Exhibit 99.1
[LETTERHEAD OF UNITED NATURAL FOODS, INC.]
IMMEDIATE RELEASE
November 29, 2005
UNITED NATURAL FOODS ANNOUNCES 21% INCREASE IN NET SALES
FOR THE FIRST QUARTER OF FISCAL 2006
Reports Record Revenue of $576 million and $0.27 diluted EPS,
Excluding Special Items and the Impact of Share-based Compensation
Dayville, Connecticut - November 29, 2005 -- United Natural Foods, Inc. (Nasdaq:
UNFI) today reported net sales for the first quarter of fiscal 2006, ended
October 29, 2005, of $575.6 million, an increase of $98.1 million, or 21%, from
the $477.5 million recorded in the first quarter of fiscal 2005. Strong growth
in all sales channels of the wholesale segment contributed to the record sales.
The Company reported net income of $10.3 million, or $0.24 per diluted share,
excluding special items but including the impact of share-based compensation,
for the first quarter of fiscal 2006. Net income for the first quarter of fiscal
2006, excluding the impact of the adoption of Statement of Financial Accounting
Standard No. 123R, Share-Based Payment ("FAS 123R"), and special items, was
$11.3 million, or $0.27 per diluted share. Net income for the first quarter of
fiscal 2006, including the effect of special items and the adoption of FAS 123R,
was $7.7 million, or $0.18 per diluted share. This compares with net income of
$9.9 million, or $0.24 per diluted share, for the first quarter of fiscal 2005
ended October 31, 2004. There were no special items for the first quarter of
fiscal 2005.
In December 2004, the Financial Accounting Standards Board finalized FAS 123R
which requires all companies to expense share-based payments, including stock
options, at fair value as of the beginning of the first annual reporting period
that begins after June 15, 2005. As such, we began expensing stock options on
August 1, 2005. Although we have adopted the modified prospective method allowed
under FAS 123R, the charge to earnings during fiscal 2006 includes the impact of
stock options granted in prior years, because the expense is recognized over the
vesting period of the options, which has typically been four years. For the
first quarter of fiscal 2006, share-based compensation, excluding special items
of $1.0 million, negatively impacted earnings by $1.5 million before taxes, or
$0.02 in earnings per diluted share.
For the first quarter of fiscal 2006 ended October 29, 2005, special items
consisted of incremental and redundant costs incurred during the transition from
our former warehouses and outside storage facility in Auburn, California into
our new larger facility in Rocklin, California, certain incremental costs
associated with the opening of our new Greenwood, Indiana facility and
non-recurring cash and non-cash expenses incurred in accordance with the
employment transition agreement we entered into during the quarter with Steven
H. Townsend, our former President and Chief Executive Officer.
The following table details the non-GAAP measures for the first quarter of
fiscal 2006:
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Quarter Ended October 29, 2005 Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
------ ---------- -----
Income, excluding special items and
share-based compensation: $ 18,160 $ 11,259 $ 0.27
Share-based compensation expense
(included in operating expenses (1,514) (939) (0.02)
--------------------------------------
Income, excluding special items: $ 16,646 $ 10,320 $ 0.24*
Special items - (Expense)
Employment transition agreement
costs (included in operating
expenses) (3,512) (2,177) (0.05)
Rocklin, CA facility relocation
costs (included in operating
expenses) (672) (416) (0.01)
Greenwood, IN facility openings
costs (included in operating
expenses) (92) (57) (0.00)
- --------------------------------------------------------------------------------
Income, including special items: $ 12,371* $ 7,670 $ 0.18
================================================================================
* Total reflects rounding.
All non-GAAP numbers have been adjusted to exclude special items. A
reconciliation of specific adjustments to GAAP results for the quarter ended
October 29, 2005 is included in the financial table shown above. A description
of the Company's use of non-GAAP information is provided under "Non-GAAP
Results" below.
Comments from Management
"We are extremely pleased to start off fiscal 2006 with another strong quarter
of financial results." said Michael Funk, Chief Executive Officer. "Reflecting
the efforts of a well-focused team and the successful execution of our sales and
operating strategies which have been designed to meet the growing demand across
all of our served channels of business for natural and organic products, we
realized record sales, and strong earnings per share."
Mr. Funk added, "We remain focused on providing superior service to our entire
customer base and are pleased to report sales growth of 21% and comparable
distribution sales growth of 18% excluding the acquisitions made during fiscal
2005. Fuel costs remained high in the quarter, negatively impacting our
operating margins by 10 bps. Our service levels remain high and our business
metrics are strong. We also successfully opened our new Rocklin, CA facility and
closed two owned facilities in Northern California as well as a third off site
storage facility. "
Confirms Fiscal 2006 Earnings Guidance
The Company is confirming its guidance for fiscal 2006, ending July 29, 2006,
with projected revenues remaining in the $2.25 to $2.35 billion range, and
projected earnings per share, excluding special items but including the impact
of share-based compensation, expected to be in a range of $1.03 - $1.08 per
diluted share. In July 2005 the Company had announced earnings per share
guidance, excluding special items and share-based compensation, from $1.14 -
$1.19 per diluted share.
