Exhibit 99.1
[LETTERHEAD OF UNITED NATURAL FOODS, INC.]
IMMEDIATE RELEASE
August 31, 2005
UNITED NATURAL FOODS REPORTS RECORD SALES AND EARNINGS RESULTS
FOR THE FOURTH QUARTER AND YEAR ENDED JULY 31, 2005
o Quarterly net sales increased 22% from the fourth quarter of fiscal 2004
to $543.0 million and quarterly net income per diluted share increased 21%
to $0.28, excluding special items, and increased 22% to $0.28 per diluted
share, including special items.
o Annual net sales increased 23% from the full fiscal year 2004 to $2.06
billion and annual net income per diluted share increased 27% from fiscal
2004 to $1.00, excluding special items, and increased 28% to $1.00 per
diluted share, including special items.
o Comparable wholesale sales growth rates were 19.3% for the quarter and
15.3% for the full year.
Dayville, Connecticut -- August 31, 2005 -- United Natural Foods, Inc. (Nasdaq:
UNFI) today reported net income of $11.6 million for the fourth quarter of
fiscal 2005, ended July 31, 2005, or $0.28 per share on a diluted basis,
excluding special items. Net income for the fourth quarter of fiscal 2005,
including special items, was $11.8 million, or $0.28 per share on a diluted
basis.
Net sales for the fourth quarter of fiscal 2005 were $543.0 million, an increase
of $96.6 million, or 21.6%, from the $446.4 million recorded in the fourth
quarter of fiscal 2004. On a comparable growth analysis, wholesale revenue
growth was 19.3% for the current quarter compared to last year.
Net income for the fourth quarter of fiscal 2005, excluding the effect of
special items, increased 21.6% to $11.6 million, or $0.28 per diluted share,
compared to $9.6 million, or $0.23 per diluted share, excluding special items,
for the quarter ended July 31, 2004. Net income for the fourth quarter of fiscal
2005, including the effect of special items, increased 23.2% to $11.8 million,
or $0.28 per diluted share, compared to $9.6 million, or $0.23 per diluted
share, for the quarter ended July 31, 2004. The special items for the fourth
quarter of fiscal 2005 included certain costs associated with the opening of the
Company's new Greenwood, Indiana facility and the closing of its Hawaii
facility. In addition, the fourth quarter included other income related to the
early termination of the interest rate swap agreement that was originally
entered into in May 2003. There were no special items related to the fourth
quarter of fiscal 2004.
During the fourth quarter of fiscal 2005, Select Nutrition Distributors, which
was acquired in December 2004, and higher fuel costs both had a negative impact
on diluted earnings per share. In addition, the Company has experienced higher
than expected external costs associated with its compliance efforts under
Section 404 of Sarbanes-Oxley.
The following table details 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) for the quarter ended July 31
2005:
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Quarter Ended July 31, 2005
Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
------ ---------- -----
Income, excluding special items: $18,116 $11,633 $0.28
Special items - Income/(Expense):
Related to the closing of the Hawaii facility
(included in operating expenses) (67) (42) (0.00)
Related to the opening of the Greenwood, Indiana
facility (included in operating expenses) (254) (158) (0.00)
Termination of interest rate swap agreement
(included in other income, net) 557 346 0.01
- ------------------------------------------------------------------------------------------------------
Income, including special items: $18,352 $11,779 $0.28*
======================================================================================================
* Total reflects rounding
All Non-GAAP numbers have been adjusted to exclude special charges. A
description of the Company's use of Non-GAAP information is provided under
"Non-GAAP Results" below.
Record Year End Results
Net income, excluding special items, for the year ended July 31, 2005 increased
$9.2 million, or 28.3%, to $41.7 million, or $1.00 per diluted share, from $32.5
million, or $0.79 per diluted share, for the year ended July 31, 2004. Net
income, including special items, was $41.6 million, or $1.00 per diluted share,
compared to $32.0 million, or $0.78 per diluted share, for the year ended July
31, 2004.
Net sales for the year ended July 31, 2005 were $2.06 billion, an increase of
23.3%, or $389.6 million, over the $1.67 billion recorded in the year ended July
31, 2004. On a comparable growth analysis, wholesale division's revenue growth
was 15.3% compared to last year.
