Exhibit 99.2
UNITED NATURAL FOODS, #11050935
January 17, 2006, 11:00 a.m. ET
Financial Relations Board
Chairperson: Julie Tu
Operator Ladies and gentlemen, thank you for standing by and welcome
to the United Natural Foods corporate conference call. At
this time all participants are in a listen-only mode.
Following today's presentation instructions will be given
for the question and answer session. If anyone should
require operator assistance during the conference, you may
press the star key followed by the zero on your pushbutton
phone. As a reminder, this conference is being recorded
today, January 17, 2006.
I would now like to turn the conference over to Ms. Julie Tu
of FRB. Please go ahead, ma'am.
J. Tu Thank you and good morning, everyone. By now you should have
all received a copy of this morning's press release. If
anyone still needs a copy, please call Janet Jazmin in our
New York office at 212-827-3777 and we'll send you a copy
immediately following this morning's conference call.
With us this morning from management is Michael Funk,
President and Chief Executive Officer. We'll begin with some
opening comments from management and then we will open up
the line for questions.
As a reminder, this call is also being webcast today and can
be accessed on the internet at www.unfi.com.
Before we begin, as usual we would like to remind everyone
about the cautionary language regarding forward-looking
statements contained in the press release. That same
language applies to comments made on this morning's
conference call.
With that, I'd like to turn the conference call over to
Michael Funk. Please go ahead, Michael.
M. Funk Thank you, Julie, and good morning, everyone. We appreciate
you being on the call today. Joining me on today's call is
Rick Puckett, our Chief Financial Officer who is leaving us
effective January 29th, and Mark Shamber, Vice President and
Corporate Controller who will assume the role of acting
Chief Financial Officer on January 29th.
As you know from the press release we announced this
morning, Rick Puckett is departing United Natural Foods to
join another publicly traded company which is not a
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competitor as its Executive Vice President and Chief
Financial Officer. While we are disappointed to lose such a
strong executive and leader, we'd like to thank Rick for his
efforts during his 3 year tenure with United Natural Foods.
We understand and respect his decision and we wish him and
his family the best. He leaves the company with a strong
balance sheet, outstanding leadership in the financial and
audit function.
As we conduct the search of internal and external candidates
to find a permanent replacement, we are pleased to be able
to announce that Mark Shamber has accepted our offer of
acting Chief Financial Officer. As a background, Mark has
served as Vice President since August 2005 and our Corporate
Controller since June 2003. Mark is highly qualified and has
been very successful during his time at UNFI. Importantly,
he is extremely familiar with our operations and systems and
has been deeply involved with our financial reporting and
corporate governance structure. Given his expertise and
knowledge, we believe Mark will be able to step in and be
very effective in this role.
To mitigate any negative reactions to this announcement, I'd
just like to clarify that we have no accounting issues or
internal control problems and that there is no financial
impropriety. There are no underlying problems with our
business or operations and we are very comfortable with our
2006 fiscal guidance and targets and we are extremely
pleased with the sales trends that we're seeing.
Additionally, there are no disagreements between management
and its auditors. In fact, business fundamentals, sales and
service levels all remain strong and all of our associates
remain focused on executing upon our sales and operating
strategies. We look forward to a productive 2006 and to
sharing our progress with you throughout this coming year.
Now I'd like to turn the call over to Rick Puckett for a few
additional comments. Thank you, Rick.
R. Puckett Thank you, Michael, and thanks for everyone being on the
call. As Michael mentioned in the press release this
morning, I have accepted the position with a public company
in the food and beverage industry as their Executive Vice
President and CFO. I actually begin the new job on January
30th, so there's no break between the 2 positions.
This is a position that actually came to me, I was not
actively searching for it. I know that it may appear that
it's related to previous management changes relating to the
CEO leaving but I can assure you it had absolutely nothing
to do with my decision relative to this particular position.
It did not come easily, the decision, but it is good for me
and my family as it does require us to relocate South, a lot
closer to our immediate family and from an economic
perspective as well.
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Just to be clear and to reiterate what Michael has already
said. It has nothing to do with accounting issues or
internal control issues, it has nothing to do with any kind
of financial impropriety or any disagreements with
management. I'm a full supporter and very strong supporter
of what Michael is doing relative to the decentralization
and strengthening the management team throughout the
regions. I think the company is in very good hands, it's in
great shape. Going forward there's nothing I think but
upside for the company.
Mark came in 2003, shortly after I came on board as the
Corporate Controller. He's done a magnificent job while he's
been here. He certainly has led the very successful
Sarbanes-Oxley project for the first year and we're in good
hands in leaving the financial role to Mark in the interim
basis.