Historically, the Company has classified expenses related to distribution
facility expansions and distribution facility relocations 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 additional special
items in fiscal 2006. 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. EST on
November 29, 2005 to review the Company's quarterly and annual results, market
trends and future outlook. The conference call dial-in number is (303) 262-2141.
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 prior 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
- --------------------------------------------------------------------------------
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 annual report on Form 10-K filed with the Commission on October
13, 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 income and earnings per
share adjusted to exclude special charges and/or share-based compensation. 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, while the measures excluding share-based
compensation provide comparability to the prior fiscal year. 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)
Three months ended
--------------------------
October 29, October 31,
2005 2004
----------- -----------
Net sales $ 575,641 $ 477,542
Cost of sales 465,374 385,099
----------- -----------
Gross profit 110,267 92,443
----------- -----------
Operating expenses (includes $2,535
and $0 of share-based compensation
expense in 2005 and 2004, respectively) 95,513 74,597
Restructuring charge -- 170
Amortization of intangibles 145 141
----------- -----------
Total operating expenses 95,658 74,908
----------- -----------
Operating income 14,609 17,535
----------- -----------
Other expense (income):
Interest expense 2,367 1,433
Other, net (129) (101)
----------- -----------
Total other expense 2,238 1,332
----------- -----------
Income before income taxes 12,371 16,203
Income taxes 4,701 6,319
----------- -----------
Net income $ 7,670 $ 9,884
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Per share data (basic):
Net income $ 0.19 $ 0.25
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Weighted average basic shares of
common stock 41,334 40,123
=========== ===========
Per share data (diluted):
Net income $ 0.18 $ 0.24
=========== ===========
Weighted average diluted shares of
common stock 42,150 41,580
=========== ===========
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
October 29, July 31,
2005 2005
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 9,906 $ 12,615
Accounts receivable, net 153,488 136,472
Notes receivable, trade, net 832 877
Inventories 270,449 235,700
Prepaid expenses and other current assets 10,023 9,811
Deferred income taxes 7,419 7,419
----------- -----------
Total current assets 452,117 402,894
Property & equipment, net 171,971 167,909
Other assets:
Goodwill 74,552 73,808
Notes receivable, trade, net 2,093 1,802
Intangible assets, net 276 307
Other 5,277 4,538
----------- -----------
Total assets $ 706,286 $ 651,258
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 144,191 $ 119,177
Notes payable 138,975 123,574
Accrued expenses and other current
liabilities 35,805 34,915
Current portion of long-term debt 5,657 5,843
----------- -----------
Total current liabilities 324,628 283,509
Long-term debt, excluding current portion 63,907 64,852
Deferred income taxes 7,032 6,904
Other long-term liabilities 1,747 474
----------- -----------
Total liabilities 397,314 355,739
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value,
authorized 5,000 shares at
October 29, 2005 and July 31, 2005,
respectively; none issued and outstanding -- --
Common stock, $0.01 par value, authorized
50,000 shares; issued and outstanding
41,436 and 41,287 at October 29,
2005 and July 31, 2005, respectively 414 413
Additional paid-in capital 125,885 120,354
Unallocated shares of ESOP (1,564) (1,605)
Accumulated other comprehensive income 210 --
Retained earnings 184,027 176,357
----------- -----------
Total stockholders' equity 308,972 295,519
----------- -----------
Total liabilities and stockholders' equity $ 706,286 $ 651,258
=========== ===========
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Three months ended
-------------------------
October 29, October 31,
2005 2004
-------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,670 $ 9,884
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 3,754 3,092
(Gain) loss on disposals of property & equipment (9) 9
Provision for doubtful accounts 369 466
Share-based compensation 2,535 --
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (17,510) (27,227)
Inventories (34,749) (18,084)
Prepaid expenses and other assets (625) (1,876)
Notes receivable, trade (246) (384)
Accounts payable 24,973 34,666
Accrued expenses and other current liabilities 2,189 (841)
Income taxes payable -- 5,021
Tax effect of stock options -- 74
----------- -----------
Net cash (used in) provided by operating activities (11,649) 4,800
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7,683) (3,590)
Payments for acquisitions, net of cash acquired (517) --
Proceeds from disposals of property and equipment 21 25
----------- -----------
Net cash used in investing activities (8,179) (3,565)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under note payable 15,401 (7,866)
Proceeds from exercise of stock options 1,713 205
Tax effect of stock options 1,284 --
Repayments on long-term debt (1,131) (1,292)
Principal payments of capital lease obligations (148) (162)
----------- -----------
Net cash provided by (used in) financing activities 17,119 (9,115)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,709) (7,880)
Cash and cash equivalents at beginning of period 12,615 13,633
----------- -----------
Cash and cash equivalents at end of period $ 9,906 $ 5,753
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 2,561 $ 1,377
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Income taxes, net of refunds $ 4,470 $ 1,166
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