EXHIBIT 99.1
12500 West Creek Parkway
Richmond, VA 23238
[PFG LOGO] PERFORMANCE Phone (804) 484-7700
FOOD GROUP FAX (804) 484-7701
NEWS RELEASE
FOR MORE INFORMATION:
MEDIA CONTACT: INVESTOR CONTACT:
CHERYL MOORE KEVIN COLLIER
DIRECTOR, CORPORATE COMMUNICATIONS DIRECTOR, INVESTOR RELATIONS
(804) 484-6273 (804) 287-8109
PERFORMANCE FOOD GROUP ANNOUNCES 65% INCREASE IN
OPERATING PROFIT FROM CONTINUING OPERATIONS
RICHMOND, VA. (MAY 3, 2005) - Performance Food Group (Nasdaq/NM:PFGC) today
announced results for the first quarter ended April 2, 2005. All amounts
pertaining to the Company's Fresh-cut produce segment are accounted for as
discontinued operations.
Consolidated net sales from continuing operations in the first quarter increased
to approximately $1.4 billion, a 16% increase compared to the prior year period.
Inflation was approximately 3% in the first quarter. Net earnings from
continuing operations amounted to approximately $4.7 million compared to
approximately $2.2 million in the year earlier period. Net earnings per share
for continuing operations were approximately $0.10 per share diluted, compared
to $0.05 per share diluted in the prior year period. Net earnings from
discontinued operations were approximately $9.0 million, compared to
approximately $5.3 million in the year earlier period. Net earnings per share
from discontinued operations were approximately $0.19 per share diluted,
compared to approximately $0.11 per share diluted in the prior year earlier
period. Consolidated net earnings per share including both continuing operations
and discontinued operations amounted to approximately $0.29 per share diluted.
On February 22, 2005, the Company signed a definitive agreement to sell all of
its stock in the subsidiaries that comprise the Fresh-cut produce segment to
Chiquita Brands International, Inc. As of that date, the Company met the
criteria required to account for the Fresh-cut segment as a discontinued
operation. As such, in accordance with generally accepted accounting principles,
depreciation and amortization were discontinued as of February 23, 2005. This
resulted in a reduction of pre-tax expense for the segment of approximately $3.7
million, or approximately $0.05 per share diluted in the first quarter.
Excluding the impact from the discontinuation of depreciation and amortization
for the segment, net earnings per share would have amounted to $0.14 per share
diluted for discontinued operations and $0.24 per share diluted including both
continuing operations and discontinued operations on a consolidated basis."
Bob Sledd, Chairman and Chief Executive Officer remarked, "We're very pleased
with the strong growth of our internal sales and operating earnings in our
continuing
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operations during the first quarter. Our focus on service excellence and
operational improvement are contributing favorably to our growth with
customers."
"Sales in the Broadline distribution segment increased approximately 19% in the
first quarter. Inflation amounted to approximately 3% in the quarter. Sales
increases in the quarter were the result of previously announced new business
rollouts, combined with incremental growth with existing customers."
Mr. Sledd added, "In our Customized distribution segment, sales increased
approximately 12% in the first quarter. Inflation was approximately 3% in the
quarter. Sales gains in the quarter were driven by continued growth with
existing customers. In April, we began shipping from our new 206,000 square foot
distribution center in Indiana. Our Customized segment remains focused on the
addition of new capacity throughout the year to position us for growth in 2006."
"Sales from the discontinued operations of the Fresh-cut segment increased
slightly in the first quarter over the prior year period. Retail sales increased
ahead of category growth in the quarter, while foodservice sales decreased as a
result of the rationalization of foodservice customers in the prior year."
"All of our business segments are experiencing higher trends in insurance costs,
particularly increases in healthcare costs. Our corporate costs increased during
the first quarter primarily as a result of incremental costs associated with the
completion of our previously disclosed Audit Committee investigation. Despite
these costs, we continue to expect operating profit from continuing operations
to be within our previously projected range of $73 to $78 million for the year.
Although given these trends, we expect to be toward the lower end of this range.