Mark's history can be found to some degree in the press
release but certainly he has a lot of talent and a lot of
capability to lead the company on the financial side. I'm
certain that the company's in good hands with the financial
team that exists today. In addition to Mark there's a lot of
strength throughout the organization. I will certainly be
here over the next 2 weeks to help in the transition.
I've truly enjoyed my time here at UNFI and will certainly
miss the friends and associates that are here. I'll turn it
back over to Mark so he can say a few words.
M. Shamber First, I'd like to thank Rick for the guidance and counsel
that he's provided me over my two and a half years here.
From a personal perspective, he certainly will be missed
although I know that he'll always be a short email or phone
call away. I think the finance organization has developed
into quite a strong organization within the company during
his tenure and the team and I look forward to continuing the
company's progress as we move forward. With that I think
we'll open the call up to any questions that may be raised.
Operator Thank you, sir. Ladies and gentlemen, at this time we will
begin the question and answer session. If you do have a
question, please press the star key followed by one on your
pushbutton phone. If you would like to decline from the
polling process once making that choice, you may press the
star followed by the two. You will hear a three-toned prompt
acknowledging your selection. Questions will be polled in
the order they are received. And as a reminder, if you are
using speaker equipment, we do need to lift your handset
before pressing the numbers. Just a moment, please, for our
first question.
Our first question is coming from Greg Badishkanian from
CitiGroup. Please go ahead.
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G. Badishkanian Great, thanks. Congratulations, Rick, on your new position.
Can you tell us what that is or are you not able to disclose
the company yet?
R. Puckett Not able to disclose yet but I expect it to be disclosed
this week.
G. Badishkanian Good. Hopefully it's a company in our universe. Mark, if you
could go through a little bit about your background. You've
been with the company for about 2 years or so, maybe before
that give us a little bit of background as well where you've
come from.
M. Shamber I joined to company in June 2003, have been the corporate
controller since that time. Prior to coming to UNFI I was
with Ernst & Young, one of the Big 4 accounting firms. I
worked there for eight, eight and a half years in various
roles in the AABS function or the audit function,
specializing in manufacturing and high tech companies and
left there as a senior manager. Prior to that upon
graduating college my first 3 or 4 years I worked in finance
at Reebok, International.
G. Badishkanian Great. Thanks. Michael, would you expect any other types of
major changes in management or anything you're planning
proactively or are you happy with the management team in
place now?
M. Funk Greg, I wouldn't expect any other changes or any other
announcements to be made.
G. Badishkanian With respect to tenor of business, you mentioned trends are
strong. Do you want to leave it at that or are there any
details you're able to disclose?
M. Funk As you know, we're in our blackout period. We're going go be
announcing ... our Q2 conference call will be on February
28th and of course we'll look forward to giving everybody an
update on how the quarter's been. But we just made the
statement about seeing strong sales trends continue so at
the moment that's all we would be able to talk about.
G. Badishkanian Great. Thanks again.
Operator Thank you, sir. Our next question is from Ed Aaron with RBC
Capital Markets. Please go ahead, sir.
E. Aaron Thanks. Good morning. First of all, Rick, certainly wish you
well, you'll be missed.
R. Puckett Thank you.
E. Aaron Good luck to you. Also, Michael, could you talk a little bit
about the void that will be left with Rick's departure. One
of the things I think Rick has brought to the table is
strength in the area of IT. Is that an area where you still
have work to do and then how much you get that done without
him being there?
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Also, as you look for new candidates, are there any
particular traits you're going to be looking for as you go
forward?
M. Funk As far as the IT side, Rick leaves behind a solid
organization in our IT headed by Gary Glenn who's been with
the company for several years. Gary will report to me and we
will be continuing many of the IT initiatives that have been
in place that are on the block for the company. I feel like
with the finance department, Rick's done a lot to create a
strong organization in the IT department as well so we'll
continue to benefit from that for years on.
As far as the CFO search, we'll be casting a broad net
obviously looking for people with food and industry
experience wherever possible. Again, we have a lot of faith
in Mark and Mark's certainly going to be a candidate for the
permanent position as well.
E. Aaron Great. Thank you.
Operator Thank you. Our next question is coming from Scott Vanwinkle
of Canaccord Adams. Please go ahead, sir.
S. Vanwinkle Congratulations, Rick. I look forward to buying the stock
wherever you're going to go.
R. Puckett Scott, I appreciate that.
S. Vanwinkle If you had to rank the reasons, it sounds like weather and
money are in there. What would be the first tipping point as
to why you decided to leave?
