables |
| 3,351 |
|
| 1,071 |
|
| - |
|
| (3,720 | ) |
| 702 |
| ||
Depreciation |
| 7,031 |
|
| 1,719 |
|
| 10,890 |
|
| 953 |
|
| 20,593 |
| ||
Amortization |
| 1,885 |
|
| - |
|
| 2,259 |
|
| - |
|
| 4,144 |
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Capital expenditures |
| 8,255 |
|
| 16,267 |
|
| 27,944 |
|
| 655 |
|
| 53,121 |
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2002 | Broadline | Customized | Fresh-Cut | Corporate & | Consolidated | ||||||||||||
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Year-to-Date | |||||||||||||||||
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Net external sales | $ | 951,211 |
| $ | 691,674 |
| $ | 422,072 |
| $ | - |
| $ | 2,064,957 |
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Intersegment sales |
| 292 |
|
| - |
|
| 5,519 |
|
| (5,811 | ) |
| - |
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Operating profit |
| 23,850 |
|
| 7,618 |
|
| 37,134 |
|
| (6,926 | ) |
| 61,676 |
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| Operating profit margin |
| 2.51 | % |
| 1.10 | % |
| 8.68 | % |
| - |
|
| 2.99 | % | |
Total assets |
| 573,986 |
|
| 96,675 |
|
| 610,695 |
|
| 107,487 |
|
| 1,388,843 |
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Interest expense (income) |
| 3,326 |
|
| 283 |
|
| 10,543 |
|
| (5,411 | ) |
| 8,741 |
| ||
Loss (gain) on sale of receivables |
| 3,045 |
|
| 870 |
|
| - |
|
| (2,984 | ) |
| 931 |
| ||
Depreciation |
| 5,766 |
|
| 1,495 |
|
| 9,156 |
|
| 618 |
|
| 17,035 |
| ||
Amortization |
| 956 |
|
| - |
|
| 2,257 |
|
| 622 |
|
| 3,835 |
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Capital expenditures |
| 4,045 |
|
| 3,892 |
|
| 18,072 |
|
| 2,600 |
|
| 28,609 |
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