EXHIBIT 99.1
12500 West Creek Parkway
[PFG LOGO] PERFORMANCE Richmond, VA 23238
FOOD GROUP Phone (804) 484-7700
FAX (804) 484-7701
NEWS RELEASE
FOR MORE INFORMATION:
INVESTOR CONTACT:
MEDIA CONTACT: KEVIN COLLIER
CHERYL MOORE DIRECTOR, INVESTOR RELATIONS
DIRECTOR, CORPORATE COMMUNICATIONS (804) 287-8109
(804) 484-6273
PERFORMANCE FOOD GROUP REPORTS 26% INCREASE IN
NET EARNINGS FROM CONTINUING OPERATIONS
- NET SALES FROM CONTINUING OPERATIONS INCREASED 13%
- NET EARNINGS FROM CONTINUING OPERATIONS INCREASED 26%
- NET GAIN ON SALE OF FRESH-CUT SEGMENT AMOUNTED TO $181.0
MILLION
RICHMOND, VA. (AUGUST 2, 2005) - Performance Food Group (Nasdaq/NM:PFGC)
today announced results for the second quarter and six months ended July
2, 2005. On June 28, 2005, the Company completed the sale of its fresh-cut
segment to Chiquita Brands International, Inc. All amounts pertaining to
the Company's fresh-cut segment are accounted for as discontinued
operations.
Consolidated net sales from continuing operations in the second quarter
increased to approximately $1.5 billion, a 13% increase compared to the
prior year period. Inflation was approximately 1% in the second quarter.
Net earnings from continuing operations amounted to approximately $12.2
million compared to approximately $9.7 million in the year earlier period.
Net earnings per share from continuing operations were $0.26 per share
diluted, compared to $0.21 per share diluted in the prior year period. Net
earnings from discontinued operations, which include the gain on the sale
of the fresh-cut segment, were approximately $191.5 million, compared to
approximately $9.1 million in the year earlier period. The net gain on the
sale of the segment amounted to approximately $181.0 million. Net earnings
per share from discontinued operations were $4.02 per share diluted,
compared to $0.18 per share diluted in the prior year period. Excluding
the impact of the gain on the sale of the segment, net earnings per share
from discontinued operations would have amounted to $0.22 per share
diluted. Consolidated net earnings per share including both continuing
operations and discontinued operations amounted to $4.28 per share diluted
compared to $0.39 per share diluted in the year earlier period.
Consolidated net sales from continuing operations for the first six months
of 2005 were approximately $2.9 billion, up 14% from approximately $2.5
billion in the year earlier period. Net earnings from continuing
operations in the same period increased 43% to approximately $16.9
million, compared to approximately $11.9 million in the prior year period.
Net earnings per share from continuing operations increased to $0.36 per
share
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diluted, compared to $0.25 per share diluted in the same period last year.
Net earnings from discontinued operations for the first six months were
approximately $200.6 million compared to $14.4 million in the year earlier
period. Net earnings per share from discontinued operations were $4.22 per
share diluted versus $0.31 per share diluted in the prior year period.
Consolidated net earnings per share including both continuing operations
and discontinued operations were $4.58 per share diluted, compared to
$0.56 per share diluted in the year earlier period.
Bob Sledd, Chairman and Chief Executive Officer noted, "Our strong
internal sales and earnings growth during the second quarter reflects that
our focus on operational excellence and outstanding customer service is
contributing to the continued improvement of our business. Sales in the
broadline distribution segment increased approximately 16% in the second
quarter compared to the prior year period. Inflation amounted to
approximately 2% in the quarter. Sales increases in the quarter were the
result of previously announced new business rollouts and incremental
growth with existing customers. During the third quarter, we are
experiencing some transition related inefficiencies resulting from our
exit of certain multi-unit business in one region and our transition into
new multi-unit replacement business in another region. We expect to have
worked through these transitions by the end of the third quarter."