Special items for fiscal 2005 included certain costs associated with closing the
Mounds View, Minnesota and Hawaii facilities, and certain costs associated with
opening the new Greenwood, Indiana facility. In addition, other income related
to the early termination of the interest rate swap agreement, which was
originally entered into in May 2003, was recorded in the fourth quarter. 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 Wild Oats Markets, Inc. primary distributorship.
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) for the years ended July 31,
2005 and 2004:
- ------------------------------------------------------------------------------------------------------------
Year Ended July 31, 2005
Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
------ ---------- -----
Income, excluding special items: $67,284 $41,716 $1.00
Special items - Income (Expense):
Related to the closing of the Mounds View, Minnesota
facility (included in operating expenses) (456) (283) (0.01)
Related to the closing of the Hawaii facility (included in
operating expenses) (67) (42) (0.00)
Related to the opening of the Greenwood, Indiana facility
(included in operating expenses) (266) (165) (0.00)
Termination of interest rate swap agreement (included in
other income, net) 557 346 0.01
- ------------------------------------------------------------------------------------------------------------
Income, including special items: $67,052 $41,572 $1.00
============================================================================================================
- ------------------------------------------------------------------------------------------------------------
Year Ended July 31, 2004
Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
------ ---------- -----
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
- ------------------------------------------------------------------------------------------------------------
Income, including special items: $52,436 $31,986 $0.78
============================================================================================================
All non-GAAP numbers have been adjusted to exclude special charges. A
description of the Company's use of non-GAAP information is provided under
"Non-GAAP Results" below.
Comments from Management
"I am very pleased with our Company's financial and operating performance in
fiscal 2005," commented Steven Townsend, Chairman and Chief Executive Officer.
"These results reflect the success of our sales and marketing strategies which
enabled us to achieve solid growth across our three primary distribution
channels. We remain focused on serving a growing customer base and are pleased
that we achieved strong year over year growth in all channels. In addition, we
continue to leverage our expenses, as we saw a 57 basis point improvement in our
operating expenses, in spite of the higher fuel costs and Sarbanes-Oxley
compliance costs that have been experienced. Overall, we realized solid
increases in net sales, net income and earnings per share, which further
indicates that our operating strategies are on target. 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 business relationships."
Mr. Townsend added, "As we look ahead, we are excited about our Company's
prospects for fiscal 2006 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."
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. EDT on
August 31, 2005 to review the Company's quarterly and annual results, market
trends and future outlook. The conference call dial-in number is (303) 262-2131.
The audio webcast will be available, on a listen only basis, via the Internet at
http://www.earnings.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
United Natural Foods, Inc. carries and distributes more than 40,000 products to
more than 20,000 customers nationwide. The Company serves a wide variety of
retail formats including conventional supermarket chains, natural product
superstores, independent retail operators and the food service channel. For more
information on United Natural Foods, Inc., visit the Company's website at
http://www.unfi.com.
Financial Tables Follow
For more information on United Natural Foods, Inc., visit the Company's website
at www.unfi.com.