This includes corporate overhead, but excludes stock compensation expense. This
would represent a solid mid-teens percentage improvement over 2004. In
conjunction with the recently announced delay in the effective date of FASB
123-R for the expensing of stock options, we now expect to adopt the new
standards in the first quarter of 2006. We have continued to focus on
implementing cost effective equity compensation programs with an increasing
emphasis on restricted stock. As a result, despite the delay in the
implementation of FASB 123-R, the Company expects to incur pre-tax stock
compensation expense of approximately $1.0 to $1.5 million related to restricted
stock grants for the 2005 year."
Mr. Sledd concluded, "Our balance sheet remains strong with a debt to capital
ratio of approximately 23% at the end of the first quarter, excluding $130
million of interests in accounts receivable sold under an accounts receivable
purchase facility. We remain focused on continued improvement of our operating
performance and we expect to achieve solid operating earnings improvement
throughout the year."
Performance Food Group markets and distributes more than 65,000 national and
private label food and food-related products to approximately 44,000
restaurants, hotels, cafeterias, schools, healthcare facilities and other
institutions. The Fresh Express(R) line is the industry leader and pioneer of
fresh packaged salads. For more information on Performance Food Group, visit
www.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 conditions; the relatively low margins and economic
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sensitivity of the foodservice business; the Company's reliance on major
customers; the level of demand for the Company's fresh-cut products; the
possibility that the closing of the sale of the fresh-cut produce operations may
not occur because of the failure of the closing conditions to be satisfied; the
risk that the results of the Securities and Exchange Commission informal inquiry
could have an adverse affect on the Company; the ability to identify and
successfully complete acquisitions of other foodservice distributors; the
Company's ability to successfully develop, produce and market new products and
management of the Company's planned growth, all as detailed from time to time in
the reports filed by the Company with the Securities and Exchange Commission.
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PERFORMANCE FOOD GROUP COMPANY
UNAUDITED FINANCIAL HIGHLIGHTS
(In thousands, except net earnings per common share)
THREE MONTHS ENDED
--------------------------------
APRIL 2, APRIL 3,
2005 2004
------------ -----------
Net sales from continuing operations $ 1,422,807 $ 1,224,537
Net earnings from continuing operations $ 4,683 $ 2,157
Net earnings from discontinued operations 9,012 5,319
------------ -----------
$ 13,695 $ 7,476
Weighted average number of shares outstanding:
Basic 46,872 45,999
Diluted 47,403 47,067
Net earnings per common share:
Basic net earnings per common share - continuing operations $ 0.10 $ 0.05
Basic net earnings per common share - discontinued operations 0.19 0.11
------------ -----------
$ 0.29 $ 0.16
Diluted net earnings per common share - continuing operations $ 0.10 $ 0.05
Diluted net earnings per common share - discontinued operations 0.19 0.11
------------ -----------
$ 0.29 $ 0.16
Note: Prior year data has been reclassified to conform to current year
discontinued operations presentation
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PERFORMANCE FOOD GROUP COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
APRIL 2, 2005
(IN THOUSANDS)
APRIL 2, 2005 JANUARY 1, 2005
------------- ---------------
ASSETS
Cash and cash equivalents $ 49,710 $ 52,322
Accounts and notes receivable, net, including
retained interest in securitized receivables 197,498 171,191
Inventories 287,097 287,019
Other current assets 22,929 25,463
Current assets of discontinued operations 669,061 109,924
------------- ---------------
Total current assets 1,226,295 645,919
------------- ---------------
Property, plant and equipment, net 214,247 201,248
Goodwill, net 354,037 354,038
Other intangible assets, net 53,405 54,471
Other assets 14,004 13,502
Non-current assets of discontinued operations - 558,587
------------- ---------------
Total assets $ 1,861,988 $ 1,827,765
============= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Checks in excess of deposits $ 54,239 $ 103,948
Trade accounts payable 287,791 227,882