"Sales in our customized distribution segment increased approximately 8%
in the second quarter compared to the prior year period. Inflation was
nominal in the quarter. Sales increases were driven by continued growth
with existing customers. We began servicing customers from our new Indiana
distribution center during the second quarter. As we anticipated, start up
costs associated with the opening of the Indiana facility negatively
impacted our operating margins in the quarter. Our customized segment
remains focused on the addition of new capacity in order to position us
for growth in 2006. We expect to complete the majority of our additions to
capacity by the end of the third quarter, with the remainder in the
beginning of the fourth quarter of this year. As anticipated, we expect
the start up costs associated with the opening of these facilities to
negatively impact operating margins in the second half of 2005. "
"Sales from the discontinued operations of the fresh-cut segment increased
slightly in the second quarter and during the first six months compared to
the prior year period. With the recent completion of the sale of our
fresh-cut segment to Chiquita Brands International, Inc., we are excited
about the opportunity to focus our energies and resources exclusively on
the sales and earnings growth of our core distribution businesses."
"As anticipated, all of our business segments are experiencing higher
trends in insurance costs, particularly increases in healthcare costs.
These trends are expected to continue throughout the balance of the year.
The third quarter will be impacted by our new facility openings in
customized and the transition of multi-unit business in broadline. As a
result, we do not expect to achieve operating profit growth in the third
quarter. However, we expect to achieve solid results in the fourth
quarter, ending the year on a positive note. Our expectations for
operating profit from our distribution businesses continue to be toward
the lower end of our previously projected range of $73.0 to $78.0 million
for the year, which includes corporate overhead, but excludes pre-tax
stock compensation expense of approximately $1.0 to $1.5 million related
to restricted stock grants for the 2005 year. Adjusted for anticipated
stock compensation expense, we expect operating
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profit from continuing operations to be toward the lower end of the range
of $71.5 to $77.0 million for the year."
Mr. Sledd concluded, "During the quarter, we paid off substantially all of
our outstanding indebtedness on the balance sheet with a portion of the
net proceeds from the sale of the fresh cut segment. As a result, our
balance sheet remains extremely strong with cash and cash equivalents of
approximately $647.1 million, prior to the payment of $162.9 million of
income taxes payable, primarily related to the gain on the sale of the
fresh-cut segment. Our debt to capital ratio is less than 1% at the end of
the second quarter, excluding $130 million of interests in accounts
receivable sold under an accounts receivable purchase facility. As such,
we expect interest expense and the loss on sale of accounts receivable,
net of interest income, to be nominal in the third quarter and
approximately $1.5 to $2.0 million for the fourth quarter of 2005.
Assuming the successful completion of our previously announced tender
offer for 10 million shares of our outstanding common stock, we anticipate
weighted average shares of approximately 42 to 43 million shares for the
third quarter and 37 to 38 million shares for the fourth quarter. For the
remainder of the year, we will maintain our focus on executing our core
strategies to drive continued growth of our business. We have made
excellent progress during the year as reflected in our solid earnings
growth. We are optimistic about the year in total and our future."
Performance Food Group markets and distributes more than 64,000 national