AT THE COMPANY: FINANCIAL RELATIONS BOARD
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Rick Puckett Joseph Calabrese
Chief Financial Officer General Information
(860) 779-2800 (212) 827-3772
"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 9,
2005, 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
generally accepted accounting principles ("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.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Quarters ended Years ended
July 31, July 31,
---------------------------- ----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net sales $ 542,981 $ 446,422 $ 2,059,568 $ 1,669,952
Cost of sales 437,652 358,500 1,664,523 1,339,496
------------ ------------ ------------ ------------
Gross profit 105,329 87,922 395,045 330,456
------------ ------------ ------------ ------------
Operating expenses 85,857 70,960 321,685 270,666
Restructuring charge -- -- 170 --
Amortization of intangibles 169 164 660 1,306
------------ ------------ ------------ ------------
Total operating expenses 86,026 71,124 322,515 271,972
------------ ------------ ------------ ------------
Operating income 19,303 16,798 72,530 58,484
------------ ------------ ------------ ------------
Other expense (income):
Interest expense 1,682 1,275 6,568 7,265
Change in fair value of financial instruments -- -- -- (704)
Other income, net (731) (154) (1,090) (513)
------------ ------------ ------------ ------------
Total other expense 951 1,121 5,478 6,048
------------ ------------ ------------ ------------
Income before income taxes 18,352 15,677 67,052 52,436
Income taxes 6,573 6,114 25,480 20,450
------------ ------------ ------------ ------------
Net income $ 11,779 $ 9,563 $ 41,572 $ 31,986
============ ============ ============ ============
Per share data (basic):
Net income $ 0.29 $ 0.24 $ 1.02 $ 0.81
============ ============ ============ ============
Weighted average basic shares of common stock 41,139 39,993 40,639 39,471
============ ============ ============ ============
Per share data (diluted):
Net income $ 0.28 $ 0.23 $ 1.00 $ 0.78
============ ============ ============ ============
Weighted average diluted shares of common stock 41,951 41,623 41,607 41,025
============ ============ ============ ============
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except per share data)
July 31, July 31,
2005 2004
---------- ----------
ASSETS
Current assets:
Cash $ 12,615 $ 13,633
Accounts receivable, net 136,472 106,178
Notes receivable, trade, net 877 772
Inventories 235,700 196,171
Prepaid expenses and other current assets 9,811 7,007
Deferred income taxes 7,419 7,610
---------- ----------
Total current assets 402,894 331,371
Property & equipment, net 167,909 114,140
Other assets:
Goodwill 73,808 57,242
Notes receivable, trade, net 1,802 1,601
Intangible assets, net 307 154
Other 4,538 4,259
---------- ----------
Total assets $ 651,258 $ 508,767
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - line of credit $ 123,574 $ 107,004
Accounts payable 119,177 80,875
Accrued expenses and other current liabilities 34,915 29,501
Current portion of long-term debt 5,843 4,766
---------- ----------
Total current liabilities 283,509 222,146
Long-term debt, excluding current portion 64,852 43,978
Deferred income taxes 6,904 7,730
Other long-term liabilities 474 137
---------- ----------
Total liabilities 355,739 273,991
---------- ----------
Commitments and contingencies
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 41,287 and 40,118 at July 31, 2005 and 2004,
respectively 413 401
Additional paid-in capital 120,354 101,118
Unallocated shares of Employee Stock Ownership Plan (1,605) (1,768)
Accumulated other comprehensive income -- 240
Retained earnings 176,357 134,785
---------- ----------
Total stockholders' equity 295,519 234,776
---------- ----------
Total liabilities and stockholders' equity $ 651,258 $ 508,767
========== ==========
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Years ended
July 31,
------------------------
2005 2004
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 41,572 $ 31,986
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 13,573 11,660
Change in fair value of financial instruments -- (704)
Gains on disposals of property & equipment (29) (95)
Deferred income taxes 1,763 3,724
Provision for doubtful accounts 2,471 3,586
Stock-based compensation 162 --
Changes in assets and liabilities, net of acquired companies:
Accounts receivable (27,437) (19,653)
Inventory (34,645) (37,801)
Prepaid expenses and other assets (3,291) (913)
Notes receivable, trade (306) (527)
Accounts payable 32,219 13,688
Accrued expenses and other current liabilities 4,199 3,202
Financial instruments -- (5,400)
Tax effect of stock options 8,095 6,213
---------- ----------
Net cash provided by operating activities 38,346 8,966
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (65,951) (23,851)
Purchases of acquired businesses, net of cash acquired (16,615) (6)
Proceeds from disposals of property and equipment 242 244
---------- ----------
Net cash used in investing activities (82,324) (23,613)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt, net 30,288 10,204
Proceeds from exercise of stock options 10,991 9,043
Net borrowings under note payable 10,850 10,834
Repayments on long-term debt (8,438) (4,522)
Principal payments of capital lease obligations (731) (924)
---------- ----------
Net cash provided by financing activities 42,960 24,635
---------- ----------
NET (DECREASE) INCREASE IN CASH (1,018) 9,988
Cash at beginning of period 13,633 3,645
---------- ----------
Cash at end of period $ 12,615 $ 13,633
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 7,006 $ 7,074
========== ==========
Income taxes, net of refunds $ 16,609 $ 9,851
========== ==========