Current installments of long-term debt 661 661
Other current liabilities 128,104 112,580
Current liabilities of discontinued operations 203,298 116,024
------------- ---------------
Total current liabilities 674,093 561,095
------------- ---------------
Long-term debt, excluding current installments 255,719 263,859
Deferred income taxes 40,871 40,775
Long-term liabilities of discontinued operations - 87,723
Shareholders' equity 891,305 874,313
------------- ---------------
Total liabilities and shareholders' equity $ 1,861,988 $ 1,827,765
============= ===============
Note: Prior year data has been reclassified to conform to current year
discontinued operations presentation
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PERFORMANCE FOOD GROUP COMPANY
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
APRIL 2, 2005
(IN THOUSANDS, EXCEPT NET EARNINGS PER COMMON SHARE)
THREE MONTHS ENDED
----------------------------------------
APRIL 2, 2005 APRIL 3, 2004
------------------- -------------------
Net sales $1,422,807 100.0% $1,224,537 100.0%
Cost of goods sold 1,242,891 87.4% 1,066,484 87.1%
---------- ----- ---------- -----
Gross profit from continuing operations 179,916 12.6% 158,053 12.9%
Operating expenses 170,490 11.9% 152,341 12.4%
---------- ----- ---------- -----
Operating profit from continuing operations 9,426 0.7% 5,712 0.5%
Other income (expense):
Interest expense (973) (1,982)
Loss on sale of receivables (1,006) (468)
Other, net 164 202
---------- ----------
Other expense, net (1,815) -0.2% (2,248) -0.2%
---------- ----- ---------- -----
Earnings before income taxes from continuing operations 7,611 0.5% 3,464 0.3%
Income taxes 2,928 0.2% 1,307 0.1%
---------- ----- ---------- -----
Net earnings from continuing operations 4,683 0.3% 2,157 0.2%
Net earnings from discontinued operations 9,012 5,319
---------- ----------
Net earnings $ 13,695 $ 7,476
========== ==========
Weighted average common shares outstanding:
Basic 46,872 45,999
Diluted 47,403 47,067
========== ==========
Net earnings per common share:
Basic net earnings per common share - continuing operations $ 0.10 $ 0.05
Basic net earnings per common share - discontinued operations 0.19 0.11
---------- ----------
$ 0.29 $ 0.16
Diluted net earnings per common share - continuing operations $ 0.10 $ 0.05
Diluted net earnings per common share - discontinued operations 0.19 0.11
---------- ----------
$ 0.29 $ 0.16
========== ==========
Note: Prior year data has been reclassified to conform to current year
discontinued operations presentation
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PERFORMANCE FOOD GROUP COMPANY
SEGMENT DISCLOSURE
2005 COMPARED TO 2004
1ST QUARTER
TOTAL
CORPORATE & CONTINUING
2005 BROADLINE CUSTOMIZED INTERSEGMENT OPERATIONS
- -------------------------- ---------- ---------- ------------ -----------
FIRST QUARTER
Net external sales $ 860,044 $ 562,763 $ - $1,422,807
Intersegment sales 225 62 (287) -
Total sales 860,269 562,825 (287) 1,422,807
Operating profit 12,654 5,766 (8,994) 9,426
Operating profit margin 1.47% 1.02% - 0.66%
Interest expense (income) 3,899 267 (3,193) 973
Loss (gain) on sale of receivables 2,776 743 (2,513) 1,006
Depreciation 3,339 1,164 1,019 5,522
Amortization 907 - - 907
Capital expenditures 3,309 13,198 2,039 18,546
TOTAL
CORPORATE & CONTINUING
2004 BROADLINE CUSTOMIZED INTERSEGMENT OPERATIONS
- -------------------------- ---------- ---------- ------------ -----------
FIRST QUARTER
Net external sales $ 723,651 $ 500,886 $ - $1,224,537
Intersegment sales 267 77 (344) -
Total sales 723,918 500,963 (344) 1,224,537
Operating profit 10,318 3,470 (8,076) 5,712
Operating profit margin 1.43% 0.69% - 0.47%
Interest expense (income) 3,080 171 (1,269) 1,982
Loss (gain) on sale of receivables 1,950 650 (2,132) 468
Depreciation 3,365 1,071 739 5,175
Amortization 900 - - 900
Capital expenditures 2,304 1,449 1,668 5,421
Total assets by reportable segment and a reconciliation to the condensed
consolidated balance sheets were as follows:
APRIL 2, 2005 JANUARY 1, 2005
------------- ---------------
Broadline $ 849,334 $ 830,421
Customized 196,474 176,827
Corporate & Intersegment 147,119 152,006
Discontinued Operations 669,061 668,511
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Total Assets $ 1,861,988 $ 1,827,765
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NOTE: Prior year data has been reclassified to conform to current year
discontinued operations presentation
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