and private label food and food-related products to approximately 44,000
restaurants, hotels, cafeterias, schools, healthcare facilities and other
institutions. 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 sensitivity of the foodservice business; the Company's reliance
on major customers; 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
------------------------
JULY 2, JULY 3,
2005 2004
----------- -----------
Net sales from continuing operations $ 1,456,735 $ 1,292,863
Earnings from continuing operations, net of tax $ 12,246 $ 9,693
Earnings from discontinued operations, net of tax 10,591 9,103
Gain on sale of Fresh-cut segment, net of tax 180,958 -
----------- -----------
$ 203,795 $ 18,796
Weighted average number of shares outstanding:
Basic 46,955 46,344
Diluted 47,608 53,325
Earnings per common share:
Basic earnings per common share - continuing operations $ 0.26 $ 0.21
Basic earnings per common share - discontinued operations 0.23 0.20
Basic earnings per common share - gain on sale of Fresh-cut 3.85 -
----------- -----------
$ 4.34 $ 0.41
Diluted earnings per common share - continuing operations $ 0.26 $ 0.21
Diluted earnings per common share - discontinued operations 0.22 0.18
Diluted earnings per common share - gain sale of Fresh-cut 3.80 -
----------- -----------
$ 4.28 $ 0.39
Note: Prior year data has been reclassified to conform to current year
discontinued operations presentation
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PERFORMANCE FOOD GROUP COMPANY
UNAUDITED FINANCIAL HIGHLIGHTS
(In thousands, except net earnings per common share) SIX MONTHS ENDED
------------------------
JULY 2, JULY 3,
2005 2004
----------- -----------
Net sales from continuing operations $ 2,879,542 $ 2,517,400
Earnings from continuing operations, net of tax $ 16,929 $ 11,850
Earnings from discontinued operations, net of tax 19,603 14,422
Gain on sale of Fresh-cut segment, net of tax 180,958 -
----------- -----------
$ 217,490 $ 26,272
Weighted average number of shares outstanding:
Basic 46,913 46,161
Diluted 47,505 47,166
Earnings per common share:
Basic earnings per common share - continuing operations $ 0.36 $ 0.26
Basic earnings per common share - discontinued operations 0.42 0.31
Basic earnings per common share - gain on sale of Fresh-cut 3.86 -
----------- -----------
$ 4.64 $ 0.57
Diluted Earnings per common share - continuing operations $ 0.36 $ 0.25
Diluted Earnings per common share - discontinued operations 0.41 0.31
Diluted Earnings per common share - gain on sale of Fresh-cut 3.81 -
----------- -----------
$ 4.58 $ 0.56
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)
JULY 2, 2005
(IN THOUSANDS)
JULY 2, 2005 JANUARY 1, 2005(A)
------------ ------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 647,058 $ 52,322
Accounts receivable, net, including retained interest in
securitized receivables 179,921 171,191
Inventories 280,822 287,019
Other current assets 22,376 25,463
Current assets from discontinued operations 12,488 109,924
------------ ------------
Total current assets 1,142,665 645,919
------------ ------------
Property, plant and equipment, net 228,301 201,248
Goodwill, net 353,963 354,038
Other intangible assets, net 52,288 54,471
Other assets 14,883 13,502
Non-current assets from discontinued operations - 558,587
------------ ------------
Total assets $ 1,792,100 $ 1,827,765
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Outstanding checks in excess of deposits $ 54,840 $ 103,948
Trade accounts payable 287,778 227,882
Current installments of long-term debt 596 661
Other current liabilities 126,238 112,580
Income taxes payable 162,880 -
Current liabilities from discontinued operations 16,425 116,024
------------ ------------
Total current liabilities 648,757 561,095
------------ ------------
Long-term debt, excluding current installments 3,536 263,859
Deferred income taxes 43,134 40,775
Non-current liabilities from discontinued operations - 87,723
------------ ------------
Total liabilities 695,427 953,452