R. Puckett Scott, Jeannie and I are empty nesters up in Connecticut
without any family around so I think that's probably the
number one driving force. I certainly did not, as I
mentioned, go looking for this opportunity and this one came
along and it was in a southern state which is certainly very
close to where our family is. So I think that's probably the
number one driving reason. The fact that the economics are
there is an additional positive.
S. Vanwinkle Well knowing you, I think the family reason is a very good
reason. Mark, a question for you. Do you anticipate any
changes in your tenure at least in the near term as CFO?
M. Shamber I don't anticipate anything in the near term, no.
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S. Vanwinkle How about managing the Street? One of the things that Rick
did very well in my opinion was managing the Street. Do you
tend to follow what he's laid out as the way it's handled?
M. Shamber I certainly hope so. During the transition period I'll
certainly be trying to seek his guidance and advice. This
will be some of my first exposure to dealing with the Street
although I have behind the scenes worked with Rick in
advance for meetings and such. I certainly anticipate there
will be some smoothing out on my part to get more
comfortable but I'm sure that with Michael's help and Rick's
help and everyone else internally that we should continue
along the path that we have been on the last 3 years.
R. Puckett Scott, just to add to that, Mark actually presented at the
CitiGroup conference this past week while I was on vacation
in Florida and did a magnificent job.
S. Vanwinkle Thank you, everyone, and best of luck, Rick.
M. Funk Thanks, Scott.
Operator Thank you, sir. Our next question is coming from Andrew Wolf
of BB&T Capital Markets. Please go ahead.
A. Wolf Good morning. This question's for Michael. On the last
conference call you talked about changing the management
structure, going back towards sort of a more decentralized,
kind of the roots if you will of the company. Could you
update us on your thinking there in terms of now that you've
been at the company longer, what you're thinking you might
want to do in that regard? Have you found anything
structurally different between the different regions of the
company either in management practices or margin trends or
anything like that you can allude to? I may follow up after
I hear your answer.
M. Funk We've been basically trying to strengthen the regional
organizations. In a few cases some of the positions have
been left vacant. The Eastern Region president was recently
filled by our long time Operations VP, Mike Beaudry. That
announcement went out last week so we've strengthened that
position. Also we promoted in the past Rick Antonelli to the
COO role to help deepen and broaden management. The Western
Region right now we're searching for a replacement for the
president position out there. We anticipate having that
position filled in the near term. We've brought back some
other people. Michael Michelle has recently rejoined the
company as Vice President of Operations in the Western
Region.
We've made several additional changes internally with
strengthening and broadening our team. We're thinking that
down the road we may have 3 regions as we expand our
facilities around the country and that we're going to
continue to look for both internal and external candidates
that can help us fill those additional positions. We also
announced as well an addition to our United Natural Brands
division. John Raisch [sp] has rejoined the company as Vice
President of Marketing.
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We're doing what we believe is in the best interest of the
company which is to strengthen and broaden the depth of our
management talent.
A. Wolf How long has the West Coast president position been vacant
and when do you anticipate you'll have an announcement on
that?
M. Funk It's been vacant since Rick Antonelli has relocated back
East so it's been basically the last 3 months. I've been
filling in that role since I'm based out West. We are
looking right now very closely at a few individuals and
would anticipate something in the next 4 to 6 weeks probably
to be announced.
A. Wolf Thank you.
M. Funk Okay, Andy. Thanks.
Operator Thank you. Our next question is coming from Eric Weissman of
Goldman Sachs. Please go ahead.
E. Weissman Good morning, guys. Given that you've had 2 pretty senior
management changes first with you, Michael, and now with
Rick leaving as well, how big of a challenge or disruption
is it to the business to have transitions at both the CEO
and CFO level? Do you think this has or will create any
noticeable issues for you guys operationally?
M. Funk I don't anticipate any issues based on these changes. On the
CEO transition I think it's gone very smoothly. It's a role
I've done before and I am very comfortable with so have felt
very good with the transition in the last 3 months on the
CEO position. I think Rick Puckett's transition again will
be made much easier based on the strength of the finance
team that he leaves behind and in particular Mark Shamber's
abilities. I feel very comfortable going forward that we'll
have no operational issues or challenges that we don't
normally have anyway.
E. Weissman Thanks very much.
Operator Gentlemen, there are no further questions at this time.
Please continue with any closing comments from management.
M. Funk Thank you. We appreciate your support of United Natural
Foods and look forward to speaking with you at our next
conference call on February 28th. Thank you.
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Operator Thank you. Ladies and gentlemen, this does conclude the
United Natural Foods corporate conference call for today. If
you would like to listen to a replay of today's conference
in its entirety you may do so by dialing 800-405-2236 or
303-590-3000 using the access code 11050935.
You may now disconnect. Thank you for using ACT
Teleconferencing. Have a very pleasant day.
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