Shareholders' equity 1,096,673 874,313
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Total liabilities and shareholders' equity $ 1,792,100 $ 1,827,765
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(A) PRIOR YEAR RESTATED TO CONFORM TO CURRENT YEAR DISCONTINUED OPERATIONS
PRESENTATION
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PERFORMANCE FOOD GROUP COMPANY
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
JULY 2, 2005
(IN THOUSANDS, EXCEPT EARNINGS PER COMMON SHARE)
THREE MONTHS ENDED
JULY 2, 2005 JULY 3, 2004
(A)
------------------ ------------------
Net sales $1,456,735 100.0% $1,292,863 100.0%
Cost of goods sold 1,267,343 87.0% 1,123,321 86.9%
---------- ----- ---------- -----
Gross profit from continuing operations 189,392 13.0% 169,542 13.1%
Operating expenses 167,441 11.5% 150,250 11.6%
---------- ----- ---------- -----
Operating profit from continuing operations 21,951 1.5% 19,292 1.5%
---------- ----- ---------- -----
Other income (expense):
Interest expense (1,540) (2,941)
Loss on sale of receivables (1,235) (506)
Other, net 641 230
---------- ----- ---------- -----
Other expense, net (2,134) -0.1% (3,217) -0.3%
---------- ----- ---------- -----
Earnings before income taxes from continuing
operations 19,817 1.4% 16,075 1.2%
Income taxes 7,571 0.6% 6,382 0.5%
---------- ----- ---------- -----
Earnings from continuing operations 12,246 0.8% 9,693 0.7%
---------- ----- ---------- -----
Earnings from discontinued operations, net of tax 10,591 9,103
Gain on sale of Fresh-cut segment, net of tax 180,958 -
---------- ----- ---------- -----
Total earnings from discontinued operations 191,549 9,103
---------- ----- ---------- -----
Net earnings $ 203,795 $ 18,796
---------- ----- ---------- -----
Weighted average common shares outstanding:
Basic 46,955 46,344
Diluted 47,608 53,325
---------- ----- ---------- -----
Earnings per common share:
Basic earnings per common share:
Continuing operations $ 0.26 $ 0.21
Discontinued operations 0.23 0.20
Gain on sale of fresh-cut 3.85 -
---------- ----- ---------- -----
Total $ 4.34 $ 0.41
---------- ----- ---------- -----
Diluted earnings per common share:
Continuing operations $ 0.26 $ 0.21
Discontinued operations 0.22 0.18
Gain on sale of fresh-cut 3.80 -
---------- ----- ---------- -----
Total $ 4.28 $ 0.39
SIX MONTHS ENDED
JULY 2, 2005 JULY 3, 2004
(A)
------------------ --------------------
Net sales $2,879,542 100.0% $ 2,517,400 100.0%
Cost of goods sold 2,510,234 87.2% 2,189,805 87.0%
---------- ------ ----------- ------
Gross profit from continuing operations 369,308 12.8% 327,595 13.0%
Operating expenses 337,931 11.7% 302,591 12.0%
---------- ------ ----------- ------
Operating profit from continuing operations 31,377 1.1% 25,004 1.0%
---------- ------ ----------- ------
Other income (expense):
Interest expense (2,513) (4,923)
Loss on sale of receivables (2,241) (974)
Other, net 805 432
---------- ------ ----------- ------
Other expense, net (3,949) -0.1% (5,465) -0.2%
---------- ------ ----------- ------
Earnings before income taxes from continuing
operations 27,428 1.0% 19,539 0.8%
Income taxes 10,499 0.4% 7,689 0.3%
---------- ------ ----------- ------
Earnings from continuing operations 16,929 0.6% 11,850 0.5%
---------- ------ ----------- ------
Earnings from discontinued operations, net of tax 19,603 14,422
Gain on sale of fresh-cut segment, net of tax 180,958 -
---------- ------ ----------- ------
Total earnings from discontinued operations 200,561 14,422
---------- ------ ----------- ------
Net earnings $ 217,490 $ 26,272
---------- ------ ----------- ------
Weighted average common shares outstanding:
Basic 46,913 46,161
Diluted 47,505 47,166
---------- ------ ----------- ------
Earnings per common share:
Basic earnings per common share
Continuing operations 0.36 $ 0.26
Discontinued operations 0.42 0.31
Gain on sale of fresh-cut 3.86 -
---------- ------ ----------- ------
Total $ 4.64 $ 0.57
---------- ------ ----------- ------
Diluted earnings per common share:
Continuing operations $ 0.36 $ 0.25
Discontinued operations 0.41 0.31
Gain on sale of fresh-cut 3.81 -
---------- ------ ----------- ------
Total $ 4.58 $ 0.56
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(A) PRIOR YEAR RESTATED TO CONFORM TO CURRENT YEAR DISCONTINUED OPERATIONS
PRESENTATION
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SEGMENT DISCLOSURE
SECOND QUARTER
SECOND QUARTER 2005
2005 Quarter CORPORATE & TOTAL CONTINUING
(In thousands) BROADLINE CUSTOMIZED INTERSEGMENT OPERATIONS
- ------------- ---------- ---------- ------------ ----------------
NET EXTERNAL SALES $ 895,853 $ 560,882 $ - $ 1,456,735
INTERSEGMENT SALES 78 54 (132) -
TOTAL SALES 895,931 560,936 (132) 1,456,735
OPERATING PROFIT 23,468 6,096 (7,613) 21,951
OPERATING PROFIT MARGIN 2.62% 1.09% - 1.51%
INTEREST EXPENSE (INCOME) 3,964 377 (2,801) 1,540
LOSS (GAIN) ON SALE OF RECEIVABLES 2,269 758 (1,792) 1,235
DEPRECIATION 3,308 1,268 1,125 5,701
AMORTIZATION 904 - - 904
CAPITAL EXPENDITURES 3,706 15,819 288 19,813
SECOND QUARTER 2004
(RESTATED TO CONFORM TO CURRENT YEAR DISCONTINUED OPERATIONS PRESENTATION)
2004 Quarter CORPORATE & TOTAL CONTINUING
(In thousands) BROADLINE CUSTOMIZED INTERSEGMENT OPERATIONS
- -------------- ---------- ---------- ------------ ----------------
NET EXTERNAL SALES $ 775,084 $ 517,779 $ - $ 1,292,863
INTERSEGMENT SALES 188 77 (265) -
TOTAL SALES 775,272 517,856 (265) 1,292,863
OPERATING PROFIT 20,262 6,093 (7,063) 19,292
OPERATING PROFIT MARGIN 2.61% 1.18% - 1.49%
INTEREST EXPENSE (INCOME) 2,722 148 71 2,941
LOSS (GAIN) ON SALE OF RECEIVABLES 2,101 667 (2,262) 506
DEPRECIATION 3,258 1,073 846 5,177
AMORTIZATION 908 - - 908
CAPITAL EXPENDITURES 1,809 4,131 1,263 7,203
TOTAL ASSETS BY REPORTABLE SEGMENT AND A RECONCILIATION TO THE CONDENSED
CONSOLIDATED BALANCE SHEETS WERE AS FOLLOWS:
JULY 2, 2005 JANUARY 1, 2005
------------ ---------------
BROADLINE $ 829,120 $ 830,421
CUSTOMIZED 210,569 176,827
CORPORATE & INTERSEGMENT 739,923 152,006
DISCONTINUED OPERATIONS 12,488 668,511
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TOTAL ASSETS $ 1,792,100 $ 1,827,765
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SEGMENT DISCLOSURE
SIX MONTHS YEAR TO DATE
SIX MONTHS YEAR TO DATE 2005
2005 Period CORPORATE & TOTAL CONTINUING
(In thousands) BROADLINE CUSTOMIZED INTERSEGMENT OPERATIONS
- -------------- ---------- ---------- ------------ ----------------
NET EXTERNAL SALES $1,755,897 $1,123,645 $ - $ 2,879,542
INTERSEGMENT SALES 303 116 (419) -
TOTAL SALES 1,756,200 1,123,761 (419) 2,879,542
OPERATING PROFIT 36,122 11,862 (16,607) 31,377
OPERATING PROFIT MARGIN 2.06% 1.06% - 1.09%
INTEREST EXPENSE (INCOME) 7,863 644 (5,994) 2,513
LOSS (GAIN) ON SALE OF RECEIVABLES 5,045 1,501 (4,305) 2,241
DEPRECIATION 6,647 2,432 2,144 11,223
AMORTIZATION 1,811 - - 1,811
CAPITAL EXPENDITURES 7,015 29,017 2,327 38,359
SIX MONTHS YEAR TO DATE 2004
(RESTATED TO CONFORM TO CURRENT YEAR DISCONTINUED OPERATIONS PRESENTATION)
2004 Period CORPORATE & TOTAL CONTINUING
(In thousands) BROADLINE CUSTOMIZED INTERSEGMENT OPERATIONS
- -------------- ---------- ---------- ------------ ----------------
NET EXTERNAL SALES $1,498,735 $1,018,665 $ - $ 2,517,400
INTERSEGMENT SALES 455 154 (609) -
TOTAL SALES 1,499,190 1,018,819 (609) 2,517,400
OPERATING PROFIT 30,580 9,563 (15,139) 25,004
OPERATING PROFIT MARGIN 2.04% 0.94% - 0.99%
INTEREST EXPENSE (INCOME) 5,802 319 (1,198) 4,923
LOSS (GAIN) ON SALE OF RECEIVABLES 4,051 1,317 (4,394) 974
DEPRECIATION 6,623 2,144 1,585 10,352
AMORTIZATION 1,808 - - 1,808
CAPITAL EXPENDITURES 4,113 5,580 2,931 12,624
TOTAL ASSETS BY REPORTABLE SEGMENT AND A RECONCILIATION TO THE CONDENSED
CONSOLIDATED BALANCE SHEETS WERE AS FOLLOWS:
JULY 2, 2005 JANUARY 1, 2005
------------ ---------------
BROADLINE $ 829,120 $ 830,421
CUSTOMIZED 210,569 176,827
CORPORATE & INTERSEGMENT 739,923 152,006
DISCONTINUED OPERATIONS 12,488 668,511
------------ ------------
TOTAL ASSETS $ 1,792,100 $ 1,827,765
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END